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Backowskiv.Solecki,316NW2d434Mich:CourtofAppeals1982GoogleScholar

112Mich.App.401(1982)
316N.W.2d434

BACKOWSKI
v.
SOLECKI.
DocketNo.45250.
MichiganCourtofAppeals.
DecidedJanuary19,1982.
EllsworthHanlonandJosephLloyd(ofcounsel),forStephenBackowski.
MeyerW.LeibandGregoryGelfand(ofcounsel),forBillmaxProperties.
Before:D.C.RILEY,P.J.,andBASHARAandCYNAR,JJ.
CYNAR,J.
Plaintiffappealsasofrightfromanamendedorderofjudgment,enteredDecember11,1979,afteranonjurytrial,whichplaced
titletocertainwarehousepropertyinBillmaxProperties,hereinafterdesignateddefendant,andawardedplaintiffdamagesinthe
amountof$14,000.Defendanthasfiledacrossappeal.Weremandtothetrialcourtforfurtherfindingsoffact.
H.S.&L.InvestmentCo.,hereinafterH.S.&L.,isaMichiganpartnership.TheoriginalpartnerswereHenrySolecki,owning20
405

percent,LottieSolecki,Henry'smother,owning40percent,andplaintiff,StephenBackowski,owning40percent.Lottie
Solecki'sinterestinthepartnershipwas*405subsequentlytransferredtoHenryin1974,leavingHenrywitha60percent
interestinthepartnership.ThebusinessofH.S.&L.wasstatedinthecomplainttobetheownershipandleasingofwarehouse
space.Thepropertywhichisthesubjectmatterofthedisputewasboughtinthepartnershipnamebyalandcontractfrom11305
StateFairProperties.
InDecemberof1974,plaintifffiledacomplaintallegingthatHenrySoleckihaddeprivedplaintiffofpartnershiprevenueandhad
refusedtorenderanaccounting.PlaintiffsoughttoenjoinSoleckifromdistributingpartnershipassetsandsoughtanorderforan
accounting.
InAprilof1975,most,ifnotall,ofthetenantshadvacatedthewarehouse.Thebuildingwasinastateofdisrepair.ByDecember
of1975thepartnershipwasfivepaymentsbehindonthelandcontract,at$3,500perpayment,andwas$25,000behindintaxes
ontheproperty.Thelandcontractvendorhadservednoticeofforfeiture.
OnDecember31,1975,withthecasebetweenSoleckiandplaintiffstillpending,Soleckiexecutedaquitclaimdeedandan
assignmentofthelandcontractpurportedlyonbehalfofH.S.&L.conveyingH.S.&L.'sinterestinthepropertytodefendant.At
thistimeSoleckialsosignedanaffidavitwarrantinghisauthoritytoactonbehalfofH.S.&L.inthismatter.Bythetermsofthe
purchaseagreementdefendantpaidthedelinquentlandcontractpaymentsandthebacktaxes.Inaddition,Soleckireceiveda
checkinthenameofH.S.&L.for$10,000.

406

PlaintifffiledamotiontoaddpartiesdefendantonMarch23,1976,allegingthattheassignmentofthelandcontractandthe
quitclaimdeedwereexecutedwithouthisconsent.Thecomplaint*406againsttheaddeddefendantssoughtdamagesandtoset
asidethesale.Ofthosepartiesthatwereadded,onlydefendantBillmaxremainsinthesuit.[1]
PriortocommencementoftrialonJanuary11,1979,HenrySoleckiandLottieSoleckiweredismissedfromthesuit,individually
andonbehalfofH.S.&L.Theorderwasentered,overobjectionsbyBillmax,pursuanttoasettlementagreementbywhich
plaintiffagreedtothedismissalinconsiderationoftheSoleckis'transfertoplaintiffofanyinteresttheymayhaveinthe
partnershipofH.S.&L.TherecordindicatesthatplaintiffthenproceededindividuallyandonbehalfofH.S.&L.
Afteralongtrialwithmuchconflictingtestimonythetrialjudgeissuedawrittenopinioninwhichheheldthattitletotheproperty
shouldremainindefendant,Billmax,andawardeddamagestoplaintiffintheamountof$14,000.

