author: M. F. Cavanagh, J.

text:
    HUGHES v LAKEY FOUNDRY CORPORATION
    Docket No. 78-460.
    Submitted November 3, 1978, at Lansing.
    Decided July 9, 1979.
    Leave to appeal applied for.
    Perry Hughes was employed by Lakey Foundry Corporation for 25 years in a job which required strenuous repetitive movements of his back and exposed him to gas, sand and dust. Subsequently, he was employed for 15 months by Eagle-Ottawa Leather Company in a job which also required twisting and bending of his back. Hughes was found to have suffered a permanent lung disability from his exposure to dust at Lakey, and a degenerative back condition attributable to the job at Lakey, and aggravated by his job at Eagle-Ottawa. The Workmen’s Compensation Appeal Board found that Hughes was totally disabled from foundry work by his lung condition, and totally disabled from common labor by his back condition after its aggravation at the second employment. Eagle-Ottawa was ordered to pay benefits of $100 per week for the back condition, and Lakey and the Self-Insurer’s Security Fund to pay benefits of $33.76 per week. The board declined to apportion liability for the back condition. Eagle-Óttawa and its insurer, Allstate Insurance Company, appeal by leave granted. Eagle-Ottawa alleges that no competent evidence existed to support the finding of aggravation of the back condition and that the board erred in not apportioning the liability for the back condition. Lakey alleges that the board erred in awarding partial disability benefits for the lung condition while finding total disability. Both defendants allege that the total award exceeds the statutory maximum. Held:

    1. There was competent evidence to show that the employment at Eagle-Ottawa aggravated the back condition.
    2. The back injury may fairly be classed as an "occupational disease”. The last employer may seek apportionment of disability benefits where the prior employment contributed to an occupational disease. The board, therefore, erred when it refused to apportion the financial liability for the back condition between the two employers. Based on the relative time of employment with each employer, Lakey should be liable for 95% of the benefits for the back condition, and Eagle-Ottawa for 5%.

      References for Points in Headnotes

       82 Am Jur 2d, Workmen’s Compensation § 631.

       82 Am Jur 2d, Workmen’s Compensation § 409.

       82 Am Jur 2d, Workmen’s Compensation §§ 296, 298.

       82 Am Jur 2d, Workmen’s Compensation §§ 343, 347-349, 384.

       82 Am Jur 2d, Workmen’s Compensation § 343.

      3. The board properly awarded partial disability benefits for the lung disability, based upon the disparity between Hughes’ earning capacity before and after the disability arose.
    4. The total award exceeds the statutory maximum. The amount for which each employer is liable must therefore be reduced so that the total award does not exceed the statutory maximum.
    Affirmed in part, reversed in part and remanded.
    1. Workmen’s Compensation — Findings of Fact — Appeal and Error.
    Findings of fact made by the Workmen’s Compensation Appeal Board acting within its power are conclusive and binding upon a reviewing court, absent fraud, when supported by competent evidence (Const 1963, art 6, § 28; MCL 418.861; MSA 17.237[861]).
    2. Workmen’s Compensation —■ Two Employers — Apportionment.
    The last employer of a disabled employee may seek apportionment of disability benefits where the employee suffers from an occupational disease and where it is shown that prior employment contributed to the disease (MCL 418.435; MSA 17.237[435]).
    3. Workmen’s Compensation — Words and Phrases — Occupational Disease.
    An "occupational disease” is one which characteristically involves a long history of exposure without actual disability until its effects force an entire cessation of work; a back injury that has arisen from continuous exposure to repeated bending, lifting and twisting may fairly be classed as an occupational disease.
    4. Workmen’s Compensation —• Two Employers — Apportionment •— Contribution to Disability.
    It is sufficient, for purposes of apportionment of workmen’s compensation benefits between two employers, for the prior employment to have contributed to the employee’s disability even though the employee may not have been subjected to identically disabling conditions at both places of employment.

      5. Workmen’s Compensation — Concurrent Benefits — Earning Capacity — Earning of Wages.
    An employee may receive concurrent disability awards where he establishes that two distinct earning capacities have been destroyed by disability; the test of whether the employee has an "earning capacity” is established by the actual earning of wages rather than the degree of skill of an individual employee.
    6. Workmen’s Compensation — Maximum Benefits — Reduction of Excess Award.
    A combined award of workmen’s compensation benefits from two employers which exceeds the statutory maximum must be reduced proportionally so that the total award does not exceed the statutory maximum.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Joseph M. Binno, Assistant Attorney General, for the Self-Insurers’ Security Fund.

      Nelson & Ackerman, P.C. (by Timothy C. Liggett), for Eagle-Ottawa Leather Company and Allstate Insurance Company.
    Before: M. J. Kelly, P.J., and J. H. Gillis and M. F. Cavanagh, JJ.
   M. F. Cavanagh, J.

Eagle-Ottawa Leather Company, and its worker’s compensation insurer, appeal from the findings and decision of the Workmen’s Compensation Appeal Board (WCAB) ordering both Eagle-Ottawa and Lakey Foundry to pay disability benefits to plaintiff.

Plaintiff Hughes was employed for 25 years by Lakey Foundry. His job required strenuous, repetitive movements of his back and exposed him to gas, sand and dust. Lakey Foundry closed in February, 1972. From November or December, 1972, to February, 1974, plaintiff worked at Eagle-Ottawa Leather Company, performing somewhat lighter work, but also involving twisting and bending of his back.

Medical evidence showed that plaintiff suffered from a permanent lung disability due to his years of exposure to the dust-laden environment at La-key. It also showed that plaintiff suffered as well from a degenerative back condition attributable to the strain from his foundry job but also aggravated by his job at Eagle-Ottawa in the proportion of 25 years to 15 months. This back condition unsuited him for all but sedentary work.

On the basis of the evidence, the WCAB found that the plaintiff’s lung condition totally disabled him from foundry work. However, in the field of common labor, due to his combined lung and back conditions, plaintiff was only partially disabled. The WCAB further found that the job at Eagle-Ottawa aggravated, accelerated or contributed to his back condition only, resulting in plaintiff’s, total disability in the field of common labor. The board declined however to apportion liability for the back condition, pursuant to MCL 418.435; MSA 17.237(435) and Derwinski v Eureka Tire Co, 79 Mich App 750; 263 NW2d 30 (1977), lv gtd 403 Mich 846 (1978). Based on these findings and conclusions of law, the WCAB ordered Lakey and the Self-Insurers Fund to pay benefits in the amount of $33.67 per week beginning June 17, 1974, until further notice. It ordered Eagle-Ottawa to pay concurrently benefits of $100 per week for the back condition, for the period beginning with plaintiff’s last day of work, through the hearing period and thereafter until further order. The combined award for partial and total disabilities equaled $133.67.

On appeal defendant Eagle-Ottawa argues that no competent evidence existed to support WCAB’s finding that plaintiffs back condition was aggravated by his employment at Eagle-Ottawa. It further asserts that the board erred in refusing to apportion liability for the disabling back condition. Defendant Lakey argues the board erred in awarding plaintiff partial disability benefits for his lungs while finding him at the same time totally disabled. Both defendants argue that the award to plaintiff improperly exceeds the statutory maximum.

Findings of fact by the WCAB acting within its power are conclusive and binding on the reviewing court, absent fraud. Const 1963, art 6, § 28, MCL 418.861; MSA 17.237(861). These findings of fact, however, must be supported by competent evidence. Deziel v Difco Laboratories, Inc, 403 Mich 1, 37; 268 NW2d 1 (1978). We conclude, after review of the record, that competent evidence existed to show that plaintiffs employment at Eagle-Ottawa aggravated his back condition.

We next consider Eagle-Ottawa’s claim that the WCAB erred in refusing to apportion liability for plaintiffs back condition between his two employers. Under MCL 418.435; MSA 17.237(435), the last employer of a disabled plaintiff may seek apportionment of disability benefits where a plaintiff suffers from an occupational disease and where it is shown that the prior employment contributed to the disease. English v Lescoa, Inc, 67 Mich App 403, 405-406; 241 NW2d 225 (1976), lv den 399 Mich 822 (1977). In the instant case, the WCAB concluded that plaintiffs prior employment indeed "caused, aggravated, accelerated or contributed to” the arthritic changes in his back.

The apportionment statute, however, does not define an occupational disease. Although Derwinski v Eureka Tire Co, supra, does treat a back condition similar to the one at issue here as an apportional disease, the WCAB declined to apply its holding. The board distinguished the Derwinski case from the case at bar based on the absence of identical tasks and differing degrees of effort involved in plaintiffs two jobs.

We are aware, as was the WCAB, of the split in authority on this issue between the Derwinski holding and Skowronski v Ajax Forging & Casting Co, 54 Mich App 136; 220 NW2d 725 (1974). There, the Court declined to apportion liability for a work-related gradual hearing loss. The opinion noted that the law distinguished between a disease and an injury not attributable to a single event to conclude that the hearing loss fell into the latter category. Skowronski, supra, at 141-142; see MCL 418.301(1); MSA 17.237(301X1).

We are persuaded that the approach adopted in Derwinski, supra, is more consonant with case law and the intent of MCL 418.435; MSA 17.237(435).

