author: M. J. Kelly, J.

text:
    FLORENTINE RISTORANTE, INC. v CITY OF GRANDVILLE
    Docket No. 77-5093.
    Submitted December 5, 1978, at Grand Rapids.
    Decided February 20, 1979.
    Leave to appeal denied, 406 Mich 963.
    Plaintiff Florentine Ristorante, Inc., operates a restaurant in the City of Grandville having a tavern license issued by the Michigan Liquor Control Commission which allows plaintiff to sell beer and wine, beginning at noon on Sundays, for consumption off the premises. However, pursuant to the terms of a Grand-ville city ordinance, the plaintiff may not serve beer and wine for consumption on the premises on Sunday. Plaintiff, therefore, brought an action for declaratory relief seeking to have the ordinance held unconstitutional and void, thereby allowing plaintiff to sell beer and wine for consumption on or off the premises on Sunday. The Kent Circuit Court, John T. Letts, J., found the ordinance valid and enforceable and signed an order to that effect. Plaintiff appeals, alleging that the city ordinance goes beyond the authority conferred upon the city by state statute and that the trial court erred in holding the ordinance did not violate due process or equal protection under the United States and Michigan Constitutions. Held:

    1. The Grandville City Ordinance in question does not conflict with the Liquor Control Act and is not in excess of the powers granted thereunder.
    2. The Liquor Control Act confers upon cities the power to prohibit Sunday sales of beer and wine for consumption on the premises while permitting beer and wine sales for off-premises consumption.
    3. The Grandville ordinance does not violate plaintiffs rights to due process and equal protection of the laws since the prohibition of on-premises consumption on Sunday is reasonably related to the public health, safety, morals or general welfare purpose of alleviating law enforcement problems attendant upon such consumption and there is a rational relationship between the ordinance and the legitimate municipal objective of alleviating such law enforcement problems; the classification is reasonable, based on substantial distinctions, and is germane to the purpose of the law.

      References for Points in Headnotes

       45 Am Jur 2d, Intoxicating Liquors §§ 27, 279.

       73 Am Jur 2d, Statutes §§ 145-148, 206.

       45 Am Jur 2d, Intoxicating Liquors § 33.

       73 Am Jur 2d, Statutes § 265.

       45 Am Jur 2d, Intoxicating Liquors § 279.

       16 Am Jur 2d, Constitutional Law §§ 500, 501.

       16 Am Jur 2d, Constitutional Law §§ 371, 372.

      Affirmed.
    1. Intoxicating Liquors — Municipal Corporations — Liquor Control Act — Sunday Liquor Sales — On-Premises Consumption — Statutes.
    The Liquor Control Act confers upon municipalities the power to prohibit Sunday sales of beer and wine for consumption on the premises while permitting beer and wine sales for off-premises consumption (MCL 436.19e; MSA 18.990[5]).
    2. Statutes — Construction — Legislature’s Plain Meaning.
    A cardinal rule of statutory construction provides that the Legislature is presumed to have intended the plain meaning of the words used by it.
    3. Intoxicating Liquors — Municipal Corporations — Prohibit —■ Sunday Liquor Sales — Less Than Absolute Sales Ban — Statutes.
    The plain meaning of the statutory term "prohibit” as used in the statute regarding the selling or furnishing of alcoholic liquor on Sunday authorizes the legislative body of a city, village, or township to impose a less than absolute ban on the sale of alcohol (MCL 436.19e; MSA 18.990[5]).
    4. Statutes — Construction — Probable and Reasonable Intentions — Alternative Interpretations.
    A court must ascribe to the Legislature the most probable and reasonable intention when the court is confronted with alternative interpretations of a statute.
    5. Intoxicating Liquors — Municipal Corporations — Sunday Liquor Sales — City Ordinances — Statutes.
    A city ordinance which permits the sale of beer and wine beginning at noon on Sundays for consumption off the premises but prohibits all such Sunday sales for consumption on the premises does not conflict with the statute regarding the selling or furnishing of alcoholic liquor on Sunday and does not exceed the powers granted thereunder (MCL 436.19e; MSA 18.990[5]).

      6. Constitutional Law — Equal Protection — Statutory Classification.
    A statutory classification or differentiation between similarly situated groups or persons must bear a reasonable relationship to a legitimate state purpose or be based upon a ground of difference having a fair and substantial relation to a legitimate object of the legislation in order to satisfy equal protection requirements.
    7. Constitutional Law — Due Process — Regulation of Business — Regulation of Occupation.
    A statute which regulates the right to do business or practice an occupation must bear a real and substantial relationship or at least a reasonable relation to the public health, safety, morals or general welfare in order to satisfy due process requirements.
    8. Constitutional Law — Equal Protection — Statutes — Reasonable Classifications.
    Equal protection principles do not prevent a reasonable classification by legislative enactment if that enactment applies to all persons within such class and reasonable grounds exist for making the distinction between those who fall within such class and those who do not.

      Mohney, Goodrich & Titta, P.C. (by Richard J. Quist), for plaintiff.

      Varnum, Riddering, Wierengo & Christenson, for defendant.
    Before: T. M. Burns, P.J., and M. J. Kelly and D. F. Walsh, JJ.
   M. J. Kelly, J.

Plaintiff appeals a decision of the Kent County Circuit Court upholding a City of Grandville ordinance which prohibits the sale, of beer and wine for consumption on the premises on Sunday.

Plaintiff operates a restaurant in the City of Grandville and has a tavern license issued by the Michigan Liquor Control Commission which allows plaintiff to sell beer and wine, beginning at noon on Sundays, for consumption off the premises. However, pursuant to the terms of § 12 of Grand-ville City Ordinance No. 133-B, plaintiff may not serve beer and wine for consumption on the premises at all on Sunday. Plaintiff brought the present action for declaratory relief seeking to have the ordinance held unconstitutional and void, thereby allowing plaintiff to sell beer and wine for consumption on or off the premises on Sunday.

A hearing was held on December 1, 1977, in Kent County Circuit Court. The trial court found the ordinance valid and enforceable and signed an order to that effect on December 15, 1977. It is from this judgment that plaintiff appeals as of right. Two issues are presented.

I

Did the trial court err in holding that § 12 of Ordinance No. 133-B of the City of Grandville is not beyond the authority conferred upon that city by MCL 436.19e; MSA 18.990(5) of the Liquor Control Act to control the liquor traffic in Grandville?

The Michigan Constitution of 1963 gives the Michigan Legislature the authority to delegate complete control of the state’s alcoholic beverage traffic to a liquor control commission subject to statutory regulation. Pursuant to this authority, the Legislature gave complete control of such traffic in Michigan to the Michigan Liquor Control Commission when it enacted MCL 436.1 et seq.; MSA 18.971 et seq.

The Michigan statute in question, MCL 436.19e; MSA 18.990(5) provides in relevant part:

"(3) A licensee enumerated under section 19 or any other person shall not sell at retail, and a person shall not knowingly and willfully buy, alcoholic liquor between the hours of 9 p.m. on December 24 and 7 a.m. on December 26. When December 26 falls on Sunday, the hours of closing shall be determined pursuant to this act. The legislative body of a city, village, or township, by resolution or ordinance, may prohibit the sale of alcoholic liquor on Sunday or a legal holiday, primary election day, general election day, or municipal election day. ” (Emphasis supplied.)

Section 12 of Ordinance No. 133-B of the City of Grandville, which is being challenged in the present case, provides as follows:

"No spirits shall be sold on any Sunday between the hours of 2:00 o’clock a.m. and 12:00 o’clock midnight * * *. No beer and wine shall be sold after 2:00 o’clock a.m. on Sunday for consumption on the licensee’s premises, nor be sold on Sunday for consumption off the licensee’s premises between the hours of 2:00 o’clock a.m. and 12:00 o’clock noon. ” (Emphasis supplied.)
The issue here is whether the City of Grandville has the authority to prohibit the sale and consumption of beer and wine on plaintiffs business premises on Sunday, while allowing the sale of beer and wine on Sunday after 12 o’clock noon for consumption off plaintiffs business premises.
Plaintiff argues that the language in MCL 436.19e; MSA 18.990(5) permits the city to either prohibit all Sunday sales of alcoholic liquor or to do nothing, and thereby permit all sales on Sunday. It is argued that Grandville is statutorily permitted to prohibit the sale of alcoholic beverages on Sunday, but is not statutorily permitted to ban some sales and allow others; that is, the authority to prohibit does not include the authority to impose less than an absolute ban. The defendant, on the other hand, asserts that the traditional rules of statutory construction, as supplemented by legislative history, indicates that the language of MCL 436.1 et seq.; MSA 18.971 et seq., confers upon cities the power to prohibit Sunday sales of beer and wine for consumption on the premises while permitting beer and wine sales for off-premises consumption. We agree with defendant’s argument for two reasons.
First, it is a cardinal rule of statutory construction that the Legislature is presumed to have intended the plain meaning of the words used by it. Gordon Grossman Building Co v Elliott, 382 Mich 596, 603; 171 NW2d 441 (1969), Threet v Pinkston, 20 Mich App 39, 41; 173 NW2d 731 (1969), Bullard v Mult-A-Frame Co, 33 Mich App 678, 683; 190 NW2d 559 (1971). The word "prohibit” does have a plain meaning; 34 Words and Phrases, Prohibit, p 459 says:
"A general power to prohibit the sale of liquor is sufficient to authorize any partial prohibition deemed advisable. Gunnarssohn v City of Sterling, 92 Ill 569, 573 [1879].”
"According to the doctrine that the greater includes the less, a power to prohibit the manufacture and sale of intoxicating liquors includes the power to prohibit such manufacture and sale unless certain rules are complied with. Cantini v Tillman, 54 F 969, 974 [D SC, 1893].”

See also, 45 Am Jur 2d, Intoxicating Liquors, § 22, p 501.

