author: N. A. Baguley, J.

text:
    STATE TREASURER v EATON
    Docket No. 78-1687.
    Submitted March 12, 1979, at Lansing.
    Decided September 6, 1979.
    In 1978, the State Treasurer brought an action in the Midland Circuit Court for the sale of certain lands in Midland County belonging to defendant taxpayer, Henry G. Eaton. The complaint alleged that the taxes were unpaid since 1975. Defendant contested the validity of the taxes. In his written objections he claimed he had gone before the local board of review to challenge the fairness of the assessment. Plaintiff concedes defendant’s appearance before the local board but claims he did not proceed with any other administrative review. Defendant objected to his assessment on the grounds of discrimination, partiality and fraud. Midland Circuit Court, Tyrone Gillespie, J., conducted a hearing on defendant’s objections. The court found the property was overvalued and overassessed. The taxes were reduced with the proviso that the land would be sold if defendant failed to pay the lowered taxes within ten days. Plaintiff appeals the circuit court’s tax reduction claiming that the court lacked authority to reduce the assessment because defendant failed to exhaust his right to direct review to the state tax tribunal and that the court exceeded its authority by reducing defendant’s assessment absent a finding of fraud. The issue on appeal is whether a circuit court in an action to foreclose a tax lien has jurisdiction to review the validity of the tax upon the taxpayer’s objection, or whether the tax tribunal formed pursuant to the Tax Tribunal Act is the appropriate forum. Held:

    It is unnecessary to determine whether there was a sufficient showing and finding of fraud to support the circuit court’s redetermination of defendant’s taxes because the circuit court did not have jurisdiction to review defendant’s tax question. The provisions of the recently enacted Tax Tribunal Act make the state tax tribunal the exclusive forum for such review. Defendant, by his written objections, asserted a tenable claim of fraud by the local board of review in assessing his property sufficient to support a finding of illegality under the General Property Tax Act. Therefore, he is entitled to collateral review of his tax assessment by the tribunal. The circuit court should have postponed or dismissed its action to give defendant an opportunity to appear before the tribunal for a determination of tax validity or a final disposition of his tax problem.

      References for Points in Headnotes

       72 Am Jur 2d, State and Local Taxation § 787.

       72 Am Jur 2d, State and Local Taxation §§ 787, 1032.

       72 Am Jur 2d, State and Local Taxation §§ 778, 787.

       72 Am Jur 2d, State and Local Taxation §§ 787, 1140.

      Reversed and transferred to the tax tribunal.
    1. Taxation — Property Taxes — Collateral Attack — Appeal — Amount and Validity of Assessments.
    A taxpayer’s failure to contest a property tax assessment by direct appeal precludes collateral attack on the amount of the assessment but does not necessarily preclude collateral attack on the validity of the assessment.
    2. Taxation — Tax Liens — Sale of Property — Illegal Assessments — Review — Redetermination of Tax — Statutes.
    A taxpayer may object to the proposed sale of his or her property in a suit brought by the state to enforce a tax lien on the grounds that the taxes assessed are illegal and if the reviewing body finds any portion of the tax to be illegal, it has the authority to redetermine the tax assessment (MCL 211.66, 211.76; MSA 7.111, 7.122).
    3. Taxation — Property Taxes — Collateral Review — Fraud — Illegality — Statutes.
    A taxpayer is entitled to collateral review of his tax assessment by the state tax tribunal where, by his written objections in an action to foreclose a tax lien, he has asserted a tenable claim of fraud by the local board of review sufficient to support a finding of illegality under the General Property Tax Act (MCL 211.76; MSA 7.122).
    4. Taxation — Property Taxes — State Tax Tribunal — Jurisdiction — Review — Refunds — Redetermination — Statutes.
    The state tax tribunal has broad jurisdiction over proceedings pertaining to property tax assessments including: (1) exclusive and original jurisdiction in proceedings for direct review of a final decision, finding, ruling, determination, or order of an agency relating to assessment, valuation, rates, special assessments, allocation, or equalization, under property tax laws, and (2) proceedings for refunds or redetermination of a tax under the property tax laws (MCL 205.731; MSA 7.650[31]).

      5. Taxation — Tax Tribunal Act — Jurisdiction — Statutes.
    The provisions of the Tax Tribunal Act are effective notwithstanding the provisions of any statute, charter or law to the contrary (MCL 205.707; MSA 7.650[7]).
    6. Taxation — Property Taxes — State Tax Tribunal — Jurisdiction — Circuit Courts — Conflicts of Rulings — Agency Decisions.
    The state tax tribunal was vested with broad authority over property tax assessments to insure that tax contests would be resolved in the first instance by an expert body.
    7. Taxation — Property Taxes — State Tax Tribunal — Circuit Courts — Jurisdiction — Statutes.
    The jurisdictional powers granted the state tax tribunal under the Tax Tribunal Act supersede those previously reserved to the circuit court; therefore, when a taxpayer raises a tenable issue regarding the validity of his property tax in circuit court, the circuit court should postpone or dismiss its action until the taxpayer has an opportunity to appear before the tribunal for a determination of tax validity or a final disposition of his tax problem (MCL 205.741; MSA 7.650[41]).
    8. Taxation — Property Taxes — State Tax Tribunal — Jurisdiction — Statutes.
    The state tax tribunal, where it has acquired jurisdiction of a property tax case, has the power to grant other relief or issue writs, orders, or any directives which it deems necessary or appropriate in the process of disposition of the matter (MCL 207.732[c]; MSA 7.605[32][c]).

      Doyle A. Rowland, Prosecuting Attorney, and Patricia A. O’Gorman, Assistant Prosecuting Attorney, for plaintiff.
    Before: Cynar, P.J., and J. H. Gillis and N. A. Baguley, JJ.

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

   N. A. Baguley, J.

The issue on appeal is whether a circuit court in an action to foreclose a tax lien, see generally MCL 211.60-211.69; MSA 7.104-7.114, has jurisdiction to review the validity of the tax upon the taxpayer’s objection, or whether the tax tribunal formed pursuant to the Tax Tribunal Act, MCL 205.701 et seq.; MSA 7.650(1) et seq., is the appropriate forum. By its action in this case, the circuit court implicitly ruled that it had jurisdiction. We reverse.

In February, 1978, the State Treasurer petitioned the Midland County Circuit Court for the sale of certain lands in Midland County belonging to the defendant taxpayer. The petition alleged that taxes assessed on the property were unpaid since 1975.

Defendant contested the validity of the taxes. In his written objections, he claimed that he had gone before the local board of review to challenge the fairness of the assessment and had written to the "Tax Commission” about the situation "with no results and only referrals to other offices”. Plaintiffs concede that defendant appeared before the local board of review to protest the assessment in 1975, but claim that defendant did not proceed with any other administrative review. Defendant objected to his assessment on the grounds that (1) he had been discriminated against, (2) the local board of review had been partial to friends, relatives and township board members, and (3) when defendant asked to have the assessment on his land lowered, the board instead raised the assessment on adjoining land belonging to the former township supervisor.

The circuit court conducted a hearing on defendant’s objections. Based upon the documents and testimony received, the court found that defendant’s property had been overvalued and overassessed. The court lowered the fair market valuation from $11,270 to $8,420 and lowered the assessed valuation from $6,250 to $4,160. The judge ordered the land to be sold if defendant failed to pay the lowered taxes within ten days of the court’s final decree.

Plaintiffs appeal the lower court’s reduction of the assessment. Plaintiffs claim the trial court lacked authority to reduce the assessment in this collateral proceeding because defendant failed to exhaust his right to direct review by the state tax tribunal, MCL 205.731; MSA 7.650(31). In addition, the state claims that even if defendant were entitled to court review of his assessment, the circuit court exceeded its authority by reducing defendant’s assessment absent a finding of fraud.

We hold that defendant was entitled to collateral review of his tax assessment to determine its validity, but that the circuit court did not have jurisdiction to review the question. By virtue of the provisions of the recently enacted Tax Tribunal Act, the exclusive forum for such review is now the tax tribunal. Because of our decision on this issue, we need not determine whether there was a sufficient showing and finding of fraud below to support the circuit court’s redetermination of defendant’s taxes.

I. Right to Collateral Review

A taxpayer’s failure to contest a property tax assessment by direct appeal precludes collateral attack on the amount of the assessment, but does not necessarily preclude collateral attack on the validity of the assessment. See Auditor General v Smith, 351 Mich 162; 88 NW2d 429 (1958). Under a provision of the General Property Tax Act, MCL 211.66; MSA 7.111, a taxpayer may object to the proposed sale of his or her property in a suit brought by the state to enforce a tax lien on the grounds that the taxes assessed are illegal. If the reviewing body in such a § 66 proceeding finds any portion of the tax to be illegal, it has the authority to redetermine the tax assessment.

Section 76 of the General Property Tax Act sets forth the acceptable bases for finding a tax illegal:

"In any suit or proceeding to enforce or set aside any tax before sale, such tax shall be held illegal only for 1 of the following reasons:
"First, That no law authorizes such tax;
"Second, That the person or persons appointed to decide whether a tax shall be raised under a given law, have acted without jurisdiction, or have not imposed the tax in question;
"Third, That the person or property assessed was exempt from the taxation in question or was not legally assessed;
"Fourth, That the tax has been paid;
"Fifth, That the supervisor or board of review in assessing a person or property for taxation, or in the apportionment of the tax to the person or property in question acted fraudulently.
"If any such illegality, omission or fraud affects the amount of one [1] tax only, the tax shall be sustained so far as the same is legal and just.” MCL 211.76; MSA 7.122.

Defendant, by his written objections, asserted a tenable claim of fraud by the board of review in assessing his property sufficient to support a finding of illegality under § 76 of the General Property Tax Act. He was thus entitled to collateral review of his tax assessment under § 66 of the same act.

II. The Proper Forum for Review

According to § 66 of the General Property Tax Act, jurisdiction over collateral review of a tax assessment under that provision was in the circuit court with appeal to the Court of Appeals.

