Isabella Bank & Trust v. Pappas

79 Mich. App. 274 (1977) 261 N.W.2d 558 ISABELLA BANK & TRUST v. PAPPAS Docket No. 29393. Michigan Court of Appeals. Decided October 24, 1977. Newman & Mackay, for plaintiff. Sinas, Dramis, Brake, Turner, Boughton & McIntyre, P.C., for defendants. Before: D.F. WALSH, P.J., and QUINN and H.D. Stair,[*] JJ. *276 H.D. STAIR, J. On December 30, 1974, suit was commenced in Isabella County Circuit Court to collect on certain promissory notes executed by Sam and George Pappas and on a guarantee of payment executed by George Pappas and his wife Ann. The complaint alleged a joint and several liability on the part of all these defendants for the total amount owed plaintiff. Following a change of venue to Ingham County, plaintiff filed an amended complaint without seeking leave of the court. This amendment alleged that George Pappas had made certain fraudulent misrepresentations to the plaintiff in obtaining the loans. This misrepresentation was that George Pappas certified himself to be the owner of a particular parcel of realty in East Lansing, Michigan, when in fact the land was owned solely by Ann Pappas. This amended complaint was later withdrawn. On January 13, 1976, George and Ann Pappas filed a document denominated as a "consent to judgment". The document assented to all relief prayed for in the original complaint with the exception of the several liability of Ann Pappas. Thereafter, defendants filed a motion for summary judgment of dismissal in their favor. Alternatively, the motion prayed for a judgment against George Pappas, severally, in the amount of $51,249.28 and against George and Ann Pappas jointly in the amount of $50,000, the latter sum representing the amount of the guarantee of payment. Individual liability of Ann Pappas was impliedly denied. On January 26, 1976, plaintiff filed an answer to the motion for summary judgment. Also filed was an application for leave to amend the complaint. The amendment sought was the same as had been evidenced in the withdrawn complaint. *277 The trial court's final opinion dated June 24, 1976, denied the summary judgment to George and Ann Pappas because the "consent to judgment" did not accede to all the relief prayed for by the plaintiff. The trial court granted summary judgment to Ann Pappas on the issue of her several liability, citing the married women's property act, MCLA 557.51 et seq.; MSA 26.181 et seq.; as its basis. Defendants have appealed from the denial of summary judgment in accordance with the "consent to judgment" and also from the order allowing the amendment. Plaintiff has cross-appealed on the issue of Ann Pappas' several liability. I. EFFECT OF THE "CONSENT TO JUDGMENT". On January 13, 1976, as noted, George and Ann Pappas filed a "consent to judgment" with the trial court. That document stated: "Now come the Defendants George P. Pappas and Ann Pappas and hereby consent to a judgment being entered against George Pappas individually and against George Pappas and Ann Pappas jointly in the amount of Fifty-One Thousand Two Hundred Forty-Nine Dollars and 28/100 ($51,249.28) together with whatever interest, costs and attorney fees the Court may order." A close review of this document reveals it to be nothing more than a settlement offer under another name. There is no question that it is not a consent or confessed judgment since the plaintiff never agreed to its terms. See Union v Ewing, 372 Mich 181; 125 NW2d 311 (1963). The trial court's ruling that the "consent to judgment" had no legal significance is eminently correct. *278 II. AMENDMENT OF PLEADINGS. GCR 1963, 118.1 states in part that: "Leave [to amend] shall be freely given when justice so requires." In the case at bar, the plaintiff's amended complaint brought forth a new allegation, i.e., that defendant George Pappas deliberately defrauded the plaintiff by falsely asserting ownership of certain realty in East Lansing when in fact that realty was owned by his wife. This claim clearly opened new avenues of proof and was plainly related to the subject matter of the litigation. Moreover, the amended complaint rather drastically altered the theory of the case. The matter had not yet come to trial. It is axiomatic that amendments may be granted prior to trial without a claim of abuse of discretion where "justice so requires". That requirement was present in this case. III. SEPARATE LIABILITY OF ANN PAPPAS. As noted, the trial court's June 24, 1976, opinion found that no separate liability existed on the part of Ann Pappas despite her having signed the guarantee of payment. That decision was based on MCLA 557.51 et seq.; MSA 26.181 et seq., which militates that unless consideration for a note passes directly to a wife's estate, a judgment on a note co-signed by her and her husband may reach jointly-held property only. In the case at bar, pursuant to plaintiff's well-pleaded allegations, George Pappas fraudulently indicated in his financial statements an ownership of realty belonging, in fact, to his wife. *279 However, on January 18, 1974, Ann Pappas co-signed a guarantee of payment with her husband. The guarantee was intended as a further security to the earlier loan. There is at least a presumption that, in doing so, Ann Pappas intended to benefit the financial well-being of both spouses. There is nothing to indicate, however, that she did not expect to derive a personal benefit. Persons seldom obligate themselves without some expectation of gain in return. Therefore, another presumption would exist, i.e., that Ann Pappas intended to benefit her own estate. The issue of consideration is a factual question and cannot be resolved solely by affidavit. In Arber v Stahlin, 382 Mich 300; 170 NW2d 45 (1969), it was conclusively stated that summary relief is inappropriate where a question of fact turns on a witness's credibility. Herein, the question of whether Ann Pappas intended her own estate to benefit by her co-signature on the guarantee of payment can only be resolved by Ann Pappas' testimony and credibility. Moreover, it should be readily apparent to one and all that the married women's property act serves as a shield to familial security and protection of the innocent and that it does not serve as a sword to be utilized by the fraudulent in promoting their schemes. IV. CONCLUSION. This matter is reversed and remanded to the trial court with directions to consider the separate liability of Ann Pappas. Affirmed as to all other questions. Costs to plaintiff-appellee and cross-appellant. QUINN, J., concurred. *280 D.F. WALSH, P.J. (concurring in part, dissenting in part). I concur in the majority opinion except insofar as it reverses the trial court's grant of summary judgment in favor of defendant Ann Pappas with respect to the chargeability of her individual estate. In my opinion the trial court properly resolved that issue in its opinion and judgment. I would affirm the trial court as to all issues. NOTES [*] Circuit judge, sitting on the Court of Appeals by assignment.