text:
    ROBERTSON v SWINDELL-DRESSLER COMPANY
    Docket Nos. 77-1729, 77-1730.
    Submitted January 17, 1978, at Detroit.
    —Decided April 4, 1978.
    Leave to appeal applied for.
    Melvin A. Robertson brought a products liability action based upon negligence and breach of implied warranties of fitness against Swindell-Dressler Company and J. B. Webb Company for damages arising from an injury suffered by plaintiff which occurred within the course of his employment with Ford Motor Company. Defendants, as contractor and subcontractor, had contracted with Ford Motor Company for the manufacture and installation of a conveyor system. Plaintiff, in the process of rotating jobs, attempted to step across the moving conveyor, and slipped or lost his balance causing his legs to become entrapped within the conveyor machinery. A jury trial in Wayne County Circuit Court, George T. Martin, J., resulted in a judgment for plaintiff. Defendants cross-claimed against each other for indemnity based upon a contractual clause covering injury to persons and damage to property. The trial court refused to grant any indemnity. Defendants brought separate appeals from both the judgment and the court’s refusal to grant indemnity. Held:

    1. Trial evidence directly placed the issue of foreseeability of possible injury in dispute. Where there can be a reasonable difference of opinion as to the foreseeability of a particular risk the question is for the jury to decide. The claim of negligence was properly placed before the jury in this case and their decision on factual issues is beyond the scope of appellate review.

      References for Points in Headnotes

       58 Am Jur 2d, Negligence § 456.

       57 Am Jur 2d, Negligence § 50.

       57 Am Jur 2d, Negligence §§ 37, 127 et seq.

    Foreseeability as an element of negligence and proximate cause. 100 ALR2d 942.

       57 Am Jur 2d, Negligence §§ 58, 205.

       57 Am Jur 2d, Negligence §§ 7, 9.

       57 Am Jur 2d, Negligence § 6.

       57 Am Jur 2d, Negligence § 317.

       57 Am Jur 2d, Negligence §§ 334, 345, 360.

       63 Am Jur 2d, Products Liability § 28.

       75 Am Jur 2d, Trial § 906.

       13 Am Jur 2d, Building and Construction Contracts §§ 141-143.

       17 Am Jur 2d, Contracts § 324.

       41 Am Jur 2d, Indemnity §§ 13, 15.

      2. Plaintiff was not precluded from recovery because of contributory negligence. Contributory negligence is generally a question of fact, not law. There was no reason to exempt this case from the general rule that contributory negligence is a matter for the trier of the fact where, based upon trial evidence, reasonable minds could differ on the issue of whether plaintiff proceeded reasonably in the face of obvious peril, particularly when he was required to rotate work stations.
    3. Failing to give a requested instruction in a products liability action that a manufacturer of machinery is under no duty to provide an accident proof or foolproof machine is error, but a new trial is not required where the error is not sufficiently prejudicial as to be inconsistent with substantial justice.
    4. A right of .indemnity between a contractor and a subcontractor for "Injury to Persons and Damage to Property” is enforceable.
    Judgment for plaintiff affirmed. Cause remanded for entry of an order granting indemnity from defendant Webb to defendant Swindell-Dressler.
    1. Negligence — Appeal and Error — Vicarious Liability — Respondeat Superior — Active Tortfeasors.
    The potential liability of a defendant in a negligence action cannot be shifted on appeal to a codefendant by a theory of vicarious liability where the defendant was not sued under the doctrine of respondeat superior, but as a joint and actively involved tortfeasor, because the vicarious liability theory did not exist at trial.
    2. Negligence — Accepted Work Doctrine — Defenses—Contractor’s Negligence.
    The accepted work doctrine has been abolished in Michigan as a defense to an action based on the negligence of a contractor.
    3. Negligence — Duty of Care — Relationship of Parties — Proximate Cause — Legal Obligations — Foreseeable Consequences.
    Duty, in an action for negligence, is essentially a question of whether the relationship between the actor and the injured person gives rise to any legal obligation on the actor’s part for the benefit of the injured person; proximate cause encompasses a number of distinct problems including the limits of liability for foreseeable consequences; no duty is owed to an unforeseeable plaintiff, but a duty may arise where injury to a person is within the foreseeable scope of a risk and there is a sufficient relationship to create a legal obligation for the benefit of the injured person.
    4. Negligence — Duty op Care — Question op Law — Question op Fact.
    The question of duty, in a negligence case, is generally decided by the trial court as a matter of law; however, where the facts presented at trial are a matter of dispute, the jury has a function in the decision on whether a duty exists and where there might be a reasonable difference of opinion as to the foreseeability of a particular risk, the reasonableness of a defendant’s conduct with respect to it, or the normal character of an intervening cause, the question is for the jury.
    5. Negligence — Directed Verdict — Foreseeability—Disputed Evidence — Jury—Question op Fact — Appeal and Error.
    Denial of a motion for a directed verdict, in a negligence action, was proper where evidence directly placed the issue of foreseeability in dispute; where the claim of negligence was properly placed before the jury, their decision of factual issues is beyond the scope of appellate review.
    6. Negligence — Contributory Negligence — Question op Fact— Reasonable Men.
    Contributory negligence is generally a question of fact, not law, except where plaintiffs own testimony or the undisputed facts of the case make the negligence too plain for reasonable, fair-minded men to draw different conclusions.
    7. Negligence — Contributory Negligence — Standard op Care— Prudent Person Test — Question op Fact.
    The ordinary care which a plaintiff must exercise to be free from contributory negligence is such care as an ordinary prudent person would exercise under the same or similar circumstances; each case must depend upon its own particular facts and it is usually a question for the jury; even where the danger is obvious, courts are reluctant to take the issue of the reasonableness of an injured person’s actions away from the trier of fact.

      8. Negligence — Contributory Negligence — Slip and Fall— Known Danger — Due Care — Unreasonable Risk — Foreseeability.
    A finding of negligence is not precluded when a cautious plaintiif slips, falls and is injured in a place where danger is obvious but he has a right to be or must be; a worker is not contributorily negligent if he proceeds with caution in an area of possible danger because it is necessary to do so to give attention to his work and the risks cannot be lessened and they are unreasonable and foreseeable.
    9. Products Liability — Instructions to Jury — Foolproof Machine —Appeal and Error — Prejudice—Miscarriage of Justice— Court Rules.
    A trial court is required to give a requested instruction that a manufacturer of machinery is under no duty to provide an accident proof or foolproof machine; however, the Court of Appeals will not order a new trial where it finds the failure to give such an instruction was not sufficiently prejudicial or that the error did not result in a miscarriage of justice (GCR 1963, 529.1).
    10. Appeal and Error — Instructions to Jury — Failure to Object —Consideration of Issues.
    Failure to object to jury instructions does not prevent the Court of Appeals from treating an issue as if there had been an objection in order to resolve any doubts as to the basis of its eventual decision.
    11. Indemnity — Negligence—Contracts—Personal Liability— Property Damage — Public Policy — Statutes.
    An indemnity provision in a construction contract which seeks to protect the promisee from liability for personal or property damage arising from the sole negligence of the promisee is void as against public policy (MCLA 691.991; MSA 26.1146[1]).
    12. Contracts — Void Section — Severability:
    A general rule of contract law is that a void section of an otherwise valid provision can be severed if it is not an essential part of the whole.
    13. Indemnity — Contracts—Strict Construction — Resolution of Ambiguities — Against Drafter.
    Indemnity clauses are to be strictly construed and all ambiguities must be resolved against the party who drafts them.

      Joselyn, Rowe, Jamieson & Grinnan, P. C. (by Lawrence A. Bohall), for plaintiff.

      Vandeveer, Garzia, Tonkin, Kerr & Heaphy, for defendant Swindell-Dressler Company.

      Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, for defendant J. B. Webb Company.
    Before: T. M. Burns, P. J., and M. F. Cavanagh and D. C. Riley, JJ.
   D. C. Riley, J.

The present action involves a products liability suit arising from an injury suffered by plaintiff which occurred within the course of his employment with Ford Motor Company. Following a lengthy trial, the jury found both defendants negligent and awarded plaintiff $931,-000. Both defendants have appealed, and the matters have been consolidated within this opinion.