In 1973, however, the Legislature enacted the Tax Tribunal Act, thereby authorizing the formation of a state tax tribunal with broad jurisdiction over proceedings pertaining to property tax assessments. Section 31 of the act provides as follows:

"The tribunal’s exclusive and original jurisdiction shall be:
"(a) A proceeding for direct review of a final decision, finding, ruling, determination, or order of an agency relating to assessment, valuation, rates, special assessments, allocation, or equalization, under property tax laws.
"(b) A proceeding for refund or redetermination of a tax under the property tax laws.” MCL 205.731; MSA 7.650(31).

The provisions of the act are effective notwithstanding the provisions of any statute, charter or law to the contrary. MCL 205.707; MSA 7.650(7).

One apparent legislative purpose of vesting the tax tribunal with such broad authority over property tax assessment questions was to assure that tax contests would be resolved in the first instance by an expert body. Cf., Davis, Administrative Law Text, § 19.01, pp 373-374 (rationale behind doctrine of primary jurisdiction).

In another situation similar to that of the instant case, this Court has already recognized that the jurisdictional powers granted the state tax tribunal under the Tax Tribunal Act supersede those previously reserved to the circuit court. Under § 53 of the General Property Tax Act, a dissatisfied taxpayer could pay the assessed tax under protest and then sue in a local circuit court for a refund. This Court held in Eyde v Lansing Twp, 79 Mich App 358; 261 NW2d 321 (1977), that the jurisdictional mandate in the Tax Tribunal Act, MCL 205.731, had divested the circuit court of jurisdiction over suits for a refund. See also MCL 205.741; MSA 7.650(41), MCL 205.774; MSA 7.650(74), and Xerox Corp v Kalamazoo, 76 Mich App 150; 255 NW2d 797 (1977).

Today we hold that an objection to the validity of a tax assessment, which was previously addressable to the circuit court in an action to enforce a tax lien under § 66 of the General Property Tax Act, must now be addressed to the tax tribunal. The Legislature has specifically provided in the Tax Tribunal Act that:

"A person or legal entity which, immediately before the effective date of this act, was entitled to proceed before the state tax commission or circuit court of this state for determination of a matter subject to the tribunal’s jurisdiction, as provided in section 31, shall proceed only before the tribunal.” MCL 205.741; MSA 7.650(41).

Common sense clearly dictates that the proceeding described in § 66 for contesting the validity of a tax assessment and redetermining the tax upon a finding of illegality is "[a] proceeding for * * * redetermination of a tax under the property tax law” within the meaning of MCL 205.731. Consistent with the language and purpose of the Tax Tribunal Act, such a proceeding must be held before the tax tribunal.

Thus, when a taxpayer raises a tenable issue regarding the validity of any tax in an action to enforce a tax lien, the circuit court should postpone its action on the case until the taxpayer has had a reasonable opportunity to obtain a determination by the tax tribunal as to the validity of the tax. Cf. Davis, supra. In some instances it may be appropriate to dismiss the case altogether to allow for a complete and final disposition of the matter by the tax tribunal. We note that among the powers of the tax tribunal is the power to "[grant] other relief or [issue] writs, orders, or directives which it deems necessary or appropriate in the process of disposition of a matter of which it may acquire jurisdiction.” MCL 205.732(c); MSA 7.605(32)(c).

In the instant case the circuit court exceeded its authority by redetermining defendant’s tax on the subject property.

Reversed and transferred to the tax tribunal for further proceedings consistent with this opinion. No costs, a public question being involved.

       Although Eyde, supra, and Xerox Corp, supra, do not mention this fact, we note that MCL 211.53; MSA 7.97, was amended in 1976 and the portion of that section allowing a taxpayer suit for refund of taxes paid under protest was deleted.


source: Caselaw Access Project

author: D. E. Holbrook, Jr., J.

license: Public Domain

text:
    BRENEMAN v BRENEMAN
    Docket No. 78-3747.
    Submitted June 5, 1979, at Grand Rapids.
    Decided September 6, 1979.
    Plaintiff, Michael B. Breneman, and defendant, Janice M. Breneman (Wilcox), were divorced in 1972. The defendant was awarded custody of the parties’ two minor children, Brian and Jeffrey. In 1975 the trial court modified the original judgment, permitting the defendant to remove the domicile of the minor children to Illinois.
    On July 19, 1978, while plaintiff was exercising his visitation rights with Brian in Michigan, the plaintiff filed with the original trial court a petition for change of custody with respect to Brian and obtained from the court an ex parte restraining order prohibiting the defendant from attempting to assert custody over Brian during the pendency of a hearing on the motion for change of custody. The grounds asserted by the plaintiff were that the defendant had inflicted and could reasonably be expected to continue to inflict physical and emotional damages upon the person of Brian Breneman. The defendant made a motion requesting the court to dismiss the plaintiff’s petition, claiming lack of jurisdiction and forum non conveniens under the provisions of the uniform child custody jurisdiction act. The Kalamazoo Circuit Court, Donald T. Anderson, J., denied the defendant’s motion and continued the preliminary restraining order until the date set by the court for hearing the plaintiff’s petition for change of custody. At the hearing, Brian Breneman, then 11 years old, was permitted to testify over the defendant’s objection.

      References for Points in Headnotes

       42 Am Jur 2d, Infants §§ 28, 29, 33.
    59 Am Jur 2d, Parent and Child § 41.

       42 Am Jur 2d, Infants § 33.

       42 Am Jur 2d, Infants §§ 33-41.

       42 Am Jur 2d, Infants §§ 32, 44-47.
    81 Am Júr 2d, Witnesses §§ 88-93.
    Competency of young child as witness in civil case. 81 ALR2d 386.

       81 Am Jur 2d, Witnesses §§ 90, 81.
    Competency of young child as witness in civil case. 81 ALR2d 386.

       42 Am Jur 2d, Infants §§ 190, 194.

      The trial court determined that a change of custody was justified and an order modifying the judgment of divorce and granting custody of Brian to the plaintiff was entered. The defendant appeals, alleging that the trial court erred reversibly in refusing to decline jurisdiction and in permitting Brian to testify and that an award of $400 for attorney fees was unreasonable. Held:

    1. The trial court was a court competent to make child custody determinations. The uniform child custody jurisdiction act confers on such courts the discretion to decline jurisdiction over a child custody matter if it finds that it is an inconvenient forum and that a court in another state is a more appropriate forum. The trial judge in the custody matter at bar was the same judge who had granted the divorce and who had heard disputes concerning the custody of the child involved and the plaintiff’s visitation rights. Also, allegations in the plaintiff’s petition coupled with the testimony of the child at the hearing on the defendant’s motion for the trial court to decline jurisdiction were sufficient to satisfy the requirement of the forum non conveniens section of the act that an emergency existed and that the child had been subjected to mistreatment or abuse. It was not an abuse of discretion for the trial judge to refuse to decline jurisdiction on the basis of forum non conveniens.

    2. The trial court specifically questioned Brian to determine his competency and ability to tell the truth before permitting the child to testify. There was no abuse of discretion in allowing him to testify.
    3. An award of attorney fees in a child custody matter is within the sound discretion of the trial court. There was no abuse of this discretion.
    Affirmed.
    1. Infants — Child Custody — Jurisdiction — Physical Presence In State — Emergency — Statutes.
    A Michigan court which is competent to decide child custody matters has jurisdiction to make a child custody determination where the child whose custody is in issue is physically present in the state and it is necessary in an emergency to protect the child because the child has been subjected to mistreatment or abuse (MCL 600.653[l][c]; MSA 27A.653[l][c]).
    2. Infants — Child Custody — Jurisdiction — Circuit Court — Statutes.
    A circuit court is competent to determine child custody matters and may assume jurisdiction under the uniform child custody jurisdiction act (MCL 600.653; MSA 27A.653).
    3. Infants — Child Custody — Uniform Child Custody Jurisdiction Act — Discretion — Statutes.
    A circuit court which has jurisdiction under the uniform child custody jurisdiction act to make an initial or modification judgment as to child custody may decline to exercise jurisdiction if the court finds that it is an inconvenient forum and that a court of another state is a more appropriate forum; a decision whether or not to decline jurisdiction is discretionary with the circuit court (MCL 600.657; MSA 27A.657).
    4. Infants — Child Custody — Witnesses — Child Abuse.
    It was not error for a trial court in a child custody matter to allow an 11-year-old child to give testimony concerning the alleged abuse and mistreatment inflicted upon him by his mother and stepfather.
    5. Evidence — Competence of Witness — Child — Rules of Evidence.
    As a general rule an 11-year-old child is competent to testify (MRE 601).
    6. Infants — Child Custody — Attorney Fees.
    Attorney fee awards in child custody cases are within the sound discretion of the trial judge.

      Harry Contos, Jr., for plaintiff.

      Russell A. Kreis, for defendant.
    Before: R. B. Burns, P.J., and D. E. Holbrook, Jr. and B. D. Burdick, JJ.

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

   D. E. Holbrook, Jr., J.

Defendant appeals as of right from a September 6, 1978 trial court order modifying a previously entered divorce judgment changing custody of Brian Breneman from defendant to plaintiff.

The parties were divorced in 1972 and custody of the parties’ two minor children, Brian and Jeffrey, was awarded to defendant. In 1975 the trial court modified the original judgment permitting defendant to remove the domicile of said minor children to Illinois until such children attained the age of 18 years or until further order of the court.

Following entry of the divorce judgment and prior to July 19, 1978, the trial court heard numerous motions for modifications of the judgment with respect to visitation and change of custody.

On July 19, 1978, and while plaintiff was exercising his visitation rights with Brian, in Michigan, plaintiff filed with the original trial court a petition for change of custody with respect to Brian and obtained from such court an ex parte restraining order prohibiting defendant from attempting to assert custody over Brian Breneman during the pendency of a hearing on the motion for change of custody. The grounds asserted by plaintiff were that defendant had inflicted and could reasonably be expected to continue to inflict physical and emotional damages upon the person of Brian Breneman. Specifically it was alleged that Brian had been beaten about the head by defendant with her fists and a paddle, had been slapped by defendant’s husband with sufficient force so that he was knocked from a chair to the floor and that as a result of beatings by defendant he had suffered a bloody nose, bumps on his head and a laceration under his eye.