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I
ResolutionofthedisputehereinrequiresapplicationoftheUniformPartnershipAct,MCL449.1etseq.MSA20.1etseq.Section
10oftheactwouldseemtogovernthecaseatbar.Itstatesinpart:
407

"(1)Wheretitletorealpropertyisinthepartnershipname,anypartnermayconveyatitletosuchproperty*407byaconveyance
executedinthepartnershipname***."MCL449.10MSA20.10.
ItisundisputedthatthetitletothepropertyinvolvedhereinwasinthepartnershipnameandthatSolecki,apartner,conveyed
titletosuchpropertybyaconveyanceexecutedinthepartnershipname.Section10statesthatthesecircumstancesconstitutea
propertransferoftitle.Nonetheless,10furtherindicatesthatthepartnershipmay,atitsoption,recoverthepropertyunless(a)
thepartner'sactbindsthepartnershipunder9(1)or(b)thepropertyhasbeenconveyedtoabonafidepurchaser.
"***butthepartnershipmayrecoversuchpropertyunlessthepartner'sactbindsthepartnershipundertheprovisionsof
paragraphone[1]ofsectionnine[9],orunlesssuchpropertyhasbeenconveyedbythegranteeorapersonclaimingthrough
suchgranteetoaholderforvaluewithoutknowledgethatthepartner,inmakingtheconveyance,hasexceededhisauthority**
*."(Footnoteomitted.)MCL449.10(1)MSA20.10(1).
ThesecondalternativehasnoapplicationtothecaseatbarsinceBillmax,thegrantee,hasnotconveyedtheproperty.
Therefore,weturntothequestionofwhetherSolecki'sactboundthepartnershipunder9(1).Thatsectionprovidesasfollows:
"SEC.9.(PARTNERAGENTOFPARTNERSHIPASTOPARTNERSHIPBUSINESS).

408

"(1)Everypartnerisanagentofthepartnershipforthepurposeofitsbusiness,andtheactofeverypartner,includingthe
executioninthepartnershipnameofanyinstrument,forapparentlycarryingonintheusualwaythebusinessofthepartnership
ofwhichheisa*408memberbindsthepartnership,unlessthepartnersoactinghasinfactnoauthoritytoactforthepartnership
intheparticularmatter,andthepersonwithwhomheisdealinghasknowledgeofthefactthathehasnosuchauthority***."
MCL449.9MSA20.9.
Underthissection,Solecki'sactofconveyingtitletothewarehousepropertybindsthepartnershipifthisactwasfor"apparently
carryingonintheusualwaythebusinessofthepartnership".Iftheconveyancewasmadeintheusualcourseofbusinessitmust
thenbedeterminedwhether,(a)Soleckihad"infactnoauthoritytoactforthepartnershipintheparticularmatter",and(b)
Billmaxhad"knowledgeofthefactthat[Solecki]ha[d]nosuchauthority".
Ontheotherhand,ifitisfoundthattheconveyancewasnotfor"apparentlycarryingonintheusualwaythebusinessofthe
partnership",thenunder10thepartnershipmayrecoverthepropertyasprayedfor.
Evenifthisfactualdeterminationismadethereisanadditionalquestionoffactnecessarytotheresolutionofthisdispute.
Section9(2)providesasfollows:
"(2)Anactofapartnerwhichisnotapparentlyforthecarryingonofthebusinessofthepartnershipintheusualwaydoesnot
bindthepartnershipunlessauthorizedbytheotherpartners***."MCL449.9MSA20.9.
TherewastestimonytendingtoshowthatSoleckiwasinfactauthorizedbyplaintifftoselltheproperty.SeeMacyvOswald,198

409

PaSuper435182A2d94(1962).Shouldthisbethecase,thepartnershipisboundbythesaleofthepropertyevenifthesale
wasnotapparentlyforthecarrying*409onofthebusinessofthepatnershipintheusualway.
Eachoneoftheseavenuestoresolutionofthedisputeturnsinitiallyonafactualdetermination.Thecasewastriedbelowbefore
thejudge.GCR1963,517.1requiresthetrialcourtto"findthefactsspeciallyandstateseparatelyitsconclusionsoflaw"."The
rulecontemplatesthatlevelofspecificitythatwilldisclosetothereviewingcourtthecontrollingchoicesmadeasbetween
competingfactualassertions."HolbernvHolbern,91MichApp566,569283NW2d800(1979).
Theconclusorystatementscontainedinthewrittenopinionfiledinthiscasedonotrevealthecoursetakenbythetrialjudgein
arrivingathisdecision.Weareparticularlyconcernedwithhowthetrialjudgecametoconcludethattitletothepropertyshould
remaininBillmaxwhenitwasapparentlyfoundthatthesaleofthepropertybySoleckitoBillmaxwas"withoutlegalefficacy".
Despitethefactthatourdenovoreviewofthiscaseencompassesthepowertomakefindingsbasedupontherecord,wedecline
todosowherethecredibilityofthewitnessesiscriticaltotheoutcome.DehringvNorthernMichiganExplorationCo,Inc,104
MichApp300,318304NW2d560(1981).Credibilityofthewitnessesappearstobethedeterminingfactorinthiscase.Solecki