We think the holding in People v Blom, 120 Mich 45; 78 NW 1015 (1899), is particularly appropriate here, for it rejects the very argument advanced by plaintiff that authority to prohibit does not include authority to impose less than an absolute ban. In Blom, the defendant had been convicted of violating a Holland, Michigan ordinance by selling liquor without a license from the city, although he had paid the requisite state taxes and furnished the bond required by state law. The Holland Charter authorized the city council to "prohibit and suppress * * * all places of resort for tippling and intemperance”. However, rather than forbidding sales of liquor, the city council adopted an ordinance requiring saloons to be licensed and limiting the areas in town where they could operate. In short, the ordinance banned some sales but allowed others on the basis of geography. On appeal, defendant claimed that the city charter did not authorize the licensing of saloons, only their prohibition. By sustaining defendant’s conviction, the Supreme Court necessarily rejected that argument and impliedly held that authority to "prohibit and prevent” includes the authority to do something less.

Thus, the "plain meaning” of the statutory term "prohibit” as used in MCL 436.19e; MSA 18.990(5) authorizes Grandville to impose a less than absolute ban on the sale of alcohol.

Secondly, we are convinced that the legislative history underlying § 19e supports this conclusion. Whenever a court is confronted with alternative interpretations of a statute, it must ascribe to the Legislature "the most probable and reasonable intention”. Board of Education of Oakland Schools v Superintendent of Public Instruction, 392 Mich 613, 619; 221 NW2d 345 (1974), Collins v Secretary of State, 384 Mich 656, 666; 187 NW2d 423 (1971). Originally, the pertinent portion of § 19e read:

"The legislative body of any city, village or township may, by resolution or ordinance, prohibit the sale of alcoholic liquor for consumption on the premises on any Sunday * * *.” 1933 (Ex Sess PA 8, § 19(19), and 1937 PA 281, § 19(18). (Emphasis supplied.)

This statute was submitted to the Attorney General for interpretation because some municipalities had adopted ordinances banning all Sunday sales of alcohol for consumption on, as well as off, the premises. It was his opinion that under the language of § 19e local legislative bodies were without power to prohibit the sale of alcohol for consumption off the premises on Sunday, but that they could prohibit the sale of all alcohol for consumption on the premises. OAG, 1945-1946, No 0-2350, p 11 (July 14, 1944). A year later, the language giving local legislative bodies only the power to prohibit the Sunday sale of alcohol for consumption on the premises was deleted from the statute and the act was amended to its present form authorizing the general prohibition of the sale of alcohol for consumption on Sunday.

It cannot be assumed from this amendment that the Michigan Legislature intended to bestow upon local legislatures only the power to prohibit all Sunday liquor sales and not the power to allow some while prohibiting others. See 48 CJS, Intoxicating Liquors, § 50, pp 187-188. There is no indication that the Legislature’s intent was to so severely limit local legislative bodies. Rather, it is more probable and reasonable to assume that, because the amendment deleted the "on the premises” limitation on local authority to regulate liquor sales, the Legislature intended to give municipalities additional flexibility to enact legislation to deal with the needs of the particular municipality within the framework of the Michigan Liquor Control Act.

This interpretation of § 19e, that the subsequent amendment expands the authority of municipalities to ban all Sunday sales while retaining preexisting authority to prohibit some sales, overcomes the defect brought to light by the Attorney General’s opinion without substantially changing the scope of the statute. We hold, therefore, that § 12 of Ordinance No. 133-B of the City of Grand-ville does not conflict with § 19e of the Liquor Control Act and is not in excess of the powers granted thereunder.

II

Did the trial court err in holding that § 12 of Ordinance No. 133-B of the City of Grandville does not violate the due process and equal protection clauses of the United States and Michigan Constitutions?

Plaintiffs constitutional attack on the ordinance is twofold: first, plaintiff asserts that under a due process analysis the ordinance in question bears no real or substantial relationship to the public health, safety, morals or general welfare; secondly, it is submitted that under the equal protection analysis the ordinance differentiating between sales for consumption on the premises and those off the premises bears no rational relationship to a legitimate city purpose.

The applicable constitutional tests as to equal protection and due process claims were restated in the case of People v McDonald, 67 Mich App 64, 71-72; 240 NW2d 268 (1976):

"Under an equal protection analysis the statutory classification or differentiation between similarly situated groups or persons must bear a rational relationship to a legitimate state purpose or be based upon a ground of difference having a fair and substantial relation to a legitimate object of the legislation. Weber v Aetna Casualty & Surety Co, 406 US 164; 92 S Ct 1400; 31 L Ed 2d 768 (1972), Reed v Reed, 404 US 71; 92 S Ct 251; 30 L Ed 2d 225 (1971). Under a due process analysis the statute, as an exercise of the police power regulating the constitutional right to do business or practice an occupation, must bear a real and substantial relationship (or at least a reasonable relation) to the public health, safety, morals or general welfare. Grocers Dairy Co v Department of Agriculture Director, 377 Mich 71; 138 NW2d 767 (1966).”

The critical question here is whether the Grand-ville ordinance restricting the on-premises Sunday sale of beer and wine is rationally related to a legitimate municipal objective (equal protection analysis) or reasonably related to the public health, safety, morals or general welfare (due process analysis).

As to plaintiffs due process claim, we are in agreement with the holding and rationale of the lower court opinion which states:

"In the opinion of this court it is not difficult to conceive of a state of facts which sustain the reasonableness of an ordinance which prohibits Sunday sales of liquor for consumption on the premises while allowing Sunday sales after noon for consumption off the premises. Brawls are indigenous to the serving of liquor in taverns and public places more so than in an individual’s home and police protection on a Sunday has always been a limited procedure for all police departments wherever situated. The court need not elaborate on this statement since it denotes that a breach of the peace is more apt to occur among strangers congregated in a restaurant or tavern than inside one’s own home. Surely the health, safety, morals and general welfare are pregnant issues wherever liquor is served.”

Turning to plaintiffs equal protection claim, we think the same basis for a reasonable relationship between the Grandville ordinance and public health, safety, morals or general welfare also serves to establish a rational relationship between the ordinance and a legitimate municipal objective. We find a rational relationship between an ordinance which prohibits on-premises liquor consumption on Sunday and the legitimate municipal objective of alleviating the law enforcement problems attendant upon such consumption. The trial court, in this regard, adopted the defendant’s argument, which states:

"First, to allow liquor to be consumed on the premises where purchased is to allow the consumption of liquor in public to be seen by all. Consumption limited to off the premises allows those who wish to drink to do so, but steers such consumption to places where it is less likely to be seen by others. Typically, Sunday is the day families with children 'go out to dinner.’ Consumption of alcohol on the premises of restaurants exposes young children out with their families to drinking. During the week, young children are less likely to frequent restaurants and, therefore, less likely to be exposed to others drinking alcohol. Surely, it is proper to shield young children from the habit of alcohol in their most impressionable years when drinking is equated with maturity.
"Second, drinking on the premises means that the drinker must travel the public streets to get home. One who buys to drink off the premises is more likely already home when he consumes his purchase. On Sundays, with the roads filled with families [and with fewer police patrolling them], it is reasonable to strive to reduce the number of drivers driving after a drink or two—or more.”

Equal protection principles do not prevent a reasonable classification by legislative enactment if that enactment applies alike to all persons within such class and reasonable grounds exist for making the distinction between those who fall within such class and those who do not. People v Palazzolo, 62 Mich App 140, 146; 233 NW2d 216 (1975). For the reasons cited above, we find the classification here to be reasonable, based on substantial distinctions, and germane to the purpose of the law.

Therefore, we hold that the Grandville ordinance does not violate plaintiffs rights to due process and equal protection of the laws.

Affirmed

       Const 1963, art 4, § 40.


source: Caselaw Access Project

author:
Riley, J.
      Danhof, C.J.

license: Public Domain

text:
    BOISE CASCADE CORPORATION v DEPARTMENT OF TREASURY
    Docket No. 78-405.
    Submitted December 12, 1978, at Detroit.
    Decided February 20, 1979.
    Leave to appeal applied for.
    Boise Cascade Corporation and Boise Cascade Home and Land Corporation do business in Michigan and other states. They filed suit against the Michigan Department of Treasury to compel the refund of intangible taxes which were paid under protest. Plaintiffs own certain income producing property (receivables) located outside the State of Michigan. At issue is whether these intangibles have a situs in Michigan subjecting them to the intangibles tax act. Defendant collected the taxes on the theory that the use in Michigan of the income from those receivables establishes a sufficient nexus between this state and the property to warrant imposition of the tax. Summary judgment for plaintiffs, Wayne Circuit Court, Patrick J. Duggan, J. Defendant appeals. Held:

    The use of income in Michigan from intangible property located in another state does not generate a Michigan tax situs in that property.
    Affirmed.
    Danhof, C.J., dissents. He would hold that for the tax period involved in the instant case the actual use of income from intangible property located in another state by a Michigan business establishes a Michigan tax situs for the assessment of intangible taxes. He would reverse the lower court and remand for a trial to determine whether such use has been made by the plaintiffs.
    Opinion of the Court
    1. Taxation — Intangible Property — Situs — Nonresident Business — Jurisdiction.
    A situs for taxable jurisdiction is not established for an intangibles tax where the only connection between the state and intangible property of a nonresident business is that the interest produced by the intangibles is available as part of the general cash account for use by the Michigan branch of the nonresident business.

      References for Points in Headnotes

       71 Am Jur 2d, State and Local Taxation §§ 671-674.
    Property tax: Business situs of intangibles held in trust in state other than beneficiary’s domicil. 59 ALR3d 837.

       71 Am Jur 2d, State and Local Taxation § 666.

      2. Taxation — Intangible Property — Situs — Nonresident Business — Jurisdiction.
    A situs for taxable jurisdiction is not established where the state treasury’s assessment is based upon a number of nonresident receivables which bear no relation to Michigan other than the fact that income from interest paid on these-receivables is sent to Michigan for use in the taxpayer’s Michigan operations; the use of income in Michigan from intangible property located in another state does not generate a Michigan tax situs in that property.
    Dissent by Danhof, C.J.
    3. Taxation — Intangible Property — Situs — Nonresident Business — Jurisdiction.

      A Michigan tax situs for assessment of intangible taxes is established where the income from intangible property located in another state is used in a Michigan business.

      Roger K. Timm, for plaintiffs.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Lawrence W. Morgan, Assistant Attorney General, for defendant.
    Before: Danhof, C.J., and R. M. Maher and D. C. Riley, JJ.
   Riley, J.

Plaintiffs, Delaware corporations doing business in Michigan and other states, filed suit to compel the refund of intangible taxes which were paid under protest. Plaintiffs’ motion for summary judgment was granted and defendant appeals as of right.