Subsequent to filing the petition for change of custody, defendant moved to dismiss plaintiff’s petition claiming lack of jurisdiction and forum non conveniens under the provisions of the uniform child custody jurisdiction act. MCL 600.651 et seq.; MSA 27A.651 et seq.

Hearing was held on July 28, 1979, following which the trial court denied defendant’s request to decline jurisdiction and continued the preliminary restraining order to August 29, 1978, the date set by the court for hearing plaintiffs petition for change of custody.

At the hearing aforesaid, Brian Breneman, age 11 years and 3 months, was permitted to testify over defendant’s objection. The boy testified to an incident which occurred on June 22, 1978, where defendant had sent him to his room, followed shortly thereafter, jumped on the bed and proceeded to beat him with a paddle resulting in injuries to his side, bruises on his arms, bumps on his head and a cut underneath his eye. He further testified that during the beating the paddle broke and that defendant continued to strike him with the broken paddle.

Brian further testified that later the same day, when he had a baseball hard-hat on his head and glasses on his face, he was struck by his stepfather with such force that he was knocked off a chair and onto the floor. As a result Brian claimed he was stunned and that his glasses and hat fell off.

Additionally, Brian testified that following a court hearing the previous fall he was called into the house, told to sit on a chair and was struck in the nose by defendant’s fist resulting in a bloody nose. Brian also testified that he was fearful to return to his mother’s home because he felt similar incidents would subsequently occur.

On August 29, 1978, the trial court heard the testimony of numerous witnesses and, over the defendant’s objection, the testimony of Brian Breneman following which the court determined that a change in custody was justified. Pursuant to such determination an order modifying the judgment of divorce and granting custody of Brian to plaintiff was entered on September 6, 1978.

From the above modification judgment defendant appeals, claiming that the trial court reversibly erred in refusing to decline jurisdiction under the uniform child custody jurisdiction act, specifically the jurisdiction section, MCL 600.653; MSA 27A.653, and the forum non conveniens section, MCL 600.657; MSA 27A.657. Defendant also claims reversible error occurred because the court, over defendant’s objection, permitted Brian to testify and further contends that an award of but $400 for attorney fees was unreasonable. We affirm.

MCL 600.653(1); MSA 27A.653(1) provides in pertinent part as follows:

"A court of this state which is competent to decide child custody matters has jurisdiction to make a child custody determination by * * * modification * * * judgment if any of the following exist.”

One provision conferring jurisdiction is found in MCL 600.653(l)(c); MSA 27A.653(l)(c) which provides in pertinent part as follows:

"The child is physically present in this state and * * * it is necessary in an emergency to protect the child because the child has been subjected to * * * mistreatment or abuse.”

We find that the allegations contained in the petition for modification coupled with the testimony of the child at the hearing on defendant’s motion for the trial court to decline jurisdiction were amply sufficient to satisfy the. requirement that an emergency existed and that the child had been subjected to mistreatment or abuse.

That the child was physically present in the state is not open to question since at the time the petition was filed and at the time of hearing on defendant’s motion to dismiss for lack of jurisdiction plaintiff was exercising his visitation rights with said child in Michigan. Moreover the child was still present in Michigan at the time of final hearing on the matter.

Furthermore, it cannot be argued that a circuit court, and especially the same court which granted the divorce judgment, is not a court competent to determine child custody matters.

We hold, therefore, that the trial court did not err in assuming jurisdiction under the provisions of the jurisdiction section of the uniform child custody jurisdiction act. MCL 600.653; MSA 27A.653.

Under the forum non conveniens section of the act, MCL 600.657; MSA 27A.657, it is stated that a court which has jurisdiction under §§ 651-673 to make an initial or modification judgment may decline to exercise jurisdiction if it finds that it is an inconvenient forum and that a court of another state is a more appropriate forum. By the use of the word may it is clear the Legislature intended that the question as to whether to decline jurisdiction on such basis is discretionary with the trial court. Here the trial judge who refused to decline jurisdiction was the same trial judge who heard and granted the original divorce and the same trial judge who on a number of other occasions had heard disputes concerning change of custody and matters relating to visitation rights. In short, the trial judge was extremely familiar with the entire matter and had been for a number of years. He therefore did not abuse his discretion in refusing to decline jurisdiction on the basis of forum non conveniens.

With respect to defendant’s claim that the trial court erred in permitting Brian, age 11, to testify in open court defendant refers us to the case of Burghdoff v Burghdoff 66 Mich App 608; 239 NW2d 679 (1976).

In Burghdoff the Court stated:

"The foregoing clearly implies that a child who is the subject of a custody dispute, who most likely has already undergone the agony inherent in the breakup of a family unit, should not be subjected to the additional pain of having to testify in open court and be cross-examined as he would be if he were a witness in ordinary criminal or civil litigation.” Id., at 613.

However, the Court stated the foreging as it applied to matters concerning the preference of the child. Id., at 612-613. The Court held that policy reasons required that an in-chambers conference be held in order to enable the judge to determine and understand the preference of the child. Id., at 612.

In the instant case, Brian Breneman was not called to testify in order for the trial judge to determine and understand his preference. He was called in order to give testimony concerning the alleged abuse and mistreatment inflicted upon him by his mother and stepfather. Since Brian was the only witness with firsthand knowledge to give his point of view, the trial court did not err in allowing him to testify. The policy considerations of Burghdoff, supra, do not apply to the instant case. Defendant’s argument is therefore without merit.

Additionally, as a general rule an 11-year-old child is competent to testify. MRE 601 provides that unless the court finds after questioning a person that he does not have sufficient physical or mental capacity or sense of obligation to testify truthfully and understandably, every person is competent to be a witness unless otherwise provided. In this instance the trial court specifically questioned the child to determine his competency and ability to tell the truth before it permitted him to testify. We find no abuse of discretion on the part of the trial court.

As to defendant’s claim that an attorney fee award of $400 is unreasonable we only comment that attorney fee awards are within the sound discretion of the trial judge. Eigner v Eigner, 79 Mich App 189; 261 NW2d 254 (1977). Having reviewed the record we find no abuse thereof in the instant case.

Affirmed.


author: D. E. Holbrook, J.

text:
    EMERSON v ARNOLD (AFTER REMAND)
    Docket No. 78-3775.
    Submitted June 11, 1979, at Lansing.
    Decided September 6, 1979.
    Plaintiff, William H. Emerson, and defendant’s decedent, Warren A. Emerson, were brothers engaged in two business partnerships involving two basically identical buy-sell agreements for the express intention of avoiding "a discontinuance of the business of the firm[s]” and assuring each partner that "his respective estate will receive the full value for his interest”. The agreements established an initial valuation for each partnership interest and provided for the purchase of life insurance policies on each other’s life to supply purchase funds. The agreements recited that the stipulated valuations would remain in effect "unless and until” different valuations were established, "provided, however, that as soon as practicable after July 1st and January 1st of each year hereafter, said partners shall reaffirm the valuation last made or establish a new value for said respective partnership interests”. The brothers never reaffirmed or reevaluated the partnership interests. Plaintiff’s brother died and plaintiff tendered the proceeds of the insurance contracts on his brother’s life to defendant, Raymond V. Arnold, executor of his brother’s estate. Defendant refused to convey decedent’s interest in the partnership. Plaintiff sued defendant in the Jackson Circuit Court for conveyance of the interests and testified that whenever the brothers felt their respective interests in the partnerships exceeded the insurance coverage they simply bought more insurance. Defendant counterclaimed, alleging plaintiff had not paid the full value of decedent’s interest. The court, Russell E. Noble, J., granted summary judgment for plaintiff, finding that the appropriate means of determining the value of decedent’s interest had been utilized, that the conditions for the transfer of decedent’s interest to plaintiff were satisfied and that there was no ambiguity in the agreements or the partners’ subsequent conduct sufficient to raise a question of fact.

      References for Points in Headnotes

       71 Am Jur 2d, Specific Performance § 4.

       27 Am Jur 2d, Equity § 19.

       27 Am Jur 2d, Equity § 239.

       46 Am Jur 2d, Judges §§ 166-169.

       27 Am Jur 2d, Equity §§ 266, 267.

       5 Am Jur 2d, Appeal and Error § 900.

       17 Am Jur 2d, Contracts §§ 245, 255.

      The defendant appealed. The Court of Appeals, in an order of October 30, 1975, granted the plaintiff’s motion to affirm the summary judgment. The defendant then sought leave to appeal to the Supreme Court. In lieu of granting leave to appeal, the Supreme Court vacated the summary order of affirmance of the Court of Appeals and remanded the case to the Court of Appeals for plenary consideration. 397 Mich 821 (1976). On remand, the Court of Appeals reversed the trial court, and remanded for trial, holding that there was a genuine issue of fact and that summary judgment for plaintiff was improper. 92 Mich App 159 (1979). A trial was then held on the merits of the case. The trial court determined that the parties had intended that the "full value”, which plaintiff was required to pay under the buy-sell provisions of the agreements, was the amount of the life insurance proceeds. A judgment granting specific performance for plaintiff was entered, Russell E. Noble, J. The defendant appeals, raising three issues: 1) whether defendant was entitled to a trial by jury on the issue of liability, 2) whether the trial judge should have been disqualified from hearing the case by reason of his having granted the plaintiff’s motion for summary judgment which was reversed on appeal, and 3) whether the trial Court properly determined, pursuant to the buy-sell provisions of the partnership agreements, that the fqll value of the partnership interests of the deceased partner required only the payment of the proceeds of life insurance received upon that partner’s death. Held:

