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Davis v. Davis, Michigan Court of Appeals, Decided June 14, 1984 (Docket No. 73075)

Factual and Procedural Background

Plaintiff Diesy Davis and defendant Calvin Davis, Jr. were divorced and Calvin Davis was ordered to pay child support. He failed to pay, producing an arrearage of $29,814.50 as of October 17, 1983. Because payments were not made, plaintiff and the children received public assistance; the arrearage is owed to the Michigan Department of Social Services and the Wayne County Friend of the Court.

On December 2, 1981, defendant Davis filed a workers' compensation claim against Ford Motor Company. On June 11, 1982, at a hearing on a bench warrant for nonsupport, the court was informed about the pending workers' compensation claim and appointed the Wayne County Friend of the Court as receiver of any workers' compensation benefits that might be awarded to Davis. The appointment order directed that any funds due Davis from that action be delivered to the Friend of the Court. A copy of the order was mailed to Ford on July 6, 1982, and Ford received and signed for it on July 7, 1982.

Davis and Ford settled the workers' compensation dispute and, on November 3, 1982, Ford paid $1,636.25 directly to Davis, contrary to the receiver appointment order. When the Friend of the Court inquired, a Ford staff attorney replied that the plant had been unaware a receiver had been appointed. The Friend of the Court sought an order to show cause; after a hearing Ford was held in contempt and ordered to pay the funds to the receiver. Ford appealed from the trial court's denial of its motion for reconsideration of the order to pay funds to the receiver.

Legal Issues Presented

  1. Whether an order appointing a receiver in a support case can be enforced against an employer (Ford) that was not a party to the support action or in privity with a party to that action.
  2. Whether the receiver appointment order instructed the employer to deliver any workers' compensation funds to the receiver.
  3. Whether the Friend of the Court is entitled to costs and attorney fees on appeal as a sanction under GCR 1963, 816.5 for a vexatious appeal.

Arguments of the Parties

Ford Motor Company’s Arguments

  • Ford contended the order appointing a receiver on behalf of the employee's wife in the support case could not be enforced against Ford because Ford was not a party to, nor in privity with a party to, the civil action that produced the order; therefore the court lacked jurisdiction to bind Ford.
  • Ford asserted the order appointing the receiver did not instruct the employer to deliver funds to the receiver.

Wayne County Friend of the Court’s Position

  • The Friend of the Court sought enforcement of the receiver appointment order and an order to show cause against Ford for failing to deliver the funds to the receiver; after hearing, Ford was held in contempt and ordered to pay the funds to the receiver.
  • The Friend of the Court requested costs and attorney fees on appeal under GCR 1963, 816.5, asserting Ford's appeal was vexatious.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analyzed whether Ford was a necessary party to the support action and whether the receiver appointment order could be enforced against it. The court concluded Ford "misperceived the nature of the order appointing the receiver." Applying the principle that a party is necessary only where its presence is "essential to permit the court to render complete relief" (citing GCR 1963, 205.1), the court determined Ford was not a necessary party because:

  • Ford had no proprietary interest in the workers' compensation funds other than the obligation to deliver such funds either to the receiver or to defendant Davis.
  • Ford had received notice of the receiver appointment order before the obligation to deliver funds arose; thus Ford had an adequate opportunity to raise any claimed error prior to becoming obliged to deliver the money.
  • Ford did not assert that its interests were affected by the order until after it had delivered the funds to defendant Davis.

On these grounds the court found the appointment order enforceable against Ford. The court separately rejected Ford's contention that the order did not instruct the employer to deliver the money to the receiver, noting the order specifically required such delivery and was properly served on Ford. Finally, although the court observed Ford had misunderstood the nature of a receiver, it declined to award appellate costs and attorney fees to the Friend of the Court under GCR 1963, 816.5.

Holding and Implications

Holding: Affirmed.