On April 26, 1972, plaintiff was employed by Ford at its Flat Rock Casting Plant. His job involved assisting rough-cast engine blocks in moving along a system of conveyors. Plaintiff worked with two other men at the conveyor system, and would rotate job positions at half-hour intervals. While in the process of rotating jobs plaintiff attempted to step across the moving conveyor, but slipped or lost his balance, causing his legs to become entrapped within the conveyor’s machinery. As a result of this accident he incurred serious injuries, including ultimately the amputation of a leg.

Defendant Swindell-Dressler Co. (Swindell) had contracted with Ford for development of the casting plant. Swindell in turn had contracted with J. B. Webb Co. (Webb) for manufacture and installation of the conveyor system in question.

Plaintiff brought the present suit alleging negligence and breach of implied warranties of fitness against both defendants. The primary claims of liability concerned (1) the use of straight rather than tapered rollers in a 90-degree turn of the conveyor; (2) the design of "popout” rollers at the point of the conveyor where plaintiff was injured; and (3) the absence of a crossover or stile at plaintiff’s job location.

Defendant Swindell’s first claim on appeal is that it could not have been held liable on a theory of negligence where, as general contractor, it subcontracted the design, manufacture, and installation of the conveyor to defendant Webb and where the conveyor was built to Ford’s specifications, was accepted by Ford, and subsequent to that acceptance Ford had altered the methods and procedures for use of the conveyor, which alterations led to plaintiff’s accident.

We do not find any of these arguments persuasive. Swindell was not sued under a doctrine of respondeat superior based upon the alleged negligence of Webb, but rather was claimed to be a joint active tortfeasor with Webb. Although Swindell claims only limited design responsibility for this conveyor system, the record is replete with testimony, including that of employees of Swindell, that both defendants were actively involved in negotiations with Ford concerning the design of the conveyor. Swindell cannot shift its potential liability onto the shoulders of Webb by reference to a theory of vicarious liability that did not exist at trial.

Defendant fares no better by arguing that Ford accepted the conveyor system without complaint or modification. The "accepted work” doctrine has been abolished in Michigan as a defense to an action based on the negligence of a contractor. Wilhelm v The Detroit Edison Co, 56 Mich App 116; 224 NW2d 289 (1974), Kapalczynski v Globe Construction Co, 19 Mich App 396; 172 NW2d 852 (1969).

Swindell’s strongest argument in regard to its own liability is that Ford changed the manner in which the conveyor system was operated after the manufacture and installation had been completed. It was not disputed at trial that the original grid plans for this part of the factory, which designated where workers would be positioned, did not have a work station at the location where plaintiff was injured. Swindell contends, on appeal as at trial, that the safety precautions built into the conveyor system could not be expected to fully protect a worker whose location was unknown during the periods of design and installation.

Implicit in this argument defendant raises the threshold question of the lawsuit; i.e., whether the danger of plaintiff’s accident was reasonably foreseeable to defendants during the design phase of the construction process. In Moning v Alfono, 400 Mich 425; 254 NW2d 759 (1977), the Michigan Supreme Court discussed at length the elements of a negligence claim in relation to products liability actions:

"The elements of an action for negligence are (i) duty, (ii) general standard of care, (iii) specific standard of care, (iv) cause in fact, (v) legal or proximate cause, and (vi) damage.
" 'Duty’ comprehends whether the defendant is under any obligation to the plaintiff to avoid negligent conduct; it does not include — where there is an obligation— the nature of the obligation: the general standard of care and the specific standard of care.
"While the court decides questions of duty, general standard of care and proximate cause, the jury decides whether there is cause in fact and the specific standard of care: whether defendants’ conduct in the particular case is below the general standard of care, including— unless the court is of the opinion that all reasonable persons would agree or there is an overriding legislatively or judicially declared public policy — whether in the particular case the risk of harm created by the defendants’ conduct is or is not reasonable.
"Duty is essentially a question of whether the relationship between the actor and the injured person gives rise to any legal obligation on the actor’s part for the benefit of the injured person. Proximate cause encompasses a number of distinct problems including the limits of liability for foreseeable consequences. In the Palsgraf [v Long Island R Co, 248 NY 339; 162 NE 99; 59 ALR 1253 (1928)] case, the New York Court of Appeals, combining the questions of duty and proximate cause, concluded that no duty is owed to an unforeseeable plaintiff.
"The questions of duty and proximate cause are interrelated because the question whether there is the requisite relationship, giving rise to a duty, and the question whether the cause is so significant and important to be regarded a proximate cause both depend in part on foreseeability — whether it is foreseeable that the actor’s conduct may create a risk of harm to the victim, and whether the result of that conduct and intervening causes were foreseeable.
"It is well established that placing a product on the market creates the requisite relationship between a manufacturer, wholesaler and retailer and persons affected by use of the product giving rise to a legal obligation or duty to the persons so affected. A manufacturer owes the consumer an obligation to avoid negligent conduct. The obligation extends to persons within the foreseeable scope of the risk.” (Footnotes omitted.) 400 Mich at 437, 438-439.

The controversy between the parties as to whether plaintiff was within the foreseeable scope of risk from the conveyor system falls under the Moning Court’s definition of "duty”. If plaintiff was foreseeable, a sufficient relationship was created, giving rise to the "legal obligation on the actor’s part for the benefit of the injured person”.

As the Moning Court further points out, the question of duty is generally decided by the trial court as a matter of law. However, where the facts presented at trial are a matter of dispute, the jury has a function in the decision on whether a duty exists:

"In any case where there might be reasonable difference of opinion as to the foreseeability of a particular risk, the reasonableness of the defendant’s conduct with respect to it, or the normal character of an intervening cause, the question is for the jury, subject of course to suitable instructions from the court as to the legal conclusion to be drawn as the issue is determined either way.” (Footnote omitted. Emphasis added.) Prosser, Torts (4th ed), § 45, p 290.

See also Farwell v Keaton, 396 Mich 281; 240 NW2d 217 (1976), Holloway v Martin Oil Service, Inc, 79 Mich App 475; 262 NW2d 858 (1977).

Applying these standards to the case at bar, we find that the court correctly denied the motion for directed verdict. Plaintiff presented evidence from an expert witness that the change made in the conveyor system from tapered to straight rollers should have caused defendants to foresee that a worker would eventually have to be stationed at the curve to assist the engine blocks in negotiating the turn. Other evidence was presented that preliminary grid drawings are often incomplete or subject to revision upon implementation of the final plans. This evidence directly placed the issue of foreseeability in dispute. Since the claim of negligence was properly placed before the jury, their decision on the factual issues is beyond the scope of our review.

Defendant Swindell’s second contention is that plaintiff was contributorily negligent as a matter of law. It was admitted at trial that plaintiff voluntarily attempted to step over the conveyor, knowing it to be operating. Swindell claims that this act, in the face of a clear danger, precluded any recovery on the basis of a defect in the machinery.

The general rule is that contributory negligence is an issue of fact:

"The Supreme Court in Funk v General Motors Corp, 392 Mich 91, 113; 220 NW2d 641 (1974), stated:
" 'The question of contributory negligence is generally one of fact, not law.’
"Bruman v Yellow Taxicab Co, 220 Mich 41, 48; 189 NW 887 (1922), stated:
" 'Contributory negligence is essentially a question of fact in all cases except where by plaintiffs own testimony or the undisputed facts the case is too plain for reasonable, fair-minded men to draw different conclusions.’
"The rule is further summarized in 18 Callaghan’s Michigan Civil Jurisprudence, Negligence, § 27, pp 257-258:
" 'The ordinary care which the plaintiff must exercise to be free from contributory negligence is such care as an ordinarily prudent person would exercise under the same or similar circumstances. It is said that no precise rules can be laid down by which all acts of contributory negligence can be measured, and each case must depend upon its own particular facts, and is usually a question of fact for the jury.’ ” Jaworski v Great Scott Supermarkets, 71 Mich App 235, 236-237; 247 NW2d 363 (1976).

