author: R. B. Burns, P. J.

text:
    MICHIGAN BELL TELEPHONE COMPANY v PUBLIC SERVICE COMMISSION
    Docket No. 77-3729.
    Submitted June 21, 1978, at Lansing.
    Decided August 8, 1978.
    Leave to appeal applied for.
    The Michigan Public Service Commission granted Michigan Bell Telephone Company a rate increase. Michigan Bell then appealed to the Ingham Circuit Court claiming errors in setting the rate in the treatment of business information system payments to an affiliated company and in amortization of a state income tax reserve. While the appeal was pending, the commission granted Michigan Bell a further rate increase, in a subsequent action, which exceeded the amount being sought in circuit court. The Michigan Attorney General participated as an intervening defendant. The commission sought summary judgment arguing mootness. The circuit court, James T. Kali-man, J., found the issues were not moot, and affirmed the commission’s order. Michigan Bell appeals and the commission cross-appeals. Held:

    The public interest exception to the mootness doctrine applies to this case. Such exception permits review where the issues involved are of continuing public interest, capable of repetition, yet also capable of evading review. Michigan Bell did not meet its burden of proof since it did not show by clear and convincing evidence that the order of the commission setting the utility’s rates was unlawful or unreasonable. It was not unreasonable for the commission to allow as reasonable expenses for business information systems the costs of only those projects which Michigan Bell actually implements. Michigan Bell also did not demonstrate error on the part of the commission in the calculation of the amount of Bell’s state income tax reserve to be amortized to income.
    Affirmed.
    1. Appeal and Error — Mootness—Exception—Public Interest.
    The mootness doctrine has a public interest exception which permits review where the issues involved are of continuing public interest, capable of repetition, yet also capable of evading review.

      References for Points in Headnotes
    [1] 5 Am Jur 2d, Appeal and Error § 768.
    [2] 64 Am Jur 2d, Public Utilities §§ 126-130.

      2. Public Service Commissions — Utilities—Appeal and Error— Rates — Burden of Proof — Statutes.
    A public utility may bring an action to vacate an order of the Public Service Commission which sets the utility’s rates; the burden of proof in such action is on the utility to show by clear and convincing evidence that the order of the commission is unlawful or unreasonable (MCL 462.26[e]; MSA 22.45[e]).

      Jack H. Shuler, H. Wayne Wells, and Honigman, Miller, Schwartz & Cohn (by Jason L. Honigman and John M. Kamins), for plaintiff.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Hugh B. Anderson and Roderick S. Coy, Assistants Attorney General, for intervening defendant-appellee.

      Don L. Keskey, Assistant Attorney General, for defendant.
    Before: R. B. Burns, P. J., and D. F. Walsh and M. E. Clements, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   R. B. Burns, P. J.

In April, 1975, Michigan Bell Telephone Company filed case no. U-4820 with the Public Service Commission, requesting authority to raise its rates so as to increase its annual revenue by approximately $88 million. On May 4, 1976, the commission granted Michigan Bell an estimated rate increase of $52,172 million per year. Michigan Bell appealed U-4820 to Ingham County Circuit Court, claiming the commission erred in, among other things, its treatment of business information system (hereinafter BIS) payments to an affiliated company, and amortization of a state income tax reserve. While that appeal was pending, the commission granted Michigan Bell a further rate increase in a subsequent case, no. U-5125, which exceeded the amount being sought in circuit court in U-4820. When Michigan Bell failed to appeal within the statutory period in U-5125, the commission sought summary judgment in U-4820, arguing mootness. The circuit court found the issues were not moot, and, reaching the substantive issues, affirmed the commission’s order. Michigan Bell appealed to this Court, raising the substantive issues, and the commission cross appealed on the mootness issue. We affirm the judgment of the circuit court.

I Mootness

The commission argues that the rates set in U-5125 supercede those set in U-4820. Since Michigan Bell did not appeal in U-5125, no change can be made in current rates. Because the rates set in U-4820 have been superceded, those rates are now final and defunct. Any attempt to change the rates in either U-4820 or U-5125 would be prohibited retroactive ratemaking. See Michigan Bell Telephone Co v Public Service Comm, 315 Mich 533; 24 NW2d 200 (1946). Consequently, no relief can be granted, and the issues presented by Michigan Bell on appeal are moot.

The circuit court rejected the commission’s theory for two reasons. First, the statutory scheme for rate setting contemplates review of commission determinations on appeal. MCL 460.4, 462.26; MSA 22.13(4), 22.45. Since it is Michigan Bell’s practice to seek new rate determinations after each commission decision, and since the appeal process generally takes longer than the commission’s resolution of each rate case, almost inevitably new rates will be set before the appeal on the old rates is decided. If the new rate determination rendered the contested issues in the old rate case moot, the review scheme would be rendered a nullity. Second, even assuming no relief could be granted in this case, the mootness doctrine has an exception permitting review where the issues involved are of continuing public interest, capable of repetition, yet also capable of evading review. See Southern Pacific Terminal Co v Interstate Commerce Comm, 219 US 498; 31 S Ct 279; 55 L Ed 310 (1911), Alton & S R Co v International Ass’n of Machinists & Aerospace Workers, 150 US App DC 36, 43; 463 F2d 872, 879 (1972).

The commission made a similar mootness argument before this Court in the recent case of General Telephone Co of Michigan v Public Service Comm, 78 Mich App 528; 260 NW2d 874 (1977). In General Telephone, the utility conceded that a subsequent rate increase precluded relief in that particular case. As a consequence, this Court also assumed that the retroactivity doctrine would preclude relief. However, this Court reached the substantive issues presented under the second rationale advanced by the trial court in the instant case, the public interest exception to the mootness doctrine, because the errors were likely to recur in the future.

The mootness issue presents two sub-issues. First, whether the substantive issues are moot because no relief can be granted in this case, and second, if moot, whether we may reach the substantive issues under the public interest exception to the mootness doctrine. Michigan Bell primarily argues the second sub-issue, but raises by implication the first sub-issue, since it requests that relief be granted in the instant case.

Assuming mootness, the public interest exception clearly applies in this case. The BIS payments are ongoing expenditures which will be taken into account in future rate cases, and the amortization of the state income tax reserve will extend over five years. Unless we reach these issues in the instant case, they may never be resolved by the courts.

Because we resolve the substantive issues against Michigan Bell, we need not determine whether relief could have been granted in the instant case. Michigan Bell Telephone Co v Public Service Comm, supra, is of questionable application to the instant situation, and the circuit court has raised a substantial question as to the applicability of the mootness doctrine in light of Michigan Bell’s right of review. While we are putting the cart before the horse by reviewing under the exception without first determining whether the substantive issues are moot, the exception to the mootness doctrine provides sufficient justification for reaching the substantive issues.

II BIS Payments

Michigan Bell is a wholly owned subsidiary of American Telephone and Telegraph Company (hereinafter AT&T). AT&T also wholly owns Western Electric, its manufacturing unit. AT&T and Western Electric each own 50 per cent of Bell Telephone Laboratories, Inc. (hereinafter Bell Labs), their research and development unit. Bell Labs has a BIS agreement with Michigan Bell and other operating companies of the Bell System, generally owned by AT&T, to develop for the operating companies electronic data processing and business information systems. For the test year 1974, Bell Labs developed or was developing 29 projects, of which Michigan Bell implemented five and a part of another, planned to implement five more, and had no plans to implement the remainder.

The expense of developing BIS projects is shared among the operating companies on a proportional basis. Michigan Bell’s average obligation is 3.5 per cent of the total cost, based on (1) the proportion of its gross plant to the aggregate gross plant of all operating companies and (2) the proportion of its operating expenses to all operating expenses of all operating companies.

The commission found that Michigan Bell was not obtaining its money’s worth from BIS, and that present ratepayers were not receiving direct benefits from BIS expenditures for projects not implemented. In calculating rates, the commission adjusted net operating income upward $741,000 to reflect as a reasonable expense for BIS a lesser amount than was actually paid, with the proviso that, as Michigan Bell implements future projects, it may amortize the costs thereof over a five-year period.

Michigan Bell must show by clear and convincing evidence that the order of the commission is unlawful or unreasonable. MCL 462.26(e); MSA 22.45(e). Michigan Bell argues that the full BIS payment is a reasonably necessary cost of doing business, because it is a cost-efficient method of obtaining centralized development of standardized systems. It would cost nearly eight times as much as its 1974 BIS payment of $1,525,000 to develop the projects on its own.

Even though centralized development may be a very good bargain, it does not necessarily follow that the commission is wrong in its treatment of BIS payments. Because the BIS contract is among affiliated companies, it is not necessarily a result of arms-length bargaining, and the commission need not assume the cost allocation under the contract is fair. See Michigan Bell Telephone Co v Public Service Comm, 332 Mich 7; 50 NW2d 826 (1952). Charges for BIS based on the relative size of Michigan Bell compared to other operating companies may not reflect the relative benefit of BIS to Michigan Bell compared to the other operating companies. To the extent that other operating companies benefit more by implementing more projects than Michigan Bell, Michigan Bell’s ratepayers will be subsidizing the operations of other companies. The commission’s determination that Michigan Bell was not receiving its money’s worth is supported by the record, which indicates that Michigan Bell paid $1,525,000 for projects worth only $329,000 based on its pro rata share cost. It was therefore not unreasonable for the commission to allow as reasonable expenses the costs of only those projects which Michigan Bell actually implements.

Ill State Income Tax Reserve

For the years 1970-1975, Michigan Bell’s rates were calculated using straight-line depreciation, but its state income tax obligation was calculated using accelerated depreciation. As a consequence, the amount Michigan Bell collected in rates for income tax liability was greater than the amount of income tax paid. Since accelerated depreciation defers, not eliminates, income tax liability, the excess collected from ratepayers for income tax was accumulated as a state income tax reserve. When the state corporate income tax was can-celled January 1, 1976, Michigan Bell’s anticipated obligation to eventually pay as state income tax its reserve of $24,794,000 was also cancelled. As a consequence, Michigan Bell reaped an unanticipated windfall in the amount of the reserve.