It is uncontested that plaintiffs own certain income producing intangible property, i.e. receivables, located outside the State of Michigan. At issue is whether these intangibles have a "situs” in Michigan subjecting them to the intangibles tax act, MCL 205.131 et seq.; MSA 7.556(1) et seq. Defendant alleges that the use in Michigan of the income from those receivables establishes a sufficient nexus between this state and the property to warrant imposition of the tax. We do not agree.

In pertinent part, MCL 205.131(c); MSA 7.556(l)(c) states:

"Provided, [t]hat in the case of intangible personal property used in connection with the conduct of the owner’s business both within and outside the state of Michigan, all such property shall be deemed to have a 'situs’ in this state to the extent of the percentage of the whole of such property as determined by the allocation formula set forth in section 12 of this act.” (Emphasis supplied.)

In construing this provision, The E F MacDonald Co v Dep’t of Treasury, 62 Mich App 626, 637; 233 NW2d 678 (1975), held that

"Where the only connection between the state and the intangibles is that the interest produced by the intangibles is available as part of the general cash account for use by the Michigan branch of the nonresident business, a situs for taxable jurisdiction is not established.”

In MacDonald the note receivable from a company which did not operate in Michigan, to the taxpayer, was made in Ohio and arose from business activities in California. The only connection between the note and the State of Michigan was that the income from the receivable was available for use, as part of MacDonald’s general cash account, by the Michigan branch of the business, as well as branches in other states. No other use of the receivable in connection with the conduct of MacDonald’s Michigan business was demonstrated. Similarly, in this case the treasury’s assessment is based on a number of receivables which bear no relation to Michigan other than the fact that the income from interest paid on those notes is sent to Michigan for the use of the taxpayers’ Michigan operations.

In making its determination the MacDonald Court affirmed the Board of Tax Appeals decision which it described as follows:

"The Board * * * applied the facts of the case to the proviso clause of the statute and decided that the record did not support the conclusion that the intangible assets were 'used in the conduct’ of MacDonald’s business in Michigan. The use in Michigan of income of the intangible, as compared with use of the intangible itself, was held to be insufficient to constitute situs under the statute(Emphasis supplied.) 62 Mich App at 633-634.

See also, National Gypsum Co v Dep’t of Treausry, State Board of Tax Appeals, docket #953 (1977).

Defendant maintains that MacDonald is not controlling since the income from that case was merely "available” and not actually used in Michigan as it purports to show here. This contention is without merit. Our reading of MacDonald persuades us that it did not intend to make such a distinction. The use of income in Michigan from intangible property located in another state does not generate a Michigan tax situs in that property. The trial court’s order of summary judgment is therefore affirmed.

R. M. Maher, J., concurred.

Danhof, C.J.

(dissenting). I dissent. I would hold that for the tax period involved in this case the actual use in a Michigan business of income from intangible property located in another state does generate a Michigan taxable situs in the property. There should be a trial in this case to determine whether such use has been made.

The taxpayer primarily argues that the rule I would establish here is inconsistent with the business situs rule established in a series of United States Supreme Court cases. The Supreme Court’s rule has been summarized by one commentator as follows:

"[I]t is necessary under the 'integration doctrine,’ in order to authorize taxation, that the intangibles have become an integral part of some business activity, and that their possession and control be localized in some independent business or investment away from the owner’s domicil, so that their substantial use and value primarily attach to and become an asset of the outside business, or, in other words, that the local independent business controls and utilizes, in its own operation and maintenance, the intangible property and its income.” Anno: "Business situs” for purposes of property taxation of intangibles in state other than domicile of owner, 143 ALR 361, 368.

The main factors considered are a continuous course of business or series of transactions within the state where the property is physically located and independent management and control of the property. Id.

The leading authority for this so-called "integration” or "localization” doctrine is Wheeling Steel Corp v Fox, 298 US 193; 56 S Ct 773; 80 L Ed 1143 (1936). The rule substantially has been codified in this state by the intangibles tax act. The act provides that a Michigan tax situs in intangible personal property is estabished when the intangible is "placed in the hands of a manager or agent in Michigan to the extent that such intangible personal property is invested in a course of repeated transactions in obligations of persons residing in Michigan or secured by property located in Michigan”. MCL 205.131(c); MSA 7.556(l)(c) (amended 1975).

I agree that the situation contemplated to be within the integration rule is not the situation here. However, Michigan’s intangibles tax act, before its amendment in 1975, see 1975 PA 229, § (l)(c), contained a broader test for business situs. In addition to the above-quoted clause the statute, before its amendment, provided that a tax situs in this state is established whenever the intangible is "used in connection with the conduct of [the owner’s] business in Michigan”. MCL 205.131(c); MSA 7.556(l)(c). There was a proviso to allocate taxes on intangibles used in connection with the conduct of the owner’s business both within and outside this state. The "use in connection with business” test is of course applicable to the present case since the tax involved was collected for a period prior to the amendment’s effective date. In applying that test it is necessary to comprehend the many ways in which an intangible can be used in connection with the conduct of a business.

The majority’s restrictive definition of "use” of an intangible misconstrues the nature of such property. Intangible property by its nature has no "physical” use. As the state contends, income producing intangibles are capable of use only to the extent that their income or interest is used or to the extent that the proceeds from their sale or pledge as security are used. In other words, use of the intangible’s product is use of the intangible itself. The majority apparently would hold that if a corporation pledges or sells intangibles and sends the proceeds to its business operation in Michigan, it may be taxed on those intangibles; on the other hand, if the corporation holds on to the intangible and sends the income or interest to its Michigan subsidiary it can avoid the levy. Under the "use in connection with business” test I find these two situations indistinguishable. The test is broad enough to enable taxation of intangibles used in either manner.

The E F MacDonald Co v Dep’t of Treasury, 62 Mich App 626; 233 NW2d 678 (1975), is distinguishable from the present case. MacDonald narrowly held that the mere availability for use in this state of income from intangibles located elsewhere is insufficient to generate a Michigan tax situs in the property. The majority is persuaded that MacDonald did not intend a distinction between mere availability for use and actual use. I am persuaded that the former legislation did.

I would reverse the lower court’s summary judgment and remand for trial.


author: M. B. Breighner, J.

text:
    CONSUMERS POWER COMPANY v PUBLIC SERVICE COMMISSION ATTORNEY GENERAL v PUBLIC SERVICE COMMISSION
    Docket Nos. 78-603, 78-604.
    Submitted November 15, 1978, at Lansing.
    Decided February 20, 1979.
    Consumers Power Company filed proposed electric rates with the Public Service Commission after the commission had determined that Consumers was entitled to a rate increase. Consumers also requested in writing that the commission allow the company to put the new rates into effect immediately upon filing. The commission denied the request for immediate implementation, and scheduled further public hearings on the rates pursuant to a request by the Attorney General. Consumers filed suit against the Public Service Commission in Ingham Circuit Court for a temporary injunction to allow it to put the new rates into immediate effect. The Attorney General and the Michigan Retailers Association intervened as party defendants. The court granted the relief requested, but required Consumers to file a bond to secure refunds in the event the Public Service Commission should ultimately approve a lesser increase. The rates subsequently were approved substantially as proposed.
    The Attorney General and the City of Wyoming, which had intervened in the rate hearings, separately appealed to the Ingham Circuit Court the commission’s order approving the rates. The Michigan Retailers Association and the City of Grand Rapids intervened in this appeal as party plaintiffs, and Consumers intervened as a party defendant.

      References for Points in Headnotes

       64 Am Jur 2d, Public Utilities §§ 126-132, 282.

       2 Am Jur 2d, Administrative Law §§ 583-585.
    64 Am Jur 2d, Public Utilities §§ 126-132, 240, 282.
    Formal requirements of judgment or order as regards appealability. 73 ALR2d 250.

       2 Am Jur 2d, Administrative Law §§ 340, 343, 346, 747.
    64 Am Jur 2d, Public Utilities § 264.
    Formal requirements of judgment or order as regards appealability. 73 ALR2d 250.
    Adequacy, as regards right to injunction, of other remedy for review of order fixing public utility rates. 8 ALR2d 839.

       2 Am Jur 2d, Administrative Law §§ 400, 583-585.
    64 Am Jur 2d, Public Utilities § 264.
    Formal requirements of judgment or order as regards appealability. 73 ALR2d 250.
    Adequacy as regards right to injunction, of other remedy for. review of order fixing public utility rates. 8 ALR2d 839.

      The parties ultimately entered into a stipulation in which the issues presented in these two cases as well as those in three other related cases, all five of which were consolidated by the circuit court, were resolved, with the exception of the question of whether Consumers was entitled to retain the added revenues it had received from the time of the circuit court’s temporary injunction allowing it to effectuate the higher rates until the time of the commission’s final order approving the new rates. On this issue the circuit court, Ray C. Hotchkiss, J., granted summary judgment in favor of Consumers Power, finding that the circuit court had jurisdiction to enter the injunction under the court’s general equitable jurisdiction and that Consumers had exhausted its administrative remedies. The Attorney General, the City of Wyoming, the City of Grand Rapids, and the Michigan Retailers Association appeal. Held:

    1. The circuit court had statutory appellate jurisdiction to grant the injunction. The Public Service Commission’s denial of the request to put the increased rates into effect was an "order fixing rates” which was reviewable by the court under its appellate jurisdiction.
    2. Consumers Power had substantially complied with the statutory procedure necessary to invoke the Public Service Commission’s authority to grant an immediate rate change, and the commission denied the request for an immediate change. Consumers had, therefore, exhausted its administrative remedies when it sought the injunction.
    Affirmed.
    1. Courts — Circuit Court — Jurisdiction — Public Service Commissions — Public Utilities — Statutes.
    The Ingham Circuit Court has statutory appellate jurisdiction in an action to vacate and set aside an order of the Public Service Commission fixing utility rates on the ground that the rates are unreasonable or unlawful (MCL 462.26; MSA 22.45).
    2. Public Service Commissions — Public Utilities — Circuit Court — Appeal and Error.
    A denial by the Public Service Commission of a utility’s request to place increased rates into effect pending final approval of the rates is an order fixing rates and, therefore, is appealable to Ingham Circuit Court.
    3. Public Service Commissions — Public Utilities — Rate Schedules.
    A public utility must do two things to invoke the Public Service Commission’s power to grant an immediate change in the utility’s rate schedules: (1) introduce facts to support its petition for a rate change, and (2) make a written request for immediate relief (MCL 460.6a; MSA 22.13[6a]).
    4. Public Service Commissions — Public Utilities — Administrative Law — Exhaustion of Remedies — Statutes.
    A public utility substantially complied with statutory requirements, sufficient to invoke the Public Service Commission’s authority to grant an immediate rate change, where the utility, following past practices, did not formally move the commission to exercise its discretion under the statute but supported the utility’s written request for immediate effect of the new rates by affidavit showing that the rates were in accord with an earlier order of the commission and stating that the distribution of rate increases was fair and reasonable; the commission’s denial of the utility’s request completed the administrative process, leaving the utility free to request injunctive relief in circuit court (MCL 460.6a; MSA 22.13[6a]).