Even where the danger was obvious, courts are reluctant to take the issue of the reasonableness of the injured person’s actions away from the trier of fact. In Byrnes v Economic Machinery Co, 41 Mich App 192; 200 NW2d 104 (1972), the plaintiff was injured when a labeling machine manufactured by defendant was inadvertently switched on while he was in the process of making internal adjustments to the machine. Defendant argued that plaintiff himself was negligent in removing certain safety guards on the machine in order to make the adjustments. The Byrnes Court, reversing a grant of summary judgment in favor of defendant, held that since the safety guards by design had to be removed before necessary adjustments were made plaintiff had proceeded reasonably in the face of a known danger:

"It is true that plaintiff was aware of the risk and that many cases find no duty where the danger is obvious. This requirement must be considered in conjunction with the modern tort concept that awareness alone does not preclude negligence. * * * A danger may be obvious but not appreciated. 1 Frumer & Friedman, Products Liability, § 7.02, p 117. Even where a danger is appreciated, circumstances may cause it to be momentarily forgotten. It is also possible for the accident to occur even though the injured party proceeds cautiously in the face of an obvious danger.
"There is an analogous line of cases in Michigan which hold that a finding of negligence is not precluded when a plaintiff slips and falls in a place where the danger is obvious but the plaintiff has proceeded with caution in a place he has a right to be or must be. Pollack v Oak Office Building, 7 Mich App 173 [151 NW2d 353] (1967); Pigg v Bloom, 22 Mich App 325 [177 NW2d 441] (1970). These cases recognize that where a party either has no alternative or chooses an alternative which does not increase the risk, he should not be precluded from placing liability on the party who has created the risk. Such reasoning applies here.
"Where a person must work in a place of possible danger, the care which he is bound to exercise for his own safety may well be less, due to the necessity of giving attention to his work, than is normally the case. Plaintiff worked in a place of possible danger on a machine controlled by another. He was aware of the dangers, but had no alternative open to him which would have lessened the risks. He proceeded with caution. Defendant should not be able to escape liability if the risk to which plaintiff was exposed was unreasonable and foreseeable by the defendant.” (Citations omitted.) Byrnes, supra at 202-203.

In the case at bar plaintiff was required to work in close proximity to the dangers of a moving conveyor. His employment required regular rotation of work stations. Evidence was presented that stepping over the conveyor was the accepted method of effectuating this rotation, since plaintiff testified that he and other employees had previously stepped over the machine in the presence, and apparently with the tacit approval, of Ford supervisory personnel. In addition, evidence was presented to the effect that plaintiff was virtually "landlocked” at the work station, thereby eliminating most, if not all, alternative methods of rotation. Finally, plaintiff testified as to the manner in which he attempted to step over the conveyor, evidencing recognition of the danger and a conscious effort to minimize the risk.

Given these facts we cannot say that reasonable minds could not differ on the issue of whether plaintiff proceeded reasonably in the face of an obvious peril, particularly when he was required to rotate work stations. Coger v Mackinaw Products Co, 48 Mich App 113; 210 NW2d 124 (1973). We see no reason to exempt this case from the general rule that contributory negligence is a matter for the trier of fact. The trial court correctly denied defendant’s motions, both during and after trial, for a directed verdict on the grounds of contributory negligence.

Defendant finally contends that the trial court erred in failing to give its requested instruction that a manufacturer of machinery is under no duty to provide an accident proof or foolproof machine. See Casey v Gifford Wood Co, 61 Mich App 208; 232 NW2d 360 (1975). It is true that the Casey Court stated that such an instruction should be given when requested in a products liability suit. Casey, supra at 218. While the court was in error in failing to give the requested instruction, we do not find that the error is sufficiently prejudicial to necessitate the granting of a new trial. This case involved many complex issues and was vigorously contested by all parties. There was no claim made that defendant was obligated to provide a foolproof conveyor, but only one that reasonably protected foreseeable employees. We do not think that the court’s failure to give this instruction, in light of the unobjected-to instructions on negligence and warranties, is inconsistent with substantial justice. GCR 1963, 529.1.

The last issue that we must discuss involves Swindell’s cross-claim of indemnity against Webb. The contract between the defendants contained the following provision:

"14. INJURY TO PERSONS AND DAMAGE TO PROPERTY: Subcontractor shall indemnify and save Contractor and Owner, or either, harmless from all claims for injuries to, or death of, any and all persons, and for loss of or damage to property arising under or by reason of this subcontract, except claims resulting from the sole negligence or wilful acts or omissions of the Contractor, its employees, or its subcontractors, agents, or representatives. Notwithstanding the foregoing, Subcontractor shall utilize at its own risk materials, tools, equipment or facilities furnished by Contractor for use by the Subcontractor and not to be incorporated in the work and Subcontractor shall indemnify and save Contractor and Owner, or either, harmless from all claims for injuries to, or death of, any and all persons, and for loss of and damage to property resulting from or by reason of the Subcontractor’s utilization thereof whether or not caused partially or totally by the negligence of Contractor, its employees, subcontractors, agents or representatives.”

Both defendants raised cross-claims for indemnity. The court instructed the jury as to the indemnity claims stating:

"All right. Now, you’ve heard me talk about indemnity. You have the matter of negligence to decide, the matter of express warranty to decide, the claim of implied warranty to decide, and there is a cross-claim between Swindell-Dressler and J. B. Webb Company for indemnity. So, I’ll read to you an instruction on that.
"I instruct you that it is the general rule that whenever the wrongful act of one person results in liability being imposed on another person, the latter person may have indemnity from the person actually guilty of the wrong.
"I instruct you, if the conveyor system manufactured by the J. B. Webb Company was defective and not reasonably fit for the purpose intended, and that such defect was the result of the sole negligence of Swindell-Dressler, J. B. Webb Company is entitled to indemnity from Swindell-Dressler.
"I instruct you that if the defect is the result of the negligence of both 'parties, Swindell-Dressler and Webb, Swindell-Dressler is entitled to indemnity from J. B. Webb Company. ” (Emphasis added.)

The judge then instructed on the form of the jury’s verdict:

"In regard to — if your verdict is for the plaintiff against both defendants, you may not divide the damages between them, but you shall return a verdict in one single sum against both defendants whom you find to be liable. That’s where you start out from, I might say, because you have to consider also the matter of indemnity, which is taken into account in your verdict. Of course, your verdict may be for one defendant and not for the other defendant. One way or the other.
"When you arrive back in the courtroom I shall call upon your foreman to announce your verdict. If your verdict is for the plaintiff, he will say, 'We find for the plaintiff, in "x” amount of dollars against one defendant or the other.’ If your verdict is for defendant, he will say, 'No Cause for Action.’ Do you understand that?
"I’ll repeat it again for you: If your verdict is for Mr. Robertson, the foreman will say, 'We find for the plaintiff in "x” amount of dollars,’ against one defendant or both defendants, as you choose. If your verdict is for the defendant, or one defendant, the foreman will say, 'We find no cause of action as to both defendants,’ or, 'as to one defendant.’ ”

There were no objections raised to either of these instructions.

After the jury had deliberated for a period of time, they requested further instructions on the form of the verdict. The judge again instructed them to phrase the verdict as "we find for plaintiff in 'x’ dollars” against one or both defendants, or "we find no cause of action”. Again there was no objection to the instructions.

Shortly thereafter the jury returned and rendered its verdict:

"FOREMAN: Your Honor, we find both defendants guilty, pay the plaintiff the sum of $931,000.00.
"THE COURT: I see. I think that needs a little bit of inquiry, because I said to you in regard to your verdict, if you find for the plaintiff in 'x’ amount of dollars, and I take it you find for him in the amount of $931,000.00, and you find against both Swindell-Dressler and J. B. Webb Company, and I suppose that takes into account that there was a cross-claim for indemnity on the part of Swindell-Dressler against Webb and a claim for indemnity on the cross-claim on the part of J. B. Webb Company against Swindell.
"Did you take that into account?
"FOREMAN: We did, your Honor.”

After the jury was polled, counsel for defendant Swindell requested that the jury be questioned as to what their verdict of "guilty” entailed. The jury was removed to the juryroom, and then returned to state that "guilty” meant negligence on the part of both defendants.