In calculating the amount of rate increase needed by Michigan Bell in U-4820, the commission determined that the reserve should be amortized to income over a five-year period for rate-making purposes. This means that Michigan Bell was determined to need $24,794,000 less income over the five years that it claimed it needed in its request for a rate increase. Since the Federal income tax rate is 48 per cent it takes nearly two dollars of revenue to yield one dollar of after-tax income. Therefore, Michigan Bell’s rate increase would be approximately $48 million dollars less than requested over five years.

Michigan Bell argued in circuit court that only $12,889,000 should be amortized to income, and the remainder should be transferred to a reserve for Federal income taxes. This is because elimination of a state tax liability of $24,794,000 also eliminated an anticipated future Federal tax deduction of the same amount, increasing future Federal income tax liability by $11,905,000. The commission rejected this argument because it was not its practice to adjust the Federal income tax reserve to account for subsequent changes in Federal income tax liability. The circuit court affirmed because there was no showing that the Federal reserve was inadequate to provide for future Federal income tax liability.

On appeal, Michigan Bell has shifted its argument on the effect of Federal income tax liability on the state income tax reserve. It now argues that the commission’s order is confiscatory, because it is being ordered to refund nearly $48 million to ratepayers even though it collected from them only approximately $24 million for the state income tax reserve. The basic premise of its argument is that the $24 million reserve is pre-tax revenue, not aftertax income. In support of its premise, Michigan Bell relies upon testimony by its assistant comptroller, Mr. Abbott, as well as the proposition that, since state income tax is deductible in calculating Federal income tax liability, it was not necessary to collect nearly two dollars of revenue in order to accumulate one dollar of state income tax reserve. Since the reserve represents pre-tax revenue, as it is amortized to income for ratemaking purposes, Michigan Bell will have to pay Federal income tax of 48 per cent of the reserve, so that its actual income from the reserve is only 52 per cent of what the commission calculated, and consequently its revenue shortfall is approximately double what it ought to be.

Michigan Bell has not shown by clear and convincing evidence that the order of the commission is unlawful or unreasonable. MCL 462.26(e); MSA 22.45(e). Although the conclusion reached in its argument on appeal is the same as the conclusion reached in its arguments before the commission and circuit court, its argument on appeal is not only different from that presented below, but also inconsistent therewith. As a consequence, the record Michigan Bell created below not only does not support its argument on appeal, it tends to disprove its basic premise on appeal.

It was Mr. Abbott’s theory that the commission amortized to income for ratemaking purposes approximately twice the income from the reserve it should have, not because the reserve was pre-tax revenue, but because Michigan Bell lost a Federal income tax deduction in the amount of the reserve when the state income tax was ended.

Money paid into the reserve had not yet been paid as state income tax, and was, therefore, not deductible for Federal income tax purposes. Since the reserve was not deducted for Federal income tax purposes, Michigan Bell’s argument that it was not necessary to collect nearly two dollars of revenue in order to accumulate one dollar of reserve is wrong. Nor does the fact that the reserve had not previously been counted as income for ratemaking purposes mean that it was not counted as income for Federal income tax purposes. Since Mr. Abbott’s testimony was inconsistent with Michigan Bell’s present theory, lifting Mr. Abbott’s conclusions out of context and quoting them as establishing Michigan Bell’s basic premise is misleading.

Michigan Bell is not being required to "refund” anything to ratepayers. Rather, the commission has determined that the rate increase sought by Michigan Bell need not be as large as Michigan Bell requested, because of the state income tax reserve windfall. The money which Michigan Bell claims it is "refunding” to ratepayers already belongs to the ratepayers, and, absent a demonstration of error on the part of the commission, shall continue to belong to the ratepayers.

Affirmed. No costs, a public question.


source: Caselaw Access Project

license: Public Domain

text:
    MANUFACTURERS NATIONAL BANK OF DETROIT v DEPARTMENT OF NATURAL RESOURCES
    Docket No. 77-4909.
    Submitted June 20, 1978, at Lansing.
    Decided August 8, 1978.
    Manufacturers National Bank of Detroit, 'under a trust agreement, and Adeline K. Werp, own royalty interests in a producing gas well. The lessee and operator of the well is Shell Oil Company. Shell petitioned the Supervisor of Wells for an expansion of the size of the drilling unit to include four adjoining quarter-quarter sections of land upon which Shell and Northern Michigan Exploration Company have oil and gas leases. The supervisor found that each of the adjoining quarter-quarter sections was partially underlain by the same pool lying under the original drilling unit, would support a drilling location under current well-spacing rules and that the existing well would adequately and economically drain the entire unit. To avoid wasteful drilling of unnecessary offset wells, the supervisor, by special order, granted the proposed expansion. Plaintiffs petitioned for review to Ingham Circuit Court, where the supervisor’s special order was affirmed, Ray C. Hotchkiss, J. Plaintiffs appeal and allege that the Supervisor of Wells does not have authority to expand a drilling unit to encompass tracts of land not completely underlain by a pool and that such expansion constitutes an unconstitutional taking of plaintiff’s royalty interests for the benefit of the owners of land not underlain by the pool. Held:

    1. The Supervisor of Wells has authority to expand a drilling unit to encompass tracts of land not completely underlain by a pool of gas or oil.
    2. A landowner may recover for the wrongful appropriation of his gas and oil by another.
    3. Where there is a pooling of property for the purpose of allocation of production from a single well each owner is to receive his just and equitable share of the gas and oil.

      References for Points in Headnotes
    [1] 38 Am Jur 2d, Gas and Oil §§ 159, 164.
    [2, 3, 5-7] 38 Am Jur 2d, Gas and Oil § 164 et seq.

    [4] 38 Am Jur 2d, Gas and Oil § 4.

      4. An order by the Supervisor of Wells is inequitable which allocates oil and gas on that proportion that the landowner’s acreage bears to the total acreage of a drilling unit rather than total acreage of the drilling unit underlain by an oil and gas pool.
    5. The Supervisor of Wells may remove inequities in the allocation of gas and oil interests by making an appropriate adjustment where his order of expansion provides for exceptions and the landowner petitions for relief and pursues his administrative remedy.
    Affirmed.
    1. Mines and Minerals — Oil and Gas — Basic Drilling Unit — Administrative Rules.
    The basic drilling unit for oil and gas is a quarter-quarter section drawn along government surveyed quarter-quarter section lines (1963 AACS, R 299.1201[A]).
    2. Mines and Minerals — Oil and Gas — Supervisor of Wells— Drilling Units — Authority to Expand.
    The Supervisor of Wells has authority to expand a drilling unit to encompass tracts of land not completely underlain by a pool of gas or oil.
    3. Mines and Minerals — Oil and Gas — Supervisor of Wells — One Well — Maximum Area — Waste—Unnecessary Wells — Statutes.
    The Supervisor of Wells may fix the maximum area which can efficiently and economically be drained by one well in order to prevent waste and the drilling of unnecessary wells (MCL 319.13; MSA 13.139[13]).
    4. Mines and Minerals — Oil and Gas — Landowner—Wrongful Appropriation.
    A landowner owns the oil and gas under his land and may recover for the wrongful appropriation of his oil and gas by another.
    5. Mines and Minerals — Oil and Gas — One Well — Pooling of Property — Landowners—Just and Equitable Share — Statutes.
    The pooling of property for the purpose of allocation of production from a single well must be upon terms and conditions that are just and reasonable and will afford to the owner of each tract the opportunity to recover and receive his just and equitable share of the oil and gas and gas energy in the pool (MCL 319.13; MSA 13.139[13]).
    6. Mines and Minerals — Oil and Gas — Landowners—Allocation of Production — Just and Equitable Share — Statutes.
    A landowner’s just and equitable share of the oil and gas in a pool in the context of allocation of production between wells is an amount substantially in the proportion that the quantity of the recoverable oil and gas under such property bears to the total recoverable oil and gas in the pool so far as can practicably be determined and obtained without waste and without reducing the bottom hole pressure materially below the average for the pool. (MCL 319.13; MSA 13.139[13]).
    7. Mines and Minerals — Oil and Gas — Supervisor of Wells — Allocation of Production — Special Orders — Equity—Administrative Remedies — Appropriate Adjustment.
    An order by the Supervisor of Wells which allocates oil and gas on the proportion that a landowner’s acreage bears to the total acreage of a drilling unit rather than total acreage of the drilling unit underlain by an oil and gas pool is inequitable; where the order provides that exceptions may be granted, the landowner has an administrative remedy available to correct any inequity by a petition to the Supervisor of Wells to make an appropriate adjustment in the allocation formula.

      Lynch, Gallagher & Lynch, for plaintiff.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Jerome Maslowski and Curtis G. Beck, Assistants Attorney General, for defendant Supervisor of Wells.

      Loomis, Ewert, Ederer, Parsley, Davis & Gotting, for Shell Oil Company and Northern Michigan Exploration Company.
    Before: R. B. Burns, P. J., and D. F. Walsh and M. E. Clements, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   R. B. Burns, P. J.

Plaintiffs appeal from a circuit court affirmance of a well-spacing and drilling unit determination made by the Supervisor of Wells pursuant to the oil and gas conservation act, MCL 319.1 et seq.; MSA 13.139(1) et seq., and rules promulgated thereunder, 1963 ÁACS, R 299.1201 et seq. We also affirm.

Plaintiffs own royalty interests in a producing gas well, originally located on an 80-acre drilling unit. Shell Oil Company, the lessee and operator of the well, petitioned the supervisor for expansion of the size of the drilling unit to include four adjoining quarter-quarter sections of land, upon which Shell and Northern Michigan Exploration Company have oil and gas leases. The supervisor found that each of the adjoining quarter-quarter sections was partially underlain by the same pool lying under the original drilling unit; that each adjoining quarter-quarter section was sufficiently underlain by the pool to support a drilling location under current well-spacing rules; and that the existing gas well would adequately and economically drain the entire proposed unit. To avoid wasteful drilling of unnecessary offset wells, the supervisor determined that the drilling unit should be expanded to the proposed 240 acres. Because by rule the basic drilling unit is a quarter-quarter section drawn along government surveyed quarter-quarter section lines, 1963 AACS, R 299.1201(A), the supervisor included all of each adjoining quarter-quarter section within the unit, even though it is undisputed that a substantial portion of each of the adjoining quarter-quarter sections are not underlain by the pool. Under Special Order 1-73, issued by the supervisor and applicable to Salina-Niagaran Formation wells, plaintiffs’ royalty interests are "communitized” with other royalty interests within the drilling unit, and they will participate in the royalty from the well in the proportion to which their acreage bears to the total acreage of the unit.