      Lawrence B. Lindemer, Allen B. Bass, and David A. Mikelonis, and Loomis, Ewart, Ederer, Parsley, Davis & Gotting (by George W. Loomis and Harvey J. Messing), for Consumers Power Company.

      Walter V. Kron, Assistant Attorney General, for the Michigan Public Service Commission.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Hugh B. Anderson, Roderick S. Coy and Albert Ernst, Assistants Attorney General, for the Attorney General.

      William J. Garlington, for the City of Wyoming.

      George A. Weible, for the City of Grand Rapids.

      MacLean, Seaman, Laing & Guilford (by Kenneth Laing and Kathleen Opperwall), for the Michigan Retailers Association.
    Before: Cynar, P.J., and R. B. Burns and M. B. Breighner, JJ.

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

   M. B. Breighner, J.

July 15, 1968, Consumers Power Company filed with the Michigan Public Service Commission a petition to increase the company’s electric rates. After public hearing the commission concluded that Consumers Power was experiencing a revenue deficiency and was entitled to a rate increase of $16,514,000. The commission directed Consumers Power to file rates and schedules designed to achieve that increase.

On October 3, 1969, Consumers Power filed comprehensive rate schedules and also in writing prayed "[t]hat the Commission issue an order authorizing the electric rate schedules * * * to become effective for service supplied on and after October 3, 1969”. Under prior practice, apparently, the utility had been allowed to charge increased rates as soon as the commission determined that the utility was experiencing a revenue deficiency.

The same day, instead of approving the company’s request to put the proposed rates into immediate effect, the commission ordered a second phase of public hearings on the rate schedules, to begin October 6, 1969. The break with apparent past practice was explained in the commission’s order. The order related that two days before Consumers Power filed its schedules, the Attorney General had requested public hearings on the proposed rates. In a later pleading the commission also stated that it was without statutory authority to grant the company’s request.

On October 6, 1969, Consumers Power commenced this action in circuit court for temporary injunctive relief to allow it to put the new electric rates into immediate effect. Consumers Power filed the complaint principally to invoke the circuit court’s original equity jurisdiction. Alternatively, the complaint was filed as a statutory appeal pursuant to § 462.26 of the compiled laws. MCL 462.26; MSA 22.45. On October 21, 1969, the circuit court granted the relief requested. In its order the court required the utility to file a bond to secure a refund of the increases should the commission finally provide for the collection of lesser rates. The circuit court reasoned that the commission’s failure to make such an order was unreasonable.

On April 20, 1970, the Public Service Commission entered its final rate order approving rate schedules substantially as proposed by the company and collected pursuant to the injunction. In the interim between the circuit court’s grant of injunction and the commission’s final rate order the company collected $6,623,417 in increased electric rates. The issue raised on this appeal is whether Consumers Power is entitled to keep that money.

The Attorney General and other intervening parties have proffered several reasons why the interim rates collected must be refunded. Only two of their theories merit discussion. First is the contention that the circuit court lacked general equity or statutory appellate jurisdiction to issue the temporary injunction that authorized Consumers Power to collect interim rate increases. Second is the claim that the circuit court erred in assuming jurisdiction before Consumers Power had exhausted its administrative remedies.

On review of its earlier order the circuit court has held that it had jurisdiction to enter the preliminary injunction as part of its general equitable jurisdiction and that Consumers Power had exhausted its administrative remedies. We affirm for the reasons stated below.

The Circuit Court had Statutory Appellate Jurisdiction to Enter a Preliminary Injunction Allowing Consumers Power Company to Collect Interim Rate Increases.

It is unnecessary to decide in this case whether the circuit court had original equity jurisdiction to grant the preliminary injunction at issue. By statute the Legislature has granted the circuit court appellate jurisdiction in any action to vacate and set aside any order fixing rates on the ground that the rates are unreasonable or unlawful. MCL 462.26; MSA 22.45. The denial of a request to place increased rates into effect pending final approval is an "order fixing rates”. Accord, Mountain States Telephone & Telegraph Co v Arizona Corporation Comm, 331 F Supp 1167 (D Ariz, 1971). As reasoned by the Arizona district court, "A 'No’ answer is just as much rate fixing as an unreasonably low 'Yes’ ”. Id. at 1170.

By its order of October 3, the Public Service Commission denied the utility’s request for immediate relief. As related above, the utility’s complaint for injunction invoked the circuit court’s appellate jurisdiction to review that order. The circuit court granted the injunction on grounds authorized by the statute.

Consumers Power Company had Exhausted its Administrative Remedies before Seeking Relief in the Circuit Court.

Appellants contend that Consumers Power, before seeking a court injunction, should have sought immediate relief from the Public Service Commission under § 460.6a of the compiled laws. MCL 460.6a; MSA 22.13(6a). In pertinent part that section provides:

"When such utility shall have placed in evidence facts relied upon to support its petition or application to so increase its rates and charges, or to so alter, change or amend any rate or rate schedules, the commission, pending the submission of all proofs by any interested parties, may in its discretion and upon written motion by such utility make a finding and enter an order granting partial and immediate relief, after first having given notice to the interested parties within the service area to be affected in the manner ordered by. the commission, and after having afforded to such interested parties reasonable opportunity for a full and complete hearing: Provided, That no such finding or order shall be authorized or approved ex parte, nor until the commission’s technical staff has made an investigation and report: * * *.”

On its face the provision shows that a public utility must do two things to invoke the Public Service Commission’s power to grant an immediate change in rate schedules. First, the utility must introduce facts to support its petition. Second, it must make a written request for immediate relief. Before exercising its discretion to grant such relief, the commission must give notice to interested parties and afford them a hearing. Also the commission’s technical staff must investigate and report. But see Attorney General v Public Service Comm, 63 Mich App 69, 77-78; 234 NW2d 407 (1975).

The apparent statutory purposes are threefold. First, § 460.6a affords utilities some form of immediate or partial relief pending a full-blown public hearing and final rate determination. Secondly, it assures that the decision to grant or deny interim relief will be made in the first instance by an expert administrative body, taking advantage of its legislative-like powers of investigation. Finally, the section affords due process to all affected parties. To preserve this balance of purposes, the judiciary should stay its hand in the rate-making process until the administrative remedy provided through § 460.6a has been exhausted.

Rote compliance with the conditions stated in § 460.6a, however, is not necessary to achieve the statutory purposes. Thus, for example, this Court has relaxed the "investigation and report” requirement when literal enforcement of that condition would render the § 460.6a remedy practically useless. Attorney General v Public Service Comm, supra.

In this case Consumers Power Company sought interim relief from the Public Service Commission before requesting p court injunction. Following past agency practices, the company did not formally move the commission to exercise its discretion under § 460.6a. The company’s "Filing of Rate Schedules and Request for Approval Thereof’, however, was supported by affidavit. The affidavit showed the schedules were in accord with the commission’s earlier order concerning rate deficiencies. It also stated that the distribution of rate increases among consumer classifications was fair and reasonable. As related above, the prayer to put the new schedules into immediate effect was written.

Under the circumstances here presented, we find this to be substantial compliance with § 460.6a, sufficient to invoke the Public Service Commission’s authority to grant immediate relief. The commission’s order of October 3 implicitly denied such relief and thereby completed the administrative process. Affected parties were afforded due process at the subsequent injunction hearing.

Affirmed. No costs, a public question.

       The electric rates finally approved by the commission differed from the company’s rate schedules with respect to three-unit and four-unit apartments. An appropriate refund of overcharges was made pursuant to the circuit court’s order and is not in contest here.

       The present appeal is actually the final phase of a rate controversy that has continued in this Court and the circuit court since the commission’s final order in 1970. All other questions have been settled by stipulation or appeal, see e.g., Consumers Power Co v Public Service Comm, 65 Mich App 73; 237 NW2d 189 (1975).

       Appellants cite General Telephone Co v Public Service Comm, 341 Mich 620; 67 NW2d 882 (1954), Michigan Bell Telephone Co v Ingham Circuit Judge, 325 Mich 228; 38 NW2d 382 (1949), and Michigan Gas Utilities Co v Public Service Comm, 27 Mich App 411; 183 NW2d 619 (1970), for the proposition that while the circuit court has general equity jurisdiction to grant the relief sought by Consumers Power in this case, such relief may never be sought nor granted except within the framework of § 462.26. Consumers Power reads these cases as preserving the circuit court’s general equitable powers on statutory appeal, but not diminishing its original equity jurisdiction except to the extent such jurisdiction is invoked to evade the statutory requirement for seeking judicial review within 30 days of a commission order.

       Consumers Power Company contends that § 460.6a only pertains to immediate rate relief pending a final commission determination of revenue deficiency. By its own language, however, the statute pertains to any order sought by a utility "to increase its rates and charges or to alter, change or amend any rate or rate schedules * * MCL 460.6a; MSA 22.13(6a).

       Because the Public Service Commission is precluded from establishing retroactive rates to correct injustice caused by a delay in establishing rates for the past, Michigan Bell Telephone Co v Public Service Comm, 315 Mich 533; 24 NW2d 200 (1946), our Supreme Court has noted that "[ejvery day a warranted rate increase is withheld is a day in which justice has been denied * * Michigan Consolidated Gas Co v Public Service Comm, 389 Mich 624, 637; 209 NW2d 210 (1973).