After the jury was excused, counsel for Swindell asked if a judgment would now be entered granting indemnity in favor of Swindell:

"MR. TONKIN: I think the court enters a judgment at this point on indemnity.
"THE COURT: Perhaps so, but I’d like to have some more discussion about that point and as it stands now, as I instructed them, if they found that Swindell-Dressler was solely negligent, their verdict would be strictly against Swindell-Dressler; on the other hand, if they felt as though there was indemnity, that Swindell was not solely negligent, then the verdict would be against Webb.
"MR. TONKIN: Yeah — you said if they were both negligent, then Swindell was entitled to indemnity.
"MR. STANCZYK: Well, I considered the entire matter — I don’t think that the judge can change the form of the verdict of the jury.
"MR. TONKIN: I think so. There’s plenty of authority—
"THE COURT: I think we’ll talk about it later on. At the present time, why, Mr. Bohall will be presenting a judgment, and at the time of the entry of the judgment, why, we’ll take that up.”

Swindell raised the indemnity issue in its post-trial motion for a new trial or judgment notwithstanding the verdict. The trial court, without explanation, refused to grant any indemnity.

The claim of indemnity presents us with two distinct sub-issues. The first is whether the indemnity clause is valid and applicable to the present lawsuit. Second, assuming the provision applies, what are the implications of the jury’s verdict of joint negligence.

In considering the validity and applicability of the indemnity clause, we note first that Webb has not properly preserved this issue for appeal. There was no objection made to the jury instructions on indemnity. Nevertheless, we will treat the issue as if there had been an objection in order to resolve any doubts as to the basis for our eventual decision.

Webb raises two questions relating to the validity and applicability of the clause. It is argued that the entire clause is invalid because the second sentence seeks to indemnify Swindell for its sole negligence, contrary to statute, and that, even if valid, the clause was intended to apply only to accidents arising during the course of construction of the conveyor system. We will respond to these claims in order.

By statute, an indemnity provision in a construction contract which seeks to protect the promisee from liability for personal or property damage arising from the sole negligence of the promisee is void as against public policy. MCLA 691.991; MSA 26.1146(1). Reviewing the instant contractual provision, we find the second sentence in clear violation of the statute. However, the second sentence of the clause relates, by its own language, only to accidents arising from Webb’s use of tools or materials supplied by Swindell. Factually, the present lawsuit is not covered under the scope of this specific wording. The first sentence, purporting to establish a general right of indemnity for all liability arising under or by reason of the contract, specifically excludes the situation of Swindell’s sole negligence, thereby comporting fully with the expressed public policy of the statute.

The fact that both sentences were combined in a single clause requires us to consider the question of severability. Webb argues that the clause must be read as a whole, and thus found totally void. Swindell naturally argues the factual inapplicability of the second sentence and seeks severance.

We find Swindell’s arguments persuasive. The second sentence of the clause was intended to govern only a limited and definite species of lawsuits, of which the present matter is not a member. A general rule of contract law is that a void section of an otherwise valid provision can be severed if it is not an essential part of the whole. 2 Restatement, Contracts, §607; Kukla v Perry, 361 Mich 311; 105 NW2d 176 (1960). We do not find the second sentence here to be an essential part of the general right of indemnity. We can sever the specific right of indemnity set forth in that sentence without doing violence to the general, and enforceable, scope of the provision.

Having found the right of indemnity enforceable in the case at bar, the issue remains as to whether it is applicable. Webb contends that the whole provision applies only to construction accidents. Again, we must employ a form of severability analysis. Clearly the second sentence relates to claims arising from the construction by Webb of the conveyor system. There is no such limiting language in the first sentence. We agree with Webb’s assertion in its brief that indemnity clauses are to be strictly construed, and all ambiguities resolved against the drafter (here being Swindell). Fireman’s Fund American Insurance Co v General Electric Co, 74 Mich App 318; 253 NW2d 748 (1977), Meadows v Depco Equipment Co, 4 Mich App 370; 144 NW2d 844 (1966). We do not agree that the scope of the sentence is ambiguous. The indemnity applies to "all” claims where not caused by Swindell’s sole negligence, not merely to construction accidents. The scope of the second sentence does not control the entire clause.

In this situation, which presents experienced corporate parties having dealt at arms-length concerning a substantial contract, we find that the intent of the parties was to contract for general indemnity not limited to construction injuries. Fireman’s Fund, supra. The first sentence of the provision is thus legally enforceable and factually applicable to the case at bar.

The last question to be answered is whether the court erred in refusing to issue an order granting indemnity to Swindell, given the verdict of the jury. We have carefully read the transcript of the confusing circumstances surrounding the verdict, and conclude that indemnity should be awarded to Swindell.

This conclusion rests on a number of factual considerations. The court, absent objection, instructed the jury that Swindell was entitled to indemnification if joint negligence was found. The court gave the jury repeated instructions on the form of their verdict, but not once instructed them to make a specific finding on the indemnity claims as part of that verdict. The jury returned a verdict of joint negligence in a form consistent with the judge’s instructions. When asked if they had considered the indemnity claims when they reached their verdict, the jury merely stated that they had considered them. We admit that this response was somewhat vague, but our review of the totality of the circumstances convinces us that the jury was indicating that they had reached a verdict of joint negligence with full awareness that such a verdict would result, as per the instructions, in an order of indemnity in favor of Swindell.

The verdict in favor of plaintiff is affirmed. The matter is remanded to the trial court for entry of an order granting indemnity from defendant Webb to defendant Swindell. Costs to plaintiff from defendant Swindell, and to Swindell from defendant Webb on the cross-appeal.

       At oral argument counsel for defendant Webb informed this Court that pursuant to an out-of-court agreement Webb’s appeal as towards plaintiff had been withdrawn, but that Webb was not abandoning its cross-appeal against defendant Swindell. Accordingly, this opinion will discuss only the issues raised by Swindell’s appeal against plaintiff and the cross-claim of indemnity between Swindell and Webb.

       Plaintiff asserted that the use of straight rollers at the curve, instead of the tapered rollers in the original plans for the conveyor, caused the engine blocks to stack up at the curve. This in turn, according to plaintiff, made it foreseeable to defendants that an employee would have to be stationed at the curve to pull the blocks around the corner. Plaintiff was in fact working at the curve immediately prior to the accident, which occurred at the point where the curve began.

       Plaintiff claimed that a different type of "popout” roller (itself a safety device) would have significantly lessened his injuries.

         "The existence of a duty. In other words, whether, upon the facts in evidence, such a relation exists between the parties that the community will impose a legal obligation upon one for the benefit of the other — or, more simply, whether the interest of the plaintiff which has suffered invasion was entitled to legal protection at the hands of the defendant. This is entirely a question of law, to be determined by reference to the body of statutes, rules, principles and precedents which make up the law; and it must be determined only by the court. It is no part of the province of a jury to decide whether a manufacturer of goods is under any obligation for the safety of the ultimate consumer, or whether the Long Island Railroad is required to protect Mrs. Palsgraf from fireworks explosions; A decision by the court that, upon any version of the facts, there is no duty, must necessarily result in judgment for the defendant. A decision that, if certain facts are found to be true, a duty exists, leaves open the other questions now under consideration.” (Footnotes omitted.) Prosser, Torts (4th ed), § 37, p 206.

       The cases cited by defendant in support of its argument are distinguishable from the present situation. In Modzel v Norwalk Truck Lines, 325 Mich 693; 39 NW2d 226 (1949), plaintiff voluntarily returned to a place of danger, in a clearly unreasonable manner, after his regular hours of employment. In Shephard v Short, 53 Mich App 9; 218 NW2d 416 (1974), and Kubasinski v Johnson, 46 Mich App 287; 208 NW2d 74 (1973), the holdings affirming directed verdicts were premised on the dual factors of plaintiffs’ violations of statutes (negligence per se) and a lack of evidence showing negligence of the defendants. Neither situation exists in the case at bar.

       MCLA 691.991; MSA 26.1146(1).