Plaintiffs contend that the supervisor does not have the authority to expand a drilling unit to encompass tracts of land not completely underlain by the pool, and that such expansion constitutes an unconstitutional taking of plaintiffs’ royalty for the benefit of the owners of land not underlain by the pool. They would have us set aside the drilling unit determination, resulting in Shell and Northern Michigan Exploration Company having to drill their own wells on the adjoining quarter-quarter sections.

While plaintiffs may be correct in their premise that the effect of the drilling unit determination is to dilute their royalty interests, their arguments on appeal are misdirected. We find that the supervisor’s action was authorized by statute, and that plaintiffs have available a remedy by which they may avoid any unconstitutional taking of their royalty.

MCL 319.13; MSA 13.139(13), provides in pertinent part:

"To prevent the drilling of unnecessary wells the supervisor, after conference with and recommendation by the board, may fix a drilling unit for each pool. A drilling unit, as contemplated herein, means the maximum area which may be efficiently and economically drained by 1 well * * * .
"The drilling of unnecessary wells is hereby declared waste * * * .”

Plaintiffs argue that the language "may fix a drilling unit for each pool” expressly limits the size of the drilling unit to the size of the pool. In support of their argument that the boundaries of the drilling unit must follow the boundaries of the underlying pool, plaintiffs cite Oklahoma decisions.

Not only do we think that the quoted provision does not carry the implication plaintiffs read into it, but there are substantial indications that the Legislature did not intend that meaning. First, that portion of MCL 319.13; MSA 13.139(13), providing for exceptions to well-spacing patterns where "the supervisor finds that the unit is partly outside the pool”, clearly contemplates that a portion of the drilling unit may not be underlain by the pool. Second, plaintiffs’ construction of the statute would be unworkable, since, absent extensive drilling, the perimeter of a pool can only be estimated through the use of seismic data. Plaintiffs’ construction could lead to wasteful drilling on the speculation that the drilling unit was fixed over a too small area, thus defeating the purpose of the statute. The supervisor’s decision to fix drilling unit boundaries along quarter-quarter section lines around the estimated boundaries of pools is a reasonable method of achieving the goal of the statute.

A landowner owns the oil and gas under his land, and may recover for the wrongful appropriation of his oil and gas by another. See, e.g., Ross v Damm, 278 Mich 388; 270 NW 722 (1936). Where the supervisor compels the pooling of property for the purpose of allocation of production from a single well, the allocation must

"be upon terms and conditions that are just and reasonable, and will afford to the owner of each tract in the pooling plan the opportunity to recover or receive his just and equitable share of the oil and gas and gas energy in the pool * * * MCL 319.13; MSA 13.139(13).

In the context of allocation of production between wells in a pool, a landowner’s "just and equitable share” has been defined as

"an amount, so far as can be practicably determined and obtained without waste, and without reducing the bottom hole pressure materially below the average for the pool, substantially in the proportion that the quantity of the recoverable oil or gas under such property bears to the total recoverable oil or gas in the pool * * * .” MCL 319.13; MSA 13.139(13).

It is apparent that plaintiffs are entitled to recover, so far as can be practicably determined, an allocation of gas in the proportion that the gas under their land bears to the gas under the drilling unit. In the absence of data on the thickness of the pool, this would seem to be the proportion to which their acreage, which is totally underlain by the pool, bears to the total drilling unit acreage underlain by the pool. Special Order 1-73, which allocates on the proportion to which plaintiffs’ acreage bears to the total acreage of the drilling unit, rather than total acreage of the drilling unit underlain by the pool, would seem to understate plaintiffs’ just and equitable share.

The determination of how much acreage to include within the drilling unit affected the size of plaintiffs’ royalty under Special Order 1-73. Plaintiffs have assumed that they are bound by the allocation formula of Special Order 1-73, and have therefore attacked the unit determination in order to secure their just and equitable share of production. We have found that the unit determination is authorized by statute. However, Special Order 1-73 specifically provides that exceptions may be granted thereto. Since plaintiffs have available an administrative remedy for any inequity created by the unit determination, it cannot be said that the unit determination deprives them of property. We will not assume that the supervisor will fail to make an appropriate adjustment in the allocation formula if plaintiffs petition for relief.

Affirmed. Costs to defendant.

       Special Order 1-73 provides in part:
      "All royalty and working interests within a drilling unit shall be communitized and each royalty owner therein shall participate in the royalty from the well drilled thereon in the relation that the acreage of such owner bears to the total acreage of the unit”.

        Caudillo v Corporation Comm, 551 P2d 1110 (Okla, 1976), Cameron v Corporation Comm, 418 P2d 932 (Okla, 1966), Panhandle Eastern Pipe Line Co v Corporation Comm, 285 P2d 847 (Okla, 1955). As these cases interpret different statutory language they are not persuasive.

       Special Order 1-73 provides in part:
      "Exceptions to this order may be granted by the Supervisor of Wells in accordance with the provisions of the statutes specified herein.”

       While we observe that plaintiffs’ royalty allocation under Special Order 1-73 does not appear to be just and equitable, that precise issue is not directly before us, and we express no opinion as to the correct resolution thereof; that is a decision entrusted to the supervisor, not this Court. MCL 319.13; MSA 13.139(13). Nor do we express an opinion as to the applicability of plaintiffs’ royalty contract with Shell upon that determination, the contract issue not being properly before us.


author: Per Curiam.

text:
    PEOPLE v DENNIS JOHNSON
    Docket No. 77-1532.
    Submitted June 20, 1978, at Detroit.
    Decided August 8, 1978.
    Leave to appeal applied for.
    Dennis Johnson was convicted of first-degree murder, Recorder’s Court of Detroit, Thomas L. Poindexter, J. Defendant appeals, alleging that the trial court committed reversible error by failing to exercise its discretion in response to defense counsel’s motion to suppress evidence of defendant’s prior convictions. Held:

    The trial court recognized that it had discretion to permit or disallow impeachment of the defendant via his prior convictions, but failed to exercise this discretion and left the decision to the parties. This was reversible error.
    Reversed and remanded.
    1. Criminal Law — Evidence—Prior Convictions — Exclusion of Evidence — Discretion—Exercise of Discretion.
    A trial judge may in the exercise of discretion exclude reference to a defendant’s prior criminal record if the defendant takes the witness stand in his own behalf; upon proper motion, the trial judge must recognize that he has such discretion, and failure to do so constitutes reversible error; the trial judge must positively indicate and identify his exercise of discretion on the record.
    2. Criminal Law — Courts—Discretionary Powers — Prior Criminal Records — Witnesses—Defendant as Witness — Delegation of Discretionary Powers.
    A trial court’s delegation to the parties of its discretionary powers to exclude reference to a defendant’s prior criminal record if the defendant takes the witness stand in his own behalf constitutes reversible error.

      References for Points in Headnotes
    [1, 2] 29 Am Jur 2d, Evidence §§ 320 et seq., 339 et seq.

    81 Am Jur 2d, Witnesses § 569 et seq.

    Propriety, on impeaching credibility of witnesses in criminal case by showing former conviction, of questions relating to extent of punishment. 67 ALR3d 775.
    Right to impeach credibility of accused by showing prior convictions as affected by remoteness in time of prior offense. 67 ALR3d 824.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Edward R. Wilson, Principal Attorney, Appeals, and Robert M. Morgan, Assistant Prosecuting Attorney, for the people.

      Carl Ziemba, for defendant on appeal.
    Before: R. M. Maher, P. J., and J. H. Gillis and McGregor, JJ.

       Former Court of Appeals judge, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.

   Per Curiam.

Defendant was tried and convicted by a jury of first-degree murder, contrary to MCL 750.316; MSA 28.548. He was subsequently sentenced to life imprisonment and now appeals as of right.

Only one issue raised by defendant in his brief on appeal merits discussion by this Court.

Defendant contends that the irial court committed reversible error by failing to exercise its discretion in response to defense counsel’s motion to suppress defendant’s prior convictions. We agree.

Prior to the commencement of trial, defense counsel moved that the criminal record of defendant be suppressed in the event that defendant testified. Defense counsel advised the trial court that defendant had three previous felonies. The prosecutor argued that if the defendant’s prior convictions were to be suppressed, the defense should not be permitted to cross-examine the prosecution’s chief witness about her previous convictions. Defense counsel would not agree to refrain from impeaching the witness. The trial court responded to the motion in the following manner:

"The Court: Well, I will rule that it will remain that way. Either they both come in or they both state [sic] out and you decide which way you want to do it.”

MCL 600.2159; MSA 27A.2159 provides in part that:

"No person shall be disqualified as a witness in any civil or criminal case or proceeding by reason of his interest in the event of the same as a party or otherwise or by reason of his having been convicted of any crime; but such interest or conviction may be shown for the purpose of affecting his credibility.”

The foregoing provision has been interpreted to provide that the trial judge may, in the exercise of his discretion, exclude reference to defendant’s prior convictions. Upon proper motion, the trial judge must recognize that he/she has such discretion, and failure to do so constitutes reversible error. People v Jackson, 391 Mich 323, 336; 217 NW2d 22 (1974).

Also, in order to comply with Jackson, supra, the trial judge must positively indicate and identify his/her exercise of discretion on the record. People v Cherry, 393 Mich 261; 224 NW2d 286 (1974), People v Strickland, 78 Mich App 40, 53; 259 NW2d 232 (1977).

In the instant case, the trial court recognized that it had discretion to permit or disallow impeachment of defendant via his prior convictions, but failed to exercise this discretion. Instead, the trial court left the decision to the parties.

The trial court’s delegation of its discretionary powers to the parties constitutes reversible error.

Accordingly, the defendant’s conviction is reversed and this case is remanded for a new trial. Upon remand the trial court should, upon request and due consideration of the factors cited in Jackson, supra, exercise its discretion to decide whether to exclude any reference to defendant’s prior conviction record.