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

text:
    HUNTINGTON WOODS PUBLIC SAFETY OFFICERS v CITY OF HUNTINGTON WOODS
    Docket No. 78-697.
    Submitted November 15, 1978, at Lansing.
    Decided February 20, 1979.
    Leave to appeal applied for.
    The Huntington Woods Public Safety Officers, Local 755, Council 23, American Federation of State, County and Municipal Employees, AFL-CIO, the bargaining representative of the Huntington Woods Fire Department employees, brought an action for injunctive relief against the City of Huntington Woods claiming that a rotating-shift work schedule of the fire department employees, which was part of a collective bargaining arbitration award, violated the statute which regulates the working hours of municipal firefighters. The Oakland Circuit Court, Alice L. Gilbert, J., granted judgment for the plaintiffs, ordering the city to comply with the statute. The city appeals. Held:

    The statute, in two separate sections, limits the working hours of firefighters to 56 hours per week, 24 hours on duty and 24 hours off duty in any 48-hour period, except where a municipality has, by agreement with its employees, established a work week of no more than 40 hours. The rotating-shift schedule in this case does not violate the statute. The fact that the agreement was the result of compulsory binding arbitration rather than of negotiations is not determinative because the statute makes no such distinction.
    Reversed.
    Cynar, P.J., dissented. He would hold that because the rotating shift agreement includes a 56-hour work week, the city does not come within the statutory exception for cities with agreed-upon 40-hour weeks, and therefore the 40-hour, five-day week shifts are in violation of the off-duty requirement of the statute. He would affirm.

      References for Points in Headnotes

       56 Am Jur 2d, Municipal Corporations, Counties, and Other Political Subdivisions §§ 115, 133.
    48 Am Jur 2d, Labor and Labor Relations §§ 1849, 1850, 1863.
    Right of labor union, or other organization for protection or promotion of interests of members, to challenge validity or ordinance on behalf of members. 2 ALR2d 917.
    Union organization and activities of public employees. 31 ALR2d 1142.

       73 Am Jur 2d, Statutes § 313.

      Opinion of the Court
    1. Municipal Corporations — Labor Law — Firefighters — Hours of Employment — Statutes.
    A municipal fire department’s work schedule in which the employees alternate between a shift of 8 hours per day, 40 hours per week and a shift of 24 hours per day, 56 hours per week does not violate a statute which makes it unlawful for a municipality to require firefighters to be on duty more than 24 hours or off duty less than 24 consecutive hours in any 48-hour period and to work more than an average of 56 hours per week, and which by its terms does not apply to any municipality which by agreement with its employees does not require more than 40 hours of duty in any 7-day period (MCL 123.841, 123.842[e]; MSA 5.3331, 5.3332[e]).
    Dissent by Cynar, P.J.
    2. Statutes — Construction of Statutes — Exceptions.

      Generally, exceptions in a statutory scheme are to be narrowly construed.

    3. Municipal Corporations — Labor Law — Firefighters — Hours of Employment — Statutes.

      A municipality which has a labor agreement with its ñreñghters under which the ñreñghters work a shift of 56 hours per week therefore does not fall within an exception for communities which, under agreement, do not require more than 40 hours in any 7-day period and is therefore subject to the terms of a statute which limits the working hours of ñreñghters to 56 hours per week, 24 hours on duty and 24 hours off duty in any 48-hour period, and the agreement violates the off-duty requirements of the statute because it rotates the 56-hour week with a 40-hour, 5-day work week (MCL 123.841, 123.842[ej; MSA 5.3331, 5.3332[ej).

      Maybaugh, Wellman & Monnich, for plaintiff.

      Davis, Hayward, Hertler, Jones & Kingsepp, for defendant.

      Before: Cynar, P.J., and R. B. Burns and M. B. Breighner, JJ.

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

   R. B. Burns, J.

Plaintiff union brought suit complaining that defendant city was violating the fire department hours of labor act, MCL 123.841-123.843; MSA 5.3331-5.3333. The trial court agreed and ordered defendant to comply with MCL 123.841; MSA 5.3331. Defendant appeals and we reverse.

Plaintiff represents city employees who engage in firefighting. Pursuant to a collective bargaining agreement arrived at by compulsory binding arbitration, MCL 423.231 et seq.; MSA 17.455(31) et seq., the employees work a rotating schedule, alternating between eight hours per day, 40 hours per week on the day, midnight and afternoon shifts and a shift of 24 hours per day, 56 hours per week.

MCL 123.841; MSA 5.3331 makes it unlawful for a municipality to require firefighters to be on duty more than 24 hours, or off duty less than 24 consecutive hours in any 48-hour period, and to work more than an average of 56 hours per week. In Flynn v City of Fraser, 45 Mich App 346; 206 NW2d 448 (1973), this Court upheld a trial court’s determination that a 40-hour, five-day work week violated MCL 123.841; MSA 5.3331. While recognizing that hours of employment were subject to collective bargaining and compulsory and binding arbitration, we ruled that a collective bargaining agreement or arbitration award could not contravene the limits set by the statute.

Apparently in response to Flynn, the Legislature amended the act to provide for a 40-hour work week under certain circumstances. MCL 123.842(e); MSA 5.3332(e) provides:

"The provisions of section l shall not apply * * * [t]o any municipality which, by agreement with the collective bargaining agent representing affected employees, does not require its employees engaged in fire fighting or subject to the hazards thereof, to be on duty more than 40 hours in any consecutive 7-day period.”

Plaintiff argues that MCL 123.842(e); MSA 5.3332(e) is an exception to MCL 123.841; MSA 5.3331, and it is illogical to assume the Legislature intended both the general rule and exception to apply simultaneously. However, the different shift schemes cannot be, and are not, applied simultaneously, but may be applied without conflict in rotation. We read the statutes as requiring the 24-hour shift restrictions to apply, unless, in any given week, pursuant to agreement, employees are not required to work more than 40 hours.

Plaintiff also argues that the shift rotation schedule is not a result of an "agreement with the collective bargaining agent representing affected employees”, MCL 123.842(e); MSA 5.3332(e), because the agreement was a result of compulsory binding arbitration rather than solely of negotiations. However, the statute draws no such distinction. There exists an agreement sufficient to bring the 40-hour week rotations within the statute.

Reversed. No costs, a public question.

M. B. Breighner, J., concurred.

Cynar, P.J.

(dissenting). I disagree with the majority’s analysis of the statutory scheme. The exception in MCL 123.842(e); MSA 5.3332(e) is limited to:

"any municipality which, by agreement with the collective bargaining agent representing affected employees, does not require its employees engaged in fire fighting or subject to the hazards thereof, to be on duty more than 40 hours in any consecutive 7-day period.” (Emphasis added.)

This exception was apparently enacted as a result of the decision in Flynn v City of Fraser, 45 Mich App 346; 206 NW2d 448 (1973), where the Court held that a regular 40-hour work week violated the provisions of MCL 123.841; MSA 5.3331.

I believe that the exception in MCL 123.842(e); MSA 5.3332(e) should be limited to the regular 40-hour work week present in Flynn, supra. As a general rule, exceptions in a statutory scheme are to be narrowly construed. Lee v J H Lee & Son, 72 Mich App 257, 260; 249 NW2d 380 (1976), Grand Rapids Motor Coach Co v Public Service Comm, 323 Mich 624, 634; 36 NW2d 299 (1949). This is especially true when the statute was enacted in response to a single case.

The arbitrated agreement in question here provides for a 56 hour per week shift. Therefore, the municipality does not fall within the terms of MCL 123.842(e); MSA 5.3332(e) as such a shift requires the employees to be on duty "more than 40 hours in any consecutive 7-day period”.

Since the statutory exception is inapplicable, the agreement is subject to the requirements of MCL 123.841; MSA 5.3331. That section prohibits a municipality from requiring firefighting employees "to be on duty in such employment more than 24 hours, or to be off duty less than 24 consecutive hours out of any 48-hour period”. (Emphasis added.) Since the agreement provides for a shift in which the employees work a 5-day, 40-hour work week, the off-duty requirements of MCL 123.841; MSA 5.3331 are not met. Flynn, supra.

Since the arbitrated agreement violates the provisions of MCL 123.841; MSA 5.3331, the trial judge properly ordered defendant to comply with the provisions of that statute. I find no error in that decision and would affirm.

       MCL 123.841; MSA 5.3331.


author: J. H. Gillis, J.

text:
    JACHIM v COUSSENS
    Docket No. 78-971.
    Submitted January 17, 1979, at Detroit.
    Decided February 20, 1979.
    Joseph J. Coussens and his former whife Nancy Coussens (now Jachim) rolled their car over following a tire blow-out. Nancy sustained extensive injuries. An out-of-court settlement was reached between Nancy and Firestone Tire and Rubber Company. As part of the settlement, Nancy agreed not to bring suit against Joseph Coussens unless four conditions were met. These conditions were not fulfilled and Nancy brought an action against Joseph alleging negligence. Defendant moved for accelerated judgment asserting an affirmative defense of release and settlement. He argued that he was a third-party beneficiary of the release and settlement agreement entered into between plaintiff and Firestone. Accelerated judgment for defendant, Macomb Circuit Court, Walter P. Cynar, J. Plaintiffs petition for relief from the judgment was denied. Plaintiff appeals. Held:

      References for Points in Headnotes

       46 Am Jur 2d, Judgments § 458.
    What constitutes final judgment within provision or rule limitation application for new trial to specified period thereafter. 34 ALR2d 1181.
    Reviving, renewing or extending judgment by order entered after expiration of statutory limitation period on motion made or proceeding commenced within such period. 52 ALR2d 672.

       17 Am Jur 2d, Contracts §§ 297, 302 et seq.

    Right of third person not named in bond or other contract conditioned for support of, or services to, another, to recover thereon. 11 ALR2d 1010.

       17 Am Jur 2d, Contracts §§ 304, 309, 315.
    Right of third person not named in bond or other contract conditioned for support of, or services to, another, to recover thereon. 11 ALR3d 1010.

       17 Am Jur 2d, Contracts §§ 114-118, 297, 307.

       17 Am Jur 2d, Contracts §§ 297, 302, 304, 307.
    Right of third person not named in bond or other contract conditioned for support of, or services to, another, to recover thereon. 11 ALR2d 1010.