       This result leaves the parties in a type of "fall-back” position. The first sentence, which applies to "all” claims arising out of the contract, must also apply to cases that were meant to be covered by the more specific language of the second sentence. Now that the second sentence is voided, the right of indemnity in effect for those cases falls back into the general right expressed in the remaining sentence of the clause.

       The jury was never instructed to decide whether the indemnity provision of the contract was applicable to this lawsuit. They were merely told, in the form of a rule of law, that a certain occurrence (indemnity) would result from a certain verdict (joint negligence). To accept Webb’s contention that the jury was indicating that they had considered the indemnity claim and rejected it would be in effect allowing the jury to disregard its instructions and render a verdict upon an alternative which was not open to them. We cannot countenance such a result.

       Because of our decision on the indemnity claim, we need not consider Webb’s extensively-briefed argument in support of adoption of the tort theory of apportionment of damages.


source: Caselaw Access Project

author: D. E. Holbrook, Jr., J. Bashara, P. J.

license: Public Domain

text:
    PEOPLE v GLENN JONES
    Docket No. 77-1835.
    Submitted December 19, 1977, at Detroit.
    Decided April 4, 1978.
    Glenn L. Jones was charged in Macomb County with the felony of attempting to take possession and drive away the automobile of another. While the charge was pending and defendant was out on bond, he was charged in Detroit with the felony of aiding in the concealment of stolen property over the value of $100. Defendant pled guilty on January 6, 1977, to the stolen property charge in Recorder’s Court of Detroit, Justin Ravitz, Jr., and on March 2, 1977, was sentenced to a prison term of two to five years. On January 27, 1977, the defendant pled guilty in Macomb County Circuit Court, Robert J. Chrzanowski, J., to a misdemeanor charge of attempted unlawful use of an automobile and on March 3, 1977, was given a one-year term in the county jail, to be served consecutively with the other sentence. The defendant appeals. Held:

    The consecutive sentence statute is a specific statutory exception to the general rule that concurrent sentences are the norm. However, the consecutive sentence statute cannot be applied where the defendant (a) was charged with a felony, (b) was charged and convicted of a second felony while the first charge was pending, but (c) not convicted of the first felony since it was dismissed pursuant to a plea bargain whereby the defendant pled guilty to a misdemeanor, because consecutive sentencing is only appropriate when a defendant is convicted of the prior charged felony.
    Reversed, and remanded for resentencing.
    Bashara, P. J., dissented:
    The fact that a prior felony charge is disposed of by the acceptance of a plea of guilty to a misdemeanor should be immaterial to the application of the consecutive sentencing act.
    References for Points in Headnotes
    [1-3] 21 Am Jur 2d, Criminal Law §§ 546-549.
    Sentences by different courts as concurrent. 57 ALR2d 1410.

      Opinion op the Court
    1. Criminal Law — Sentencing—Concurrent Sentences — Consecutive Sentencing Act — Statutes.
    Generally, concurrent sentences are the norm and consecutive sentencing is not to be used except when specifically authorized by statute; the consecutive sentencing act is a specific statutory exception to the general rule and allows a trial court to impose consecutive sentences in appropriate circumstances (MCLA 768.7b; MSA 28.1030[2]).
    2. Criminal Law — Sentencing—Consecutive Sentencing Act — Felonies — Misdemeanor—Statutes.
    The consecutive sentencing act allows a trial court to impose a consecutive sentence where a defendant had been charged with a felony and while that charge was pending the defendant was charged with another felony and was convicted of the second felony and subsequent to that conviction was convicted on the first felony charge; but consecutive sentencing should apply only where the defendant is convicted of the prior charged felony, therefore, where a defendant on the prior charged felony pled guilty to a misdemeanor, the consecutive sentencing act was inapplicable (MCLA 768.7b; MSA 28.1030[2]).
    Dissent by Bashara, P. J.
    3. Criminal Law — Sentencing—Consecutive Sentencing Act — Felonies — Plea op Guilty — Misdemeanors—Statutes.

      The salient circumstances invoking the application of the consecutive sentencing statute are: (1) the commission of a felony, (2) while a previous felony charge is pending disposition; the fact that a felony charge is disposed of by the acceptance of a plea of guilty to a misdemeanor should be immaterial (MCLA 768.7b; MSA 28.1030[2]).

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, George N. Parris, Prosecuting Attorney, and Don L. Milbourn, Chief Appellate Lawyer, for the people.

      Robert Pagano, for defendant on appeal.
    Before: Bashaba, P. J., and Beasley and D. E. Holbrook, Jr., JJ.
   D. E. Holbrook, Jr., J.

This case involves an interpretation of the consecutive sentence statute, MCLA 768.7b; MSA 28.1030(2). That statute provides:

"Sec. 7b. When a person, who has been charged with a felony and pending the disposition of the charge, commits a subsequent offense which is a felony, upon conviction or acceptance of a guilty plea of the subsequent offense, the sentences imposed for conviction of the prior charged offense and any subsequent offense, may run consecutively.”

This appeal stems from the imposition of consecutive sentences based on two plea-based convictions of the defendant.

Defendant was initially charged in Macomb County with the felony of attempting to take possession and drive away the automobile of another. MCLA 750.92; MSA 28.287, MCLA 750.413; MSA 28.645. While the charge was pending and defendant was out on bond, he was arrested and charged in Detroit with the felony of aiding in the concealment of stolen property over the value of $100. MCLA 750.535; MSA 28.803.

On January 6, 1977, defendant pled guilty to the stolen property charge in Recorder’s Court in Detroit and was sentenced on March 2, 1977.

On January 27, 1977, in Macomb County Circuit Court the defendant pled guilty to the misdemeanor charge of attempted unlawful use of an automobile, MCLA 750.92; MSA 28.287, MCLA 750.414; MSA 28.646, in return for the dismissal of the felony charge of attempting to take possession and drive away the automobile of another. MCLA 750.92; MSA 28.287, MCLA 750.413; MSA 28.645. Defendant was sentenced in Macomb County Circuit Court on March 3, 1977. In imposing sentence on defendant’s latter misdemeanor conviction, the circuit judge noted the earlier Recorder’s Court conviction and sentence and concluded the defendant’s sentences could and would run consecutively pursuant to MCLA 768.7b; MSA 28.1030(2). We disagree.

In general, concurrent sentences are the norm and consecutive sentencing is not to be used except when specifically authorized by statute. In re Carey, 372 Mich 378, 380; 126 NW2d 727 (1964), People v Leal, 71 Mich App 319, 320; 248 NW2d 252 (1976), lv den, 399 Mich 821 (1977). It is clear that MCLA 768.7b;MSA 28.1030(2), is a specific statutory exception to the general rule and allows a trial court to impose consecutive sentences in appropriate circumstances. The purpose of the statute is deterrence — to provide an extra dose of punishment for those who commit a second felony while an earlier felony charge is pending. People v Bonner, 49 Mich App 153, 158; 211 NW2d 542 (1973), People v Mayes, 78 Mich App 618; 261 NW2d 22 (1977). We have no quarrel with the intent and validity of the statute but we conclude the statute cannot be applied in defendant’s case.

In the instant case: a) defendant was charged with a felony, b) was charged and convicted of a second felony while the first charge was pending, but c) was not convicted of the first felony since it was dismissed pursuant to a plea bargain whereby defendant pled guilty to a misdemeanor. A close reading of MCLA 768.7b; MSA 28.1030(2) leads us to conclude that consecutive sentencing is only appropriate when a defendant is convicted of the prior charged felony.

"Sec. 7b. When a person, who has been charged with a felony and pending the disposition of the charge, commits a subsequent offense which is a felony, upon conviction or acceptance of a guilty plea of the subsequent offense, the sentences imposed for conviction of the prior charged offense and any subsequent offense, may run consecutively.” (Emphasis supplied.)

Conviction of the "prior charged offense” — the felony — is a prerequisite for imposing consecutive sentences. Here the defendant was convicted of a misdemeanor and not the prior charged felony.

The prosecutor focuses on the deterrence purpose of the statute and argues that all the statute requires is that a second felony be committed when an earlier felony charge is pending. This interpretation not only ignores the statutory language requiring conviction of the charged offense but would violate an accused’s right to a presumption of innocence. The prosecutor’s analysis would equate being "charged” with being "convicted”. The statute allows consecutive sentencing only upon conviction of two or more felonies.