Reversed and remanded for new trial.

        People v Jackson, 391 Mich 323, 336; 217 NW2d 22 (1974), People v Cherry, 393 Mich 261; 224 NW2d 286 (1974).


text:
    STEVENS v HOGUE
    Docket No. 77-2705.
    Submitted April 13, 1978, at Detroit.
    Decided August 8, 1978.
    Leave to appeal denied, 404 Mich —, 1979.
    June D. Stevens brought an action against Maxine R. Hogue for damages resulting from an automobile accident. Following the automobile collision plaintiff fell on ice and snow and broke her ankle. Plaintiff attributes the fall to injuries she received in the automobile accident. Defendant admitted negligence in the initial collision but denied liability for the subsequent fall. The case was tried solely to determine if plaintiff had suffered a "serious impairment of body function” or "permanent serious disfigurement”. Judgment for defendant, Oakland Circuit Court, Farrell E. Roberts, J. Plaintiff appeals and claims that a section of the automobile no-fault act is unconstitutional, that the question of whether defendant was insured should have been submitted to the jury, that only the undefined statutory phrases "serious impairment of body function” and "permanent serious disfigurement” should have been given in the instructions to the jury and that the actual cost of taking a videotape deposition exceeded the limit allowed by statute and court rule. Held:

    1. The section of Michigan’s no-fault act dealing with tort liability for noneconomic loss is constitutional.
    2. Inquiry as to whether a defendant is insured must be addressed to the court. Refusing to submit the question of whether a defendant is insured to a jury is proper where the certainty of insurance is supplied by interrogatory, testimony of defense counsel and defendant, and where no claim is made that defendant was uninsured.
    3. The court’s jury instructions covering "serious impairment of body function” and "permanent serious disfigurement” were accurate and fair to both sides and gave substance and acceptable meaning to these somewhat nebulous statutory phrases; the instructions given were not prejudicial or erroneous.

      References for Points in Headnotes
    [1] New Topic Service, No-Fault Insurance §§ 12, 13.
    [2-4] 75 Am Jur 2d, Trial §§ 208, 256.
    Admissibility of evidence, and propriety and effect of questions, statements, comments, etc. tending to show that defendant in personal injury or death action carries liability insurance. 4 ALR2d 761.
    [5] 20 Am Jur 2d, Cost § 89 et seq.

      4. Actual costs of videotape depositions in excess of limits set by statute and court rule may not be taxed.
    Affirmed and remanded for a redetermination of costs.
    1. Automobiles — Insurance—No Fault — Constitutional Law— Equal Protection — Statutes.
    A section of Michigan’s no-fault act dealing with tort liability for noneconomic loss is constitutional and does not violate equal protection of the law (MCL 500.3135; MSA 24.13135).
    2. Automobiles — Insurance—No Fault — Tort Liability — Question of Insurance — Trial—Mention of Insurance — Statutes.
    The no-fault automobile insurance act did not abolish tort liability for noneconomic loss if the other vehicle is insured, so whether a defendant is insured is a relevant inquiry; however, such inquiry must be addressed to the court rather than the jury because of a statutory ban on injecting insurance into a trial (MCL 500.3030; MSA 24.13030).
    3. Automobiles — Insurance—Existence of Insurance — Jury Question.
    Refusing to submit the question of whether a defendant is insured to a jury does not constitute error where the name of the insurer, policy number and limits were supplied in an answer to interrogatories, defense counsel stated he was acting as a representative of defendant’s insurer, defendant testified that she was insured and where plaintiff made no claim that defendant was uninsured.
    4. Automobiles — Insurance—No Fault — Instructions to Jury— Accurate and Fair — Prejudice—Error.
    Jury instructions in no-fault automobile cases, where no standard jury instructions have been developed, are not prejudicial or erroneous if they are accurate and fair to both sides and inform the jury of an acceptable meaning of and give substance to the somewhat nebulous statutory phrases "serious impairment of body function” and "permanent serious disfigurement”.
    5. Costs — Videotape Depositions — Statutes—Court Rules.
    Taxable costs for videotape depositions are controlled by statute and court rule and actual costs in excess may not be taxed (MCL 600.2549; MSA 27A.2549; GCR 1963, 526.1).

      Turner & Turner, P. C. (by Carol Petsko), for plaintiff.

      Condit & McGarry, P. C., for defendant.
    Before: T. M. Burns, P. J., and N. J. Kaufman and Bashara, JJ.
   Per Curiam.

This case presents issues of trial procedure for cases under the no-fault automobile act, MCL 500.3101 et seq.; MSA 24.13101 et seq., and an issue concerning the constitutionality of the act.

The parties to this action were involved in an automobile accident on September 25, 1974. Plaintiff June Stevens was injured in the collision and taken to a hospital by ambulance. She was treated at the hospital and released. Plaintiff was admitted to a different hospital several weeks later for treatment of back and leg pains. There was evidence that she had a history of prior back trouble. After her discharge from the hospital, plaintiff walked with the aid of crutches. In December she fell on snow and ice while getting out of a car. The fall resulted in a broken ankle. Plaintiff attributes the fall to injuries she received in the automobile accident.

Defendant admitted negligence in the initial collision before trial, but denied liability for the subsequent fall. The case was tried solely to determine if plaintiff had suffered a "serious impairment of body function” or "permanent serious disfigurement”, MCL 500.3135; MSA 24.13135, and if so, to assess damages. The jury returned a verdict of no cause for action. Plaintiff appeals by right and we affirm.

Plaintiff first claims MCL 500.3135; MSA 24.13135, is unconstitutional on equal protection grounds. The Supreme Court has rejected the identical argument. Shavers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978).

Believing she would not have to make the threshold showing of serious impairment of body function or permanent serious disfigurement under § 3135(1) if defendant were uninsured, plaintiff argued the question of whether defendant was insured should have been submitted to the jury. The Supreme Court has read the no-fault statute as not abolishing tort liability if the other vehicle is uninsured, Shavers, supra, so whether the defendant is insured is a relevant inquiry. However, because of the ban on injecting insurance into a trial contained in MCL 500.3030; MSA 24.13030, the inquiry must be addressed to the court.

In most cases, an affidavit or certificate of insurance will be sufficient to show that a policy covers the casualty. Here, defendant answered plaintiff’s interrogatories giving the name of the insurer, the policy number and the policy limits. When plaintiff’s counsel raised the objection at trial, defense counsel stated, as an officer of the court, that he was acting as a representative of defendant’s insurer. Defendant herself testified that she was insured at the time of the accident. Plaintiff does not claim now, nor has she apparently ever claimed, that defendant was uninsured. The trial court did not err in refusing to submit the question of insurance to the jury or in relying on the proof of insurance mentioned above.

The plaintiff testified that because of the accident she had scars on her head and her activities were restricted. The court, therefore, instructed the jury to determine whether, as a result of the accident, plaintiff had suffered a serious impairment of body function or permanent serious disfigurement. Over plaintiff’s objection that only the statutory phrase should be given to the jury, the court attempted to define serious impairment of body function.

At the present time, no standard instructions have been developed for no-fault cases. The court’s instruction in this case seems to us to be accurate, and fair to both sides. It informs the jury of an acceptable meaning of a somewhat nebulous phrase. See, Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich 441; 208 NW2d 469 (1973), McKendrick v Petrucci, 71 Mich App 200; 247 NW2d 349 (1976), Vitale v Danylak, 74 Mich App 615; 254 NW2d 593 (1977). Plaintiff can claim no prejudice from an instruction which was not more limited than the statutory phrase, but rather, gives it some substance. There was no error.

Only one other issue merits extended discussion. At trial the defendant presented expert testimony by way of a videotape deposition. After the judgment was entered the defendant taxed costs which included $245 for the taking of the videotape deposition and a playback fee. Plaintiff claims this amount exceeds the limit allowed by statute and court rule.

GCR 1963, 315 provides for the use of videotape depositions. Rule 315.10 provides that the cost for the deposition may be taxed in "accordance with the provisions of Rule 526.” Under GCR 1963, 526.1, the amount of costs to be taxed is subject to any limitation contained in a statute. MCL 600.2549; MSA 27A.2549 limits costs for depositions. There is no reason not to apply this statute to videotape depositions. It was error for the trial court to assess the actual cost incurred in taking and presenting this videotape deposition. Mihailoff v Meijer, Inc, 53 Mich App 312; 218 NW2d 798 (1974).

Plaintiff also raises several issues concerning the admission or exclusion of evidence at trial. We have considered each allegation of error and found none would require reversal and a new trial.

Affirmed and remanded for redetermination of costs in the trial court. No costs on appeal, neither party having fully prevailed.

       Several panels of this Court had stated that the threshold showing of § 3135 must be met to recover noneconomic damages even if the other vehicle was uninsured. Shigur v West Bend Mutual Insurance Co, 80 Mich App 640, 643; 264 NW2d 83 (1978), McKendrick v Petrucci, 71 Mich App 200, 203-204; 247 NW2d 349 (1976). Neither Court has made a specific holding on the point and it is unnecessary to do so in this case.

       In the automobile accident itself, plaintiff sustained a laceration on her head which required several stitches to close. This cut was at or near the hairline. In the fall on the ice, which plaintiff also attributed to the collision, she received a cut on the bridge of her nose which left a small scar and a bump.

       The court instructed: "If the impairment is of a permanent nature, it must certainly be a serious one and if it is merely temporary and to pass away without serious results, it cannot well be said to render the person unsound in her general health. However, an impairment need not be permanent to be serious. The word serious is not generally used to signify a dangerous condition but rather to define a grave, important or weighty trouble.” This instruction was apparently drawn from Brown v Metropolitan Life Ins Co, 65 Mich 306, 315; 32 NW 610 (1887).
      No attempt was made to define permanent serious disfigurement.