    1. The trial court was construing a written instrument, a proper function of a court of equity. The defendant was not entitled to a trial by jury.
    2. The defendant’s motion to disqualify the trial judge failed to show any allegations of actual prejudice. The denial of the motion to disqualify the trial judge was without error.
    3. The intent of the partners, as evidenced by the buy-sell provisions of the agreements, was to avoid a discontinuation of the business of the firms and to assure each partner that his respective estate would receive the full value for his interests. A discontinuance of the business of the firms has been avoided, leaving only the ascertainment of the meaning of “full value”. The term in this case, means the greatest worth of the deceased partner’s interest. The full value of the deceased brother’s interest is in excess of the insurance proceeds tendered by the plaintiff to the defendant. The trial court’s construction of the agreements is contrary to the intent of the parties.
    Reversed and remanded for further proceedings, with a new trial judge to be assigned.
    1. Specific Performance — Equity.
    An action for specific performance of an agreement is equitable in nature.
    2. Equity — Contracts — Construction of Written Agreement.
    The construction of a written agreement in the course of an action seeking equitable relief is a proper function of a court of equity.
    3. Equity — Jury Trial.
    A party is not entitled to a jury trial in an action presenting only equitable issues.
    4. Judges — Disqualification of Judge — Prejudice — Bias.
    Actual prejudice or bias must be shown before a trial judge will be disqualified; the fact that a judge was involved in a prior trial or other proceedings between the parties does not disqualify the judge from subsequently conducting the trial of the case.
    5. Appeal and Error — Equity — De Novo Review.
    The findings of a court of equity are reviewed de novo by the Court of Appeals, with due deference being given to the findings of the trial court.
    6. Appeal and Error — Findings of Fact.
    The Court of Appeals is required to sustain on appeal the findings of a trial court unless the Court of Appeals becomes convinced, upon review of the evidence, that had it heard the evidence in the first instance it would have been compelled to rule contrary to the ruling actually made by the trial court.
    7. Contracts — Intention of Parties — Reasonable Inferences — Construction of Contract.
    The intention of the parties to a contract, as expressed in their agreement, and the reasonable inferences therefrom must be controlling in the construction of the contract.

      Rosenburg, Stanton, Bullen & Nelson, P.C. (by Philip M. Moilanen), for plaintiff.

      Edward L. Cobb, P.C., for defendant.

      Before: Allen, P.J., and T. M. Burns and D. E. Holbrook, JJ.

       Former Court of Appeals Judge, sitting on the Court of Appeals by assignment pursuant to Const Í963, art 6, § 23 as amended in 1968.

   After Remand

D. E. Holbrook, J.

This case involves two partnership agreements between two brothers, involving a printing company and a grocery store. One of the brothers died in September of 1968, thus ending the co-partnerships. The survivor of the brothers, plaintiff herein, tendered $59,665.20, the proceeds from life insurance policies taken out by plaintiff on the life of defendant’s decedent. Plaintiff claimed this was the proper value to be paid the estate under the agreements for the interest of the decedent. The administrator of the decedent’s estate, defendant herein, refused the tender, claiming the agreements called for full value payment, and that the $59,665.20 tendered was greatly insufficient because the full value of the decedent’s interests would require an additional payment of $96,000.

Plaintiff filed a complaint September 14, 1971, seeking specific performance of the partnership agreements between plaintiff and his brother, Warren A. Emerson, deceased, including the conveyance to plaintiff of all partnership real estate and personal property. The defendant, administrator of the Estate of Warren A. Emerson, deceased, filed on November 3, 1971, an answer and counterclaim praying that the court enter judgment for defendant for the unpaid share of the full value of the partnership interests.

The plaintiff filed a motion for summary judgment denying relief to defendant under his counterclaim, and granting the relief prayed for by plaintiff for specific performance. There were several amendments to the original motion and several answers filed thereto by defendant. On February 11, 1975, the trial court issued an opinion determining the motion for summary judgment and on February 21, 1975, signed an order in accord with the opinion, dismissing the defendants counterclaim and ordering summary judgment for plaintiff granting him specific performance as prayed for in his complaint.

This summary judgment was appealed to this Court by defendant and our Court granted the plaintiff’s motion to affirm the summary judgment on October 30, 1975. This order was appealed to our Supreme Court, resulting in the order of our Court being vacated and remanded to our Court for plenary consideration. On remand our Court filed a per curiam opinion, stating in pertinent part:

"Plaintiff and defendant’s decedent were brothers. In 1956 they entered into two separate partnership agreements, respectively involving a printing company and a small grocery store. Through their attorney, the brothers established two, basically identical buy-sell agreements to provide for disposition of the assets of these partnerships upon the death of either brother. Their express intention was to avoid 'a discontinuation of the business of the firm[s]’, and to assure each partner that 'his respective estate will receive the full value for his interest’.
"The agreements establish an initial valuation for each brother’s share of $25,000 in the printing business and $20,000 in the grocery store. These sums were to be guaranteed by the proceeds from life insurance policies purchased by each brother on the other’s life.
"The agreements further recited that the stipulated valuations would remain in effect 'unless and until’ different valuations were established, 'provided, however, that as soon as practicable after July 1st and January 1st of each year hereafter, said partners shall reaffirm the valuation last made or establish a new value for said respective partnership interests’.
"The brothers never reaffirmed or revalued the interests despite the fact that the attorney who drafted the agreements provided them with prepared forms for that purpose. According to plaintiff, the surviving partner, whenever the brothers felt that their respective interests in the partnerships exceeded the insurance coverage they simply bought more insurance. At the time of decedent’s death, September 10, 1968, the partnerships’ insurance proceeds on his life totalled $59,665.20.
"As provided in the agreements, plaintiff paid this amount to decedent’s executor (the same attorney who had drafted the agreements). Defendant, however, refused to convey decedent’s interest in the two partnerships as required by the agreements alleging that plaintiff had not paid the full value of decedent’s interest. Defendant counterclaimed that the original valuations had expired and that defendant was entitled to one-half of the fair market value of the businesses as of the date of decedent’s death. Defendant thus sought $96,000 in addition to the $59,665.20 in insurance benefits previously tendered.
"It is settled that '[f]or a summary judgment granted under GCR 1963, 117.2(3) to be upheld on appeal, it must be clear that, giving the opposing party the benefit of every reasonable doubt, there is no genuine issue as to any material fact’. Wynglass v Prudential Life Ins Co of America, 68 Mich App 514, 516; 242 NW2d 824 (1976). Applying this rigorous standard, we respectfully disagree with the opinion of the trial court.
"The mandatory language of the agreements that the partners 'shall’ reaffirm or revalue their interest manifests their apparent intent to keep the values current. While the agreements are explicit as to what steps had to be taken to make a new valuation effective, they do not mention what effect, if any, the partners’ failure to comply with this seemingly mandatory provision was to have on the values initially established. Where there is uncertainty in an agreement because of incompleteness, it is for a jury to determine the true nature of the agreement. Anderson v Brown, 21 Mich App 699; 176 NW2d 457 (1970).
"Giving every reasonable doubt to defendant, it cannot be said that this case presents no genuine issue as to any material fact.
"Reversed and remanded for trial. Costs to plaintiff.”

Prior to trial on remand, a pre-trial conference was held on June 17, 1977, and the pre-trial summary states in part:

"This pretrial conference is limited to the factual issues of liability, which shall be tried before the Court, without a jury, in accordance with the agreement of counsel recited by Judge Dalton in his unchallenged pretrial summary dated March 9, 1973.”

Defendant moved to set aside the pre-trial summary and order. Defendant further sought to have a jury trial on the issue of liability and to have Judge Noble disqualified from hearing the matter.

All of these motions were duly denied with the matter of disqualification assigned to and decided by another judge in the circuit, on September 28, 1977.

Trial was held on March 29, 1978. The parties entered a stipulation of facts and further stipulated the various depositions and exhibits were to be admitted into evidence.

On August 22, 1978, the trial court issued an opinion in which it was determined that the parties had intended that the "full value” which plaintiff was required to pay under the buy-sell provisions of the agreements was the amount of the life insurance proceeds. Accordingly, specific performance was ordered in plaintiffs favor. Judgment was entered pursuant to that opinion on September 1, 1978.

Defendant appeals from that judgment as of right and raises three issues on appeal.

I. Was the defendant entitled to a trial by jury on the issue of liability?

At the March 1973 pre-trial conference the summary provided in part as follows:

"Liability will be tried to the Court first by agreement of counsel and the valuation of assets will be tried to a jury.”

On remand, a pre-trial conference was held on June 17, 1977, and that summary reiterated the arrangement made in the March 1973 pre-trial summary.

The trial on remand was the first trial held on the merits. The summary judgment cannot qualify as an initial trial. See, Anno: Withdrawal or disregard of waiver of jury trial in civil action, 64 ALR2d 506, pp 574-578.

In any event the pleadings filed in the action disclose that the dispositive issue was what the defendant was entitled to receive under the buy-sell agreements for the one-half partnership interests. This issue is presented in plaintiffs prayer for specific performance of the agreements. The action for specific performance of an agreement is equitable in nature. Curbelo v Macomb County Community College Trustees, 38 Mich App 432, 434; 196 NW2d 843 (1972); 5A Corbin, Contracts, § 1137, p 97. The construction of a written agreement in the course of an action seeking equitable relief is a proper function of a court of equity. Salvador v Connor, 87 Mich App 664, 674; 276 NW2d 458 (1978); 5 Callaghan’s Michigan Civil Jurisprudence § 171, p 743. A party is not entitled to a jury trial on an action presenting only equitable issues. 2 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), pp 412-414; Abner A Wolf, Inc v Walch, 385 Mich 253; 188 NW2d 544 (1971). The defendant was not entitled to a trial by jury.

II. Was the trial judge disqualifíed from hearing the case by reason of his having granted plaintiff’s motion for summary judgment which was reversed on appeal?

GCR 1963, 405.1, in effect at the time the motion to disqualify was decided, provided in part:

"The judge shall be deemed disqualified to hear the action when the judge:
"(3) is personally biased or prejudiced for or against any party or attorney;
"(8) for any other reason is excluded or disqualified from sitting as a judge at the trial.”

The fact that a judge was involved in a prior trial or other proceeding between the parties does not disqualify the judge from subsequently conducting the trial of the case. People v Lincourt, 221 Mich 674, 675; 192 NW 572 (1923). Actual prejudice or bias must be presented before a trial judge will be disqualified. Irish v Irish, 59 Mich App 635, 639; 229 NW2d 874 (1975), Moldovan v Allis Chalmers Manufacturing Co, 83 Mich App 373, 379; 268 NW2d 656 (1978).