While the present statute does not define an occupational disease, it is apparent that such a disease characteristically involves a long history of exposure without actual disability until its effects force an entire cessation of work. 4 Larson, Workmen’s Compensation Law, § 95.21. In Dressler v Grand Rapids Die Casting Corp, 402 Mich 243, 256-257; 262 NW2d 629 (1978), the Supreme Court quotes this definition with approval and acknowledges that a number of Michigan cases have treated back conditions as occupational diseases where they have arisen gradually because of repeated bending, lifting and twisting. The Dressier opinion distinguishes this type of back injury from one due to single or multiple event trauma and subsequent aggravation. Logically and legally, therefore, a back injury that has arisen from continuous exposure to such strenuous job-related conditions may fairly be classed as an occupational disease.

Given this reasoning, we are unimpressed with the WCAB’s attempt to distinguish Derwinski from the case at bar. It is sufficient, for purposes of apportionment, for the prior employment to have contributed to the disability, even though the employee may not have been subjected to identically disabling conditions. Mundy v Detroit Grey Iron Foundry, 57 Mich App 331; 225 NW2d 754 (1975). In our view, differences in severity of the work conditions between employers have relevance only in calculating the proportion of each employer’s contribution to the disability.

We therefore hold that the WCAB erred by refusing to apportion financial liability for plaintiff’s back condition between the two defendant employers.

The WCAB ordered defendant Eagle-Ottawa to pay $100 per week to plaintiff for his total disability, based on two-thirds of his weekly salary ($150). It previously found that defendant Lakey had contributed to plaintiff’s back condition in the proportion of 25 years to 15 months. Based on this finding, we remand for entry of an order pursuant to MCL 418.435; MSA 17.237(435), apportioning liability for the above award as follows: Lakey Foundry and SISF, 95%; Eagle-Ottawa, 5%; and for entry of a separate order in favor of Eagle-Ottawa to enforce its claim for reimbursement of 95% of its payments to plaintiff against Lakey Foundry and the SISF.

We next address the issue of whether the WCAB improperly awarded plaintiff compensation for partial disability of his lungs concurrently with compensation for his total disability due to his back condition.

An employee may receive concurrent disability awards where he establishes that two distinct earning capacities have been destroyed by disability. Hebert v Ford Motor Co, 285 Mich 607, 613-614; 281 NW 374 (1938), Thumser v Lakey Foundry Corp, 84 Mich App 319, 323; 269 NW2d 583 (1978). These cases involved situations where the employee had first lost an earning capacity in a skilled occupation due to total disability and then lost a second earning capacity in an unskilled occupation. However, it is clear that the test of "earning capacity” is established by the "actual earning of wages”, Dalton v Candler-Rusche, Inc, 65 Mich App 282, 288; 237 NW2d 290 (1975), rather than the degree of skill an individual employee possesses. It is therefore conceivable that a given employee may establish several earning capacities throughout his working life based on his actual wages in any individual job. He may likewise lose, due to separate disabilities, more than one ability to earn a certain wage; in such circumstances, the employee should also be entitled to concurrent compensation awards.

We are persuaded that this situation exists in the case at bar. Due to his lung disability, plaintiff had a net loss of $50 in earning capacity, based on the difference between his wages at Lakey Foundry and those at Eagle-Ottawa. For this loss, the WCAB properly awarded plaintiff two-thirds of this difference, or $33.67 in weekly benefits pursuant to MCL 418.361; MSA 17.237(361).

We next address the issue of whether the WCAB’s award of $133.67 exceeded the statutory maximum of $106 per week. In Thumser v Lakey Foundry, supra, another panel addressed an identical contention on facts analogous to the case at bar and concluded that the weekly benefits could not exceed the statutory maximum. Applying the Thumser reduction method to the case at bar, we find that Lakey’s maximum award equals $128.67 ($95 for the back injury after apportionment, and $33.67 for plaintiff’s lung disability). After reduction, we hereby direct defendants Lakey Foundry and the SISF to pay plaintiff $102.03 per week in benefits. Defendant Eagle-Ottawa’s maximum award equals $5, representing its proportionate liability for plaintiff’s total back disability; after reduction, Eagle-Ottawa is hereby ordered to pay plaintiff benefits of $3.97 per Week.

To summarize, we affirm the WCAB’s findings of fact and award of $100 per week compensation to plaintiff based on his employment at Eagle-Ottawa, and its award of $33.67 per week based on his employment at Lakey Foundry. We reverse the board’s refusal to apportion liability for the plaintiffs back condition and remand for entry of an order apportioning liability for the benefits awarded, 95% as to Lakey Foundry and SISF and 5% as to Eagle-Ottawa. We further find that the WCAB erred as a matter of law in awarding plaintiff compensation in excess of the statutory maximum of $106 per week, and reduce it to conform to that maximum.

Reversed and remanded for entry of an order consistent with this opinion.

       Lakey Foundry went bankrupt in 1972. Pursuant to MCL 418.537(2); MSA 17.237(537X2), the Self-Insurers Security Fund has been made a party to this action.

       This apportionment is calculated as follows:

        Plaintiffs total years worked,
      expressed as months = 315 months (26 years, 3 months)
      Years worked at Lakey = 300 months (25 years)
      Years worked at Eagle-Ottawa = 15 months (1 year, 3 months)
      To arrive at the proportion each employment contributed to the disability (expressed as a rounded percent):
      Lakey: 300 = .9524 or 95% 315
      Eagle-Ottawa: _15 = .0476 or 5% 315

       The reduction formula set out in Thumser v Lakey Foundry, supra, at 324, fn 4, is applied as follows to the awards at issue in the instant case:
      $106 divided by $133.67 (the total maximum awards) equals .7929976, the reduction fraction. Hence, Lakey’s liability equals $128.67 times .7929976, or $102,035, say $102.03; Eagle-Ottawa’s liability equals $5 times .7929976, or $3,965, say $3.97.


source: Caselaw Access Project

license: Public Domain

text:
    CONSUMERS POWER COMPANY v PORT SHELDON TOWNSHIP
    Docket No. 78-589.
    Submitted November 2, 1978, at Lansing.
    Decided July 9, 1979.
    Plaintiff, Consumers Power Company, owns the James H. Campbell Electric Generating Plant located in defendant Port Sheldon Township. The State Tax Commission appraised that facility for the purpose of tax assessments for the years 1975, 1976, and 1977 utilizing the current reproduction cost less depreciation method of valuation. The commission’s method of valuation resulted in much higher values for the facility than the values determined by plaintiff utilizing either a capitalized earning approach or an original cost less depreciation and economic obsolescence approach. Plaintiff appealed to the Michigan Tax Tribunal, which adopted the Tax Commission’s method of valuation. Plaintiff appeals as of right arguing that the Tax Tribunal adopted "wrong principles” by relying exclusively on a depreciated current reproduction cost approach to value the facility. Held:

    1. The Court of Appeals, in the absence of fraud, an error of law or the adoption of wrong principles, cannot substitute its judgment on matters of valuation for that of the Michigan Tax Tribunal.
    2. Rejection by the Michigan Tax Tribunal of the "unit valuation”, or capitalized earning, method of determining the true cash value of an electric power generating plant does not constitute the adoption of wrong principles, since there is no uniform method to allocate income from the entire generating system to an individual generating plant.
    3. The current reproduction cost less depreciation method of valuation is properly used to assess, for tax purposes, an electric power generating plant, rather than using the original cost less depreciation and economic obsolescence caused by rate regulation method of valuation, since the Legislature has expressed an intent to reject the depreciated original cost method of valuation for tax assessment purposes, and there is no uniform method to allocate economic obsolescence over the entire power generating system.

      References for Points in Headnotes

       2 Am Jur 2d, Administrative Law § 675.

       71 Am Jur 2d, State and Local Taxation § 441.

       72 Am Jur 2d, State and Local Taxation §§ 765-767.

      Affirmed.
    1. Appeal and Error — Taxation — Tax Tribunal — Standard of Review.
    The Court of Appeals, in the absence of fraud, an error of law or the adoption of wrong principles, cannot substitute its own judgment on matters of valuation in appeals from decisions of the Michigan Tax Tribunal.
    2. Taxation — Tax Tribunal — True Cash Value — Electric Power Generating Plant — “Unit Valuation” — Wrong Principles.
    Rejection by the Michigan Tax Tribunal of the "unit valuation”, or capitalized earning, method of determining the true cash value of an electric power generating plant does not constitute the adoption of wrong principles, since there is no state-wide uniform method to allocate income from the entire generating system to an individual generating plant.
    3. Taxation — Assessments — Method of Assessment — Electric Power Generating Plant.
    The current reproduction cost less depreciation method of valuation for tax assessment purposes, rather than the original cost less depreciation and economic obsolescence caused by rate regulation method of valuation, is properly used to assess the value of an electric power generating plant, since the Legislature has expressed an intent to reject the depreciated original cost method of valuation for tax assessment purposes, and there is no uniform method to allocate economic obsolescence over the entire power generating system.

      Lawrence B. Lindemer, Allen B. Bass, Robert J. Bayers and Travis, Warren, Nayer & Burgoyne, P.C. (by Bert Burgoyne and Richard F. Rosow), for plaintiff.

      Bauckham, Reed, Lang, Schaefer & Travis, for defendant.

      Before: M. J. Kelly, P.J., and J. H. Gillis and M. F. Cavanagh, JJ.
   M. F. Cavanagh, J.