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attimesmadestatementswhichwouldprovidedirectsupportfordefendant'spositiononSolecki'sauthority.Atothertimeshe
madestatementscontradictingthistestimony.Thecredibilityofotherwitnesses,includingplaintiffandMr.Sherr,isalsoan
importantconsiderationintheresolutionofthiscase.Thereforewemustremandtothetrialjudgesothathemaymakespecific
findingsoffactandconclusionsoflaw.
410

*410II
Inthepleadingsbelowandattrialplaintiffsoughttohavethesaleofthewarehousepropertysetasideandthepropertyreturned
tothepartnership.Plaintiffnowclaimsonappealthathissuitdoesnotseektohavethewarehousereturnedtothepartnership.
PlaintiffarguesthatBillmax,byitstransactionwithSolecki,succeededtoSolecki'sinterestandthattheproperownerofthe
buildingisnowaBackowskiBillmaxpartnership.Plaintiffemploysthisargumentasabasisforclaimingarighttoanaccounting
under22oftheUniformPartnershipAct,hereinafterUPA,MCL449.22MSA20.22.Werejecttheargumentinitiallybecauseit
wasnotpledandthecasewasnottriedasasuitforanaccounting.Secondly,werejecttheargumentbecausetheUPA
precludesit.
UndertheUPAeachpartnerholdsthreepropertyrights:
"SEC.24.(EXTENTOFPROPERTYRIGHTSOFAPARTNER).Thepropertyrightsofapartnerare(1)hisrightsinspecific
partnershipproperty,(2)hisinterestinthepartnership,and(3)hisrighttoparticipateinthemanagement."MCL449.24MSA
20.24.
Section25,whichaddressestheincidentsofapartner'srightsinspecificproperty,providesthatapartner'srightinspecific
partnershippropertyisnotassignable.MCL449.25(2)(b)MSA20.25(2)(b).Thus,totheextentthatplaintiffseekstoenforcethe
conveyanceasanassignmentofSolecki'srightintheproperty,suchassignmentisprohibited.

411

Furthermore,theconveyancecannotbeconstruedasanassignmentofSolecki'ssecondpropertyright,hisinterestinthe
partnership.Section*41126oftheUPAdefinesthispropertyrightasfollows:
"SEC.26.(NATUREOFPARTNER'SINTERESTINTHEPARTNERSHIP).
"Apartner'sinterestinthepartnershipishisshareoftheprofitsandsurplus,andthesameispersonalproperty."MCL449.26
MSA20.26.
Unlikeapartner'srightinspecificproperty,apartner'sinterestinthepartnershipisassignable.However,suchassignment
merelyentitlestheassigneetoreceive,inaccordancewithhiscontract,theprofitstowhichtheassigningpartnerwould
otherwisebeentitled.MCL449.27MSA20.27.
Thetransferofalimitedinterestinpartnershippropertybyonepartnermay,undercertaincircumstances,beviewedasatransfer
ofthatpartner'sinterestinthepartnershipitself,definedashisshareintheprofitsandsurplus.SeeStroebelPolaskyCov
Slachta,106MichApp538308NW2d273(1981).However,thatavenueisnotavailableherewheretheinstrumentwasnot
intendedtoconveyonlyalimitedinterestinthepartnership.Accordingly,Solecki'sconveyanceoftitletothewarehouseproperty
cannotoperateasaconveyanceofSolecki'sinterestinthepartnership.
III
WenextaddresstheallegationsoferrorbroughtbeforethisCourtbydefendantoncrossappeal.Defendantfirstclaimsthatthe
trialjudgeerredindenyingitsmotiontodisqualifybasedonareferencetothetitleinsurermadebythetrialjudgeduringanin
chambersconference.

412

*412Atrialjudgewillnotbedisqualifiedabsentashowingofactualprejudiceorbias.EmersonvArnold(AfterRemand),92
MichApp345,353285NW2d45(1979),IrishvIrish,59MichApp635,639229NW2d874(1975).Defendantclaimsthetrial
judge'sremarkevincedadesiretoseethecasecomeoutinsuchawayastotakeadvantageofthe"deeppocket"ofinsurance.
Areviewoftherecordindicatesthatdefendanthastakentheremarkoutofcontext.Thetrialjudgewasapprisedoftheexistence
oftitleinsurancebydefendantduringthecourseofsettlementnegotiations.Theremarkwasmadebywayofprobingthe
possibilitiesofsettlementinthiscase.Noprejudiceorbiasisevidentintheremark.
Defendant'sclaimthatplaintiff'ssuitisbarredbylachesbecauseplaintifffailedtofileanoticeoflispendensonthepropertyis
whollyunfounded.Plaintiffwasundernoaffirmativedutytofileanoticeoflispendens.Generally,alispendensisdesignedto
warnpersonswhodealwithpropertywhileitisinlitigationthattheyarechargedwithnoticeoftherightsoftheirvendor's