       17 Am Jur 2d, Contracts §§ 244, 305, 315.

       17 Am Jur 2d, Contracts §§ 304, 315.

      Defendant was a third-party beneficiary of the release and settlement agreement. A promise shall be considered to be for the benefit of a third party where the promisor has undertaken to give or to do or refrain from doing something directly to or for said third party; therefore, where a plaintiff promisor had undertaken to refrain from instituting an action against a party, the promise is to be construed to be for that party’s benefit and he has the right to enforce it. A party’s motive, purpose, or desire in entering a contract does not govern and even though Firestone’s sole purpose may have been to protect itself, the contract directly benefited the present defendant making him a third-party beneficiary of the release and settlement agreement. The trial court’s refusal to withdraw its grant of accelerated judgment was not an abuse of discretion.
    Affirmed.
    1. Judgment — Relief from Judgment — Motions — Finality of Judgment — Appeal and Error — Court Rules.
    A motion for relief from a judgment does not affect the finality of the judgment or the running of the period allowed for appeal (GCR 1963, 528.3).
    2. Contracts — Third-Party Beneficiaries — Enforcement of Promises — Statutes.
    A person for whose benefit a promise is made by way of contract becomes a third-party beneficiary of the contract and has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee (MCL 600.1405; MSA 27A.1405).
    3. Contracts — Third-Party Beneficiaries — Promises — Definitions — Statutes.
    A promise shall be considered to be for the benefit of a third party where the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person (MCL 600.1405[1]; MSA 27A.1405[1]).
    4. Contracts — Third-Party Beneficiaries — Enforcement of Promises.
    A promise to refrain from instituting an action against a party unless certain conditions have occurred is to be construed to be for that party’s benefit and he has the right to enforce it.

      5. Contracts — Third-Party Beneficiaries — Contractual Promises — Benefits and Immunities.
    A third person who is necessarily and directly benefited by the terms of a contract is a third-party beneficiary of the agreement and it is immaterial that the protection afforded to that third person by that contract was not an end in itself but was for the sole purpose of securing to the contractual promisee some consequent benefit or immunity.
    6. Contracts — Third-Party Beneficiaries — Contractual Intentions.
    The intention of the contracting parties determines whether a third person is a third-party contractual beneficiary, for it is the parties’ intention, as disclosed by their contract terms, which governs, not the parties’ motive, purpose, or desire in entering the contract.
    7. Contracts — Third-Party Beneficiaries — Contractual Intentions Govern — Presumptions — Consequences Intended.
    The intention of contracting parties differs from their motive, desire, or purpose and, in determining whether a third person is a third-party contractual beneficiary, it is the intention which governs; the parties are presumed to intend the consequences of contractual performance and that which is contemplated by contractual terms is intended by the parties.

      James D. Wines, for plaintiff.

      Sullivan, Ranger, Ward & Bone, for defendant.
    Before: D. C. Riley, P.J., and J. H. Gillis and Mackenzie, JJ.
   J. H. Gillis, J.

Plaintiff appeals from an order of the Macomb County Circuit Court denying plaintiffs motion for relief from judgment and reaffirming accelerated judgment in favor of defendant. The chronology of events leading to this appeal is as follows.

On August 4, 1972, defendant and plaintiff, then husband and wife, were returning from a vacation in northern Michigan when a tire blew out on the freeway and their car rolled over. Plaintiff sustained extensive injuries.

Negotiations were entered into between plaintiff and Firestone Tire and Rubber Company. A settlement was reached on March 28, 1973, without the necessity of filing a suit. As part of the settlement, plaintiff agreed not to bring suit against defendant Joseph Coussens unless four conditions were met. It is conceded that these conditions have not been fulfilled.

Plaintiff brought this action on July 31, 1975, alleging defendant was negligent.

On July 15, 1976, Firestone filed a complaint against plaintiff herein seeking specific performance of the release and settlement agreement or alternate forms of equitable relief. This case is not before us and has been held in abeyance pending this appeal.

Defendant was allowed to amend his pleadings to assert an affirmative defense of release and settlement. Defendant thereafter moved for accelerated judgment, purusant to GCR 1963, 116.1(5), arguing that he was a third-party beneficiary of the release and settlement agreement entered into between plaintiff and Firestone. The trial court granted this motion and an order was entered on December 27, 1977.

On January 9, 1978, plaintiff sought relief from that order pursuant to GCR 1963, 528.3(6). The trial court denied such relief on February 21, 1978. Plaintiff then commenced this appeal on March 3, 1978.

Plaintiff claims that the trial court improperly granted defendant’s motion for accelerated judgment. However, as defendant correctly contends, the focus of our review is limited to whether the trial court erred in denying plaintiffs motion for relief from judgment.

The order of accelerated judgment was entered on December 27, 1977. Plaintiffs appeal was taken on March 3, 1978, far beyond the 20-day limit for an appeal by right. Moreover, a motion for relief from judgment does not extend the time for appeal. GCR 1963, 528.3 reads, in pertinent part:

"A motion under sub-rule 528.3 does not affect the finality of a judgment or suspend its operation.”

The committee notes to this rule also make it quite clear that the time limits for appeal from the judgment must be observed:

"A motion for relief from a judgment is unlike a motion for new trial in that it does not affect the finality of a judgment and the running of the period allowed for appeal.” 3 Honigman & Hawkins, Michigan Court Rules Annotated, p 173.

Plaintiffs appeal, while not timely as to the accelerated judgment, was taken within 20 days from the trial court’s denial of plaintiffs motion for relief from judgment. Thus, the issue before us is whether the trial court abused its discretion in denying this motion. Gyurkovics v Mitchel, 70 Mich App 602; 246 NW2d 309 (1976). However, because of the apparent confusion in the court below and the wording of the trial court’s order, we will address the merits of plaintiffs claim concerning the accelerated judgment.

The trial court found that defendant was a third-party beneficiary of the release and settlement agreement. Michigan’s third-party beneficiary statute provides, in part:

"Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee.” MCL 600.1405; MSA 27A.1405.

In addition, the statute goes on to define when a promise shall be considered to be for the benefit of a third party:

"A promise shall be construed to have been made for the benefit of a person whenever the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person.” MCL 600.1405(1); MSA 27A.1405(1).

The third paragraph of the agreement between plaintiff and Firestone provides that Nancy Coussens

"[W]ill make no claim nor commence any legal action against Joseph J. Coussens, or his personal representative, for injuries or other damage sustained by reason of the accident or occurrence described in paragraph 1 unless all of the following events shall have occurred.”

The language is unequivocal. Plaintiff has undertaken to refrain from instituting an action against defendant unless certain conditions have occurred. Hence, pursuant to the above-quoted provision, the promise is to be construed to be for defendant’s benefit and he has the right to enforce it.

Plaintiff argues that the parties to the agreement did not intend to benefit defendant. Instead, it is contended that the purpose of the contract was to protect Firestone from being subject to additional liability. Such a motive does not preclude defendant from having an enforceable right under the contract.

" 'So long as the contract necessarily and directly benefits the third person, it is immaterial that this protection was afforded him not as an end in itself, but for the sole purpose of securing to the promisee some consequent benefit or immunity. In short, the motive, purpose, or desire of the parties is a quite different thing from their intention. The former is immaterial; the intention as disclosed by the terms of the contract, governs. It is to be borne in mind that the parties are presumed to intend the consequences of a performance of the contract. That which is contemplated by the terms of the contract is "intended” by the parties.’ Annotation, 'Right of Third Persons to Enforce Contract Between Others for His Benefit.’ 81 ALR 1271, 1287.” Talucci v Archambault, 20 Mich App 153, 160; 173 NW2d 740 (1969).

See also Guardian Depositors Corp v Brown, 290 Mich 433, 437-438; 287 NW 798 (1939).

We believe the above quote from Talucci is directly on point. Even though Firestone’s sole purpose may have been to protect itself, the contract directly benefited defendant. Hence, the trial court correctly determined that defendant was a third-party beneficiary of the release and settlement agreement.

Plaintiff argues, nonetheless, that any rights defendant had to enforce the contract were divested under MCL 600.1405(2)(c); MSA 27A.1405(2)(c) when plaintiff confessed partial judgment in the suit filed by Firestone against plaintiff.

This subsection has no application to the case at bar. It provides:

"If the promisee is indebted or otherwise obligated to the person for whose benefit the promise was made and the promise in question is intended when performed to discharge that debt or obligation, then the promisor and the promisee may, by mutual agreement, divest said person of his rights, if this is done without intent to hinder, delay or defraud said person in the collection or enforcement of the said debt or other obligation which the promisee owes him and before he has taken any legal steps to enforce said promise made for his benefit.” MCL 600.1405(2)(c); MSA 27A.1405(2)(c).

Whether or not the confession of judgment constituted a "mutual agreement” we need not decide for, by its terms, the subsection applies only where the third party is a creditor beneficiary and performance of the promise will discharge the debt owed to the third party. By refraining from suing defendant plaintiff discharged no debt owed by Firestone to defendant. Hence, this subsection is irrelevant to the instant case.

We conclude that the trial court committed no error in awarding accelerated judgment to defendant. Hence, it is even more certain that the court did not abuse its discretion in denying relief therefrom under GCR 1963, 528.3(6). Plaintiff’s motion for relief claimed that it was necessary for the trial court to either decide Firestone’s complaint for equitable relief, or consolidate the two actions, before a meaningful appeal could be taken. However, it appears that the decisive issue, the effect of plaintiff’s partial confession of judgment, could be decided equally well in either action. Thus, the trial court’s refusal to withdraw its grant of accelerated judgment or to consolidate the actions was not so violative of fact and law as to be an abuse of discretion.

Affirmed. Costs to appellee.

       "On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: * * * (6) any other reason justifying relief from the operation of the judgment.” GCR 1963, 528.3(6).

       At the hearing for her motion for relief plaintff appeared primarily concerned about preserving her right to appeal. Moreover, the final paragraphs of the trial court’s order denying relief read as follows:
      "It is further ordered that the defendant’s order for accelerated judgment for no cause for action may be and the same is hereby granted as it was on December 27, 1977.
      "It is further ordered that the plaintiff’s appeal period, pursuant to MGCR 803.1 shall commence upon filing and entry of this order.”