Plaintiff appeals as of right from the Michigan Tax Tribunal’s decision to adopt the State Tax Commission’s appraisal of plaintiff’s James H. Campbell Electric Generating Plant, Port Sheldon Township, Ottawa County, for assessment purposes for tax years 1975, 1976 and 1977.

On appeal, the parties focus entirely upon the proper method to be used in valuating the subject property for the above tax years. Plaintiff’s expert considered two methods to arrive at the true cash value of the Campbell facility — a unit valuation, in which earnings of the entire system are first capitalized, and then a portion of those capitalized earnings is allocated to the power plant as its value; and a cost approach, based on original cost of the facility less accrued depreciation and less the economic obsolescence caused by rate regulation. These approaches resulted in the following values for assessment:

1975 $40,063,000
1976 $49,910,000
1977 $61,500,000

The State Tax Commission appraisal adopted a valuation method using the current reproduction cost of the Campbell plant less depreciation, which resulted in substantially higher appraisals for the same period, as follows:

1975 $ 93,467,000
1976 $105,719,000
1977 $116,788,000

The commission’s expert testified that he considered but rejected a unit valuation based on capitalized earnings on the grounds that the choice of the allocation factor presented innumerable practical problems when assessing power companies on a local basis.

In its opinion adopting the valuation of the Campbell facility determined by the State Tax Commission, the Michigan Tax Tribunal also indicated its concern with the practical problems of fairly and uniformly allocating an accurate portion of the capitalized earnings among the various power plants in the Consumers Power system, as well as with allocation of economic obsolescence created by rate-making done on a statewide basis. Plaintiff appeals from this adverse decision, arguing that the Tax Tribunal has adopted "wrong principles” by relying exclusively on a depreciated current reproduction cost approach to value the plaintiff’s plant.

All assessments for ad valorem property taxes must be based on a proportion of the property’s "true cash value”. 1963 Const, art 9, § 3. MCL 211.27; MSA 7.27 defines "true cash value” as:

"the usual selling price at the place where the property to which the term is applied shall be at the time of assessment, being the price which could be obtained for the property at private sale, and not at forced or auction sale. * * * the value attributed to the property of regulated public utilities by any governmental regulatory agency for rate making purposes, shall not be considered as controlling evidence of true cash value for assessment purposes. In determining the value the assessor shall also consider the advantages and disadvantages of location, quality of soil, zoning, existing use, [and] present economic income of structures.”

Because the concepts of " 'true cash value’ and 'fair market value’ are synonymous”, CAF Investment Co v State Tax Comm, 392 Mich 442, 450; 221 NW2d 588 (1974), the usual appraisal method is to posit a hypothetical market to value the property from both a buyer’s and a seller’s points of view in order to arrive at a usual sales price. A number of valuation methods, in addition to actual selling price, may legitimately be used to establish the "fair market value” of the property. It is the duty of the Tax Tribunal to weigh the values produced from the various valuation methods and to adopt the method that approaches true cash value most closely on "a cosmic scale of truth”. This weighing process involves a considerable amount of judgment and reasonable approximation. Consumers Power Co v Big Prairie Twp, 81 Mich App 120, 131; 265 NW2d 182 (1978).

Finally, we reiterate that the scope of review in property tax cases is limited by Const 1963, art 6, § 28, which prevents a court from substituting its own judgment in matters of valuation for that of the agency charged with administering property tax laws, in the absence of fraud, an error of law, or, as alleged here, the adoption of wrong principles by the agency. Pantlind Hotel Co v State Tax Comm, 3 Mich App 170, 176; 141 NW2d 699 (1966), aff'd 380 Mich 390; 157 NW2d 293 (1968).

With these principles in mind, we turn to the merits of this controversy. The dispute in the instant case centers on which valuation method is most properly utilized to assess an electric generating plant which is an integral part of an entire energy-producing system. Plaintiff contends primarily that a "unit valuation”, based on the capitalized earnings of the entire system, achieves the best approximation of the plant’s value. This approach rests on the theory that the primary purpose of a utility system like Consumers Power is to earn a return, that is "income”, on the investment in its various generating plants, distribution lines and other operating components. Plaintiff argues that, because an individual power plant has little value apart from its contribution to the system’s output expressed in terms of earnings, a plant’s value for property tax purposes should be synonymous with the portion of the system’s total earnings allocable to it. According to plaintiffs methods, this value is derived by applying an allocation multiplier, based on the original cost in the individual plant divided by the original cost of the entire system, to the system’s capitalized earnings. In support of this sytem income approach, plaintiff cites CAF Investment Co v State Tax Comm, supra, and Detroit v Detroit & Canada Tunnel Co, 92 F2d 833 (CA 6, 1937), as well as a number of cases from foreign jurisdictions.

We recognize that a company may be valued as a "unit”, based on its capitalized earnings. This income approach to property valuation has been approved by the Michigan Supreme Court, CAF Investment Co v State Tax Comm, supra. Defendant’s appraisal expert also testified that he normally considered income, among other indicators of value, when appraising utilities such as telephone companies and railroads, and admitted that little difference in valuation theory appeared between these utilities and a state-wide electric company. He further stated, in connection with the above utilities, that reasonable allocation factors may be developed to separate out the Michigan value for those doing business interstate. Plaintiff thus contends that the same approach may equally be employed in valuing a power generating system.

In Michigan, however, the unit method is used to value only those public utility properties which by statute must be centrally assessed. These include telephone, telegraph and rail companies assessed by the State Board of Assessors. MCL 207.4; MSA 7.254. Mineral properties are likewise centrally assessed by the State Geologist. MCL 211.24; MSA 7.24. These central assessment provisions do not include power generating public utilities, which thus remain under local assessment. MCL 211.3, 211.10; MSA 7.3, 7.10. In addition to authorizing central assessment by one assessing authority, the Legislature has also established uniform guidelines and allocation techniques applicable to all properties assessed under the above provisions. MCL 207.9, 207.275; MSA 7.259, 13.158(5).

By contrast, no statutory authority exists to permit local assessing officers to assess property located outside their individual districts, nor is there a state-wide uniform method to allocate income from a power-generating system to an individual plant.

Given the present property tax structure and the risk of arbitrariness in the allocation of a power system’s value among its various components, we are unable to conclude that the Michigan Tax Tribunal adopted wrong principles in declining to apply the unit valuation method in assessing plaintiff’s property.

Detroit v Detroit & Canada Tunnel Co, supra, is distinguishable from the case at bar; in the former case only one assessing unit was involved, unlike the present case where the plaintiff presumably has generating facilities in many townships, cities and villages. Nor is the holding in CAF Invest ment Co v State Tax Comm, supra, an unqualified endorsement of the income approach to valuation. The opinion indicates that the income approach may be rejected as too speculative in certain circumstances. It also reaffirms the proposition that:

"Any method for determination of true cash value which is recognized as accurate and reasonably related to fair market valuation will fill the statutory prescription and is an acceptable indicator of true cash value.” CAF Investment Co v State Tax Comm, supra, at 450, fn 2, 456.

Under the circumstances presented by this case, the adjusted current reproduction cost method employed by defendants meets the above criterion.

The plaintiff also argues that, if a cost approach is used to value the Campbell plant, the valuation must be based on the depreciated original cost of the plant, which is the basis on which Consumers Power must set its rates and thus earn its return, less the economic obsolescence (i.e., the deficiency in earnings) caused by rate regulation.

However, several considerations undermine plaintiffs argument. First, this Court has recognized a distinction between the value of property for rate-making purposes and ad valorem property tax purposes. Consumers Power Co v Big Prairie Twp, supra, at 137. Secondly, the Legislature recently amended MCL 211.27; MSA 7.27, to provide that:

"[t]he value attributed to the property of regulated public utilities by any governmental regulatory agency for rate making purposes, shall not be considered as controlling evidence of true cash value for assessment purposes.”

Although the statute took effect after the tax years in question, its express language indicates a legislative intent to reject assessments based on the depreciated original cost of public utility property, thus undermining plaintiffs basis for calculating economic obsolescence. Furthermore, while rate regulation may indeed contribute to economic obsolescence, a multitude of other factors, including management inefficiency, may create an earnings deficiency. Indeed, it appears that Consumers Power failed to earn for the tax years in question its authorized rate of return. To totally attribute an earnings shortfall to government regulation appears exaggerated. Finally, similar allocation problems appear to exist with this cost method as with the income approach, in light of the fact that rate-making is also done on a system-wide basis, and the economic obsolescence it presumably creates affects the total system’s earnings.