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antagonistandtakesubjecttothejudgmentrenderedinthelitigation.51AmJur2d,LisPendens,1,p949.Thefailuretofilea
noticeoflispendensdoesnotoperatetoprecludeasuitovertitletoproperty.
DuringcrossexaminationofSolecki,defensecounselquestionedSoleckiwithregardtothedismissalofthecomplaintagainst
him.Thisquestioningbroughtoutthefollowingtestimonywhichdefendantclaimsrequiresdismissalofthesuit:
"Q.(ByMr.Leib):DidyoureceivesometypeofagreementfromMr.Backowskiwithrelationshiptothedismissalofthelawsuit
againstyou?
413

*413***
"Q.(ByMr.Leib):Now,Mr.Solecki,didyoureceiveanytypeofagreementwithMr.Backowski?
"A.Therewasnotypeofwrittenagreement,no.
"Q.Whatwastheoralagreement?
"A.Oralagreementthatwemake:thatifMr.Backowskiwonhiscase,thatanythingupandabove$75,000,hewouldsplitfifty
fifty.

***
"Q.(ByMr.Leib):Andsothiswastheagreementthenthatyouweretoshare,asyouhaveindicated,andthat'swhyyouwerelet
outofthecase,right?
"A.Idon'tknowifthat'swhyIwasletoutofthecase.
"Q.Thatwastheoralagreement?
"A.Correct.
"Mr.Hanlon:Whotoldyouthat,sir?
"TheWitness:Itwasdiscussed.
"Mr.Hanlon:Yourattorneytoldyouthat?
"TheWitness:Yes.
"Mr.Hanlon:Objection,yourHonor,andhaveitbestricken.It'spurelyhearsay.Ithinkthat'savalidobjection,yourHonor.
"Mr.Leib:YourHonor,itjustcamefromthelipsofthiswitness.
"Mr.Hanlon:Hesaidhisattorneytoldhim.AndImovethatitbestricken.
"TheCourt:Well,whydon'tyourephrasethequestionandwewillfindoutifthiswitnesshasanyknowledgeofthisonhisown.
"Q.(ByMr.Leib):Mr.Solecki,wasthattheagreementthatyouagreedtobetakenoutofthislawsuit?
"A.Yes.
"Q.Okay."

414

Defensecounsellatermovedtodismissthecaseonthebasisofcollusionandfraudevidencedbythistestimony.Thecourttook
themotionunderadvisement.Plaintiffsubsequentlybroughtamotion*414tostrikethetestimonyonthegroundthatitwas
hearsayandthatitconstitutedmatterssubjecttothelawyerclientprivilege.Thecourtgrantedplaintiff'smotiononthebasisofthe
hearsayobjection.
Thetrialcourterredinstrikingthetestimonyashearsay.ThepurposeofthistestimonywastoimpeachSolecki'scredibilityby
demonstratinghispecuniaryinterestintheoutcome.Itwasnotelicitedforthepurposeofprovingthetruthofthematterasserted.

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Theinterestorbiasofawitnessgoesdirectlytothequestionofhiscredibilityandisneverregardedasirrelevant.Peoplev
MacCullough,281Mich15,26274NW693(1937),PeoplevMeier,47MichApp179209NW2d311(1973).Thetestimony
wasproperlyinthecase,shouldnothavebeenstricken,andshouldhavebeenconsideredbythetrialcourtinassessingthe
credibilityofSolecki.However,wedonotbelievetheexistenceoftheagreementwouldwarrantdismissalofthecase.
IV
Asafinalcomment,weindicatethat,ontherecordbeforeusatthistime,thetrialcourtappearstohavereachedanequitable
result.Perhapsonlythepartiesthemselves,bycompromise,couldachieveafairerresult.
Weherebyremandtothetrialcourtforspecificfindingsoffactontheissuesraisedinthisopiniontobemadebythetrialcourt
within60daysfromthedateofreleaseofthisopinion.Weretainjurisdiction.
[1]AnorderwasenteredonApril2,1976,addingasdefendants,11305StateFairProperties,Frank'sNurserySales,Inc.,Frank'sNursery
Distributors,Inc.,andBillmaxProperties.OnMay14,1976,anorderwasenteredgrantingsummaryjudgmentinfavorofFrank'sNurserySales,
Inc.,andFrank'sNurseryDistributors,Inc.,anddenyingsummaryjudgmenttoBillmax.Apparently,StateFairneverseparatelyansweredandno
furtheractionregardingthemwastaken.LawyersTitleInsuranceCompanywasalsoaddedasadefendantonJanuary19,1979,butthecourt
latergrantedamotiontovacatethejoinderorder.

SavetreesreadcourtopinionsonlineonGoogleScholar.

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