STEELCASE FINANCIAL SERVICES V LJ ORMSBEE MOTORS INC
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STATE OF MICHIGAN
COURT OF APPEALS
STEELCASE FINANCIAL SERVICES, INC.
UNPUBLISHED
January 14, 2000
Plaintiff-Appellee,
v
No. 216555
Otsego Circuit Court
LC No. 98-007765 CK
L. J. ORMSBEE MOTORS, INC.,
Defendant-Appellant.
Before: Talbot, P.J., Gribbs and Meter, JJ.
PER CURIAM.
Defendant appeals as of right the trial court’s $64,137.15 judgment in favor of plaintiff following
its grant of summary disposition to plaintiff pursuant to MCR 2.116(C)(10). We affirm.
This action arises out of a lease of office furniture manufactured by Steelcase, Inc. and financed
by plaintiff, Steelcase Financial Services, Inc. Plaintiff alleged that it entered into a lease agreement with
defendant, L. J. Ormsbee Motors, Inc., a corporation operating an auto dealership in Cheboygan. The
lease agreement and related documents list the lessee as “L. J. Ormsbee Motors, Inc.”, which is
defendant’s official corporate name. The same documents are signed by John Lee Ormsbee, who is an
officer of another dealership with the official corporate name “L. J. Ormsbee Motors of Gaylord, Inc.”
(Ormsbee-Gaylord). After eleven monthly installments, payments ceased and plaintiff accelerated
payment pursuant to the default provisions of the lease.
Plaintiff sought to collect the amounts due on the lease from defendant, but defendant denied
any obligation under the lease, claiming that Ormsbee-Gaylord was the lessee. Plaintiff subsequently
filed a complaint, alleging that defendant breached its obligations under the lease and sought to recover
the amount owed under the default provisions plus costs and expenses. In response to interrogatories,
defendant denied that it had entered into a lease with plaintiff, stating that John Ormsbee was not
authorized to sign the lease on defendant’s behalf because he was neither an officer nor a director of
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defendant. Defendant further maintained that the furniture was delivered to Ormsbee-Gaylord and that
it was not a subsidiary or otherwise affiliated with it.
Plaintiff filed a motion for summary disposition, arguing that either John Ormsbee or OrmsbeeGaylord was an agent of defendant with apparent authority to enter into the lease, and alternatively, that
defendant ratified the agreement. The trial court granted plaintiff’s motion, ruling that the existence of
defendant’s name on the lease, related documents, and checks led plaintiff to believe that defendant was
the lessee, and regardless whether the persons signing the checks had authority to do so, defendant
“apparently stood behind them for a period and let it happen.” The trial court entered a final judgment
in the amount of $64,137.15, consisting of $47,046.84 for the present value of future payments as
alleged in the complaint plus $17,090.31 representing plaintiff’s costs and expenses.
On appeal, defendant argues that summary disposition was improper because genuine issues of
material fact exist regarding whether John Ormsbee or Ormsbee-Gaylord had apparent authority to
enter into a lease on defendant’s behalf. This Court reviews a motion for summary disposition de novo.
Smith v Globe Life Ins Co, 460 Mich 446, 454; 597 NW2d 28 (1999), citing Quinto v Cross and
Peters Co, 451 Mich 358, 362-363; 547 NW2d 314 (1996). In reviewing a motion brought pursuant
to MCR 2.116(C)(10), the trial court must consider the documentary evidence in the light most
favorable to the nonmoving party. Id. Summary disposition is appropriate where there is no genuine
issue of material fact and the moving party is entitled to judgment as a matter of law. Id. at 454-455.
Even assuming defendant cannot be held liable under an apparent authority theory, we conclude
that summary disposition was proper under plaintiff’s alternative theory of ratification. Ratification “is
the affirmance by a person of a prior act which did not bind him but which was done or professedly
done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized
by him.” David v Serges, 373 Mich 442, 444; 129 NW2d 882 (1964). A corporation can ratify and
become bound by the unauthorized acts or contracts of its directors, officers, or agents which are within
the scope of its corporate powers. See Carnahan v M. J. & B. M. Buck Co, 250 Mich 198, 201
202; 229 NW 513 (1930). Unauthorized acts are ratified by the corporation if it has received and
accepted the benefits of the unauthorized acts with knowledge of the material facts connected with the
transaction. Cudahy Bros Co v West Michigan Dock & Market Corp, 285 Mich 18, 25; 280 NW
93 (1938). Hutton v Roberts, 182 Mich App, 153, 162; 451 NW2d 536 (1989); see also Old
Motgage & Finance Co v Pasadena Land Co, 241 Mich 426, 436; 216 NW 922 (1928) (in order
to bind the corporation, ratification by the officer, board, or agent must be made with full knowledge of
the material facts connected with the transaction).
In support of its motion for summary disposition, plaintiff submitted documentary evidence that
the lease payments were made on checks bearing defendant’s corporate name and that five of the
checks were signed by defendant’s treasurer, Jetre Ormsbee, as its “authorized representative.” An
officer who has authority to execute a contract on behalf of the corporation has authority to ratify its
execution by parties who have no such authority, American Employers’ Ins Co v H.G. Christman &
Bros Co, 284 Mich 36, 43; 278 NW 750 (1938). In the absence of any provision to the contrary in a
corporation’s charter, it is presumed that a corporate treasurer has the authority to make all necessary
contracts in transacting the ordinary business of a corporation. Stone-Ordean-Wells Co v New
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England Pie Co, 201 Mich 407, 415; 167 NW 943 (1918). While plaintiff submitted evidence that
defendant ratified the lease through Jetre Ormsbee, defendant did not offer sufficient evidence to rebut
plaintiff’s showing. MCR 2.116(G)(4); Quinto, supra at 371. Indeed, defendant submitted no
evidence contesting Jetre Ormsbee’s authority to execute contracts on behalf of defendant and, in fact,
withdrew his affidavit from the court’s consideration.1 Nor did defendant present evidence to rebut the
claim that Jetre Ormsbee, by making payments on behalf of “L.J. Ormsbee Motors, Inc.”, had
knowledge of the material facts connected with the lease. Further, while it was undisputed that the
furniture that was the subject of the lease was delivered to Ormsbee-Gaylord, plaintiff produced no
documentary evidence showing that defendant did not use the subject furniture or otherwise benefit from
the lease. Because defendant failed to satisfy his burden of opposing plaintiff’s motion with evidence
sufficient to establish a genuine issue of material fact, we conclude that the trial court properly granted
summary disposition in plaintiff’s favor.
Affirmed.
/s/ Michael J. Talbot
/s/ Roman S. Gribbs
/s/ Patrick M. Meter
1
Accordingly, defendant’s submission of Jetre Ormbee’s affidavit in support of his argument on appeal
constitutes an impermissible expansion of the record and has not been considered in deciding the merits
of this appeal. MCR 7.210(A); Reeves v Kmart Corp, 229 Mich App 466, 480 n 7; 582 NW2d 841
(1998).
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