       We do not mean to intimate that the statutory phrase must be amplified. We hold only that the trial court’s amplification in this case did not detract from the statute or invade the province of the jury. Plaintiff was thus not prejudiced by the instruction.


text:
    CHIPPEWA VALLEY SCHOOLS v DEPARTMENT OF PUBLIC INSTRUCTION
    Docket No. 77-4145.
    Submitted June 22, 1978, at Detroit.
    Decided August 8, 1978.
    Chippewa Valley Schools brought an action for a declaratory judgment against the Michigan Department of Public Instruction and Macomb County alleging that the state applied the wrong tax equalization figures in calculating the amount of state school aid to be paid to plaintiff, or in the alternative, that the county erred in the same manner, and requesting that the state and county actions be declared unlawful and invalid. Several other school districts intervened as plaintiffs. The Macomb Circuit Court, Norman A. Baguley, J., granted an accelerated judgment in favor of the Department of Public Instruction, and in a subsequent order granted plaintiffs a summary judgment against the county. All but two of the plaintiffs appeal the accelerated judgment in favor of the Department of Public Instruction. Held:

    The remedies requested by the plaintiffs were alternative and mutually exclusive. Because the summary judgment against the county effectively grants the plaintiffs the relief they requested, the appeal should be dismissed as moot.
    Appeal dismissed.
    Appeal and Error — Dismissal of Appeal — Dismissal as Moot.
    An appeal should be dismissed as moot where a plaintiff’s complaint requested two alternative and mutually exclusive remedies, a judgment denying one remedy was entered, the trial court subsequently entered another judgment which effectively granted the other remedy for which the plaintiff prayed, and the plaintiff appeals from the denial of the first remedy.

      Robert P. Dank, P. C. (by Robert P. Dank and Thomas L. Treppa), for plaintiffs.
    Reference for Points in Headnote
    5 Am Jur 2d, Appeal and Error §§ 761, 762, 913.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Gerald F. Young and George L. McCarger, Assistants Attorney General, for defendant Department of Public Instruction.
    Before: R. M. Maher, P. J., and J. H. Gillis and McGregor, JJ.

       Former Court of Appeals judge, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.

   Per Curiam.

Plaintiffs appeal as of right from an order entered in Macomb County Circuit Court granting the motion of defendant Michigan Department of Public Instruction for accelerated judgment.

The trial court’s opinion, attached to the judgment, concluded that a prior mandamus action was res judicata to the instant case.

Reduced to bare essentials, plaintiffs seek to secure the 1975 school funding to which they are entitled pursuant to state statute, MCL 388.1101 et seq.; MSA 15.1919 (501) et seq. Defendant State of Michigan contends that plaintiffs were deprived of full funding in 1975 because defendant Macomb County improperly based its 1975 tax levy on county equalized valuations rather than the higher state equalized valuations, and that plaintiffs must look to the county to remedy the error. Defendant Macomb County contends that plaintiffs were deprived of full funding in 1975 because the state improperly allocated supplemental state school aid on the basis of state equalized valuations rather than the lower county equalized valuations. In their prayer. for relief, plaintiffs requested the trial court to declare the state’s action and the county’s action unlawful and invalid. Of course, these are alternative and mutually exclusive remedies.

Subsequent to the entry of accelerated judgment in favor of the state, the trial court, by order dated September 29, 1977, entered summary judgment against the county. Plaintiffs have effectively received the relief for which they prayed. The entry of summary judgment against Macomb County has rendered this appeal moot. Should plaintiffs desire ancillary coercive relief, they may move the trial court for an appropriate order pursuant to GCR 1963, 521.6. This appeal is hereby dismissed as moot.

No costs, a public question being involved.

        See Michigan Court of Appeals order in L’Anse Creuse Public Schools v Superintendent of Public Instruction, Docket No. 26008, issued 11-24-75, ordering dismissal of a mandamus complaint which sought the same relief as plaintiffs desire in this case.


text:
    NAG ENTERPRISES, INC v ALL STATE INDUSTRIES, INC
    Docket No. 77-5209.
    Submitted April 21, 1978, at Detroit.
    Decided August 8, 1978.
    Leave to appeal applied for.
    NAG Enterprises, Inc., filed a complaint in Oakland Circuit Court against All State Industries, Inc., and Meridian Industries, Inc., seeking a money judgment on a promissory note between All State as payor and Meridian as payee. The note had been assigned to NAG by Meridian with an unconditional guarantee of payment. Default judgment was entered against All State. Meridian filed an answer and counterclaim and NAG filed a motion for summary judgment. The defense and counterclaim stated that there was a contemporaneous oral agreement that the assignment and guarantee of the note were to be held only as security for funds advanced by NAG to Meridian’s subsidiary, Huron Die Casting Company, which NAG was in the process of acquiring. At the hearing on NAG’s motion for summary judgment, Meridian asked to amend its pleadings, but James S. Thorburn, J., entered the order of summary judgment, ruling that Meridian’s request came too late because summary judgment had already been granted and the court at that time only had before it a motion for entry of an order. Meridian appealed from the order of summary judgment and NAG filed a motion to affirm. The Court of Appeals, in an order of March 3, 1977, granted NAG’s motion to affirm. Meridian then sought leave to appeal to the Michigan Supreme Court. The Supreme Court vacated the order of the Court of Appeals and remanded the matter to the Court of Appeals for plenary consideration. 402 Mich 825 (1977). The basic questions in the case are whether the parol evidence rule would prohibit admission of evidence of the alleged oral agreement to hold the assignment and guarantee as security only and whether the court erred in denying Meridian’s request to amend its pleadings. Held:

      References for Points in Headnotes
    [1] 73 Am Jur 2d, Summary Judgment § 26 et seg.

    [2] 30 Am Jur 2d, Evidence §§ 1065, 1066.
    Comment note on parol evidence rule and admissibility of extrinsic evidence to establish or clarify ambiguity in written contract. 40 ALR3d 1384.
    [3, 4] 4 Am Jur 2d, Appeal and Error §§ 98, 99.
    61 Am Jur 2d, Pleading §§ 308-313.

      1. Parol evidence of a contemporaneous oral agreement is inadmissible where it is completely inconsistent with a clear and unambiguous written instrument.
    2. There was no evidence that the trial court abused its discretion in denying Meridian’s motion to amend pleadings.
    3. The requirement that a trial court make a statement of reasons for denying a motion to amend pleadings is satisfied where the court in granting summary judgment determines that because of estoppel, apparent authority and the parol evidence rule, the desired amendment was not justified by the evidence.
    Affirmed.
    1. Motions — Summary Judgment — Pleading—Court Rules.
    Motions for summary judgment based upon the opposing party having failed to state a claim upon which relief can be granted or upon the opposing party having failed to state a valid defense to the claim asserted against him are to be tested by pleadings alone and all well-pleaded material allegations must be taken as true (GCR 1963, 117.2).
    2. Evidence — Parol Evidence — Contracts—Written Instrument— Inconsistent Parol Evidence — Admissibility.
    Parol evidence of a contemporaneous oral agreement should not be admitted where it is completely inconsistent with a clear and unambiguous written instrument.
    3. Pleading — Amendment—Judge’s Discretion — Appeal and Error —Court Rules.
    A court rule provides that leave to amend a pleading shall be given when justice so requires; on appeal, the test is whether a trial court abused its discretion in denying a motion to amend (GCR 1963, 118.1).
    4. ' Pleadings — Amendment—Reasons for Denial — Motions—Summary Judgment.
    A trial court must state its reasons for denying a motion to amend pleadings, although this can ordinarily be done in the granting of a motion for summary judgment.

      Hardig, Goetz, Heath & Baumhart, for plaintiff.

      Evans & Luptak (by D. Michael Kratchman), for defendant.
    Before: D. F. Walsh, P. J., and D. E. Holbrook and R. M. Maher, JJ.
   Per Curiam.

On November 19, 1975, plaintiff NAG Enterprises, Inc. filed a complaint against All State Industries, Inc. and Meridian Industries, Inc., seeking a money judgment on a promissory note dated March 26, 1975, between All State, as payor, and Meridian, as payee. The note had been assigned to NAG by Meridian with an unconditional guarantee of payment.

On February 4, 1976, a default judgment was entered against All State for failure to answer the complaint. After Meridian filed its answer and a counterclaim, NAG filed its motion for summary judgment or, in the alternative, accelerated judgment. The motion for summary judgment was based solely on GCR 1963, 117.2(1) and GCR 1963, 117.2(2). It was opposed by Meridian, but the trial judge orally granted the motion at a hearing held on February 25, 1976.

At the March 15, 1976, hearing on plaintiffs motion for entry of the order of summary judgment, Meridian asked to amend its pleadings. But the court entered the order of summary judgment, ruling that Meridian’s request came too late because summary judgment had already been granted and the court at that time only had before it a motion for entry of an order.

Meridian’s motion for rehearing was denied. Plaintiff NAG filed a motion to affirm while defendant appealed from the order of summary judgment as of right, seeking reversal and an order remanding the case for further proceedings and granting defendant’s motion to file an amended answer and counterclaim.

On March 3, 1977, this Court granted the motion to affirm. Defendant then sought leave to appeal to the Michigan Supreme Court. That Court vacated the decision of the Court of Appeals and remanded to this Court for plenary consideration, 402 Mich 825 (1977).

The essence of defendant Meridian’s answer and counterclaim was that the assignment and guarantee of the note were given to plaintiff NAG as security for funds advanced by plaintiff to or on behalf of Huron Die Casting Company, a subsidiary of defendant Meridian, which plaintiff was in the process of acquiring. This contemporaneous oral agreement to hold the note and defendant’s guarantee as security only were not incorporated into the written guarantee because of the refusal of Meridian’s accountants to accept a conditional guarantee.

In its motion for summary judgment, plaintiff set out the terms of the assignment and guarantee and argued that the parol evidence rule would preclude any evidence of the contemporaneous oral agreement alleged in defendant’s answer and counterclaim.

With respect to defendant’s counterclaim, plaintiff’s motion for summary judgment was brought under GCR 1963, 117.2(1), failure to state a claim upon which relief can be granted and, with respect to defendant’s answer, the motion was brought under GCR 1963, 117.2(2), failure to state a valid defense. Motions based solely on these court rules are to be tested by the pleadings alone. Chatham Super Markets, Inc v Ajax Asphalt Paving, Inc, 370 Mich 334; 121 NW2d 836 (1963). All well-pleaded material allegations must be taken as true. Martin v Fowler, 36 Mich App 725; 194 NW2d 524 (1971), Wynn v Cole, 68 Mich App 706; 243 NW2d 923 (1976).