The decision of the Michigan Tax Tribunal is therefore affirmed.


author: D. F. Walsh, P.J. T. M. Burns, J.,

text:
    SCHWARK v LILLY
    Docket No. 78-648.
    Submitted February 6, 1979, at Grand Rapids.
    Decided July 9, 1979.
    Leave to appeal applied for.
    Naomi R. Schwark was killed and four of her children were injured in an automobile collision. Her husband, Guy Schwark, brought an action for himself, as administrator of his wife’s estate, and as next friend of the couple’s four minor children, three of whom were injured in the collision. Guy Schwark, III, an adult child who was also injured, joined in the suit as a plaintiff. Defendants were Max E. Lilly, the other driver, Duane K. Wiltse, VFW Mecwarf Post 5319, and State Farm Mutual Automobile Insurance Company. The alleged liability of Wiltse and the VFW Post was premised upon violation of the dramshop act. The plaintiffs’ claims were dismissed, pursuant to settlements, as to all the defendants except State Farm. The Calhoun Circuit Court, Paul Nicolich, J., found that State Farm was not entitled to set off from survivors’ benefits Social Security benefits received by plaintiffs, that State Farm was not entitled to reimbursement of benefits paid from plaintiffs’ recovery from the dramshop defendants, and that the survivors’ benefits due the plaintiffs were equal to Mrs. Schwark’s take-home pay. State Farm appeals. Held:

    1. The setoff for Social Security benefits is enforceable.
    2. The amount of survivors’ benefits is to be determined by the deceased’s gross wages, minus the amount she would have paid in taxes and minus an amount fairly representing her personal consumption.
    3. State Farm is not entitled to reimbursement from the proceeds of the dramshop recovery because the dramshop defendants’ liability did not arise from the ownership, maintenance or use of a motor vehicle.
    Affirmed in part, reversed in part, and remanded.
    References for Points in Headnotes

       New Topic Service Am Jur 2d, No-Fault Insurance § 22.

       73 Am Jur 2d, Statutes §§ 194, 225.

       New Topic Service Am Jur 2d, No-Fault Insurance § 31.

       New Topic Service Am Jur 2d, No-Fault Insurance § 9.

       New Topic Service Am Jur 2d, No-Fault Insurance §§ 9, 14, 15.

      T. M. Burns, J., concurred in all respects except that he would hold that survivors’ benefits should not be reduced by the amount the deceased would have paid in taxes, as the statute does not expressly provide for such a deduction.
    Opinion op the Court
    1. Insurance — Automobiles — No-Fault — Reductions in Benefits — Social Security Benefits — Statutes.
    The section of the no-fault insurance act which provides for a reduction in no-fault benefits in the amount of benefits received from state or Federal governments is constitutional as it relates to Federal Social Security benefits (MCL 500.3109[1]; MSA 24.13109[1]).
    2. Statutes — Meaning — Judicial Construction.
    Judicial construction or attempted interpretation to vary the plain meaning of a statute is precluded where there is no necessity to reconcile conflicting statutes, where there is no absence of adequate operational definitions of relevant terms, and where the statutory language is plain and unambiguous.
    3. Insurance — Automobiles •— No-Fault — Survivor’s Benefits — Reduction in Benefits — Statutes.
    Survivors’ benefits payable as personal protection insurance benefits under the no-fault insurance act are to be in the amount of the gross wages of the deceased reduced by the amount the deceased would have paid in taxes and by the amount the deceased would have spent on • personal consumption (MCL 500.3108; MSA 24.13108).
    4. Insurance — Automobiles — No-Fault — Reimbursement From Tort Recovery —■ Statutes.
    An insurance carrier paying personal injury protection benefits under a no-fault insurance policy is entitled to reimbursement for economic benefits out of a third-party tort recovery of the person injured as a result of a motor vehicle accident only where the defendant is uninsured, the accident occurs out of state, or the injury is intentionally inflicted (MCL 500.3116; MSA 24.13116).
    5. Insurance — Automobiles — No-Fault — Liability — Dram-shop Act — Statutes.
    The no-fault act addresses only tort liability arising out of the ownership, maintenance or use of a motor vehicle; therefore, an insurer which has paid personal protection benefits as the result of an automobile accident is not entitled to reimbursement from the proceeds of a recovery by the injured person from a bar owner under the dramshop act because the liability of the bar owner arises from the unlawful selling, giving or furnishing of intoxicating liquor to a visibly intoxicated person (MCL 436.22, 500.3116, 500.3135; MSA 18.993, 24.13116, 24.13135).
    Partial Concurrence, Partial Dissent by T. M. Burns, J.
    6. Insurance — Automobiles — No-Fault — Survivors’ Benefits — Reduction in Benefits — Taxes — Statutes.

      The amount of survivors’ beneñts payable under a policy of no-fault automobile insurance should not be reduced by the amount that the deceased would have paid in taxes because the statute governing payment of beneñts does not expressly provide for such a deduction and it should not be read into the statute (MCL 500.3108; MSA 24.13108).

      Sloan, Zarbock, Risdon, Beneñel & Farrer, for plaintiffs.

      James, Dark & Brill, for defendant State Farm Mutual Automobile Insurance Company.
    Before: D. F. Walsh, P.J., and J. H. Gillis and T. M. Burns, JJ.
   D. F. Walsh, P.J.

Defendant State Farm Mutual Automobile Insurance Company (hereinafter "defendant”) appeals the entry of judgment for plaintiffs in the amount of $9,445.49, representing the personal protection insurance benefits payable to plaintiffs as survivors of the deceased Naomi Schwark.

This cáse arose out of an August 3, 1975, automobile accident in which a car driven by defendant Max E. Lilly collided with a car driven by Naomi Schwark. Mrs. Schwark was killed and four of her children, passengers in the automobile, were injured in the accident. Plaintiff Guy Schwark, husband of Naomi Schwark and father of the injured children, filed suit individually and as administrator of his wife’s estate. He also sued as next friend of the four minor Schwark children, three of whom were injured in the accident. The Schwark’s only adult child, Guy Schwark III, was among those injured in the accident and joined in the suit. The defendants were Mr. Lilly, Duane K. Wiltse d/b/a The Lazy Lounge, VFW Mecwarf Post 5319 (Kenneth Suit, Commander) and State Farm Mutual Automobile Insurance Company. Pursuant to settlements, plaintiffs’ claims against all defendants except State Farm were dismissed. The claims against Mr. Wiltse and the VFW post were based on alleged dramshop liability. MCL 436.22; MSA 18.933.

Trial was held on December 6, 1977. The parties agreed that the sole remaining issues concerned: (1) whether Social Security benefits paid to plaintiffs as a result of Mrs. Schwark’s death could be deducted from survivors’ benefits owed to plaintiffs by defendant under the no-fault act, MCL 500.3109(1); MSA 24.13109(1); (2) the amount of survivors’ benefits owed to plaintiffs by defendant under the no-fault act, MCL 500.3108; MSA 24.13108; and (3) whether defendant could be reimbursed from the amount paid to plaintiffs by the dramshop defendants, MCL 500.3116; MSA 24.13116.

The trial court found that § 3109 of the no-fault act was unconstitutional and ruled that defendant was not entitled to a setoff for Social Security benefits. The court also found that § 3116 of the act was unconstitutional and that defendant was not entitled to reimbursement from plaintiffs’ dramshop recovery.

At trial it was established that Naomi Schwark had been employed outside the home at the time of her death. Her gross weekly earnings were approximately $90. Her weekly take home pay was $69.12. Her husband testified repeatedly that he did not know what portion of those earnings had been used for family purposes and what portion had been used by Mrs. Schwark for her own personal needs. In his final response to questioning along this line, he estimated that half of his wife’s income had been used for family purposes.

The trial judge found that survivors’ benefits due plaintiffs under § 3108 of the no-fault act were equal to Mrs. Schwark’s take-home pay of $69.12 per week. The court interpreted § 3108 as requiring payment of something less than the deceased’s gross income. With regard to Mr. Schwark’s testimony as to the portion of Mrs. Schwark’s income which was used for family purposes, the court found that the evidence was "at best * * * untrustworthy. For example, the amount spent on gasoline and repairs for the decedent’s automobile, although used for taking her to and from her place of employment, could have been used for the benefit of the dependents.”

We address three issues on appeal:

1. Did the trial court err in ruling that defendant was not entitled to subtract from personal protection insurance benefits the Social Security benefits paid to plaintiffs as a result of Mrs. Schwark’s death?

2. Did the trial court properly compute the amount of personal protection insurance benefits payable to plaintiffs as dependent survivors of Mrs. Schwark?

3. Did the trial court err in ruling that defendant was not entitled to reimbursement out of plaintiffs’ dramshop recovery from the dismissed defendants?

I. Social Security Setoff

The Supreme Court recently held that the setoff provision of § 3109 of the no-fault act is constitutional and enforceable as it relates to Social Security benefits. O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524; 273 NW2d 829 (1979). The trial court’s ruling to the contrary is, therefore, reversed.

II. Computation of Personal Protection Insurance Beneñts for Survivors’ Losses

MCL 500.3108, provides:

"Personal protection insurance benefits are payable for a survivors’ loss which consists of a loss, after the date on which the deceased died, of contributions of tangible things of economic value, not including services, that dependents of the deceased at the time of his death would have received for support during their dependency from the deceased if he had not suffered the accidental bodily injury causing death and expenses, not exceeding $20.00 per day, reasonably incurred by these dependents during their dependency and after the date on which the deceased died in obtaining ordinary and necessary services in lieu of those that the deceased would have performed for their benefit if he had not suffered the injury causing death. The benefits payable for survivors’ loss in connection with the death of a person in a single 30-day period shall not exceed $1,000.00 and is not payable beyond the first 3 years after the date of the accident.”

In Miller v State Farm Mutual Automobile Ins Co, 88 Mich App 175; 276 NW2d 873 (1979), a panel of this Court held that the Legislature did not intend that survivors’ benefits under § 3108 be reduced by the amount the decedent would have paid in taxes but did intend that such benefits be reduced by the amount used for the decedent’s personal consumption.