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

text:
    MOORE v DEPARTMENT OF MILITARY AFFAIRS LARKEY v DEPARTMENT OF MILITARY AFFAIRS
    Docket Nos. 78-1460, 78-1461.
    Submitted December 11, 1978, at Lansing.
    Decided February 20, 1979.
    Noble O. Moore and Kenneth Larkey, retirees of the Michigan National Guard, commenced separate actions, in the Court of Claims, against the Department of Military Affairs for an adjustment of their retirement pay. The Court of Claims granted judgments for the defendant. The plaintiffs appealed. The Michigan Supreme Court eventually reversed and remanded to the Court of Claims, Moore v Dep’t of Military Affairs, 398 Mich 324 (1976), and Larkey v Dep’t of Military Affairs, 399 Mich 1936 (1977). On remand, the Court of Claims, Martin E. Clements, J., entered summary judgments for the plaintiffs on the principal amounts owing and determined that interest should run from the date of the judgments. Plaintiffs appeal, alleging that they are entitled to interest from the time retirement benefits came due but were wrongfully withheld. Held:

    The Court of Claims judgment interest statute bars recovery in the Court of Claims of prejudgment interest on damages.
    Affirmed.
    J. H. Gillis, J., dissented. He would hold that the plaintiffs should be allowed to recover prejudgment interest as an element of damages.
    Opinion of the Court
    1. Interest — Judgment — Prejudgment Interest.
    The Court of Appeals recognizes a distinction between interest on a judgment and prejudgment interest included as an element of damages; the former is purely statutory, while the latter has evolved judicially.
    References for Points in Headnotes

       45 Am Jur 2d, Interest and Usury §§ 59, 60, 96, 97.

       45 Am Jur 2d, Interest and Usury § 74.

       45 Am Jur 2d, Interest and Usury § 60.

      2. Judgment — Interest — Prejudgment Interest — Exceptions — Statutes.
    The Court of Claims judgment interest statute prohibits the Court of Claims from awarding prejudgment interest on damages, except where expressly stipulated to by contract (MCL 600.6455; MSA 27A.6455).
    Dissent by J. H. Gillis, J.
    3. Interest — Prejudgment Interest — Damages — Liquidated Damages.

      It is a denial of full compensation to preclude prejudgment interest on an award of damages where the damages are liquidated.

      H. Donald Bruce, for plaintiffs.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Stephen H. Garrard, Assistant Attorney General, State Affairs Division, for defendant.
    Before: R. B. Burns, P.J., and J. H. Gillis and V. J. Brennan, JJ.
   R. B. Burns, P.J.

When plaintiffs retired from the Michigan National Guard, a dispute arose over the computation of their retirement benefits. The Supreme Court eventually determined that plaintiffs had been underpaid, and remanded to the Court of Claims for entry of summary judgments in favor of plaintiffs. Moore v Dep’t of Military Affairs, 398 Mich 324; 247 NW2d 801 (1976), Larkey v Dep’t of Military Affairs, 399 Mich 1036; 249 NW2d 302 (1977). On remand, the Court of Claims entered judgments on the principal amounts owing and determined that interest should run from the date it entered the judgments. Plaintiffs appeal, arguing they are entitled to interest from the time retirement benefits came due, but were wrongfully withheld.

The issue presented on appeal is whether the Court of Claims judgment interest statute, MCL 600.6455; MSA 27A.6455, bars recovery in the Court of Claims of prejudgment interest on damages. We hold that it does.

MCL 600.6455; MSA 27A.6455 provides:

"No interest shall be allowed upon any claim up to the date of the rendition of judgment by the court, unless upon a contract expressly stipulating for the payment of interest. All judgments from the date of rendition thereof shall carry interest at the rate of 5% per annum, except that judgment upon a contract expressly providing for interest shall carry interest at the rate provided by said contract in which case provision to that effect shall be incorporated in the judgment entered.”

In construing the statute, our function is to discover and give effect to the intent of the Legislature. See, e.g., Moore v Dep’t of Military Affairs, supra, at 327; 247 NW2d at 803.

Although this Court has several times stated in particular cases that plaintiffs could not recover prejudgment interest in the Court of Claims, citing MCL 600.6455; MSA 27A.6455, Williams v Dep’t of State Highways, 44 Mich App 51; 205 NW2d 200 (1972), Reich v State Highway Comm, 43 Mich App 284; 204 NW2d 226 (1972), but see Buckeye Union Fire Ins Co v Michigan, 38 Mich App 155; 195 NW2d 915 (1972), the Court has not addressed the precise question presented in the instant case. Williams involved the applicability of the more specific Court of Claims judgment interest statute over the general judgment interest statute, MCL 600.6013; MSA 27A.6013, and Reich appears to have involved a request for unliquidated, not easily ascertainable damages for trespass, in which prejudgment damages interest would not be allowable in any event. See Banish v Hamtramck, 9 Mich App 381; 157 NW2d 445 (1968).

This Court has recognized a distinction between interest on a judgment and prejudgment interest included as an element of damages. The former is purely statutory, while the latter has evolved judicially. See Militzer v Kal-Die Casting Corp, 41 Mich App 492, 496-497; 200 NW2d 323, 326 (1972), Vannoy v City of Warren (On Rehearing), 26 Mich App 283, 288; 182 NW2d 65, 68 (1970), aff'd, 386 Mich 686; 194 NW2d 304 (1972), Banish v Hamtramck, supra, Swift v Dodson, 6 Mich App 480, 483; 149 NW2d 476, 478 (1967). Both have the purpose of compensating the plaintiff for the loss of use of funds. Vannoy v City of Warren, supra. Although there exists some confusion as to when prejudgment damages interest is recoverable, Banish v Hamtramck, supra, it is clear that, but for MCL 600.6455; MSA 27A.6455, it would be recoverable in the instant case. As in Banish, the disputed amount of pension benefits is certain, and an award of interest is necessary to insure adequate compensation.

Notwithstanding the applicability of the rationale for an award of prejudgment interest on damages in the instant case, the statute bars such recovery. The first sentence unambiguously excludes recovery of any prejudgment interest, except that expressly stipulated to by contract. The second sentence adequately establishes that the time at which judgment interest is recoverable is the date of judgment, without the necessity of further indicating in the first sentence that judgment interest is not recoverable prior to the date of judgment. Unless the first sentence refers to prejudgment interest on damages, it is meaningless. The Court must give effect to every sentence of a statute, if possible. Grand Rapids v Crocker, 219 Mich 178, 182; 189 NW 221, 222 (1922). Moreover, the exception of expressly stipulated contract interest is a form of prejudgment interest on damages; in order to be an exception to the general rule, the general rule must prohibit recovery of prejudgment interest on damages generally. We therefore hold that the statute bars recovery of prejudgment interest on damages in the Court of Claims.

Banish v Hamtramck, supra, is not inconsistent. The language barring recovery of prejudgment interest on damages in MCL 600.6455; MSA 27A.6455 does not appear in the general judgment interest statute, MCL 600.6013; MSA 27A.6013.

Affirmed. No costs, a public question.

V. J. Brennan, J., concurred.

J. H. Gillis, J.

(dissenting). I disagree with the majority’s position that plaintiffs are not entitled to prejudgment interest. This case does not involve a tort claim with unliquidated damages as was the situation in Williams v Dep’t of State Highways, 44 Mich App 51; 205 NW2d 200 (1972), and Reich v State Highway Comm, 43 Mich App 284; 204 NW2d 226 (1972).

Where the damages are liquidated it is a denial of full compensation to preclude interest. Therefore, I would allow plaintiffs to recover prejudgment interest as an element of damages. Banish v Hamtramck, 9 Mich App 381; 157 NW2d 445 (1968).

       Although MCL 600.6013; MSA 27A.6013 now allows recovery of judgment interest calculated from the date of the filing of the complaint, at the time MCL 600.6455; MSA 27A.6455 was originally enacted, 1939 PA 135, §18, MCL 600.6013; MSA 27A.6013 also provided that judgment interest was calculated from the date of judgment. 1937 PA 77. Thus, the first sentence of MCL 600.6455; MSA 27A.6455 could not have been intended to distinguish the situation under MCL 600.6013; MSA 27A.6013, which permits the recovery of judgment interest which is actually in part prejudgment interest.


author: D. F. Walsh, J.

text:
    BURNS v AUTO-OWNERS INSURANCE COMPANY
    Docket No. 78-1470.
    Submitted January 5, 1979, at Lansing.
    Decided February 20, 1979.
    Elroy C. Burns was injured in a collision between his motorcycle and an automobile. He brought an action against Auto-Owners Insurance Company, the insurer of the owner of the automobile, to recover personal injury protection benefits. The Ingham Circuit Court, Ray C. Hotchkiss, J., granted defendant’s motion for accelerated judgment, holding that the action was not commenced within the applicable period of limitation. Plaintiff appeals, alleging that the statutory provision of the no-fault insurance act relied upon is not a statute of limitations but a notice provision, and that notice may be given to the insurer by someone other than the claimant or someone acting on the claimant’s behalf. Held:

    1. The provision which states that a claim is to be brought within one year of the injury is a statute of limitation, not a notice provision.
    2. The notice of injury must be given to the insurer by the claimant or someone in his behalf.
    Affirmed.
    1. Automobiles — Insurance — Limitation of Actions — Statutes.
    The provision of the no-fault automobile insurance act which provides that an insured is to bring his claim against the insurer for personal injury protection benefits within one year of the injury is a statute of limitations, not a notice provision (MCL 500.3145[1]; MSA 24.13145[1]).
    2. Statutes — Words and Phrases — Mandatory Provisions.
    The use of the word "may” in a statute generally denotes a directory or discretionary, rather than a mandatory, provision; however, in certain contexts "may” has the effect of "must” or "shall”.

      References for Points in Headnotes

       51 Am Jur 2d, Limitation of Actions §§ 102, 103.
    New Topic Service Am Jur 2d, No-Fault Insurance § 27.

       73 Am Jur 2d, Statutes §§ 22, 24.

       44 Am Jur 2d, Insurance § 1476.
    15 Am Jur 2d, Limitation of Actions § 115.

      3. Automobiles — Insurance — Limitation of Actions — Notice — Statutes.
    The Legislature is presumed to have a purpose in inserting every clause and word in a statute, and in the case of the statute regarding claims for personal injury protection benefits the Legislature, by specifying that notice may be given by a person claiming benefits or by someone in his behalf, intended to provide for the exclusive method by which notice can be given to the insurer so as to extend the one-year limitations period (MCL 500.3145[1]; MSA 24.13145[1]).

