Affiliated Bank of Middleton v. Am. Ins. Co.

77 Mich. App. 376 (1977) 258 N.W.2d 232

AFFILIATED BANK OF MIDDLETON
v.
AMERICAN INSURANCE COMPANY

Docket No. 28630.

Michigan Court of Appeals.

Decided August 9, 1977.

Santini, Jacobs, McDonald & Silc, P.C. (by William C. Merchant), for plaintiff.

Weis, Cossi & Slade, for defendant.

Before: R.M. MAHER, P.J., and M.F. CAVANAGH and D.F. WALSH, JJ.

PER CURIAM.

This appeal raises a question of first impression for Michigan.

In 1974, defendant American Insurance Company executed a performance bond and a labor and material payment bond for Burger Masonry and General Construction, Inc., a construction company that had contracted to construct a recreational facility for the Hancock Public Schools. MCLA 129.201; MSA 5.2321(1) requires these bonds when a public entity enters into a construction contract exceeding $50,000 in cost. Burger contracted with Building Dynamics, Inc., a Wisconsin corporation, to furnish labor and material for construction of the recreational facility. Burger ceased work on the facility by December 31, 1974, and final payment under its contract with the Hancock Public Schools was made on January 15, 1975.

After performance under its contract with Burger, Building Dynamics declared bankruptcy and a trustee was appointed. On October 9, 1975, the trustee brought an action against Burger and defendant American Insurance Company for $12,625 allegedly due Building Dynamics for labor and materials furnished under its contract with Burger. Both Burger and defendant American Insurance Company answered the complaint. On December 3, 1975, they moved for accelerated judgment, alleging that the claim against Burger had earlier been assigned to plaintiff Affiliated Bank of Middleton. The court below granted the motion for accelerated judgment against the trustee on January 16, 1976.^[1]

On January 20, 1976, plaintiff filed the present action against defendant to recover, under the labor and material payment bond, the $12,625 allegedly due Building Dynamics. Defendant moved for accelerated judgment under GCR 1963, 116.1(5), on the basis that the one-year limitation in MCLA 129.209; MSA 5.2321(9) prevented an action begun after January 15, 1976. The court rejected plaintiff's argument that the earlier action by the trustee tolled the statute of limitations under MCLA 600.5856; MSA 27A.5856, and an order granting defendant accelerated judgment was entered.

MCLA 600.5856; MSA 27A.5856 provides:

"The statutes of limitations are tolled when (1) the complaint is filed and a copy of the summons and complaint are served on the defendant, or when (2) jurisdiction over the defendant is otherwise acquired, or when, (3) the complaint is filed and a copy of the summons and complaint in good faith, are placed in the hands of an officer for immediate service, but in this case the statute shall not be tolled longer than 90 days thereafter."

This provision allows a plaintiff to avoid the bar of the statute of limitations when there has been a prior suit not adjudicated on the merits. Buscaino v Rhodes, 385 Mich. 474; 189 NW2d 202 (1971), Kiluma v Wayne State University, 72 Mich. App. 446; 250 NW2d 81 (1976); Committee Comment, MCLA 600.5856; MSA 27A.5856. It has not yet been decided whether the statute is applicable when the renewed action is instituted by someone other than the original plaintiff.

The statute does not indicate an answer; it should, however, be liberally construed to allow litigation of apparently valid claims of which defendants had timely notice, Kiluma, supra, Cronin v Minster Press, 56 Mich. App. 471; 224 NW2d 336 (1974).

Cases from other jurisdictions have, for the most part, construed similar statutes to permit, after failure of the original action commenced within the limitations period, a renewed action by a different plaintiff when he represents the same interest as the original plaintiff. Premo v Lee, 56 Vt 60 (1884), Anthony Investment Co v Law, 62 Kan 193; 61 P. 745 (1900), Siever v Klots Throwing Co, 101 W Va 457; 132 S.E. 882 (1926), Van Der Stegen v Neuss, Hesslein & Co, 243 App Div 122; 276 N.Y.S. 624, aff'd 270 NY 55, 200 N.E. 577 (1934), Young v Willis, 58 Tenn App 678; 436 S.W.2d 445 (1968), C & C Tile Co v Independent School District Number 7 of Tulsa County, 503 P2d 554 (Okla, 1972), McDaniel v North Carolina Pulp Co, 198 Va 612; 95 SE2d 201 (1956).

54 CJS, Limitations of Actions, § 292C, p 360, summarizes the cases:

"Failure of an action for defects in parties is frequently within the statutes permitting a new action to be instituted within a specified time after such failure. Thus the failure of a former suit, because prosecuted in the name of the wrong person as plaintiff, brought to recover the same claim sought to be recovered in a later suit by the proper person as plaintiff, is a failure within a statute allowing a new action to be brought within a limited time after the failure of a former action; but there is also authority to the contrary."

We think the trial court was in error in not applying the tolling, or "saving" statute. The statute is remedial and deserves a construction as broad as that given similar statutes in most other jurisdictions.

Reversed and remanded.

M.F. CAVANAGH, J. (concurring).

I concur separately on more limited grounds. In this case, the trustee in bankruptcy himself assigned the claim against Burger to the bank. Moreover, the bank and the trustee entered into a formal stipulation, before either suit, that the trustee would attempt to collect Building Dynamics' accounts receivable on behalf of the bank. Those facts render the bank a clear successor to the claim which the trustee had previously unsuccessfully asserted, and entitle the bank to the protection of the tolling statute. This contrasts with the more common situation where the trustee and debtor's assignee-secured creditor assert competing interests based on the same claim. In such a situation, commencement of suit by one party should not toll the statute of limitations in favor of the other.

NOTES

[1] The assignment from Building Dynamics to plaintiff bank appears to have merely created a security interest. The trustee later agreed with plaintiff bank that he would attempt to collect, on behalf of the bank as a secured creditor of Building Dynamics, the accounts receivable of Building Dynamics. Whether the grant of accelerated judgment against the trustee was proper under GCR 1963, 116.1(5) is not before this Court.