An examination of defendant’s motion to disqualify and the brief in support thereof fails to show an allegation of actual prejudice. The denial of defendant’s motion to disqualify the trial judge was without error.

III. Did the trial court properly determine, pursuant to the buy-sell provisions of the partnership agreements, that the full value of the partnership interests of the deceased partner required only the payment of the proceeds of life insurance received upon that partner’s death?

The trial court was correct when it stated that the articles of co-partnership provided for payment of the proceeds of the insurance on the life of a deceased partner’s interest. This is stated in the Ray Printing Company articles drawn up in 1956. The North Side Take-Out articles, drawn up in 1956, provided similar provisions; however, in 1961 new articles of partnership for North Side TakeOut were executed on January 23. Therein it is stated "rescinding a prior partnership agreement entered August 24 A.D., 1956”. This last agreement has the following provision: "If the parties of the first and second part are unable to agree on the interpretation or legal effect of this agreement in any particular, the differences between them shall be determined by three (3) arbitrators, one to be appointed by each of the parties and the third appointed by the first two so chosen, and the determination of said board of arbitrators shall be deemed final and binding, as to liabilities in dispute and as to the constructive and legal effect of this agreement as to settlement and computation.”

This provision is not effective for the reason that the parties have elected not to avail themselves of it.

It is evidence, however, that in 1961, the parties recognized a possibility of disagreement as to the legal effect of their agreement.

Now in connection with the value of the insuranee taken out on the respective lives of the partners as being the value of each partner’s interest in the two partnerships, we go to the record.

In 1956, as to Ray Printing the value in the agreement was set at $25,000 for each and the insurance obtained for each was $25,000. In the same year for the North Side Take-Out the value was set at $20,000 for each partner but only $5,000 of insurance was obtained. In 1957, insurance in the amount of $10,000 for each partner was added. Nothing was added in 1961 when the partners entered in the new agreement for the North Side Take-Out partnership. At that time the valuation was stated as $20,000 for each partner.

In order for the parties to have a proper amount of insurance for just the stated value of each partner—$25,000 for the print shop and $20,000 for the grocery store each would have been required to have at least $45,000—however, the facts are that from 1956 to 1957 they had only $30,000, and after 1957 until 1964 they had only $40,000 of insurance each. Then in 1964 they each added $10,000 of insurance—and for the first time they each had $50,000 of insurance. $5,000 each more than the original value placed on the two partnerships by the parties both in 1956 and 1961.

The first part of § 12 of the Ray Printing agreement provides as follows:

"It is further agreed to provide upon the death of either partner for the purchase by the survivor of the interest in the said co-partnership of the partner so to die, thereby avoiding a discontinuance of the business of the firm, and assuring each partner that his respective estate will receive the full value for his interest in said co-partnership as hereinafter determined in the event of death.”

In the 1961 articles of partnership for the North Side Take-Out business there is no provision in § 12 thereof for the purchase by a surviving partner of a deceased partner’s interest. Said, § 12 in the 1961 agreement reads as follows:

"It is agreed upon the execution of this partnership agreement, the value of each partner’s respective interest in said partnership shall be as follows:
Howard Emerson $20,000.00
Warren Emerson $20,000.00
and the above valuations shall remain the value of said respective partnership interest for the purpose of determining the purchase price unless and until a different valuation is established. Such a new valuation may be established at any time. Provided, however, that as soon as practicable after July 1st and January 1st of each year hereafter, said partners shall reaffirm the valuation last made or establish a new value for said respective partnership interests. To supersede any valuation made prior therto, any new valuation must be reduced to writing and signed by both partners. It is further agreed that this method of establishing the valuation of the partnership interests shall be used in section 11 of this agreement if either of the partners should choose to terminate said partnership as outlined in section 11, but only if the date of the last valuation or reaffirmance of valuation is not more than two years prior to date of sending of notice of termination to the other partner.”

Section 12 e of the 1956, Ray Printing partnership agreement reads as follows:

"(e) It is agreed upon the execution of this co-partnership agreement, the value of each partner’s respective interest in said partnership shall be as follows:
Howard Emerson $25,000.00
Warren Emerson $25,000.00
and the above valuation shall remain the value of said respective co-partnership interests for the purpose of determining the purchase price unless and until a different valuation is established. Such a new valuation may be established at any time. Provided, however, that as soon as practicable after July 1st and January 1st of each year hereafter, said partners shall reaffirm the valuation last made or establish a new value for said respective partnership interests. To supersede any valuation made prior thereto, any new valuation must be reduced to writing and signed by both of said partners. It is further agreed that this method of establishing the valuation of the partnership interests shall be used in paragraph eleven (11) of this agreement if either partner should choose to terminate said partnership as outlined in paragraph eleven (11), but only if the date of the last valuation or reaffirmance of valuation is not more than one year prior to date of sending of notice of termination to the other partner.”

The parties failed to follow the mandated requirements in both partnership agreements to reaffirm twice a year, on July 1 or January 1, the last made valuation or establish a new value. This in spite of the fact that the attorney gave them forms to fill out and reminded them at least once of their duty to do this. Plaintiff, William Howard Emerson, when asked if he were so told by the attorney, replied that he did not remember.

These partners were busily engaged in managing their growing businesses. Their bookkeeping was mainly for the purpose of complying with the income tax laws.

From a review of the transcript, it is evident that the actual value of the businesses was increasing from year to year. The cost of insurance was an item to be considered. The plaintiffs claim that the partners increased the insurance to equal the value of their interests in the partnerships is inaccurate as evidenced hereinabove.

We review on appeal the findings of a court of equity de novo, with due deference being given to the findings of the trial court, Barnett v International Tennis Corp, 80 Mich App 396; 263 NW2d 908 (1978). This Court is required to sustain the findings of the court below unless it becomes convinced, upon review of the evidence, that had it heard the evidence in the first instance it would have been compelled to rule contrary to the ruling actually made by the trial court. Salvador v Connor, 87 Mich App 664; 276 NW2d 458 (1978), lv den 406 Mich 966, (1979).

The intention of the parties as expressed in their agreement and the reasonable inferences therefrom must be controlling in the construction of the contract. Rowe v Wililam Ford & Co, 257 Mich 646, 649; 241 NW 889 (1932); 5 Callaghan’s Michigan Civil Jurisprudence, § 158, p 720. It must be determined whether the trial court properly ascertained the partners’ intention with respect to the "full value” of the partnership interests.

The subject buy-sell agreements in the two partnership articles evidence that the parties’ primary intentions in the case of death of a partner were to avoid a discontinuation of the business of the firms and to assure each partner that his respective estate would receive the full value for his interests.

The continuation of the firms has been maintained and is not in issue in this case. The ascertainment of the meaning of "full value” of the deceased partner’s interests in the partnerships is a subject for our determination.

"Value” is defined in Webster’s New World Dictionary as "the worth of a thing in money or goods”. One of the definitions of the word "full” in the same dictionary, which we think is appropriate, is "having reached the greatest size”. We interpret that "full value” means the greatest worth of the deceased partner’s interest in the partnerships.

We find that the contract must be construed in this light in order to satisfy the expressed fundamental intent of the parties. The construction of the contract by the trial court fails to accomplish this intent.

We assume, as does the plaintiff, that the full value of the deceased brother’s interests in the partnerships is in excess of the insurance proceeds tendered by plaintiff to defendant administrator. We determine that the construction of these contracts by the trial court is contrary to the intent of the parties.

We note that the trial court heard this case on stipulated facts, depositions and exhibits, a comparatively cold record which we likewise consider in this de novo review hearing.

We are convinced upon review of the evidence, that had we heard the evidence in the first instance we would have been compelled to rule contrary to the ruling actually made by the trial court. We therefore reverse and remand for further proceedings consistent with this opinion. In deference to the trial judge, who has heard all the proceedings thus far, another judge shall be assigned to hear further proceedings herein.

Costs to the defendant.


author: N. J. Kaufman, P.J.

text:
    CHAYKA v BROWN
    Docket No. 78-4039.
    Submitted June 20, 1979, at Detroit.
    Decided September 6, 1979.
    Leave to appeal denied, 407 Mich 941.
    Plaintiffs, John M. Chayka and Rochester Operating Company, obtained a judgment against defendants Stanley M. Brown and his wife Dorothy R. Brown resulting from an attempt to purchase real property which failed to materialize. Prior to entry of judgment 3 Faces, Inc., offered to purchase the realty from the Browns. Before the agreement to purchase was closed 3 Faces, Inc., was put on notice of a prejudgment writ of garnishment. Thereafter, the Browns, principal defendants, entered into a land contract for sale of the property to 3 Faces, Inc., the garnishee defendant. Writs of garnishment were issued on behalf of the plaintiffs which ordered the garnishee defendant not to dispose of any property which belonged to the principal defendants or to pay any obligations to the principal defendants. Plaintiffs’ writs of garnishment, issued by the district court, were certified to the circuit court. At this point the garnishee defendant prepaid the remainder of the land contract installments and received title to the property from the principal defendants. A judgment was entered against the garnishee defendant in the Oakland Circuit Court, Robert L. Templin, J. The court indicated that the garnishee defendant had paid funds owing to the principal defendants after service of the writs of garnishment issued by the district court, contrary to the express prohibitions contained in the writs. The garnishee defendant was ordered to pay an amount not to exceed 1-1/4 times the amount owing on the judgment owed to the plaintiffs by the principal defendants. The garnishee defendant appeals from this ruling. Held:

    1. Both statute and court rule impose a restraint upon a garnishee defendant not to part with any of the principal debtor’s property or pay any obligations to the principal debtor after service of a writ of garnishment. The garnishee defendant violated these express prohibitions which were contained in the writs of garnishment when it accelerated its installment payments to the principal defendants under the land contract and took title to the property. The trial court did not err in adjudging the garnishee defendant liable.

