Duro Steel Products, Inc. v. Neubrecht

Starr, J. Plaintiffs appeal from an order, entered March 12, 1942, dismissing their bill of complaint which was filed to set aside a levy and sheriff’s sale of certain real estate to defendant. *176 On January 27, 1939, defendant obtained a. judgment for $500 against plaintiff, Duro Steel Products, Inc. (formerly Steel Products, Inc.), in tbe common pleas court for tbe city of Detroit. Such judgment was for a balance due defendant for architectural service. On March 4, 1939, defendant filed a transcript of such judgment in the circuit court for Wayne county. Oh March 6, 1939, execution was issued and levied upon three lots owned by ■ plaintiff corporation and which lots were subject to two mortgages. At sheriff’s sale in May, 1939, the lots were sold to defendant for $552.90, that being the full amount of defendant’s judgment, and all costs. Plaintiffs did not redeem from such sale and defendant obtained a sheriff’s deed to the lots. In January, 1940, plaintiff, Duro Steel Products, Inc., conveyed such lots by quitclaim deed to plaintiff, Samuel B. Solomon, individually. Plaintiff Solomon was a stockholder and officer of plaintiff corporation. In September, 1940, Solomon, individually, filed a bill of complaint in the circuit court for Wayne county to set aside the levy and sheriff’s sale to defendant. In his sworn bill of complaint in that suit plaintiff Solomon alleged, in substance, that he was the owner of the lots involved; that the lots were sold to defendant at sheriff’s sale at grossly inadequate prices and that there were irregularities in the sale. He also alleged that the levy and sale were void because, at the time of the levy, the judgment debtor, Duro Steel Products, Inc., had sufficient personal property out of which the execution could have been satisfied and that the sheriff failed to levy on such personal property. The case was tried and decree entered setting aside the sheriff’s deed to defendant, permitting plaintiff Solomon to pay the judgment and costs and determining that Solomon was the owner of the *177 premises. Defendant appealed from such decree. In onr decision in that case (Solomon v. Neubrecht, 300 Mich. 177, decided January 5,1942), Mr. Justice Wiest, in reversing the decree, said, in part: “The judgment on which the execution issued was for $500, and with the costs in all amounted to $552.90. The judgment creditor (defendant) hid that amount and became the purchaser. # * * ‘ ‘ Plaintiff invokes the power of the court of equity to set aside a sale under execution if the price at which the property is struck off to the judgment creditor shocks the conscience of the court. There is no evidence of any wrong-doing on defendant’s part. The plaintiff had free exercise of every right he possessed. Plaintiff cannot be heard to urge that the levy on the real estate was bad by reason of the claimed fact that the judgment debtor had personal property open to levy. 3 Comp. Laws 1929, §14547 (Stat. Ann. § 27.1512). Plaintiff is not the judgment debtor and he cannot invoke the statute which is personal to the judgment debtor. Besides, the showing of personal property is unsatisfactory. # * # “We do not find fraud, irregularities or unfairness calling for relief. * * * “Plaintiff made no case for equitable relief.” On February 17, 1942, plaintiffs filed their bill of complaint in the present case, seeking to set aside the same levy and sheriff’s sale to defendant which were involved in the case of Solomon v. Neubrecht, supra. In their bill of complaint plaintiffs allege, in substance, the same facts that Solomon alleged in the former case regarding the entry of judgment for defendant, the sheriff’s sale of the premises for grossly inadequate prices, irregularities in the levy and sale and failure to first levy on personal prop *178 erty. Plaintiffs further allege that the quitclaim deed of January 26, 1940, from plaintiff Duro Steel Products, Inc., to plaintiff Solomon: “did not describe plaintiff, Samuel B. Solomon as a trustee for the benefit of creditors and stockholders, but it was the intent and agreement of the parties that said Samuel B. Solomon should take said property as such trustee and plaintiff, and Samuel B. Solomon, does hereby acknowledge that he, in fact, did receive said conveyance as trustee for the benefit of creditors and stockholders, and plaintiff, Samuel B. Solomon, does hereby offer to execute any instrument that this court may direct, if deemed .necessary or expedient, to further evidence the aforesaid facts.” Defendant’s motion to dismiss the bill of complaint was granted and an order entered March 12, 1942,' dismissing the bill. Plaintiffs appeal from such order. • The question is: Does plaintiffs’ bill of complaint in the present case, when considered in connection with our decision in