Defendant raises one other issue related to his sentencing but we find it to be without merit.

Reversed and remanded to Macomb County Circuit Court for resentencing. The defendant’s sentences shall run concurrently.

Beasley, J., concurred.

Bashara, P. J.

(dissenting). I respectfully disagree with the majority opinion. While it recognizes and approves the Legislature’s intent as articulated in People v Bonner, 49 Mich App 153; 211 NW2d 542 (1973), it would appear to circumvent that intent by an over-technical interpretation.

The salient circumstances invoking application of the statute are:

1) The commission of a felony;

2) While a previous felony charge is pending disposition.

The fact that a prior felony charge is disposed of by the acceptance of a plea to a misdemeanor should be immaterial. To conclude otherwise,not only ignores the legislative intent but is oblivious to the practicalities of the administration of criminal justice, which requires that many criminal cases be concluded by the acceptance of a plea to a lesser offense.

I would affirm the conviction.


author: Allen, J.

text:
    CHRISTENSEN v PARRISH
    Docket No. 77-1892.
    Submitted March 15, 1978, at Lansing.
    Decided April 4, 1978.
    Leave to appeal applied for.
    Regina Christensen, by her next friend, Robert Christensen, and Robert Christensen and Jeanne Christensen brought an action for negligence against Kay Parrish seeking damages for personal injuries suffered by Regina Christensen when the car in which she was riding went off the road and struck a tree as a result of the driver’s intoxication. The driver, a minor, had become intoxicated at a party at the defendant’s home where alcoholic beverages had been served to him. However, the alcoholic beverages were neither furnished nor served by the defendant but were brought by the young persons attending the party. Defendant’s motion for summary judgment was granted, Ingham County Circuit Court, Michael G. Harrison, J. The plaintiffs appeal. Held:

    1. Violation of the statute which prohibits knowingly giving or furnishing alcoholic beverages to a minor constitutes negligence per se. However, where plaintiffs alleged a violation of the statute as a basis for their negligence claim but failed to show that the defendant knowingly gave or furnished alcohol to a minor, they failed to state a claim upon which relief could be granted and summary judgment was proper.
    2. The defendant did not have a common-law duty not knowingly to permit others to serve or furnish intoxicants to minors in her home where she did not supply the intoxicants and was not present in the home when additional intoxicants were purchased and brought to her home without her knowledge.
    Affirmed.
    1. Negligence — Statutes—Violation—Prima Facie Case.
    Violation of a penal statute gives rise to a prima facie case of negligence.
    References for Points in Headnotes

       57 Am Jur 2d, Negligence §§ 245, 246, 259, 270.

       45 Am Jur 2d, Intoxicating Liquors §§ 271, 561. 57 Am Jur 2d, Negligence § 69.

      2. Negligence — Negligence Per Se — Statutes—Violation—Minors —Alcoholic Beverages.
    It is negligence per se to violate the statute which prohibits knowingly giving or furnishing any alcoholic beverage to a person under the age of 18 years; it is the violation of the statute which gives rise to the civil action; however, by its terms, only a person who knowingly gives or furnishes alcoholic beverages violates the statute; where a plaintiff, alleging negligence based on a violation of the statute, fails to show that a defendant knowingly gave or furnished alcohol to a minor, he has not stated a cause of action upon which relief can be granted (MCLA 750.141a; MSA 28.336[1]).
    3. Negligence — Common-Law Duty — Minors—Alcoholic Beverages — Furnishing Intoxicants.
    There was no common-law duty for a defendant not knowingly to permit others to serve or furnish intoxicants to minors in her home where the defendant did not supply the intoxicants and was not present in the home when the intoxicants were served nor when an intoxicated minor left the home.

      Abood, Abood & Abood, P. C. (by William E. Rheaume), for plaintiff.

      George H. Denfield, for defendant.
    Before: Bashara, P. J., and Allen and M. J. Kelly, JJ.
   Allen, J.

Was error committed when the trial court granted summary judgment in favor of defendant on a charge of furnishing alcoholic beverages to a minor in violation of MCLA 750.141a; MSA 28.336(1) where defendant, an adult homeowner, was present in her home while alcoholic beverages were being consumed by minors even though said beverages were brought to defendant’s home by persons other than defendant, and defendant did not purchase or give any of the beverages to any of the minors? If the statute was not violated, did defendant violate a common-law duty not knowingly to permit a minor to consume alcoholic beverages in defendant’s home? These questions of apparent first impression come to us on the following facts.

Following a high school football game on the evening of November 8, 1974, several young people gathered at the home of defendant Parrish where alcoholic beverages were served and consumed. Among the persons present to whom alcoholic beverages were served was Gary Bailey, a minor, who became intoxicated. While so intoxicated, Bailey left the defendant’s home, driving his car with Regina Christensen as a passenger. A short time later Bailey lost control of his car which went off the road striking a tree, causing severe injuries to Regina Christensen. An affidavit of defendant as well as the deposition of all witnesses conclusively showed that whatever beverages were consumed at defendant’s home were not furnished or served by defendant but were brought to her home by the young persons attending the gathering. The affidavit was not challenged and no counter-affidavit was filed.

Violation of a penal statute gives rise to a prima facie case of negligence. Zeni v Anderson, 397 Mich 117; 243 NW2d 270 (1976). In Thaut v Finley (On Rehearing), 50 Mich App 611; 213 NW2d 820 (1973), this Court concluded that it was negligence per se to violate the statute now before us, MCLA 750.141a; MSA 28.336(1). That case stands for the proposition that it is the violation of the statute which gives rise to the civil action. But by its terms, only a person who "knowingly gives or furnishes” alcoholic beverages violates the statute. Plaintiffs have failed to show that defendant was such a person. In all of the civil action cases relied upon by defendant, the person allegedly violating the statute had some control over or an active part in supplying a minor with alcohol. Lover v Sampson, 44 Mich App 173; 205 NW2d 69 (1972), People v Neumann, 85 Mich 98; 48 NW 290 (1891), People v Lumley, 189 Mich 613; 155 NW 486 (1915). Other cases holding a person liable for violating the statute or a similar statute have had the same element of control present. People v Driver, 174 Mich 214; 140 NW 515 (1913), Brockett v Kitchen Boyd Motor Co, 24 Cal App 3d 87; 100 Cal Rptr 752 (1972), Brattain v Herron, 159 Ind App 663; 309 NE2d 150 (1974). The need for this element is one of the reasons the Legislature included the word "knowingly” in the statute.

Since plaintiffs have not shown that defendant knowingly gave or furnished alcohol to a minor, they have not stated a cause of action upon which relief can be granted. Plaintiffs have shown little more than the fact that defendant was present in her own home while minors consumed alcoholic beverages furnished by someone else. As the above cases indicate, this does not constitute a violation of the statute. Summary judgment was therefore proper.

Plaintiffs’ amended bill of complaint asserts that defendant violated a common-law duty not knowingly to permit minors to consume alcoholic beverages in her home. According to plaintiffs a common-law duty exists which imposes upon an adult a duty not knowingly to permit others to serve or furnish intoxicants to minors even though, as here, the intoxicants are not supplied or served by the adult. Plaintiffs present no on-the-nose authority supporting such a duty. Although the Court in Lover v Sampson, supra, at 181, spoke in language that could be read to support plaintiffs’ position, later in the opinion, at 183, the Court stated that the statute was indispensable to the action. Attempts in other jurisdictions to attribute liability to persons who allow minors to be supplied with alcohol, even under circumstances where the "knowingly furnish” element is much clearer, have failed. See, for example, Anno: Liability of Person Furnishing, on Special Occasion, Intoxicating Liquor, for Negligent Acts of Intoxicated Minors Causing Injury to Plaintiff, 53 ALR3d 1285.