We concur in the latter conclusion and so rule in this case. With respect to the former conclusion, however, we disagree with the Miller panel and rule to the contrary.

Under generally recognized principles of statutory construction, when there is no necessity to reconcile conflicting statutes, Wayne County Civil Service Comm v Board of Supervisors, 384 Mich 363; 184 NW2d 201 (1971), when there is no absence of adequate operational definitions of relevant terms, Prisoners’ Labor Union v Dep’t of Corrections, 61 Mich App 328; 232 NW2d 699 (1975), lv den 394 Mich 843 (1975), and when the statutory language is plain and unambiguous, Jones v Grand Ledge Public Schools, 349 Mich 1, 9-10; 84 NW2d 327 (1957), judicial construction or attempted interpretation to vary the plain meaning of a statute is precluded.

The language employed by the Legislature in MCL 500.3108, is explicit and unambiguous. It clearly expresses the intent of the Legislature that "benefits are payable for a survivors’ loss” and that the "loss” consists of "tangible things of economic value” which the dependents of the deceased "would have received” from the deceased for support during their dependency. The dependents of the deceased, however, would not have received any amounts of the decedent’s income which the decedent was required to pay in taxes.

The case is remanded to the circuit court for proper determination of the amount of the "tangible things of economic value” which the dependents of Naomi Schwark would have received from her for support if she "had not suffered the accidental bodily injury causing death”. In making this determination the triál court must reduce Mrs. Schwark’s gross wages by an amount fairly representing her personal consumption and also by the amount she would have paid in taxes. It should be noted, however, that this panel agrees with the trial judge that Mr. Schwark’s statement that one half of his wife’s income was used for family purposes, when read in context, was not sufficiently trustworthy to be relied upon as determinative of the amount of her personal consumption.

III. Applicability of the No-Fault Act’s Reimbursement Provision When Recovery From Third Parties is Based on Dramshop Liability

In ruling that defendant was not entitled to reimbursement for personal protection insurance benefits from plaintiffs’ recovery from the dram-shop defendants, the trial court relied on Murray v Ferris, 74 Mich App 91; 253 NW2d 365 (1977). The court found § 3116 of the no-fault act unconstitutional and declined to allow reimbursement from that portion of the dramshop recovery which represented plaintiffs’ noneconomic damages.

At the time of the accident which gave rise to this lawsuit, MCL 500.3116(1); MSA 24.13116(1) provided:

"A subtraction from personal protection insurance benefits shall not be made because of the value of a claim in tort based on the same accidental bodily injury. However, after recovery is realized upon a tort claim, a subtraction shall be made to the extent of the recovery, exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery. If personal protection insurance benefits have already been received, the claimant shall repay to the insurers out of the recovery a sum equal to the benefits received, but not more than the recovery exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery. The insurer shall have a lien on the recovery to this extent. A recovery by an injured person or his estate for loss suffered by him shall not be subtracted in calculating benefits due a dependent after the death and a recovery by a dependent for loss suffered by the dependent after the death shall not be subtracted in calculating benefits due the injured person.”

The Supreme Court recently declined to follow the approach taken in Murray v Ferris, supra. Applying established rules of statutory construction in Workman v Detroit Automobile Inter-Insurance Exchange, 404 Mich 477; 274 NW2d 373 (1979), the Court interpreted § 3116 so as not to allow unconditional reimbursement of no-fault insurance carriers out of tort recoveries from third parties. The Court found that it was necessary to construe § 3116 in light of § 3135 of the no-fault act. To do otherwise would allow the absurd result of depriving an injured person of the limited tort remedy provided in § 3135. The Court held that, under § 3116,

"an insurance carrier paying personal injury protection benefits is entitled to reimbursement from the tort recovery of a person injured as a result of a motor vehicle accident only if, and to the extent that, the tort recovery includes damages for losses for which personal injury protection benefits were paid.” Id. at 510 (opinion of Williams, J.).

This interpretation of § 3116 gives full effect to § 3135, and effectuates the essential purpose of § 3116 — i.e., to prevent double recovery of economic loss by persons whose right to sue in tort for economic loss is not abolished by § 3135. The Court noted that such double recovery might occur with respect to: (1) persons injured by uninsured motorists, § 3135(2); (2) persons injured in automobile accidents in another state, § 3135(2); and (3) persons suffering intentionally caused harm in auto accidents, § 3135(2)(a). Id. at 510, fn 15 (opinion of Williams, J.).

Concurring in the result on this issue, Justices Levin and Kavanagh found that the Legislature’s recent amendment of § 3116 provided the definitive answer in the controversy over the proper construction and validity of the section. As amended, the section provides for reimbursement for economic benefits out of third-party tort recoveries only where the defendant is uninsured, the accident occurs out of the state, or the injury is intentionally inflicted.

On appeal in the instant case, defendant concedes that it is not entitled to reimbursement from that part of the dramshop recovery which represents plaintiffs’ noneconomic losses. It argues only that that portion of the dramshop recovery representing economic losses for which defendant is liable to plaintiffs under the no-fault act should be subject to its right of reimbursement.

If we were to adopt the analysis of Justices Levin and Kavanagh, we would reject defendant’s argument summarily, since, as recently amended, § 8116 clearly has no applicability to the instant fact situation. We are also persuaded, however, that the analysis of the Workman majority compels us to reject defendant’s argument. Section 3116 must be construed in light of and together with § 3135. In the latter section the Legislature discusses only "tort liability arising out of the ownership, maintenance or use * * * of a motor vehicle”. § 3135(2). The liability of the dramshop defendants did not arise out of the ownership, maintenance or use of an automobile. Instead their liability arose from their alleged "unlawful selling, giving or furnishing * * * intoxicating liquor” to "a visibly intoxicated person”. MCL 436.22.

In enacting the no-fault act the Legislature addressed only one type of tort liability. The act comprehensively covers only tort liability arising out of the ownership, maintenance or use of motor vehicles. To extend its provisions to liability arising outside its intended scope would circumvent the legislative process. We rule, therefore, that the defendant is not entitled to reimbursement for personal protection insurance benefits from plaintiffs’ recovery from the dramshop defendants.

Affirmed in part; reversed in part; remanded for determination of the amount of no-fault benefits still owed to plaintiffs by defendant. No costs, each party having partially prevailed.

J. H. Gillis, J., concurred.

T. M. Burns, J.,

(concurring in part, dissenting in part). I concur in Judge Walsh’s opinion in all respects save one. I would hold that the conclusion expressed in Miller v State Farm Mutual Automobile Ins Co, 88 Mich App 175; 276 NW2d 873 (1979), concerning deduction for amounts the deceased would have paid in taxes is correct. MCL 500.3108; MSA 24.13108, does not expressly provide for such deduction, as does MCL 500.3107; MSA 24.13107, and I would not read this requirement into the act.

       "Benefits provided or required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury.” MCL 500.3109(1); MSA 24.13109(1).

       There is no question that plaintiffs are dependents of the deceased. MCL 500.3110; MSA 24.13110.

       "Q [by Mr. Dark, defense counsel] Now, you understand, I assume, that one of the questions involved is what she contributed for the support of the family.

        "A [by Mr. SchwarkJYes.

      "Q So I’m going to be asking you a number of questions to try and determine what that amount might be as compared to what her take-home pay was. I assume some of her take-home pay was used on her purely personal expenses.
      "A Yes.
      "Q What would those be, Mr. Schwark?
      "A She used to have her hair done a couple times a week.
      "Q What would that cost?
      "A I have no idea.
      "Q She just paid for it and didn’t tell you or bother you with it.
      "A No, she always had her own money.
      "Q What else would she use her money for?
      "A Oh, gas to get back and forth to work.
      "Q Did she pay for her own car repairs and all that?
      "A Not all of 'em. It would be hard for me to try to itemize 'em.
      "Q She buy her own clothing?
      "A Some of 'em.
      "Q What other things would she use her money for or her earnings for her own personal use?
      "A I can’t think of anything else.
      "Q Now, what did she do with her paycheck? She give it to you?
      "A No.
      "Q Did she account to you at all for it?
      "A No.
      "Q Do you know what part of it she used to buy clothing for the children or things like that?
      "A No.
      "Q What I’m trying to get at, did you give her your paycheck?
      "A I gave her some money, yes.

        "Q In other words, you gave her so much money to run the house and so on.
      "A Yes.
      "Q And how much would you give her a week?
      "A I never give her any set amount. Whatever was required.
      "Q She’d tell you what expenses she had and you’d give her the money.
      "A Yes.
      "Q And do you have any idea what portion of her earnings she used for the family as a whole or for the children versus what portion she used for herself?
      "A No, I don’t know. With five kids, don’t take long.
      "Q Can you give us an estimate of what portion or percentage of her pay you feel that she used for family rather than for her gas, her own entertainment? Did she smoke?
      "A Yes, she did.
      "Q Cigarettes and things that would be purely for herself?
      "A I’m not saying I used to buy her cigarettes, too.
      "Q All right. Can you give me an estimate in your mind what portion of her paycheck went for the family versus her own personal needs?
      "A Not honestly. I don’t know.
      "Q Would you say half of it.
      "MR. BENEFIEL [plaintiffs’ counsel]: Your Honor, it’s already been asked and answered.
      "THE COURT: Are you able to answer that question then, Mr. Schwark?
      "THE WITNESS: I’ll say half.”