      References for Points in Headnotes

       6 Am Jur 2d, Attachment and Garnishment § 455.

       6 Am Jur 2d, Attachment and Garnishment § 127.

       6 Am Jur 2d, Attachment and Garnishment §§ 446, 450.

       6 Am Jur 2d, Attachment and Garnishment §§ 388, 389, 449-452.

       6 Am Jur 2d, Attachment and Garnishment §§ 388, 389.

      2. A court rule provides that a garnishee defendant may be liable up to 1-1/4 times the amount of a judgment entered in favor of the plaintiffs against the principal defendants where the garnishee defendant fails to perform in accordance with the garnishment statute. The liability of a garnishee defendant may, in the discretion of the trial judge, be in excess of the principal debtor’s liability up to 1-1/4 times the principal debt. Where the Court of Appeals determines from the facts that the trial court has abused its discretion by imposing an unduly harsh penalty assessment, that assessment will be reversed and modified.
    Affirmed in part, reversed in part, and remanded.
    1. Garnishment — Courts — Satisfaction of Claims — Personal Property — Personal Obligations — Jurisdiction — Statutes.
    Circuit courts have power by garnishment to apply to the satisfaction of a claim evidenced by contract, judgment of this state, or foreign judgment: (1) personal property belonging to the person against whom the claim is asserted but which is in the possession or control of a third person if the third person is subject to judicial jurisdiction of the state and the personal property to be applied is within the state, and (2) an obligation owed to the person against whom the claim is asserted if the obligor is subject to the judicial jurisdiction of the state, whether or not the state has jurisdiction over the person against whom the claim is asserted (MCL 600.4011; MSA 27A.4011).
    2. Garnishment — Writs of Garnishment — Present Debts — Future Debts — Fixed Amounts — Court Rules.
    Garnishee defendants are liable for all debts owed to the principal defendants at the time of the service of the writ of garnishment whether or not they are due; there must be an existing debt for a garnishment to be effective; debts due in the future refer to claims which are already fixed in amount or capable of being so fixed and do not depend for their validity or amount on anything to be done or earned in the future or on a continued liability which may be changed by events (GCR 1963, 738.5[4]).
    3. Garnishment — Writs of Garnishment — Debts — Restraints — Statutes — Court Rules.
    A statute and court rule impose a restraint upon a garnishee defendant not to part with any of a principal debtor’s property or pay any obligations to the principal debtor after the service of a writ of garnishment (MCL 600.4011; MSA 27A.4011, GCR 1963, 738.3[4]).
    4. Garnishment — Writs of Garnishment — Garnishee’s Duties and Liability — Penalty Assessments — Court Rules.
    A garnishee defendant’s duties, obligations and potential liability attach at the time a writ of garnishment was properly served; thereafter, if he fails to perform properly, he runs the risk of a default judgment which could amount to 1-1/4 times the amount of the judgment entered in favor of a plaintiff against the principal defendant and which may be executed against the garnishee defendant’s own funds or property (GCR 1963, 738, 738.4, 738.5).
    5. Garnishment — Penalty Assessments — Discretion — Abuse of Discretion — Appeal and Error — Court Rules.
    A garnishee defendant may be held liable up to 1-1/4 times the amount of a judgment entered in favor of a plaintiff against a principal defendant where the garnishee defendant fails to perform in accordance with the garnishment statute; however, a penalty assessment in a garnishment action is discretionary and the imposition of an unduly harsh penalty assessment which amounts to an abuse of discretion should be reversed and adjusted on appeal (GCR 1963, 738.5).

      Dell, Shantz, Booker & Schulte (by John F. Shantz and Timothy J. Currier), for plaintiffs.

      E. Donald Goodman, for 3 Faces, Inc.
    Before: N. J. Kaufman, P.J., and D. C. Riley and J. X. Theiler, JJ.

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

   N. J. Kaufman, P.J.

Garnishee defendant appeals by right from a September 13, 1978, judgment of the Oakland County Circuit Court ordering it to pay to the plaintiffs one and one-quarter (1-1/4) times the balance owed plaintiffs under a previous judgment plaintiffs obtained against the principal defendants. The principal defendants have not filed a brief in this cause.

This dispute arose when the plaintiffs attempted to purchase real property from the principal defendants. The sale did not materialize. A contest arose over the return of the down payment. Accordingly, plaintiffs commenced an action and obtained a judgment for $7,730.17 with costs in the amount of $34.

Prior to the entry of the judgment, the garnishee defendant had offered to purchase the realty from the principal defendants. Garnishee defendant was subsequently put on notice of a prejudgment writ of garnishment which was served upon their predecessor before they closed their agreement to purchase the land. This prejudgment writ was later released. At the time of this release, garnishee defendant paid $1,000 on the judgment against the principal defendants in their behalf.

Thereafter, principal defendants entered into a land contract for the sale of the property to garnishee defendant with installment payments to be made on the first of each month. The plaintiffs then secured their first post-judgment writ of garnishment. This writ was served upon garnishee defendant after one installment payment was made and before another fell due. They disclosed that the debt they owed to the principal defendants was "a total installment contract in excess of the judgment”. A second post-judgment writ of garnishment was also issued and served upon garnishee defendant between installment payments. They did not file a disclosure pursuant to this writ. Both writs ordered garnishee defendant not to dispose of any property which belonged to the principal defendants, or pay any obligations to the principal defendants.

This matter first came before the district court upon principal defendants’ motion to quash the first post-judgment writ and demand for a jury trial on the liability of the garnishee defendant. The plaintiffs in turn moved for the appointment of a receiver. The district court denied both motions. In response to plaintiffs’ petition, the court determined that it did not have the authority to appoint a receiver. As to the defendants’ motion, the court’s order provided that the debt of the garnishee defendant was an established one with payments deferred as per the terms of the land contract. Subsequently, garnishee defendant paid $1,000 into escrow with the court.

The plaintiffs, pursuant to DCR 741, had the judgment against principal defendants and the post-judgment writs against garnishee defendant, which were issued by the district court, certified to the circuit court. At this point, garnishee defendant prepaid the remainder of the installments under the land contract and received title to the property from the principal defendants. The plaintiffs renewed their petition for the appointment of a receiver before the Oakland County Circuit Court. In the alternative, the plaintiffs prayed for an entry of judgment against the garnishee defendant.

On September 13, 1978, a judgment was entered against garnishee defendant in the Oakland County Circuit Court. The court indicated that garnishee defendant had paid funds owing to principal defendants after service of the writs of garnishment issued by the district court, contrary to the express prohibitions therein. The court therefore found that the plaintiffs were entitled to a judgment in accordance with GCR 1963, 738.5 in an amount not to exceed one and one-quarter times the amount owing on the judgment the principal defendants owed the plaintiffs. The garnishee defendant appeals from this ruling as of right.

Many questions have been raised in this appeal. Garnishee defendant has challenged: the timeliness of the post-judgment writs; the amounts able to be garnisheed under these writs; plaintiffs’ compliance with the technical, procedural requirements for the issuance of these writs; and the effect of the district court’s certification of this cause to, the circuit court.

The development of this case does not require a consideration of all of these questions. However, one of the garnishee defendant’s claims raises an interesting question of first impression: whether or not a vendee’s interest under a land contract represents an existing, established indebtedness. If so, to what extent would the instant garnishments be effective? The circuit court was convinced by plaintiffs’ argument that the debt was established and that only payments were delayed under the terms of the land contract. Thus, it held that the garnishment writs were effective to reach the entire obligation owed. The garnishee defendant, however, seeks to analogize this case to Erb-Kidder Co v Levy, 262 Mich 62; 247 NW 107 (1933). There, the Supreme Court held that monthly installments of rent under a written lease which fell due on the first day of each month could not be garnisheed until their due dates. The theory was that the individual debts were not established and did not exist until these accrual dates. In a similar fashion, the garnishee defendant stresses that the instant writs were served between installment due dates and were therefore wholly ineffective.

The present statute regulating the circuit courts’ garnishment powers, MCL 600.4011; MSA 27A.4011, confers upon them the power by garnishment to apply the following property or obligation or both, to the satisfaction of a claim evidenced by contract, judgment of this state, or foreign judgment, whether or not the state has jurisdiction over the person against whom the claim is asserted: (1) personal property belonging to the person against whom the claim is asserted but which is in the possession or control of a third person if the third person is subject to the judicial jurisdiction of the state and the personal property to be applied is within the boundaries of this state; (2) an obligation owed to the person against whom the claim is asserted if the obligor is subject to the judicial jurisdiction of the state, whether or not the state has jurisdiction over the person against whom the claim is asserted.

GCR 1963, 738.5(4) further provides that the garnishee defendants are liable for all debts they owed to the principal defendants at the time of the service of the writ "whether or not they are due”. In its interpretation of this clause, Michigan is in accord with the majority of jurisdictions which hold that for a garnishment to be effective there must be an existing debt. Debts due in the future then refer to claims which are already fixed in amount or capable of being so fixed, and which do not depend for their validity or amount on anything to be done or earned in the future, or a continued liability which may be changed by events, Walker v Paramount Engineering Co, 353 F2d 445, 449 (CA 6, 1965).

In Erb-Kidder Co, supra, the Court deemed the rent to be an unmatured debt which would not come into existence until its due date. By analogy, it is arguable that the land contract installment payments should have been treated similarly. The problem with this analogy arises when one considers that the Erb-Kidder case was decided under a 1929 garnishment statute, 3 Comp Laws 1929, § 14858. That statute did not provide for a restraint or an injunction upon the garnishee with the issuance of the writ. Thus, it placed the onus upon the garnisher to initiate supplemental proceedings for the appointment of a receiver in order to preserve his claim for future obligations. The present statute, MCL 600.4011; MSA 27A.4011, supplemented by GCR 1963, 738.3(4), imposes a restraint upon the garnishee not to part with any of the principal debtor’s property or pay any obligations to the principal debtor after the service of the writ.

Thus, although it is an interesting question as to whether an installment land contract is analogous to a lease or is an unmatured and uncertain claim not garnishable until the individual installments fall due, on the facts of this case it becomes academic and need not be answered. Garnishee defendant disclosed that its debt was "a total installment contract in excess of the judgment”. It went on to pay the amount of two installments into escrow with the court. Moreover, and most importantly, it violated express prohibitions contained in the garnishment writs.