Solomon v. Neubrecht, supra, state a cause of action? In the former case of Solomon v. Neubrecht, supra, we held that plaintiff Solomon could not invoke the statute (3 Comp. Laws 1929, §14547 [Stat. Ann. §27.1512]), “which is personal to the judgment debtor” (Duro Steel Products, Inc.). Such statute provides: “Executions to authorize the sale of real estate shall command the officer to whom they are directed that of the goods and chattels of the person against whom such execution shall issue, in the county of such officer, he shall cause to be made the debt, damages or other sum of money, and costs, for which the judgment was rendered; and if sufficient goods and chattels cannot be found, that then he cause the *179 amount of such judgment to be made of the real estate of the person against whom such judgment was rendered within such county. ’ ’ The above statute does not define what investigation the officer shall make to ascertain ‘ ‘ if sufficient goods and chattels” can be found to satisfy the judgment. The officer is clearly vested with some discretion in determining whether or not the goods and chattels found are insufficient to satisfy the judgment so as to justify a levy on the real estate of the debtor. In our decision in Solomon v. Neubrecht, supra, we held “the showing of personal property is unsatisfactory.” The record in the former case was made, by reference in defendant’s motion to dismiss, a part of the record in the present case. In the former case plaintiff Solomon testified, in part: “I was associated with a company called Steel Products, Incorporated, a Michigan corporation, as president and treasurer, and as a stockholder. I think the company was incorporated for $200,000. My brother and I held all the stock, and then I held my brother’s stock as collateral. * * * This company is no longer in business. Before dissolution, the company changed its name to the Duro Steel Products, Incorporated, because the present company that is occupying the building at the present time wanted to use the name of Steel Products Corporation. * * * The Steel Products, Inc., continued in business under the name of Duro Steel (plaintiff), until it could liquidate the assets. The assets were finally liquidated, and the company dissolved March, 1940. * * * I took a deed from the company covering its real estate and all other assets it held. * * * “I am the present owner of that building. *180 “This $50,000 mortgage (to the Reconstruction Finance Corporation on the real estate in question) was also a chattel mortgage on all personal equipment we had at that time. “This $25,000 second mortgage, was the same as RFC had, only subject to the RFC mortgage.” In the former case an employee of the Wayne county sheriff’s office testified, in substance, that no personal property of the Duro Steel Products, Inc., could be found to levy upon. There was also testimony that when the execution on defendant’s judgment was issued and levied on the real estate in question on March 6, 1939, there were other unsatisfied executions against the debtor’s property. In his sworn bill of complaint in the former case, plaintiff Solomon alléged that-he personally was the owner of the property in question. The bill of complaint in the present case is signed and sworn to by Solomon, as president of plaintiff Duro Steel Products, Inc. In such present bill Solomon now claims to own the property in question as a trustee. Solomon’s conflicting statements under oath do not improve his position in a court of equity. It is apparent that Duro Steel Products, Inc., is made a party plaintiff in the instant case and that Solomon now describes himself as a trustee for the sole purpose of attempting to raise again the issue as to whether the sheriff, under the material facts disclosed in the former case, was required to levy on personal property before levying on the real estate of plaintiff corporation. This being a chancery case, we consider the same de novo. Plaintiff Duro Steel Products, Inc., had transferred all its property and assets to plaintiff Solomon in January, 1940, and was dissolved in March, 1940. Plaintiffs did not begin the present suit until nearly two years later. When we look *181 through the empty shell of the corporate entity of plaintiff Duro Steel Products, Inc., we find only plaintiff Solomon. Equity looks at the substance, and we are satisfied that plaintiff Solomon is the only real party in interest in the present case. Therefore, all issues presented by the allegations of plaintiffs’ bill of complaint in the present case were concluded by and are res judicata under our decision in Solomon v. Neubrecht, supra. The order of the trial court dismissing plaintiffs’ bill of complaint is affirmed, with.costs to defendant. Chandler, C. J., and Boyles, Butzel, and Sharpe, JJ., concurred with Starr, J.