       The § 3109 setoff is made only against personal protection benefits paid to dependent survivors pursuant to § 3108 — i.e., as repeatedly emphasized by the Supreme Court in O’Donnell, § 3109 was designed to require setoff only of duplicative government benefits. See id. at 544-547 (Coleman, J.) and 553, fn 3 (Williams, J., dissenting).
      Plaintiffs raised the novel argument that § 3109 violates § 207 of the Federal Social Security Act:
      "The right of any person to any future payment under this sub-chapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.” 42 USCA 407.
      We note first that much of plaintiffs’ argument is erroneously premised on the assumption that Social Security disability benefits will be set off against no-fault benefits. In the instant case, plaintiffs have received survivors’ benefits under the Social Security Act. The complexity of issues and the consequent possibility of protracted administrative proceedings and litigation in Social Security disability cases are necessarily greater than in cases of application for survivors’ benefits. We have been presented with no evidence of cases where Social Security survivors’ benefits were paid at a later date than no-fault survivors’ benefits so that the possibility of attachment of Social Security funds arose.
      Nor are we persuaded by plaintiffs’ argument that § 3109 operates as a "legal process” to which Social Security benefits are subjected in violation of the Social Security Act. The Social Security recipient is in no way deprived of his Social Security benefits by operation of the no-fault act. Plaintiffs’ reliance on Philpott v Essex County Welfare Board, 409 US 413; 93 S Ct 590; 34 L Ed 2d 608 (1973), and Manfredi v Maher, 435 F Supp 1106 (D Conn, 1977), is, therefore, misplaced. In Philpott, the Supreme Court held that the respondent, one of New Jersey’s welfare agencies, was barred by § 407 from recovering any amount from the retroactive disability insurance benefits paid to the petitioner under the Social Security Act. As a condition of receiving welfare assistance the petitioner had been required to execute an agreement to reimburse the county welfare board for all assistance payments. Before the Supreme Court, New Jersey argued that the welfare benefits could have been reduced by the amount of Federal Social Security benefits if the latter had been received monthly. Justice Douglas, speaking for a unanimous Court, saw no reason, on that basis, to allow reimbursement from the retroactive benefits paid to the petitioner. Significantly, the Court did not disapprove the automatic setoff of welfare benefits by amounts received from the Federal government under the Social Security Act.
      The words "or other legal process” must be interpreted consistently with the named actions at law immediately preceding them in the statute. In re Vary Estate, 401 Mich 340, 352; 258 NW2d 11 (1977), cert den 434 US 1087; 98 S Ct 1283; 55 L Ed 2d 793 (1978). The exemption provision of § 407 was apparently intended to protect Social Security recipients from the claims of creditors, including the state acting in the capacity of creditor. See Philpott, supra. By subtracting from no-fault personal protection insurance benefits to be paid to dependent survivors the amount of duplicative Social Security benefits received by them, a no-fault insurer does not become a creditor of the no-fault beneficiary. Section 3109 does not contemplate a transfer of Social Security benefits or an assignment of one’s future right to such benefits. We perceive no violation of the Social Security Act in § 3109(1).

       "(1) A person remains subject to tort liability for noneconomic loss caused by his ownership, maintenance or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function or permanent serious disfigurement.

        "(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle with respect to which the security required by subsections (3) and (4) of section 3101 was in effect is abolished except as to:
      "(a) Intentionally caused harm to persons or property. Even though a person knows that harm to persons or property is substantially certain to be caused by his act or omission, he does not cause or suffer such harm intentionally if he acts or refrains from acting for the purpose of averting injury to any person, including himself, or for the purpose of averting damage to tangible property.
      "(b) Damages for noneconomic loss as provided and limited in subsection (1).
      "(c) Damages for allowable expenses, work loss and survivor’s loss as defined in sections 3107 to 3110 in excess of the daily, monthly and 3 year limitations contained in those sections. The party liable for damages is entitled to an exemption reducing his liability by the amount of taxes that would have been payable on account of income the injured person would have received if he had not been injured.” MCL 500.3135; MSA 24.13135.

       Section 3116 as amended provides:
      “(1) A subtraction from personal protection insurance benefits shall not be made because of the value of a claim in tort based on the same accidental bodily injury.
      "(2) A subtraction from or reimbursement for personal protection insurance beneñts paid or payable under this chapter shall be made only if recovery is realized upon a tort claim arising from an accident occurring outside this state, a tort claim brought within this state against the owner or operator of a motor vehicle with respect to which the security required by section 3101(3) and (4) was not in effect, or a tort claim brought within this state based on intentionally caused harm to persons or property, and shall be made only to the extent that the recovery realized by the claimant is for damages for which the claimant has received or would otherwise be entitled to receive personal protection insurance beneñts. A subtraction shall be made only to the extent of the recovery, exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery. If personal protection insurance beneñts have already been received, the claimant shall repay to the insurers out of the recovery a sum equal to the beneñts received, but not more than the recovery exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery. The insurer shall have a lien on the recovery to this extent. A recovery by an injured person or his or her estate for loss suffered by the person shall not be subtracted in calculating beneñts due a dependent after the death and a recovery by a dependent for loss suffered by the dependent after the death shall not be subtracted in calculating beneñts due the injured person.

      "(3) A personal protection insurer with a right of reimbursement under subsection (1), if suffering loss from inability to collect reimbursement out of a payment received by a claimant upon a tort claim is entitled to indemnity from a person who, with notice of the insurer’s interest, made the payment to the claimant without making the claimant and the insurer joint payees as their interests may appear or without obtaining the insurer’s consent to a different method of payment.

        "(4) A subtraction or reimbursement shall not be due the claimant’s insurer from that portion of any recovery to the extent that recovery is realized for noneconomic loss as provided in section 3135(1) and (2)(b) or for allowable expenses, work loss, and survivor’s loss as deñned in sections 3107 to 3110 in excess of the amount recovered by the claimant from his or her insurer.” (Emphasis indicates amendatory language of 1978 PA 461.)

       Another example of a theory of liability which may be the basis of a claim for damages following a motor vehicle accident is products liability. As is the case with dramshop liability, liability under this theory would not arise out of the ownership, maintenance or use of a motor vehicle.


author: T. M. Burns, J.

text:
    SHERRIFF-GOSLIN COMPANY v CAWOOD
    Docket No. 78-1002.
    Submitted February 7, 1979, at Grand Rapids.
    Decided July 9, 1979.
    Leave to appeal denied, 407 Mich —.
    Plaintiff, Sherriff-Goslin Company, brought an action against David M. Cawood, manager of the plaintiffs business in Ann Arbor, Wolverine Insurance Company, the plaintiffs business insurer, and against Peoples State Bank in St. Joseph, Michigan, to recover funds lost when checks made out to the plaintiff were embezzled by Cawood and paid by the bank over endorsements forged by Cawood. Cawood had no authority to cash these checks or to deal with them in any way other than to pass them on to the plaintiffs home office. Cawood opened an account with defendant Peoples State Bank in the name of Society Products and the sums from the embezzled checks were deposited in this account. The checks were deposited with a stamped endorsement in blank with no restriction on further negotiation. No one at the bank knew of Cawood’s position with the plaintiff or even inquired about these checks. During the course of Cawood’s scheme, the bank credited his account with and collected over $100,000 which belonged to the plaintiff. When the scheme was discovered, no money was left in the account.
    The theory advanced against the bank was that by cashing the checks, over a forged endorsement in blank, the bank had converted Sherriff-Goslin’s money.
    Summary judgment was entered for the plaintiff against Peoples State Bank, Calhoun Circuit Court, Creighton R. Coleman, J. Defendant Peoples State Bank appeals, contending that under the Uniform Commercial Code it is not liable in a direct suit by the payee. Held:

    1. The Uniform Commercial Code provides no defense for the collecting bank in a suit by the payee of an instrument in this type of fact situation.
    2. The trial court based its judgment on the fact that even if certain provisions of the UCC did apply, providing certain defenses to the bank, the bank did not act "in accordance with the reasonable commercial standards applicable to the business” and, for this reason, could be held liable. This alternative ground relied upon by the trial court is also a proper basis for the trial court’s ruling.

      References for Points in Headnotes

       10 Am Jur 2d, Banks § 635.

       29 Am Jur 2d, Evidence § 98.

      Affirmed.
    1. Banks and Banking — Conversion of Instrument — Uniform Commercial Code — Forged Instrument — Statutes.
    A section of the Uniform Commercial Code dealing with conversion of an instrument provides no defense for a collecting bank in an action for conversion of an instrument brought by the payee where the bank has paid out funds to another party over a forged endorsement (MCL 440.3419; MSA 19.3419).
    2. Banks and Banking — Conversion of Instrument — Forged Instrument — Reasonable Commercial Standards — Judicial Notice.
    A trial court in an action for conversion by a payee on negotiable instruments against a depository bank for funds paid out over a forged endorsement on the instruments was justified in taking judicial notice of the depository bank’s lack of compliance with reasonable commercial standards where 1) over 300 checks were embezzled and the endorsements on them forged by the manager of one of plaintiffs branch offices, 2) the forger had no authority to cash the checks or to deal with them in any way except to pass them on to the plaintiffs home office, 3) the forger opened an account with the defendant bank, in a city 130 miles from the branch office managed by the forger, under an assumed name and the sums from the embezzled checks were deposited in this account, 4) the checks were deposited with a stamped endorsement in blank with no restriction on further negotiation, 5) no one at the bank knew of the forger’s position with the plaintiff or even inquired about the checks, 6) the value of the embezzled checks deposited into the forger’s account, from which he alone was authorized to draw funds, exceeded $100,000, and 7) the only other activity in this account amounted to less than $1,500.