Essentially, the defense and counterclaim stated that there was a contemporaneous oral agreement that the assignment and guarantee of the note were to be held only as security for funds advanced by plaintiff to defendant’s subsidiary Huron. If the parol evidence rule, as a matter of law, precludes proof of the oral agreement, defendant has failed to state a valid defense or counterclaim, even if defendant’s allegations are taken as true.

The trial court, we note, was also extremely concerned with respect to material issues of fact under GCR 1963, 117.2(3) and incorporated that language in his order granting the motion, along with appropriate language under (1) and (2). Defendant does argue that there were material issues of fact which barred summary judgment. Even if the court did treat the motion as being made under (3) as well as (1) and (2), his error was harmless since neither party was misled. Cf. Todd v Biglow, 51 Mich App 346; 214 NW2d 733 (1974).

The basic question in this case is whether the parol evidence rule would prohibit admission of evidence of the alleged oral agreement to hold the assignment and guarantee as security only.

When two parties have made a contract and have expressed it in writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing. 3 Corbin on Contracts, § 573.

In Goodwin, Inc v Orson E Coe Pontiac, Inc, 392 Mich 195; 220 NW2d 664 (1974), the Supreme Court stated the parol evidence rule in these terms:

"Where a contract is clear and unambiguous, parol evidence of negotiations cannot be admitted to vary the contract”. The Court noted several exceptions to the rule, one of which allowed the admission of parol evidence to explain ambiguous language in the contract. The Court propounded the following rules concerning clarification of ambiguous terms:

"D Where ambiguity may exist in a contract, extrinsic evidence is admissible to prove the existence of ambiguity.
"2) Where ambiguity may exist in a contract, extrinsic evidence is admissible to indicate the actual intent of the parties.
"3) Where ambiguity exists in a contract, extrinsic evidence is admissible to indicate the actual intent of the parties as an aid in the construction of the contract.” 392 Mich 209-210.

In Union Oil Co v Newton, 397 Mich 486; 245 NW2d 11 (1976), however, the Court, in a perceptible shift, adopted a modified interpretation of the parol evidence rule. Newton noted that the real question in a case involving parol evidence is whether or not the proffered parol evidence "is inconsistent with the written language. If there is no inconsistency, the parol evidence is admissible”. 397 Mich at 488. In support of this, the Court cited Restatement Contracts 2d, § 239(1), which reads, "A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them”. 397 Mich at 488, fn 1. (Emphasis in original.)

Newton is in accord with pre-Goodwin cases which use the inconsistency — opposed to the ambiguity — language "The trial court should not have allowed oral testimony which was so completely inconsistent with the written instruments”. Gorsche v First National Bank of Manistique, 233 Mich 428, 439; 206 NW 992 (1926). See also Wright v Seco Metals, Inc, 38 Mich App 410; 196 NW2d 341 (1972).

In Michigan National Bank of Detroit v Holland-Dozier-Holland Sound Studios, 73 Mich App 12; 250 NW2d 532 (1976), a panel of this Court held, and we believe correctly, that Newton had surreptitiously reversed Goodwin. The Court interpreted the word "inconsistent” to be synonymous with "contradictory”. See also Oakland County v Detroit, 81 Mich App 308; 265 NW2d 130 (1978).

Using the standards articulated in Newton and Holland-Dozier-Holland, we find the proposed evidence in violation of the parol evidence rule as that rule has developed in Michigan. The contemporaneous oral agreement alleged in defendant’s answer and counterclaim directly contradicts the terms of the written instrument. The instrument was clear and unambiguous, guaranteeing payment unconditionally. The contemporaneous oral agreement alleged that the assignment and guarantee of the note were to be held only as security for funds advanced by plaintiff to defendant’s subsidiary, Huron. Unless we are to destroy settled principles of contract law, we cannot permit the admission of the parol evidence.

Defendant seeks to convert the written guarantee, unconditional and unambiguous on its face, into a conditional security agreement, through the use of parol evidence. Nor do wé find persuasive defendant’s reliance, in attempting this conversion, on cases dealing with the imposition of equitable mortgages: those cases are inapposite to the case at bar. If the parol evidence rule is to be of any effect at all, it should certainly be applied in this case. The trial court properly concluded that the parol evidence rule precluded proof of defendant’s defense and counterclaim and the order granting summary judgment was not error.

We briefly address defendant’s contention that the trial court erred in denying defendant’s motion to amend its pleadings. GCR 1963, 117.3 provides in pertinent part:

-"Each party shall be given opportunity to amend his pleadings as provided by Rule 118 unless the evidence then before the court shows amendment would not be justified.”

GCR 1963, 118.1 permits amendment "as a matter of course” within 15 days after service of a responsive pleading, but its effect is limited by the proviso in GCR 1963, 117.3, "unless the evidence then before the court shows amendment would not be justified”. The relevant question is whether the trial court was correct in concluding that the evidence before the court showed that the amendment would not be justified.

On appeal, the test is whether the trial court abused its discretion in denying the motion to amend. Fred Gibbs, Inc v Old Colony Insurance Co, 30 Mich App 352; 186 NW2d 396 (1971). Moreover, the trial court must state its reasons for denying the motion to amend, although this can ordinarily be done in the granting of summary judgment. Taylor Board of Education v Taylor Federation of Teachers, 66 Mich App 695; 239 NW2d 713 (1976).

There was no evidence that the trial court abused its discretion in denying the motion to amend. Because of the principles of estoppel, the doctrine of apparent authority, and the parol evidence rule, the court found that defendant’s desired amendment was not justified by the evidence. A more succinct statement of those findings may have been desirable, but it was made in the granting of summary judgment. Taylor Board of Education v Taylor Federation of Teachers, supra.

Affirmed.


text:
    RIGGS v FREMONT MUTUAL INSURANCE COMPANY
    Docket No. 77-2716.
    Submitted May 4, 1978 at Grand Rapids.
    Decided June 9, 1978.
    Plaintiffs Roger and Emily Riggs owned a dwelling which was insured against fire loss by defendant Fremont Mutual Insurance Company. The dwelling was destroyed by fire and the defendant denied plaintiff’s claim on their policy claiming arson by the plaintiffs. Plaintiffs brought suit seeking damages under the policy and for mental pain and anguish suffered as a result of defendant’s alleged wrongful failure to pay according to the policy. The defendant raised an affirmative defense of arson. The Lake Circuit Court, Charles A. Wickens, J., awarded plaintiffs $15,000 for the loss of the house. The court also awarded Emily $6,000 in punitive damages for personal mental anguish, humiliation, and emotional distress, and the court awarded Roger $2,000 for mental anguish and humiliation. Defendant appeals. Held:

    The trial court did not err in finding that the insurer failed to prove its affirmative defense of arson by a preponderance of the evidence. The trial court’s finding as to the amount of compensatory damages was not clearly erroneous since it was within the policy limits and conflicting estimates of the parties. Michigan allows only exemplary damages which are compensatory in nature, such damages are recoverable for humiliation and indignity resulting from an injury maliciously or wantonly inflicted. Exemplary damages generally are not recoverable in Michigan even for intentional breaches of commercial contracts. Contract cases allowing such recovery in Michigan either involve a contract of a personal nature or some malicious, reckless or negligent conduct. A contract to insure against fire loss is*an ordinary commercial contract, not a contract of a personal nature. Therefore, since this case did not involve a contract of a personal nature, and there is no evidence that the insurer’s refusal to pay was malicious, reckless or negligent, the trial court erred by awarding plaintiffs any exemplary damages.

      References for Points in Headnotes
    [1, 6] 44 Am Jur 2d, Insurance §§ 1967, 2046.
    [2] 44 Am Jur 2d, Insurance § 1990.
    [3] 22 Am Jur 2d, Damages §§ 249, 250.
    [4] 22 Am Jur 2d, Damages § 245.
    [5] 43 Am Jur 2d, Insurance § 194.

      Affirmed in part, reversed in part.
    1. Appeal and Error — Insurance—Arson—Affirmative Defense— Preponderance of Evidence.
    A trial court did not err in finding that an insurer failed to prove its affirmative defense of arson, in an action by an insured for damages under a policy of fire insurance, where the insurer did not prove such a defense by a preponderance of the evidence.
    2. Appeal and Error — Compensatory Damages — Insurance—Policy Limits.
    A trial court’s finding as to the amount of compensatory damages to be awarded, in an action for damages under a policy of fire insurance, is not clearly erroneous where the amount awarded is within the policy limits and conflicting estimates of the parties.
    3. Damages — Exemplary Damages.
    Michigan allows only exemplary damages which are compensatory in nature; such damages are recoverable for humiliation and indignity resulting from an injury which has been maliciously or wantonly inflicted.
    4. Damages — Exemplary Damages — Commercial Contracts — Intentional Breaches — Personal Contracts.
    Exemplary damages generally are not recoverable in Michigan even for intentional breaches of commercial contracts; contract cases allowing recovery either involve a contract of a personal nature or involve some malicious, reckless or negligent conduct.
    5. Insurance — Contracts—Fire Insurance — Commercial Contracts — Personal Contracts.
    A contract to insure against fire loss is an ordinary commercial contract and is not a contract of a personal nature.
    6. Insurance — Duty to Defend — Fraudulent Claims.
    Insurers have a duty to defend against what they believe to be fraudulent claims; therefore, the fact that an insurer was not able to prove its affirmative defense of arson, in an action by an insured for damages under a policy of fire insurance, does not automatically lead to the conclusion that the insurer was in any sense malicious, reckless or negligent in advancing such a defense.

      Terrence R. Thomas, for plaintiffs.

      Reber & Reber, for defendant.
    Before: D. E. Holbrook, Jr., P. J., and Bashara and R. M. Maher, JJ.
   Per Curiam.

Plaintiffs are the owners of a one-story dwelling which was insured by defendant against' fire loss. While the policy was in effect, the dwelling was destroyed by fire. Plaintiffs timely filed their proof of loss, but it was rejected since defendant claimed that the fire was incendiary in nature and that one or both of the plaintiffs had set the fire.

