As dogs and wolfs are the same species it is not unusual for them to mate, in fact in some parts of the States and especially in the parts of Europe that wolves still inhabit this cross breeding is threatening the very survival of the wolf. (In America wolves commonly breed with coyotes too.) Some wolves will not tolerate dogs however, or coyotes.
It is one of the basic rules of keeping wolfdogs to never let any sign of dominance by the animal go unnoticed or undealt with. Your friend was wise to gauge his animals reaction to you! Many people just don't understand the very subtle language of this animal to keep it safely.