      Sabin & Humbarger, for plaintiff.

      Cholette, Perkins & Buchanan (by Bruce M. Bieneman and Kenneth L. Block), for defendant Peoples State Bank.

      Before: D. F. Walsh, P.J., and J. H. Gillis and T. M. Burns, JJ.
   T. M. Burns, J.

Plaintiff Sherriff-Goslin Company brought this suit to recover for amounts lost when checks made out to it were embezzled and paid over a forged endorsement. The trial court entered a summary judgment, under G.CR 117.2(3), against the defendant Peoples State Bank and it appeals. We affirm.

From April 1, 1973, until sometime in July of 1974, defendant David Cawood was the branch manager of plaintiff’s business in Ann Arbor. While serving in this capacity Cawood received checks from plaintiff’s customers drawn on various banks. Cawood had no authority to cash these checks or deal with them in any way other than to pass them on to the home office. However, the checks were diverted from plaintiff and the sum deposited in an account controlled by Cawood when he used a stamp to endorse the checks in blank and without restriction on further negotiation.

Cawood had an account with Peoples State Bank in St. Joseph, Michigan, in the name of Society Products. Cawood was the only person authorized to draw money from the Society Products account. No one at the bank knew of Cawood’s position with plaintiff or ever inquired about these checks on which plaintiff was the payee. During the course of Cawood’s scheme, Peoples State Bank credited his account with and collected over $100,-000 which properly belonged to plaintiff. When the embezzlement was discovered no money was left in Cawood’s account at Peoples State Bank.

Plaintiff sued Cawood, their own business insurer and Peoples State Bank to recover the sums lost. The theory advanced against the bank was that by cashing the checks on which Sherriff-Goslin was payee over the stamped endorsement in blank, which was in fact a forgery, it had converted Sherriff-Goslin’s money. UCC 3-419, MCL 440.3419; MSA 19.3419.

Whether a payee may bring a direct action against a collecting bank in conversion for funds paid out over a forged endorsement under the UCC has not reached this Court before this case. Before adoption of the UCC it was almost universally accepted that a payee, subject to certain defenses, could maintain a direct action on one theory or another against a collecting bank or other entity which cashed a check bearing a forged or unauthorized endorsement of the payee and procured payment from the drawee. Anno: Right of check owner to recover against one cashing it on forged or unauthorized indorsement and procuring payment by drawee, 100 ALR2d 670, § 2, p 672. Michigan allowed such suits on a conversion theory. See, e.g., Kaufman v State Savings Bank, 151 Mich 65; 114 NW 863; 123 Am S Rep 259; 18 LRA NS 630 (1908).

The bank contends that it is not liable in a direct suit by the payee and points to UCC 3-419 for support. In relevant part, that section provides:

"(1) An instrument is converted when
"(c) it is paid on a forged indorsement.
"(3) Subject to the provisions of this Act concerning restrictive indorsements a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands.”

The bank’s contention has not been successful in other jurisdictions. Courts which have considered the question have not construed § 3-419(3) in a way which protects a collecting bank in a normal check cashing transaction such as that presented by the facts of this case.

In one line of cases, represented by Ervin v Dauphin Deposit Trust Co, 38 Pa D&C 2d 473; 3 UCC Rep Serv 311 (1965), and Tubin v Rabin, 389 F Supp 787 (ND Tex, 1974), aff'd 533 F2d 255 (CA 5, 1976), the collecting bank has been found not to be a "representative” within the meaning of this section. This interpretation is based on the official comments to the code and their reference to prior law involving security brokers dealing with bearer bonds.

Other courts have analyzed the relationship between the forger and the collecting bank and concluded that when the collecting bank pays out funds it has collected from the drawee bank it is paying out its own funds and not the proceeds of the check. Thus when the true owner brings a direct suit the collecting bank still has the "proceeds” of the stolen check in its hands and is liable to that extent. The commencement of the present action ratifies the collection by the depository bank but does not ratify the act of paying the amount collected to the wrong person. Cooper v Union Bank, 9 Cal 3d 371; 107 Cal Rptr 1; 507 P2d 609 (1973), Sonnenberg v Manufacturers Hanover Trust Co, 87 Misc 2d 202; 383 NYS2d 863 (1976).

Some courts have recognized the weight of this authority and the code’s purpose to "make uniform the law among the various jurisdictions”, UCC l-102(2)(c), MCL 440.1102(2)(c); MSA 19.1102(2)(c), and accepted the results. Mott Grain Co v First National Bank & Trust Co of Bismarck, 259 NW2d 667 (ND, 1977).

While this body of case law has not developed without criticism, the reasons which support it are clearly ascertainable. This case is a good example of the most important of these reasons. The bank here accepted for collection some 300 checks drawn by various entities on many different banks. If the payee cannot sue the depository bank directly it would be necessary to sue either the drawee bank under 3-419(l)(c) or the drawer under 3-804. Thus 300 lawsuits might be required where one will do under the prevailing construction of 3-419(3). But, even then the matter would not be closed. When the drawee bank or drawer loses the suit to the payee, they in turn pass the loss to the first party to deal with the forger, here Peoples State Bank, under the warranty provisions of 3-417. Other courts have recognized the code’s allocation of the ultimate loss in this factual pattern, even in suits brought against the drawer or drawee bank. Mississippi Bank & Trust Co v County Supplies & Diesel Service, Inc, 253 So 2d 828 (Miss, 1971), Maddox v First Westroads Bank, 199 Neb 81; 256 NW2d 647 (1977).

We agree with the result reached in the cases cited above and affirm the court’s finding that 3-419(3) provides no defense for the collecting bank in a suit by the true owner of the instrument in this type of fact situation.

The trial court based its holding on an alternative ground which should also be affirmed. In the view of the court below, even if the depository bank fell within the first phrase of 3-419(3) it would still not be absolved from liability because it did not act "in accordance with the reasonable commercial standards applicable to the business”. Defendant bank argues this finding could not be made on the present record.

We cannot accept the bank’s argument. The undisputed facts are that Peoples State Bank, located in St. Joseph, some 130 miles from Ann Arbor, handled over 300 checks made out to a corporate payee and endorsed only by a rubber stamp. The value of the checks exceeded $100,000. The only activity in this account, other than checks payable to Sherriff-Goslin, amounted to less than $1,500. No one at the bank knew that Ca-wood worked for Sherriff-Goslin and certainly no one ever asked by what authority he was dealing with these checks. The bank simply failed to make any inquiry into these various transactions.

Under the circumstances the court was justified in taking judicial notice of the lack of compliance with reasonable commercial standards. Many courts have found a lack of compliance with such standards on similar facts. See, e.g., Gresham State Bank v O & K Construction Co, 231 Or 106; 370 P2d 726; 372 P2d 187; 100 ALR2d 654 (1962), Atlas Building Supply Co, Inc v First Independent Bank of Vancouver, 15 Wash App 367; 550 P2d 26 (1976), Von Gohren v Pacific National Bank of Washington, 8 Wash App 245; 505 P2d 467 (1973), Mott Grain Co v First National Bank & Trust Company of Bismark, supra, Belmar Trucking Corp v American Trust Co, 65 Misc 2d 31; 316 NYS2d 247 (1970). We recognize, as these other courts have, that when a corporation is the payee of a check, that corporation usually deposits the check in its account rather than negotiating it in blank to a third person. The bank had a duty to inquire before accepting these checks. Since it did not inquire and paid the checks over forged endorsements, it must bear the ultimate loss.

Peoples State Bank contends on a number of other issues that it should be allowed to present evidence of several possible code defenses. These sections were never raised in any pleading and are mentioned only in passing in the brief in opposition to the motion for summary judgment. The record does not show that an answer to the motion for summary judgment was ever filed. From review of the other documents in the file there is no reason to believe that these assertions could be factually supported. We consider the defenses waived. GCR 1963, 111.3, 111.7.

The judgment of the circuit court is affirmed. Costs to appellee.

        Continental Casualty Co v Huron Valley National Bank, 85 Mich App 319; 271 NW2d 218 (1978), presented the same factual pattern but the majority rested its decision on an issue relating to the statute of limitations. That issue has not been raised in this case.

       See also, Salsman v National Community Bank of Rutherford, 102 NJ Super 482; 246 A2d 162 (1968), aff'd 105 NJ Super 164; 251 A2d 460 (1969).

       There is a fourth group of cases which seem to have completely ignored the possible, impact of 3-419(3) and simply carried pre-code law on conversion liability forward to a post-code law situation. See, e.g., Equipment Distributors, Inc v Charter Oak Bank & Trust Co, 34 Conn Supp 606; 379 A2d 682 (1977), DoAll Dallas Co v Trinity National Bank of Dallas, 498 SW2d 396 (Tex Civ App, 1973).