These writs were prepared according to GCR 1963, 738.3(4). As such, they directed the garnishee defendant to deliver no tangible or intangible property to principal defendants unless allowed by statute, court rule or court order. They also clearly indicated that garnishee defendant was not to pay any obligations to the principal. Yet, while these writs were in effect, garnishee defendant accelerated its installment payments to principal defendants under the land contract and took title to the property.

Garnishees’ duties and obligations under the rules and their potential liability to the plaintiffs attach at the time they are properly served with the writ. GCR 1963, 738.4, 738.5. They then become responsible for the timely performance of the specific duties imposed by GCR 1963, 738, at the risk of default judgment against them which may be executed against their own funds or property, GCR 1963, 738.8. Their liability in such situations is limited to 1-1/4 times the amount of the judgment entered in favor of the plaintiffs against principal defendants.

In view of the express mandate of this court rule, we find the trial court did not err in adjudging the garnishee defendant liable. We affirm this ruling. However, we cannot accept the penalty assessment imposed. Under GCR 1963, 738.5, this assessment is discretionary with the court. Under the facts of this case, imposition would be unduly harsh. Therefore, we hold that the garnishee defendant is not liable for 1-1/4 times the amount of the plaintiffs’ judgment against principal defendants. Its liability is limited to the amount of this judgment plus six-percent interest thereon. To hold otherwise would ignore questions of first impression raised herein. The garnishee defendant’s objections to the timeliness of the writs on the theory that installment payments under a land contract are not garnishable until their due dates might be a viable contention. However, their violation of the express prohibitions embodied in these writs cannot be sanctioned.

In view of the foregoing, we remand this case to the trial court for the entry of a judgment consonant with this opinion.

Affirmed in part; reversed in part. No costs.

       Other allegations raised by garnishee defendant are: that the affidavits in support of the writs were jurisdictionally defective and, therefore, void; that there never was a hearing and a trial of their liability in the district court; and, finally, that the writs did not survive transcription from the district court to the circuit court in that they were never reduced to judgment at the district court level and, accordingly, garnishment writs were never independently issued by the circuit court. The first two contentions were not pleaded nor otherwise presented to the trial court and cannot be urged on appeal, Lintern v Zentz, 327 Mich 595, 604; 42 NW2d 753 (1950), Sturgis Savings & Loan Ass’n v Italian Village, Inc, 81 Mich App 577, 583; 265 NW2d 755 (1978).
      The last allegation is unsupported. The district court’s order makes it clear that the garnishee defendant’s debt was established and that only payments were deferred pursuant to the terms of the land contract. The garnishee defendant was aware of this ruling wherein the district court denied a motion to quash the writs. Thus, there is no basis for his present stance that the writs were never reduced to judgment. Moreover, DCR 741 indicates that, after transcription to circuit court, proceedings for satisfying the district court judgment may be had as if the judgment had been rendered there initially.

       The present court rule, GCR 1963, 738.3-738.4, enjoins and restrains the garnishee from transferring property of the principal defendant automatically—by service of the garnishment writ. It also allows the trial court to appoint a receiver if upon disclosure it appears that the garnishee had certain property of the principal defendant in his possession at the time of service of the writ. Whereas, under the law in effect at the time of Erb-Kidder, supra, specific court orders were required to enjoin and restrain the garnishee defendant from disposing of the principal defendant’s property, and, to have a receiver appointed to protect the plaintiffs interests. As pointed out in 2 Gilmore, Michigan Civil Procedure Before Trial (2d ed), Creditor’s Remedies, § 19-204, p 854, it is no longer necessary to seek a court order:
      "* * * The required contents of the writ of garnishment are set out in GCR 1963, 738.3. The sub-rule provides that the writ must:
      "(1) state that an action has been commenced against the defendant or that a judgment has been rendered against him;
      "(2) state the amount of the indebtedness claimed;
      "(3) direct the garnishee to
      "(a) file with the clerk, within 15 days after he is served with the writ, a sworn disclosure of his liability to the principal defendant at the time of service of the writ;
      "(b) deliver no tangible or intangible property and pay no obligations to the principal defendant, unless statute or court rule permits it;

      “(c) inform the principal defendant of the garnishment proceeding;
      "(4) direct the principal defendant not to dispose of any negotiable instrument that represents a debt of the garnishee to him or title to any property in the possession or control of the garnishee in which the principal defendant claims an interest; * * (Emphasis supplied.)
      See 4 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), pp 628-632 for a further overview of the differences between the old and new garnishment rules.

       GCR 1963, 738.5 states:
      "Subject to the provisions of the garnishment statute and any setoff permitted by these rules, the garnishee may be held liable to the plaintiff in the amount of any and all of the following, but in the case of garnishment before judgment not in the excess of 1-1/4 times the amount of the claim stated in the affidavit of garnishment and in the case of garnishment after judgment, not in excess of 1-1/4 times the amount of the judgment entered in favor of the plaintiff against the principal defendant: * * (Emphasis added.)
      However, neither the statute nor the court rule indicates when the penalty should be applied or how it should be applied.
      On the other hand, GCR 1963, 738.13(1) states:
      "Judgment may be entered against the garnishee for the payment of money or the delivery of specific property as may be warranted by the facts. Judgment for money against the garnishee shall not be entered in an amount that exceeds 1-1/4 times the amount of the judgment against the principal defendant. Judgment for specific property shall be enforced only to the extent necessary to satisfy the judgment against the principal defendant.” (Emphasis added.)


author: T. M. Burns, J.

text:
    DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE v IRVINE
    Docket No. 78-5222.
    Submitted June 11, 1979, at Lansing.
    Decided September 6, 1979.
    Leave to appeal applied for.
    David Anderson was injured when he was struck by the automobile being driven by David Irvine in an "auto-cross” race sponsored by a sports car club and being held in a public high school parking lot. Janene Henley, next friend of Anderson, filed suit against Irvine, the car club and the school district. Detroit Automobile Inter-Insurance Exchange, insurer of Irvine under a no-fault auto insurance policy, filed the instant action for declaratory judgment against defendant Irvine, seeking to have the automobile insurance policy declared to be not in effect at the time of the accident by reason of the policy provision excluding coverage while the automobile was being operated in a prearranged race or speed contest. Henley, individually and as next friend of Anderson, was permitted to intervene in the declaratory judgment action and argued that the exclusionary clause was invalid and unenforceable because it was contrary to public policy. The Jackson Circuit Court, Russell E. Noble, J., held the language of the insurance policy excluding coverage for a prearranged race or speed contest was invalid. Plaintiff appeals. Held:

    1. The clause excluding liability coverage when the vehicle is engaged in a race or speed contest is invalid and unenforceable. Such an exclusionary clause is not authorized by the Legislature and operates so as to limit the coverage mandated by the financial responsibility law.
    2. The fact that the accident occurred on private property and not on a public highway is irrelevant, since the motor vehicle being driven was designed for operation upon a public road.
    Affirmed.
    References for Points in Headnotes

       New Topic Service Am Jur 2d, No-Fault Insurance §§ 17, 20.

       New Topic Service Am Jur 2d, No-Fault Insurance §§ 14,15.

      1. Insurance — Automobiles — Liability Insurance — Exclusionary Clauses — Bodily Injury — Public Policy — Statutes.
    A clause in a no-fault automobile insurance policy which excludes coverage "to any automobile while operated in any prearranged race or speed contest” is invalid and unenforceable with respect to a third-party personal injury claim because it is against public policy, such exclusion not being authorized by the Legislature and operating so as to limit the coverage required by the financial responsibility law (MCL 257.520[b][2], 500.3135; MSA 9.2220[b][2], 24.13135).
    2. Insurance — Automobiles — Liability Insurance — Private Property.
    Third-party personal injury coverage by a no-fault automobile insurance policy is not affected by the fact that an accident occurred on private property rather than a public highway where the motor vehicle being driven was designed for operation on a public highway.

      Susskind, Hedstrom & Falahee, for plaintiff.

      Rosenburg, Stanton, Bullen & Nelson, P.C. (by Philip M. Moilanen), for defendant.
    Before: Allen, P.J., and T. M. Burns and D. E. Holbrook, JJ.

       Former Court of Appeals Judge, sitting on the Court of Appeals by assignment pursuant to Const Í963, art 6, § 23 as amended in 1968.

   T. M. Burns, J.

Plaintiff, Detroit Automobile Inter-Insurance Exchange (DAIIE), appeals of right a December 5, 1978, lower court order holding a clause in the no-fault auto insurance policy under which defendant David Irvine was insured by plaintiff to be invalid and unenforceable as against public policy. We affirm.

On June 20, 1976, 14-year-old David Anderson was injured when struck by an automobile being driven by defendant. At the time of the accident defendant was driving his car in an "auto-cross” race that was sponsored by the Jackson Small Car Club, Inc., and that was being held on a local public high school parking lot in Jackson, Michigan.

The object of the race was to test the driving skills of participants by having them maneuver their automobiles around pylons that were arranged in a particular manner on the school parking lot. Drivers attempted to execute the course without leaving it or striking any of the pylons. During his attempt, defendant lost control of his vehicle, left the race course and struck Anderson. Anderson was pinned against another vehicle and suffered serious injuries requiring the amputation of part of his right leg.

Through his next friend, Janene Henley, Anderson filed suit against the Jackson Small Car Club, the Jackson public school district and defendant Irvine. Subsequently, on May 19, 1977, DAIIE filed the instant action for declaratory judgment seeking a declaration that the insurance policy under which defendant was insured was not in effect at the time of the accident. The basis for this contention was a provision in the policy that excluded coverage "to any automobile while operated in any prearranged race or speed contest”.

Anderson sought, and was granted, permission to intervene in the declaratory judgment action. Anderson argued that the exclusionary clause was invalid and unenforceable because it violated both public policy and the no-fault act. The lower court agreed with Anderson and entered judgment accordingly.