Direct consequences for the parties: the trial court's contempt order requiring Ford Motor Company to pay the workers' compensation funds to the Wayne County Friend of the Court was affirmed, and the appellate court declined to award costs or attorney fees to the Friend of the Court on appeal under GCR 1963, 816.5.

Broader implications: the opinion does not announce a new judicial precedent beyond its application to the facts here; it enforces a receivership order against a third-party employer who had notice and an obligation to deliver funds, even though the employer was not a party to the underlying support action.

DAVIS v DAVIS

PER CURIAM.

Defendant Ford Motor Company appeals as of right from the trial court's order denying Ford's motion for reconsideration of an order for payment of funds to a receiver.

Plaintiff Diesy Davis and defendant Calvin Davis, Jr., were divorced and defendant Davis was ordered to pay child support. He did not pay the support, resulting in an arrearage of $29,814.50 as of October 17, 1983. Because defendant Davis had not been paying the support, plaintiff Davis and the children received aid to dependent children; the arrearage in child support is thus owed to the Michigan Department of Social Services and the Wayne County Friend of the Court.

On December 2, 1981, defendant Davis brought a claim against defendant Ford Motor Company to recover workers' compensation benefits. On June 11, 1982, at a hearing on an outstanding bench warrant for defendant Davis's arrest for nonsupport, the court was informed of the pending workers' compensation case against Ford and the Wayne County Friend of the Court was appointed receiver of any workers' compensation benefits that might be awarded to defendant Davis. The order appointing the receiver specifically stated that any funds due defendant Davis from the workers' compensation action were to be delivered to the Wayne County Friend of the Court. A copy of this order was mailed to Ford Motor Company on July 6, 1982, and defendant Ford received and signed for the order on July 7, 1982.

Defendant Davis and defendant Ford subsequently settled the workers' compensation dispute. On November 3, 1982, Ford Motor Company paid $1,636.25 directly to defendant Davis, contrary to the order appointing the receiver. When the friend of the court made inquiries about the money, a staff attorney with defendant Ford Motor Company responded by letter, stating that "[t]hrough inadvertence [sic] the plant was not aware of the fact that a receiver had been appointed".

The friend of the court sought an order to show cause against Ford Motor Company for its failure to comply with the order appointing the receiver. After a hearing, defendant Ford was held in contempt and ordered to pay the funds to the receiver.

On appeal, defendant Ford Motor Company argues that an order appointing a receiver on behalf of an employee's wife in a support case cannot be enforced against the employee's employer when the employer is sued for workers' disability compensation. Specifically, Ford argues that the order in this case is unenforceable against it because Ford was not a party to the civil action giving rise to the order nor in privity to a party to that action and, therefore, the court never acquired jurisdiction over Ford. We believe that Ford has misperceived the nature of the order appointing the receiver. Ford was not a necessary party to this action because its presence was not "essential to permit the court to render complete relief" in its order. GCR 1963, 205.1. Ford had no interest in the money sought to be collected, other than the responsibility of delivering it to either the receiver or defendant Davis. Finally, Ford had received notice of its obligation to deliver the funds to the receiver before that obligation arose; if Ford believed that an error had occurred, Ford had an adequate opportunity to bring that error to the court's attention prior to the time Ford was obligated to deliver the money. We note that Ford did not claim that its interests had been affected by the order until after it had improperly delivered the money to defendant Davis. For these reasons, we believe the order appointing the receiver was enforceable against Ford Motor Company. 1 Clark on Receivers (3d ed), Ch VIII, § 250(a), pp 362-363.

We also reject defendant Ford's claim that the order appointing the receiver did not instruct the employer to deliver the money to the receiver. The order specifically required delivery of the money to the receiver, and the order was properly served on defendant Ford.

Plaintiff friend of the court has requested that this Court award it costs and attorney fees on appeal pursuant to GCR 1963, 816.5, because defendant Ford's appeal is vexatious. However, while we agree that defendant Ford has misunderstood the nature of the concept of a receiver, we decline to assess such an award.

Affirmed.

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DAVIS v. DAVIS
(Jun 14, 1984)