Following rejection of their claim, plaintiffs brought suit against the insurer for $18,000 in damages under the policy and for mental pain and anguish suffered as a result of defendant’s wrongful failure to pay according to the policy. Defendant raised an affirmative defense of arson.

After a bench trial, the court awarded plaintiffs $15,000 for loss of the house. Also, the court awarded Emily Riggs $6,000 in exemplary damages for personal mental anguish, humiliation, and emotional distress and the court awarded Roger Riggs $2,000 in exemplary damages for mental anguish and "humility” (sic). Defendant appeals as of right.

As noted earlier, defendant argued arson as an affirmative defense. The trial court found that, even assuming the fire was incendiary in nature, defendant failed to prove plaintiffs were the ones who started it. We conclude the trial court’s finding is not clearly erroneous. A review of the evidence indicates plaintiffs were at a conference at the time the fire destroyed the dwelling. Defendant failed to prove its affirmative defense of arson by a preponderance of the evidence.

The $15,000 award was within the policy limits and within the conflicting estimates of the parties. We conclude that the trial court’s finding as to the amount of compensatory damages was not clearly erroneous. GCR 1963, 517.1.

We reverse, however, the lower court’s award of exemplary damages. In Michigan, only exemplary damages which are compensatory in nature are allowed. Such damages are recoverable for humiliation and indignity resulting from an injury which has been maliciously or wantonly inflicted. Ray v Detroit, 67 Mich App 702; 242 NW2d 494 (1976), lv den, 397 Mich 828 (1976).

Exemplary damages generally are not recoverable for even intentional breaches of commercial contracts. Caradonna v Thorious, 17 Mich App 41, 46; 169 NW2d 179 (1969). Those contract cases allowing recovery either involve a contract of a personal nature (for example, breach of promise to marry, breach of promise to deliver a baby by Caesarean section) Isagholian v Carnegie Institute of Detroit, Inc, 51 Mich App 220, 222; 214 NW2d 864 (1974), lv den, 392 Mich 763 (1974), or involve some malicious, reckless or negligent conduct. Isagholian, supra, at 222.

A contract to insure against fire loss is an ordinary commercial contract and is not a contract of a personal nature. Further, we find no evidence that defendant’s refusal to pay was malicious, reckless or negligent. Insurers have a duty to defend against what they believe to be fraudulent claims. The fact that defendant was not able to prove its affirmative defense of arson does not automatically lead to the conclusion that defendant was in any sense malicious, reckless or negligent. Defendant’s belief that the fire was deliberately set was supported by the conclusions of qualified experts who advised defendant and testified at trial.

Since this case involved neither a contract of a personal nature nor malicious, reckless or negligent conduct by the insurer, the court erred by awarding plaintiffs any exemplary damages.

Affirmed in part; reversed in part. No costs; neither party having prevailed in full.


text:
    FARRIS v BEECHER
    Docket No. 77-341.
    Submitted February 15, 1978, at Detroit.
    Decided June 21, 1978.
    On March 13, 1971, Dianne Farris injured her left leg in an automobile accident. She was treated for this injury by Alvin J. Beecher, M.D., for approximately one month, although she saw this doctor professionally on other matters until December 4, 1973. Dr. Beecher diagnosed the injury as a sprain. On September 9, 1974, Dianne Farris consulted an orthopedic surgeon and was advised that she needed surgery for a bone chip of her left tibia. On August 27, 1976, Dianne Farris and her husband Jerry Farris commenced an action for damages for medical malpractice against Dr. Beecher claiming that the defendant had failed to X-ray plaintiffs leg or failed to properly analyze any X-rays taken and consequently failed to discover the bone chip and instead diagnosed the injury as a sprain and failed to refer Dianne Farris to an orthopedic surgeon. On December 2, 1976, the defendant’s motion for summary judgment based on a lack of dispute as to any material fact and/or accelerated judgment based on the running of the statute of limitations period was denied, Macomb Circuit Court, Walter P. Cynar, J. Defendant appeals by leave granted. Held:

    1. The cause of action accrued on September 8, 1974, when Dianne Farris was informed by the orthopedic surgeon that she needed surgery for the bone chips.
    2. Since the cause of action accrued on September 8, 1974, the commencement of the suit, on August 27, 1976,. was within the two-year limitations period applicable upder a statute in effect at the time.
    3. The statutory amendment which shortened the limitations period for medical malpractice from two years to six months contains no language to make it operate retroactively and, therefore, plaintiffs’ cause of action was not barred by the six-month limitation period of the amended statute.

      References for Points in Headnotes
    [1] 61 Am Jur 2d, Physicians, Surgeons, and other Healers §§ 181-185.
    [2] 61 Am Jur 2d, Pleadings § 225 et seq.

    [3] 51 Am Jur 2d, Limitation of Actions §§ 27, 28, 57.
    [4] 61 Am Jur 2d, Physicians, Surgeons, and other Healers § 121.
    [5] 73 Am Jur 2d, Summary Judgment § 26 et seq.

      4. The defendant’s motion for summary judgment based on there being no dispute as to any material fact was properly denied because there are significant fact issues remaining which need to be resolved.
    Affirmed.
    1. Limitation op Actions — Malpractice—State Licensed Person— Statute of Limitations — Accrual op Cause op Action — Statutes.
    An action based on malpractice by a state licensed person must be brought within two years of the time when such person discontinues treating or otherwise serving the plaintiff, or within two years of the time when the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, the asserted malpractice, whichever is later, where the cause of action accrued prior to the statutory amendment which shortened the applicable limitations period (MCL 600.5838; MSA 27A.5838).
    2. Judgment — Accelerated Judgment — Statute of Limitations— Malpractice — Material Factual Issue — Accrual of Cause op Action.
    A motion for accelerated judgment, in an action for malpractice, based on the statute of limitations was properly denied by the trial court where material factual disputes exist regarding the time of the discovery of the asserted malpractice.
    3. Limitation op Actions — Statutes—Prospective Operation.
    Statutes of limitation are to be construed to operate prospectively only unless their terms clearly indicate a contrary intent.
    4. Judgment — Summary Judgment — Medical Malpractice — Misdiagnosis — Improper Examination.
    Summary judgment for a defendant in a medical malpractice action is not appropriate where the plaintiff alleges an improper examination by the defendant as well as an improper diagnosis.
    5. Judgment — Summary Judgment — Issue of Fact — Court Rules.
    Summary judgment should not be granted unless it is impossible for a claim or defense to be supported at trial because of some deficiency which cannot be overcome (GCR 1963, 117.2[3]).

      Lopatin, Miller, Bindes, Freedman & Bluestone (by Michael Gagleard), for plaintiff.

      Moll, Desenberg, Purdy, Glover & Bayer, for defendant.
    Before: D. E. Holbrook, P. J., and V. J. Brennan and M. F. Cavanagh, JJ.
   Per Curiam.

Defendant Alvin J. Beecher appeals by leave granted Macomb County Circuit Judge Walter P. Cynar’s denial of his motion for summary/accelerated judgment in plaintiffs Dianne and Jerry Farris’ malpractice action against him. The facts of this case may be simply stated.

On March 13, 1971, plaintiff Dianne Farris (hereinafter plaintiff) injured her left leg in an automobile accident. She was treated by defendant, a board certified general surgeon, for approximately one month. She continued to consult defendant professionally until December 4, 1973, with regard to other matters, but the fact is undisputed that she only treated with defendant relative to the injured left leg for approximately one month.

On September 8, 1974, plaintiff consulted an orthopedic surgeon and was advised that she needed surgery. It was alleged that defendant had failed to X-ray plaintiff’s leg or failed to properly analyze any X-rays taken and consequently failed to discover a bone chip of plaintiff’s left tibia. Plaintiff claims that defendant diagnosed her injury as a sprain and failed to refer her to an orthopedic specialist. Plaintiff contends that she did not discover the malpractice injury until September 8, 1974.

On August 27, 1976, plaintiff commenced this malpractice action in Macomb County Circuit Court. This date was within two years of the alleged date of discovery of her injury on September 8, 1974. The trial court denied defendant’s motions for summary/accelerated judgment on December 2, 1976.

On appeal, defendant brings two claims of error concerning. the trial court’s denial of these motions. We will address them both.

Defendant first claims that the trial judge erred by denying his motion for accelerated judgment based upon the malpractice statute of limitations due to the fact that the amended statute, effective on July 9, 1975, if operative in this case, would bar plaintiff’s recovery because she had not filed her suit within six months of the date the statute became law.

Viewed from the point at which plaintiff’s malpractice action allegedly accrued, the suit was properly filed within the limitations period established by the Michigan Supreme Court at that time. Dyke v Richard, 390 Mich 739, 747; 213 NW2d 185 (1973). See also Berry v Zisman, 70 Mich App 376, 378; 245 NW2d 758 (1976). In Dyke, the Court had held that an action for malpractice need be filed within two years of the date of last treatment or within two years of the date the malpractice is discovered or should have been discovered, whichever is later.

The Legislature responded to this decision by amending the limitations period specified in the statute. See MCL 600.5838; MSA 27A.5838. The statute now reads:

"Sec. 5838. (1) A claim based on the malpractice of a person who is, or holds himself out to be, a member of a state licensed profession, intern, resident, registered nurse, licensed practical nurse, registered physical therapist, clinical laboratory technologist, inhalation therapist, certified registered nurse anesthetist, X-ray technician, hospital, licensed health care facility, employee or agent of a hospital or licensed health care facility who is engaging in or otherwise assisting in medical care and treatment, or any other state licensed health professional, accrues at the time that person discontinues treating or otherwise serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim.
"(2) An action involving a claim based on malpractice may be commenced at any time within the applicable period prescribed in sections 5805 or 5851 to 5856, or within 6 months after the plaintiff discovers or should have discovered the existence of the claim, whichever is later. The burden of proving that the plaintiff, as a result of physical discomfort, appearance, condition or otherwise, neither discovered nor should have discovered the existence of the claim at least 6 months before the expiration of the period otherwise applicable to the claim shall be on the plaintiff. A malpractice action which is not commenced within the time prescribed by this subsection is barred.” (Emphasis added.) MCL 600.5838; MSA 27A.5838.