We think it clear that the Legislature intends that automobile insurance policies conform to the dictates of the no-fault act. Where an insurance policy contains an exclusionary clause that was not contemplated by the Legislature, that clause is invalid and unenforceable. Community Service Ins Co v Shears, 89 Mich App 372; 280 NW2d 532 (1979), Allstate Ins Co v DeFrain, 81 Mich App 503; 265 NW2d 392 (1978).

While no prior case has addressed the permissibility of the exclusionary clause before us here, in DeFrain, id., this Court held that a household exclusionary clause in an automobile insurance policy was invalid and unenforceable. In reaching this result, the Court noted that even though the no-fault act partially abolished tort remedies, it retained residual liability in some circumstances. See, MCL 500.3135; MSA 24.13135. Upon examining applicable statutes to determine the situations under which the Legislature authorized exclusionary clauses, the Court found that neither MCL 500.3009(2); MSA 24.13009(2), which permits exclusion of coverage when a vehicle is operated by a named person, nor MCL 257.520(b)(2); MSA 9.2220(b)(2), which allows exclusion where a named person operates the motor vehicle and the exclusion is authorized by the insured, provided approval of a household exclusionary clause. Thus, finding no statutory support for the clause the Court held it to be void as against public policy. Other Michigan appellate cases addressing the validity of identical clauses have reached the same result. See, Community Service Ins Co v Shears, supra, State Farm Mutual Automobile Ins Co v Traycik (After Remand), 86 Mich App 285; 272 NW2d 629 (1978), Gurwin v Alcodray, 77 Mich App 97; 257 NW2d 665 (1977).

Similarly, in State Farm Mutual Automobile Ins Co v Sivey, 404 Mich 51; 272 NW2d 555 (1978), the Supreme Court held that an automobile insurance policy that excluded recovery for bodily injury by an insured owner who was a passenger in the car at the time of the accident, as against a person who was driving it with the owner’s permission, was contrary to public policy because its effect was to prevent insurance coverage mandated by the motor vehicle financial responsibility law. MCL 257.520(b)(2); MSA 9.2220(b)(2). In pertinent part, that law provides that all policies of liability insurance:

"Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles.”

After quoting from Judge (now Justice) Levin’s dissent in Weisberg v Detroit Automobile Inter-Insurance Exchange, 36 Mich App 513, 524; 194 NW2d 193 (1971), the Court found that the only legislative exception to this broad requirement of liability insurance was that contained in MCL 257.520(e); MSA 9.2220(e):

"Such motor vehicle liability policy need not insure any liability under any workmen’s compensation law nor any liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance or repair of any such motor vehicle nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.”

Having highlighted this exception as the only one clearly authorized by the Legislature, the Supreme Court relied upon the general maxim of statutory construction that the express mention of one thing implies the exclusion of other similar things, Stowers v Wolodzko, 386 Mich 119, 133; 191 NW2d 355 (1971), and held the exclusionary clause before it void as against public policy.

We find the reasoning of the Supreme Court in Sivey to be persuasive. Defendant has pointed out no legislative authorization for the exclusionary clause that it seeks to use to avoid its liability and our examination of the applicable statutes discloses none. Thus, because the effect of the exclusionary clause’s operation would be to limit the coverage required by the motor vehicle financial responsibility law, the clause is against public policy and void.

DAIIE also argues in this appeal that the no-fault statute has no application in this case because the accident occurred on private property and not on a public highway. We hold this claim to be without merit. Defendant Irvine was driving a motor vehicle "designed for operation upon a public highway” at the time of the accident. MCL 500.3101(2); MSA 24.13101(2). The fact that the accident occurred on private property and not on a public highway is irrelevant for the purpose of the no-fault act’s applicability.

Affirmed. No costs, a public question being involved.


author: V. J. Brennan, J.

text:
    ROBERTSON v CITY OF DETROIT
    Docket No. 78-5436.
    Submitted February 27, 1979, at Detroit.
    Decided September 6, 1979.
    Plaintiff, Eddie Robertson, an employee of the City of Detroit Department of Transportation, filed charges of unfair labor practices against his employer with the Michigan Employment Relations Commission alleging, among other things, that he was prohibited from passing out leaflets at a bus terminal and that on his day off he was asked to see his superintendent where, according to his superintendent, he became belligerent and was given a three-day suspension and, upon review, was given six months probation for no reason. The administrative law judge considered each allegation separately and found the six months probation to be a reprisal for plaintiff’s use of the grievance procedure. He found that the pamphlets to be handed out by plaintiff did not deal with organizational activities (they gave an alternative viewpoint concerning a proposed contract) and, thus, the conduct did not fall within the purview of the ' protection of the public employees relations act. Plaintiff appeals. Held:

    1. Since plaintiff failed to file exceptions to the administrative law judge’s proposed order in compliance with the statutory provision, plaintiff’s objections have not been preserved for appeal.
    2. The protection of the public employees relations act extends to the dissemination of information or opinion related to a proposed contract and does not cover only "organizational activity”.
    Affirmed.
    1. Labor Relations — Public Employees — Proposed Orders — Exceptions — Waiver — Review — Statutes.
    Failure by a party timely to file exceptions to a proposed order issued pursuant to the Michigan Public Employment Relations Act constitutes a waiver of any objections to that order and is a bar to an appeal in the absence of a showing of good cause for the failure timely to file the exceptions (MCL 423.216[b]; MSA 17.455[16][b]).

      References for Points in Headnotes

       48A Am Jur 2d, Labor and Labor Relations §§ 1649,1650.

       48A Am Jur 2d, Labor and Labor Relations §§ 1764-1775.

      2. Labor Relations — Statutes — Public Employees — Pamphleteering.
    A pamphlet distributed by public employees and containing an alternative viewpoint as to the value of a labor contract proposed by an employer and distributed to the members by the union falls within the purview of the protections of the public employees relations act; the public employees relations act protects more than organizational activity alone (MCL 423.209; MSA 17.455[9]).
    Eddie Robertson, in propria persona.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Jon M. DeHorn, Assistant Attorney General, for the Michigan Employment Relations Commission.

      George G. Matish, Acting Corporation Counsel, and Anna Diggs-Taylor and Nancy McCaughan-Blount, Assistants Corporation Counsel, for defendant.
    Before: Danhof, C.J., and V. J. Brennan and H. R. Carroll, JJ.

       Former circuit judge, sitting on the Court of Appeals by assignment pursuant to Const Í963, art 6, § 23 as amended in 1968.

   V. J. Brennan, J.

Plaintiff is an employee of the City of Detroit Department of Transportation. On December 5, 1977, he filed a charge of unfair labor practices with the Michigan Employment Relations Commission alleging that:

1. On September 19, 1977, plaintiff was prohibited from passing out leaflets at the Shoemaker bus terminal;

2. On November 22, 1977, plaintiff was prohibited from passing out leaflets at the Coolidge bus terminal;

3. On August 5, 1977, on plaintiff’s day off, he was at the Coolidge terminal to pick up his paycheck. He was asked to go to the superintendent’s office concerning a grievance. According to the superintendent, plaintiff became belligerent anil was given a three-day suspension. Plaintiff contended he did not have to see the superintendent on his day off and was improperly disciplined; ánd

4. When the suspension was reviewed, plaintiff was given six months probation for no reason.

Plaintiff alleged three additional general unfair labor practices:

A. Defendant City of Detroit printed and gave to the union proposed contracts for distribution to the members;

B. Defendant City of Detroit printed á leaflet designed to influence the members’ decision on the contract; and

C. Defendant City of Detroit did not give á cost of living allowance due under the old contract that had been extended during contract negotiations.

The administrative law judge issued his decision on November 9, 1978. The opinion discussed each allegation. The administrative law judge found that the first three charges did not constitute unfair labor practices. However, he found the six months probation to be a reprisal for plaintiff’s use of the grievance procedure. This is the only charge that caused the judge to issue an order. The administrative law judge also found that the general allegations were not unfair labor practices.

Plaintiff failed to file exceptions to the administrative law judge’s proposed order in accordance with MCL 423.216(b); MSA 17.455(16)(b). Since there is no demonstration of good cause for this failure, the plaintiffs objections are not preserved for review by this Court. Robertson v Local Division 26, Amalgamated Transit Union, 91 Mich App 429; 283 NW2d 766 (1979).

However for the purpose of clarification on this subject in future dispositions we point out error regarding the administrative law judge’s ruling that the solicitation ban in the present case did not constitute an unfair labor practice. The ruling had a two-fold basis which is evident from the following quote:

"The Charging Party does not have a constitutional right to pass out handbills and/or solicit signatures for a petition on company property during working hours where the purpose of the handbilling or petition is not organizational in nature. Here the purpose of handbilling was criticism of the Union, not an effort to organize employees. The employer’s long established no solicitation rule is reasonable. As the employer pointed out—if all employees had a right to solicit or petition, thousands could be doing so at any given time.”

We disagree with the initial supposition set forth above that only organizational activities are protected. Section 9 of the public employees relations act, MCL 423.209; MSA 17.455(9), outlines public employees’ protections as follows:

"It shall be lawful for public employees to organize together or to form, join or assist in labor organizations, to engage in lawful concerted activities for the purpose of collective negotiation or bargaining or other mutual aid and protection, or to negotiate or bargain collectively with their public employers through representatives of their own free choice.”

Dissemination of information or opinion relating to a proposed contract aids the ratification process by assisting the electorate in making informed and rational decisions. The pamphlet distributed by plaintiff on September 19 falls within this category since it attempted to give ah alternate view of the real value of the proposed contract. Thus, the commission erred in defining the right to distribute pamphlets in terms of organizational activity alone.

Our ruling as to the September 19 pamphlet in any event would not affect the commission’s final disposition which was also based upon the finding that the long-established no solicitation rule was reasonable. Such a rule is valid if not enacted or enforced for a discriminatory purpose. See NLRB v Babcock & Wilcox Co, 351 US 105; 76 S Ct 679; 100 L Ed 975 (1956); TRW, Inc v NLRB, 393 F2d 771 (CA 6, 1968). There was no evidence presented below which would intimate any discriminatory purpose.

Affirmed.