At oral argument it was said that the holding in Moning v Alfono, 400 Mich 425; 254 NW2d 759 (1977), is supportive of plaintiffs’ claim. In that case the manufacturer, wholesaler and retailer of a 10-cent slingshot were sued by plaintiff who, when 12 years old, lost the sight of one eye when struck by a pellet fired from the slingshot by his 11-year-old playmate. The trial judge directed a verdict for the defendants and the Court of Appeals affirmed. In a 3-2 decision the Supreme Court reversed, saying:

"We remand for a new trial because a manufacturer, wholesaler and retailer of a manufactured product owe a legal obligation of due care to a bystander affected by use of the product, and whether defendants in violation of that obligation created an unreasonable risk of harm in marketing slingshots directly to children is for a jury to decide, reasonable persons being of different minds.
"Whether it would be a violation of that obligation to market slingshots directly to children is not a question of duty, but of the specific standard of care: the reasonableness of the risk of harm thereby created.
"Negligence is conduct involving an unreasonable risk of harm.
"Slingshots pose a risk of harm. In manufacturing and marketing slingshots the defendant necessarily created such a risk.
"The meritorious issues are whether the risk so created was unreasonable because the slingshots were marketed directly to children, and whether this should be decided by the court or by the jury.” Moning v Aliono, supra, at 432-433.

Plaintiffs argue that if manufacturing and selling toy slingshots gives rise to a jury determination of whether the seller, wholesaler or retailer created an unreasonable risk of harm to children, so, too, it should be left for the jury to determine whether Kay Parrish’s conduct in the case before us created an unreasonable risk of harm to the plaintiff. Respectfully, we disagree. In Moning, the majority opinion assumed the existence of the duty of the manufacturer whereas, here, the basic question is the existence of the duty. Finally, and most importantly, the defendant supplied the slingshots whereas in the case before us Kay Parrish did not supply the intoxicants and was not present in the house when additional intoxicants were served or later when Gary Bailey left the house with Regina Christensen.

We do not go so far as to rule that under every set of circumstances a common-law duty by adults to minors might not exist. But we do hold that on the facts in this case there was no such duty and the trial court was correct in granting summary judgment. Our decision is limited to the facts in this case.

Affirmed, costs to defendant.

         "A person, who knowingly gives or furnishes any alcoholic beverage to a person under the age of 18 years except upon authority of and pursuant to a prescription of a duly licensed physician, shall be guilty of a misdemeanor, and if the furnishing involved any consideration, the person shall be imprisoned for not more than 1 year or fined not more than $1,000.00 or both.” (Emphasis supplied.)

       There is no transcript recorded in this case. The facts are all from affidavits and depositions.

       Justices Ryan and Moody did not participate in the decision.

       Defendant did not keep liquor or beer in the house nor did she know that an impromptu party would take place at her home. She worked as a waitress in a restaurant from midnight until 8 a.m., and left her home about 11:45 p.m., thinking that the young people were departing. After she left, more beer was purchased and brought to the home.


text:
    BEBEE v GRETTENBERGER
    Docket No. 77-3225.
    Submitted March 15, 1978, at Lansing.
    Decided April 4, 1978.
    The defendants, Orin K., Laura A., and John and Jane Grettenberger, entered into a land contract for the sale of certain farmlands to plaintiff Roger C. Bebee. Later, in order to enable the plaintiffs Roger C. Bebee and Nancy M. Bebee to finance development of the land the defendants accepted a second martgage on the farmlands and a note and a second mortgage at 8 percent interest on the plaintiffs’ home in Lansing as a security replacement for the defendants’ interest in the land contract for the sale of the farmlands. The plaintiffs defaulted on the note and mortgage given to the defendants covering their Lansing home. The defendants commenced foreclosure by advertisement. The plaintiffs thereafter served the defendants with notice of rescission under the Federal Truth in Lending Act and commenced a suit in circuit court claiming that the interest rate on the second mortgage was usurious because it exceeded the rate of 7 percent allowed by statute. Prior to sale on foreclosure the plaintiffs secured an ex parte injunction on such sale from the Ingham County Circuit Court, Michael G. Harrison, J., acting for Jack W. Warren, J. The case was thereafter assigned to James T. Kallman, J. Defendants filed a motion for summary judgment which was granted, and an order in conformity with the opinion dissolving the injunction on the sale was entered. Plaintiffs appeal. Held:

    1. All second mortgages are restricted to a maximum annual rate of interest of 7 percent while nonbank lenders qualifying for an exception to the 7 percent rate may charge up to 11 percent per annum interest on land contracts and first mortgages; the Court noted that such a classification scheme has been held reasonable.
    2. The second mortgage was not merely an alter ego of the land contract, therefore the doctrine of "same transaction” did not apply to validate the 8 percent interest rate on the second mortgage which was given in exchange for the land contract which provided for 8 percent interest.

      References for Points in Headnotes

       45 Am Jur 2d, Interest and Usury §§ 30, 31, 69, 111, 295.
    55 Am Jur 2d, Mortgages § 149.

       45 Am Jur 2d, Interest and Usury §§ 196, 210, 217.

      3. The main contract itself is not declared void when it provides for a usurious rate of interest, but the seller is barred from recovering any interest that remains due and payable and the buyer is entitled to recover his attorney fees and court costs from the seller; however, any usurious interest already freely and voluntarily paid by the buyer cannot be recovered.
    4. The defendants are entitled to repayment of the principal remaining due on the promissory note and are also entitled to proceed to enforce the second mortgage by foreclosure.
    Reversed in part, affirmed in part. Plaintiffs to recover costs and attorney fees.
    1. Mortgages — Usury—Second Mortgages — Interest—Banks— Nonbank Lenders — Statutes.
    All second mortgages are restricted to a maximum interest rate of 7% per annum regardless of whether the mortgage is from a bank or a nonbank lender (MCLA 438.31c; MSA 19.15[lc]).
    2. Mortgages — Land Contracts — Nonbank Lenders — Interest— Exceptions — Statutes.
    Nonbank lenders who qualify for an exception to the 7% maximum annual interest rate may charge up to 11% per annum interest on land contracts and first mortgages (MCLA 438.31c; MSA 19.15[lc]).
    3. Mortgages — Interest—First Mortgages — Second Mortgages— Statutes.
    The statutory classification scheme that mandates lower rates of interest on second mortgages than on first mortgages is reasonable (MCLA 438.31c; MSA 19.15[lc]).
    4. Mortgages — Interest—Vendor and Purchaser — Land Contracts — Same Transaction Doctrine — Usury—First Mortgage — Second Mortgage.
    The doctrine of "same transaction” does not apply to validate an otherwise usurious 8% per annum rate of interest on a second mortgage which was given in exchange for a land contract which provided for a valid 8% per annum rate of interest where the terms of the promissory note secured by the second mortgage differ in substantial and meaningful ways from the terms of the land contract, thus negating the claim that the second mortgage was merely the alter ego of the land contract or a "same transaction”.

      5. Usury — Vendor and Purchaser — Interest—Attorney Fees— Court Costs — Land Contract — Interest Remaining — Statutes.
    A seller who enters into a land contract which provides for a usurious rate of interest is barred from the recovery of any interest and the buyer is entitled to recover his attorney fees and court costs from the seller; the main contract is not void, and any usurious interest already freely and voluntarily paid by the buyer cannot be recovered, but usurious interest that remains due and payable may not be collected by the seller (MCLA 438.32; MSA 19.15[2]).

      Robert W. Luoma, for plaintiffs.

      John P. O’Brien, for defendants.
    Before: Bashara, P. J., and Allen and M. J. Kelly, JJ.
   Allen, J.

Where a prior land contract for undeveloped farmland containing an 8% annual interest charge is cancelled and, at the request of the land contract purchasers, there is substituted a second mortgage on the purchasers’ homestead containing an 8% annual interest charge, is the second mortgage in violation of MCLA 438.31c; MSA 19.15(lc) of the state usury laws? On July 27, 1977, the trial court held there was no violation and defendants could proceed to a public sale of plaintiffs’ residence. Plaintiffs appeal of right.