The effective date of the amended language was July 9, 1975. Consequently, the principal question we must resolve is whether or not the plaintiff in this case is affected by the amended language. If she is, then her action is barred and the trial court acted improperly by denying defendant’s motion. If the amended statute does not control this case, then plaintiff’s action is not barred and the trial court acted correctly on the authority of Dyke.

Defendant’s contention that plaintiff’s action is barred even under Dyke is without merit. The date of last treatment for the leg injury appears to be April, 1971. However, plaintiff claims not to have discovered the alleged malpractice until she con-suited an orthopedic specialist in September, 1974. Since this action was filed on August 27, 1976, plaintiff would have appeared to have complied with the two-year requirement of Dyke. Defendant alleges that plaintiff should have discovered the malpractice before September, 1974. Indeed, we would agree that if plaintiff should have discovered the malpractice before August 27, 1974, her action would be barred.

We find this case similar to Johnson v Caldwell, 371 Mich 368; 123 NW2d 785 (1963). In Johnson, the Court found that the date of discovery was the date when plaintiff was ultimately told defendant’s advice was incorrect. The parallel is apparent in this case where plaintiff was told that the injury was a sprain and learned of the malpractice only when eventually told on September 8, 1974, that the "sprain” was actually a result of bone fragments. Although plaintiff may have been in pain prior to consulting a specialist and thereby put on notice of some prior malpractice, we are not prepared to rule as a matter of law on the basis of a silent record that plaintiff should have discovered the malpractice at some date prior to receiving actual knowledge. In the past, such a question has been left to the jury to decide. See Kelleher v Mills, 70 Mich App 360, 365; 245 NW2d 749 (1976), Winfrey v Farhat, 382 Mich 380, 387-388; 170 NW2d 34 (1969), Cates v Frederick W Bald Estate, 54 Mich App 717, 720-722; 221 NW2d 474 (1974), lv den, 394 Mich 758 (1975). Consequently, if the decision in Dyke applies to this case, then the question of when plaintiff should have learned of the malpractice was for the jury and defendant’s motion for accelerated judgment was properly denied.

However, were we to find MCL 600.5838; MSA 27A.5838, as amended, applicable to this case, clearly plaintiffs action would be barred. In order to resolve this question, what we must determine is whether or not this particular amended provision will operate prospectively only or reach back retroactively to affect plaintiffs suit. The Michigan Supreme Court has noted in prior decisions that statutes of limitation are to be construed to operate prospectively only unless their terms clearly indicate a contrary intent. See McKisson v Davenport, 83 Mich 211, 215; 47 NW 100 (1890). See also Tarnow v Railway Express Agency, 331 Mich 558, 564-566; 50 NW2d 318 (1951). We use the terms "prospective” and "retroactive” with some hesitation, recognizing that when we apply a statute "prospectively” we mean that the statute applies only to causes of action which accrue after the effective date of a statute. See 51 Am Jur 2d, Limitation of Actions, § 57, p 634.

In this case, we see nothing in the statute to indicate an intention to apply its provisions to causes of action which accrue prior to the effective date of July 9, 1975. The legislative analysis does not address this problem. In short, we find nothing in the language of the amended statute to indicate that application should be retroactive. Therefore, we find the statute operates prospectively only. See Hathaway v Washington Milling Co, 139 Mich 708, 711; 103 NW 164 (1905) (where the Court interpreted a limitations provision concerning recovery of damages for personal injuries to apply only to actions which accrued after the law became operative).

Consequently, upon close consideration, we find that no evidence appears in the amended language of the statute to support finding the limitations provision, as amended, applicable to causes of action which accrued prior to the date the law became effective. We thus find defendant’s claim of error without merit and sustain the trial court’s denial of his motion for accelerated judgment.

Defendant next contends the trial court erred by denying his motion for summary judgment on grounds that no material questions of fact remained to be resolved.

Defendant’s motion for summary judgment was made under GCR 1963, 117.2(3), claiming that no dispute as to any material fact remained and that defendant was entitled to judgment as a matter of law. We agree with defendant that had he been able to show plaintiff’s complaint alleged nothing more than misdiagnosis then defendant would have been entitled to summary judgment. Johnson v Borland, 317 Mich 225, 231; 26 NW2d 755 (1947). However, granting summary judgment for a mere allegation of misdiagnosis requires that no further allegation of improper examination appear as an issue in the complaint. Johnson v Borland, supra at 231.

Plaintiff’s complaint in this case is not merely one for misdiagnosis. Plaintiff alleges the following violations of defendant’s duties: (1) failing to make a thorough examination of plaintiff’s injuries and incorrectly ascertaining their nature and extent; (2) misdiagnosing plaintiff’s injuries as a sprain and wrongfully informing plaintiffs that no bones were chipped; (3) failing to X-ray plaintiff’s leg, or, alternatively, failing to properly analyze X-rays that were taken; and, (4) failing to refer plaintiff to an orthopedic surgeon. Though some of these allegations may be convincingly rebutted, disputed issues of fact remain regarding: (1) whether a sufficiently thorough examination of plaintiff’s injury was made; (2) whether defendant properly analyzed the X-rays in determining that the bone fragments resulted from an old injury; and (3) whether defendant should have referred plaintiff to an orthopedic specialist. Given that summary judgment under GCR 1963, 117.2(3) should not be granted unless "it is impossible for the claim or defense to be supported at trial because of some deficiency which cannot be overcome”, we do not believe summary judgment could have properly been granted in this case. See Rizzo v Kretschmer, 389 Mich 363, 372; 207 NW2d 316 (1973). Therefore, we believe the trial court acted correctly in denying defendant’s motion for summary judgment.

Having thus reviewed defendant’s claims of error and finding them unpersuasive, we sustain the trial court in its denial of defendant’s motions.

Affirmed.


text:
    PEOPLE v HOOPER
    Docket No. 77-1466.
    Submitted June 16, 1978, at Detroit.
    Decided July 19, 1978.
    Defendant, Larry Hooper, was convicted in Wayne Circuit Court, Horace W. Gilmore, J., of possession of heroin. Defendant appeals alleging error in admitting statements made to police after being informed of his Miranda rights and after expressing his desire to remain silent. Held:

    The trial court erred in admitting statements defendant made to police after being informed of his Miranda warnings and after expressing a desire to remain silent.
    Reversed and remanded.
    Criminal Law — Evidence—Statements of Defendants — Miranda Warnings — Appeal and Error.
    Once Miranda warnings are given and the defendant indicates that he wishes to remain silent, any subsequent statements made by the defendant in response to questioning during the booking process prior to incarceration are inadmissible at trial; admission of such statements is reversible error.
    Reference for Points in Headnote
    29 Am Jur 2d, Evidence §§ 614, 638-640.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Edward Reilly Wilson, Principal Attorney, Appeals, and Maura D. Corrigan, Assistant Prosecuting Attorney, for the people.

      Charles E. Raymond, for defendant.
    Before: N. J. Kaufman, P. J., and Beasley and P. R. Mahinske, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   Per Curiam.

Defendant was charged with possession with intent to deliver heroin, and was convicted by a jury of possession of heroin. After sentence to a term of not less than two and one-half years nor more than four years in prison, he appeals as of right, raising three claims of error.

First, defendant claims that the trial court committed reversible error in admitting into evidence statements allegedly made by defendant in response to questioning that occurred after defendant had been informed of his rights and had said he did not wish to make any statement.

Defendant was arrested during the execution of a search warrant at his residence. The arresting officers informed him of his Miranda rights, and defendant indicated that he would not make any statement and signed a questionnaire evidencing his refusal to do so. At this point, Miranda holds that further statements made by such a defendant are not admissible in evidence. In this case, subsequent to declining to waive his Miranda rights, defendant was requested to supply certain information of a personal history and medical nature, ostensibly for the purpose of assisting the booking process.

One space on the personal history form was titled "Drugs Used”. When asked whether he used drugs, the defendant allegedly replied that he used pills to "get high”. He also allegedly denied using heroin, although that information was not included on the form. Prior to trial, defendant sought to exclude the statements made to officers in response to questions on the personal history form on the ground that they violated his Miranda rights. His motion was denied, and the statements were subsequently admitted into evidence. Under these circumstances, admission of those statements made after refusal to waive Miranda rights was reversible error.

The mandate of Miranda is clear:

"Once warnings have been given, the subsequent procedure is clear. If the individual indicates in any manner, at any time prior to or during questioning, that he wishes to remain silent, the interrogation must cease. At this point he has shown that he intends to exercise his Fifth Amendment privilege; any statement taken after the person invokes his privilege cannot be other than the product of compulsion, subtle or otherwise. Without the right to cut off questioning, the setting of in-custody interrogation operates on the individual to overcome free choice in producing a statement after the privilege has been once invoked.”

At the point that defendant, in the instant case, expressly indicated his unwillingness to make any statement, interrogation should have ceased. Therefore, the answers to any questions put to defendant after that point in time were, under Miranda, inadmissible in evidence at trial. This is not to say that police may not seek to obtain information vital to the care and health of a person taken into custody, including necessary information on possible drug use. Information gained for the benefit of a defendant and for the purpose of assisting in his custodial care may not, however, subsequently be used against him at trial. To allow this practice would be to encourage the subverting of an accused’s constitutional right to remain silent under the guise of obtaining statements purely for his own benefit.

We hold that to admit into evidence statements made by a defendant after the defendant has been advised of his Miranda rights and has indicated a refusal to make any statements is reversible error even where those statements are made in response to questions posed ostensibly for custodial care purposes.

Since the situations giving rise to defendant’s other claims of error are not likely to recur on retrial, we find it unnecessary to decide them.

Reversed and Remanded for new trial.

       MCL 335.341(l)(a); MSA 18.1070(41)(l)(a).

       MCL 335.341(4)(a); MSA 18.1070(41)(4)(a).

        Miranda v Arizona, 384 US 436; 86 S Ct 1602; 16 L Ed 2d 694; 10 ALR3d 974 (1966).

         Unless, of coarse, they are preceded by a subsequent valid Miranda waiver.

         Miranda v Arizona, 384 US at 473-474.

       Except where subsequent valid waiver of Miranda rights is given.