      Sinas, Dramis, Brake, Turner, Boughton, McIntyre & Reisig, P.C. (by John F. Rohe), for plaintiff.

      Fraser, Trebilcock, Davis & Foster (by C. Mark Hoover), for defendant.
    Before: Beasley, P.J., and D. F. Walsh and J. E. McDonald, JJ.

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

   D. F. Walsh, J.

Plaintiff Elroy Burns appeals the entry of accelerated judgment for defendant Auto-Owners Insurance Company. GCR 1963, 116.1(5).

The trial court ruled that plaintiffs claim for personal injury protection insurance benefits from defendant, which claim arose out of a June 3, 1975, accident, was barred by the no-fault law’s statute of limitations. MCL 500.3145(1); MSA 24.13145(1). Plaintiff argues that this statutory provision is not a statute of limitations but a notice provision.

We agree with the reasoning of a panel of this Court in the recent case of Davis v Farmers Insurance Group of Companies, 86 Mich App 45; 272 NW2d 334 (1978), and hold that the statute is a one-year statute of limitations.

We also reject plaintiffs argument that notice to the insurer may be given by someone other than the claimant or someone in behalf of the claimant. The statute provides, in pertinent part, that:

"The notice of injury required by this subsection may be given to the insurer or any of its authorized agents by a person claiming to be entitled to benefits therefor, or by someone in his behalf. The notice shall give the name and address of the claimant and indicate in ordinary language the name of the person injured and the time, place and nature of his injury.”

As noted by the Davis panel, MCL 500.3145(1) is a "one-year statute of limitations, with a provision enabling claimants [or someone in their behalf] to extend the period for up to one additional year by giving notice”. Davis, supra, at 48. Although use of the word "may” generally denotes a directory or discretionary, rather than a mandatory, provision, King v Director of Midland County Dep’t of Social Services, 73 Mich App 253, 261 fn 5; 251 NW2d 270 (1977), in certain instances the context indicates that "may” has the effect of "must” or "shall”. 2A Sutherland on Statutory Construction (4th ed), § 57.03, pp 415-416. The rule of expressio unius est exclusio alterius has long been applied in Michigan and aids in determining whether a statutory provision shall be construed as mandatory or permissive. Taylor v Michigan Public Utilities Commission, 217 Mich 400; 186 NW 485 (1922), 2A Sutherland, supra, § 57.10, p 428.

We find that the Legislature intended to provide for the exclusive method by which notice can be given to the insurer so as to extend the one-year limitations period. If, as plaintiff argues, notice may be given by anyone, the Legislature would have had no apparent reason to specify that notice "may be given * * * by a person claiming * * * benefits * * * or by someone in his behalf’. The Legislature is presumed to have a purpose in mind in inserting every clause and word in a statute. Wyandotte Savings Bank v State Banking Commissioner, 347 Mich 33, 44; 78 NW2d 612 (1956).

This statute does not deal with notice clauses in insurance contracts. Cf. MCL 500.3008; MSA 24.13008. As noted by the Davis panel, the statute’s purpose is not to protect litigants who may be unaware of a notice provision but who nevertheless bring their claims within the limitations period, but rather to encourage claimants or persons acting in their behalf to bring their claims to court while those claims are still fresh. To hold that mere notice, from whatever source, of an accident which could possibly give rise to a claim for benefits by a noninsured is sufficient would, we think, thwart this legislative purpose.

Entry of accelerated judgment for defendant is affirmed.

       See Richards v American Fellowship Mutual Ins Co, 84 Mich App 629; 270 NW2d 670 (1978), where a panel of this Court interpreted the notice to the insurer as a "request for payment”. Id. at 632. The Court’s analysis of the issue involved in Richards indicates that the Legislature included two ways to extend the one-year period so that the claimant’s right to bring an action for recovery of benefits will not be cut off during certain periods when the insurer should be or actually is assessing its liability. Unless the insurer receives notice from the claimant or someone acting in behalf of the claimant there is no reason to assume that the insurer will or should begin to assess its liability under the insurance contract with its insured. The statute clearly contemplates that the identity of the “claimant” be given.


author: Beasley, P.J.

text:
    PEOPLE v ROSECRANTS
    Docket No. 78-2120.
    Submitted January 5, 1979, at Lansing.
    Decided February 20, 1979.
    Defendant Robert L. Rosecrants was convicted of resisting an officer and sentenced to pay a fine of $100 or spend 60 days in jail and to pay court costs of $582. The statute creating the crime of resisting an officer defines it as a misdemeanor with a maximum penalty of imprisonment for two years and a fine of $100. The prosecutor had also filed a supplemental information charging defendant with being a second felony offender, alleging one prior felony conviction. The Jackson Circuit Court, Russell E. Noble, J., granted defendant’s motion to dismiss the supplemental information on the ground that defendant’s offense of resisting an officer was a misdemeanor under the penal code. The prosecution appealed. Held:

    The defendant may properly be charged as a second felony offender despite the designation of the crime of resisting an officer as a misdemeanor under the penal code.
    Reversed and remanded.
    Criminal Law — Habitual Offender — Felony — Resisting an Officer — Statutes.
    A felony, for purposes of the habitual offender statute, is any offense for which the offender may be punished by death or imprisonment for more than one year or any offense expressly designated by law to be a felony; a felon convicted of resisting an officer may be prosecuted under the habitual offender statute despite the fact that the statute creating the offense of resisting an officer defines the offense as a misdemeanor, since the maximum potential term of imprisonment for resisting an officer is two years (MCL 750.479, 769.10; MSA 28.747, 28.1082).
    Reference for Points in Headnote
    39 Am Jur 2d, Habitual Criminals and Subsequent Offenders § 15.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, Edward J. Grant,
      Prosecuting Attorney, and John W. Wildeboer, Assistant Prosecuting Attorney, for the people.
    Before: Beasley, P.J., and D. F. Walsh and J. E. McDonald, JJ.

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

   Beasley, P.J.

Defendant was convicted by jury of resisting a police officer contrary to MCL 750.479; MSA 28.747. He was sentenced to pay a fine of $100 or spend 60 days in jail and to pay court costs of $582.

The prosecutor had also filed a supplemental information charging defendant with being a second felony offender under MCL 769.10; MSA 28.1082. The trial judge dismissed the supplemental information on the ground that, although defendant had one prior felony conviction, defendant’s present offense was designated a misdemeanor under the applicable penal code provision, MCL 750.479; MSA 28.747 and, therefore, would not support application of the habitual offender statute. The prosecutor appeals this dismissal.

Defendant’s offense, that of resisting a police officer, is termed a misdemeanor under the penal code, but is punishable by up to two years imprisonment. MCL 750.479; MSA 28.747. The prosecutor argues that, for purposes of charging defendant as a second felony offender under the code of criminal procedure, the court must use the definition of "felony” as set forth in the criminal code rather than on the basis of whether a crime is nominally termed a misdemeanor or felony in the penal code. The trial judge held that, absent an express repealer clause by the Legislature, the court must be governed by the prior enacted designation of defendant’s offense as a misdemeanor under the penal code.

"Felony”, as used in the code of criminal procedure [MCL 761.1(g); MSA 28.843(g)] of which the habitual offender provision in question is a part, reads as follows:

"As used in this act:
"(g) 'Felony’ means an offense for which the offender, upon conviction, may be punished by death or by imprisonment for more than 1 year or an offense expressly designated by law to be a felony.” 1974 PA 63, § 1.

Prior to the amendment, a "felony” under the code of criminal procedure was "construed to mean an offense for which the offender, on conviction, may be punished by death or by imprisonment in state prison”. 1970 CL 761.1. Defendant’s offense, although termed a misdemeanor, would also appear to have been a felony under the penal code before the statute’s amendment as it is "punishable by imprisonment in the state prison not more than 2 years or by a fine of not more than 1,000 dollars”. 1970 CL 750.479.

The Legislature has expressed two intents as to the designated grade of defendant’s offense; under the penal code defendant’s activity is termed a misdemeanor, while under the later enacted code of criminal procedure it falls under the classification of a felony. The Legislature has the general power to designate both the grade and the punishment of criminal offenses. The habitual offender statute is an example of the Legislature’s intent to use this power to augment the permissible punishment for second and subsequent felony offenders rather than to make a separate substantive crime out of being an habitual offender.

The Legislature, in implementing its inherent power to define the grade of crimes, sets forth a uniform definition of the term "felony” for use when the code of criminal procedure applies, as in the instant case where the habitual offender statute is being applied. Although this uniform definition in MCL 761.1(g) does not expressly purport to affect or change the designated grade, as set forth under the prior enacted penal code, a legislature, enacting or amending a statute, must be presumed to have knowledge of existing statutes and laws.

This case does not present a situation where the Legislature has enacted two inconsistent penalties. If so, defendant could argue that he was entitled to receive the lesser of the two penalties. The statute governing prosecution of an habitual offender is clear in designating defendant’s offense as a felony, and the punishment for defendant’s activity falls within the felony definition under the criminal code.

Furthermore, we do not find the divergent designations of the grade of defendant’s offense to be irreconcilable. For purposes of the penal code alone, the crime of resisting a police officer is treated as a misdemeanor. However, any application of the code of criminal procedure would result in the characterization of defendant’s offense as a felony.

Although designating defendant’s offense as a felony under the code of criminal procedure eliminates most, if not all, of the effect the prior designation of the offense as a misdemeanor under the penal code, the Legislature has the inherent power to define crimes, their grades and allowable punishment. We must, if at all possible, uphold the legislative determination as expressed in the applicable statute.

Therefore, we reverse the trial court’s dismissal of the supplemental information charging defendant as a second felony offender and remand for trial on the supplemental information.

Reversed and remanded.

        People v Causley, 299 Mich 340; 300 NW 111 (1941).

        People v Shotwell, 352 Mich 42; 88 NW2d 313 (1958).

         Skidmore v Czapiga, 82 Mich App 689, 691; 267 NW2d 150 (1978).

        People v Lockhart, 242 Mich 491; 219 NW 724 (1928); People v Hoaglin, 262 Mich 162; 247 NW 141 (1933).

        People v Duhamel, 72 Mich App 77; 248 NW2d 670 (1976).