Plaintiff Roger Bebee, a real estate broker, was employed by defendants to sell farmlands known as the Old Ed Grettenberger Farm which defendants had acquired by inheritance. When Roger Bebee purchased the property himself he was credited with a $7,000 commission on the sale and, on November 5, 1973, the parties entered into a land contract for $70,000, with $12,000 paid down and the balance of $58,000 to be paid at 8% interest in monthly installments of $410. Payment in full was required by November 5, 1978. In May, 1974, when $48,000 remained due on the contract, plaintiffs requested a deed from defendants in order to obtain a first mortgage loan of $175,000 from the First State Savings Association for the purpose of developing the farm for commercial purposes. On May 31, 1974, defendants gave the deed as requested and, in return for the deed so given them, the plaintiffs gave a second mortgage on their home at 6616 Old River Trail, Lansing, for $48,000 at 8% annual interest and monthly payments of $410. The entire balance was payable December 31, 1979, but $5,000 was payable September 10, 1974, and an additional $5,000 December 31, 1974.

Plaintiffs’ commercial venture failed and the loan association foreclosed on the first mortgage. When plaintiffs likewise defaulted on the promissory note secured by the second mortgage on their residence the defendants commenced foreclosure by advertisement. At that time the balance due on principal and interest on the second mortgage was $36,025.04. Plaintiffs served on defendants a notice of rescission under the Truth in Lending Act and filed the present lawsuit claiming, among other things, that the interest rate on the second mortgage on plaintiffs’ residence was usurious because it exceeded 7%. In March 1977, plaintiffs obtained an ex parte injunction on the foreclosure sale and, in June 1977, defendants filed a motion for summary judgment. Following a hearing, the trial court granted defendants’ motion and dissolved the injunction, saying:

"It would lead to an absurd result, under these circumstances, to construe the statute as permitting an 8% interest rate on the land contract, but prohibiting that same interest rate as usurious merely because the subsequent transaction involved a second mortgage. And it would create an injustice to construe the statute as permitting plaintiffs to avoid payment of the note as a result of a change in the security interest that was made at their request and for their benefit. Such a result would not carry out the purpose of the statute, which is to prevent excessive interest rates.”

Section 1 of the state usury law as amended, MCLA 438.31; MSA 19.15(1) provides that the rate of interest shall not exceed 7%. Subsections (2) (5) and (6) of § 1(c) provide for certain exceptions to the 7% limitation. These read:

"(2) For the period ending on December 31, 1981, it is lawful for the parties to a note, bond, or other evidence of indebtedness, executed after August 11, 1969, the bona ñde primary security for which is a ñrst lien against real property, or a land lease if the tenant owns a majority interest in the improvements thereon, or the parties to a land contract, to agree in writing for the payment of any rate of interest, but no such note, mortgage, contract, or other evidence of indebtedness shall provide that the rate of interest initially effective may be increased for any reason whatsoever * * * .
"(5) The provisions of subsection (2) shall apply only to loans made by lenders approved as a mortgagee under the national housing act or regulated by the state, or by a federal agency, who are authorized by state or federal law to make such loans.
"(6) Notwithstanding subsection (5), lenders or vendors not qualiñed to make loans under subsection (5) may make, or may have made, mortgage loans and land contracts speciñed in subsection (2) on or after August 16, 1971, which mortgage loans and land contracts provide for a rate of interest not to exceed 11% per annum, which interest shall be inclusive of all amounts defined as the "finance charge” in the federal truth in lending act (Public Act 90-321), and the regulations promulgated thereunder.” MCLA 438.31c; MSA 19.15(lc). (Emphasis supplied.)

We must first decide which of two conflicting interpretations to place on the above provisions. Plaintiffs interpret subsection (2) to mean that interest on any loan secured by a second mortgage on real property may not exceed 7%. Defendants contend that subsection (6) contains an exception to the 7% limitation for lenders who are not banks. As interpreted by defendants, non-banks under subsection (6) may charge up to 11% on all loans secured by real property whether or not the security is a first or second mortgage. The trial court adopted defendants’ interpretation. We reject defendants’ interpretation. Subsection (6) permits non-bank lenders to make "mortgage loans and land contracts speciñed in subsection (2) * * * [at] * * * a rate of interest not to exceed 11% per annum”. (Emphasis supplied.) But subsection (2) specifies only land contracts and first mortgages. Thus, as to these, non-bank lenders may charge up to 11% but, as to second mortgages, both banks and non-bank lenders are uniformly limited to 7%.

Support for our interpretation is found in Smith v Department of Commerce, Corporation & Securities Bureau, 79 Mich App 107; 261 NW2d 228 (1977). In that case plaintiff Smith attempted to file articles of incorporation for a non-bank lending corporation to be known as the Freedom Mortgage Company whose purpose was to provide second mortgage loans on single-family dwellings in excess of 7% interest per annum. The Corporation and Securities Bureau refused to file the articles, on grounds that the rate of interest to be charged on second mortgages exceeded 7%. This Court affirmed and, in so doing, also held that the statutory classification scheme which mandates lower rates of interest on second mortgages than on first mortgages was not an unreasonable classification. The clear implication of Smith is that all second mortgages are restricted to a maximum interest rate of 7%.

Having determined that the interest rate charged on the second mortgage exceeds the statutory permissible rate, we must now decide whether, under the special circumstances of this case, the 8% interest charge is usury. On this issue the equities clearly favor defendants. Unfortunately, the law favors the plaintiffs. Perhaps if the second mortgage were but an alter ego substitution for the earlier land contract, we might find no violation of the statute. However, in at least the five respects footnoted below, 23 45the terms of the promissory note secured by the second mortgage differ from the terms of the land contract. We find the differences substantial and meaningful. Thus, contrary to defendants’ claim, we hold that the second mortgage is not merely the alter ego of the land contract or a "same transaction”. Hence the doctrine of "same transaction” does not validate the interest rate on the second mortgage on the basis of the valid interest rate under the land contract. The clear language of the statute evidences a legislative intent to forbid interest rates on second mortgages which exceed 7%. Despite the equities in defendants’ favor we hold that the legislative intent was violated, though unintentionally, in the situation before us. Though blameless, the interest rate charged by defendants on the second mortgage contract was usurious under the statute. To this extent the trial court erred.

However, the trial court did not err in dissolving the injunction which prohibited foreclosure on plaintiffs’ residence. The penalty for charging a usurious rate is the barring of the seller from recovery of any interest and the buyer is entitled to recover his attorney fees and court costs from the seller. MCLA 438.32; MSA 19.15(2). Usurious interest already freely and voluntarily paid by the buyer cannot be recovered but usurious interest remaining due and payable may not be collected. Wright v First National Bank of Monroe, 297 Mich 315, 328; 297 NW 505 (1941). The main contract itself is not declared void. Sienkiewicz v Leonard Mortgage Co, 59 Mich App 154, 157; 229 NW2d 352 (1975). Defendants are entitled to repayment of the principal remaining due on the promissory note and are also entitled to proceed to enforce the second mortgage by foreclosure.

Reversed in part, affirmed in part. Plaintiffs to recover costs and attorney fees as prescribed by MCLA 438.32; MSA 19.15(2)._

       Plaintiffs also gave a second mortgage on the farm on which the First State Savings Association had taken the first mortgage.

       Consumer Credit Protection Act, 15 USCA 1601 et seq. Count II of plaintiffs’ complaint alleged violation of the Truth in Lending Act, 15 USCA 1601 et seq., and Count I alleged violation of the Michigan usury law. The appeal in the instant case is taken on the trial court’s ruling as to Count I only.

       (1) The realty securing the indebtedness is different.
      (2) The parties are different. Nancy Bebee was not a named party on the land contract but is a signatory on the promissory note and second mortgage.
      (3) The scheduled payments are different. Both the land contract and second mortgage called for payments of $410 per month, but the promissory note also required a payment of $5,000 by September 10, 1974, and an additional $5,000 by December 31, 1974.
      (4) The date for payment in full is different. Under the contract, payment in full was required by November 5, 1978, but under the note, payment in full was extended until December 31, 1979.
      (5) The legal relationship between the parties is different. Under the land contract the relationship is one between vendor and vendee but under a mortgage it is one of mortgagor and mortgagee. The time period for foreclosure and for redemption substantially differs.

         The trial court’s opinion was made without benefit of Smith v Department of Commerce, Corporation & Securities Bureau, supra, in which the statute was construed as limiting all second mortgages to 7% interest.