       See, e.g., White & Summers, Handbook of the Law Under the Uniform Commercial Code, § 15-4, pp 504-505, Tolley, Comment, Depository Bank Liability Under § 3-419(3) of the Uniform Commercial Code, 31 Wash and Lee L Rev 676 (1974).

       MCL 440.3804; MSA 19.3804.

       MCL 440.3417; MSA 19.3417.


author: R. B. Burns, J.

text:
    GOLDMAN v LOUBELLA EXTENDABLES
    Docket No. 78-1048.
    Submitted May 9, 1979, at Detroit.
    Decided July 10, 1979.
    Leave to appeal denied, 407 Mich 901.
    Plaintiff, Seymour Goldman, is a retailer of women’s fashions, doing business as Marti K Suburban Shops. Defendant, Loubella Extendables, is a manufacturer of women’s sportswear. Plaintiff filed an action in the Wayne Circuit Court alleging an unlawful combination or conspiracy involving defendant and plaintiffs competitors to restrain trade by stopping sales of defendant’s merchandise to plaintiff because plaintiff was discounting the merchandise to his retail customers. Defendant moved for summary judgment on the ground that plaintiff was unable to present any evidence of conspiracy. Defendant’s affidavits in support of the motion stated that the decision not to sell to plaintiff was made by defendant’s vice president in charge of sales and was not made pursuant to any request or suggestion of any other store; and, defendant had never agreed with any store to refuse to sell to another store or ceased to sell to a store at the request of another store. Plaintiff relied on his own deposition which indicated that: defendant refused to sell its merchandise to him; he was informed by his New York buying agent that he had been cut off by defendant because he discounted the price of the merchandise; he was able to purchase defendant’s merchandise for a while from other retailers but his sources dried up when defendant cut off sales to those retailers which it learned were supplying him; he was told that one of defendant’s sales representatives had told other retailers and salesmen that defendant would not stand still for discounting because the big stores would not stand still for discounting; the big stores regularly discounted defendant’s merchandise through the device of leisurely sales; he had received calls from other retailers complaining of his discounting and had assumed that they had learned he was discounting from defendant’s salesman; that another retailer had told Mr. Morrie Konop that he thought Konop was reselling to plaintiff and that he had called defendant, who was going to stop shipping to Konop; and, plaintiff had heard that one of defendant’s former sales representatives and a competitor of plaintiff had agreed that plaintiff should not get defendant’s line of merchandise. Plaintiff also relied on the deposition of Mr. Stephen Konop, a competitor, who testified that: a sales representative of defendant warned him against discounting and stated that he was afraid of selling to Konop’s Eastland store for fear of losing Hudson’s business and that plaintiff had been cut off for discounting; Konop’s business continued to sell defendant’s merchandise to plaintiff; and, defendant later refused to sell to Konop for the reason that he supplied plaintiff and discounted. The Wayne Circuit Court, Andrew DiMaggio, J., granted summary judgment for defendant on the theory that plaintiff was unable to present any evidence of conspiracy. Plaintiff appeals. Held:

      References for Points in Headnotes

       73 Am Jur 2d, Summary Judgment §§ 26, 27.

       54 Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices § 284.

       54 Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices § 458.

      1. The moving party, in a motion for summary judgment under GCR 1963, 117.2(3), is required to identify by supporting affidavit those facts which it believes cannot be genuinely disputed. The opposing party must make a showing by opposing affidavits, testimony, depositions, admissions or documentary evidence on file that a genuine issue of disputed fact does exist, and, while disputed facts must be established by admissible evidence, under some circumstances, a promise to produce admissible evidence may suffice. The trial court placed an impossible burden on plaintiff by requiring him to oppose the motion through affidavits from alleged conspirators.
    2. Summary judgment was premature because it was granted prior to the expiration of the time for discovery. Since plaintiff may rely on depositions to oppose the motion, the Court of Appeals can only assume, on review, that the hearsay allegations of conspiracy could be proven at trial by admissible evidence.
    3. A combination under the Michigan antitrust act is formed, even absent an agreement between a manufacturer and its customers, where the manufacturer engages in tactics to fix prices which go beyond simple refusal to sell goods to persons who will not sell at stated prices. When a manufacturer goes beyond mere announcement of his policy and the simple refusal to deal and employs other means which effect adherence to his resale prices, he has put together a combination.
    Reversed and remanded.

      1. Judgment — Summary Judgment — Issue of Pact — Court Rules.
    A court rule providing for summary judgment requires there be a trial unless there is no genuine issue as to any material fact and the courts are liberal in finding that a "genuine issue” does indeed exist; a court, before granting a summary judgment, will give the benefit of any reasonable doubt to the opposing party and must be satisfied that it is impossible for the claim or defense to be supported at trial because of some deficiency which cannot be overcome (GCR 1963, 117.2).
    2. Judgment •— Summary Judgment — Antitrust Litigation.
    Summary judgment should be sparingly granted in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of alleged conspirators and hostile witnesses thicken the plot.
    3. Judgment — Summary Judgment — Discovery.
    Summary judgment is premature if made before discovery on the disputed issues is completed.
    4. Monopolies — Antitrust Act — Words and Phrases — Combinations.
    A combination under the Michigan antitrust act is formed, even absent an agreement between a manufacturer and its customers, where the manufacturer engages in tactics to fix prices which go beyond simple refusal to sell goods to persons who will not sell at stated prices; when a manufacturer goes beyond mere announcement of his policy and the simple refusal to deal and employs other means which effect adherence to his resale prices, he has put together a combination.

      Metry, Metry & Sanom, for plaintiff.

      Sommers, Schwartz, Silver & Schwartz, P.C. (by John H. Shepherd), for defendant.
    Before: M. J. Kelly,. P.J., and Bashara and R. B. Burns, JJ.
   R. B. Burns, J.

In this antitrust action plaintiff, a clothing retailer, has alleged that defendant, a clothing manufacturer, conspired or combined with plaintiffs competitors to restrict trade by stopping sales of defendant’s merchandise to plaintiff because plaintiff was selling the merchandise at a discount. The trial court granted defendant’s motion for summary judgment on the theory that plaintiff was unable to present any evidence of conspiracy. GCR 1963, 117.2(3). Plaintiff appeals and we reverse.

Defendant’s vice president in charge of sales submitted an affidavit in support of the motion for summary judgment. The affidavit stated that the company’s sales representatives were all made aware, that they had no authority to agree with any store to refuse to sell to any other store, or even to discuss such a refusal to sell. The decision to refuse to sell to plaintiff had been made by the vice president in charge of sales personally and had not been made pursuant to any request or suggestion by another store. Defendant had never agreed with a store to refuse to sell to another store or ceased to sell to a store upon the request of another store.

Plaintiff relied upon his own deposition testimony and that of Mr. Stephen Konop to oppose the motion. Plaintiff testified that defendant manufactures a brand name label, the presence of which is necessary for the successful operation of his business. The label is readily available in most of the other high fashion clothing and department stores in his area. When the label is present in his stores, it sells rapidly, but when it is not, many of his customers go elsewhere. In 1974, defendant cancelled his orders and refused to explain why, refused to take further orders or to see him. He subsequently learned from his New York buying agent that the reason he was cut off was that he discounted the price on the merchandise. He was able for a time to make intermittent purchases from other retailers, but his sources dried up when defendant cut off sales to those retailers which it learned were supplying him. Plaintiff asserted that large stores were able to control resources and discount with impunity such merchandise as defendant’s through the device of leisurely sales. He had heard that one of defendant’s sales representatives, Mr. Kasmer, had told various retailers and salesmen that defendant would not stand still for discounting because the big stores would not stand still for discounting. He had received calls from other retailers who complained of his discounting activity and assumed that they had learned he was discounting from Mr. Kasmer. Another retailer, Mr. Bernstein, had told Mr. Morrie Konop that he thought Konop was reselling to plaintiff and that he had called defendant, who was going to stop shipping to Konop. Plaintiff had heard that one of defendant’s previous sales representatives had been a friend of Mr. Victor, a competing retailer, and that the representative and Victor had agreed that plaintiff should not get defendant’s line of merchandise.

Mr. Stephen Konop testified that he had a clothing store from which he once sold defendant’s label. Mr. Kasmer had warned him that he should not discount and had stated that he was afraid that, if he sold to Konop’s Eastland store, Kasmer might lose Hudson’s account. Kasmer had also told him that plaintiff was cut off because he was discounting. Konop nonetheless supplied plaintiff and discounted defendant’s line himself. Defendant thereafter refused to fill his orders. Kasmer advised him that he was cut off because he supplied plaintiff and discounted.

Much of the testimony upon which plaintiff relied was hearsay, and recognized as such. Plaintiff argued in the alternative that admissible evidence circumstantially established conspiracy, and that, if it did not, the motion could not be resolved in defendant’s favor because discovery had not been completed and plaintiff was entitled to an opportunity to develop the hearsay into admissible evidence. The trial court concluded that plaintiff had presented no evidence of conspiracy, and that plaintiff should have submitted supporting affidavits to establish that which he had attempted to establish by hearsay.

A motion for summary judgment under GCR 1963, 117.2(3) has the limited function of determining whether material issues of fact exist. The moving party is required to identify by supporting affidavit those facts which it believes cannot be genuinely disputed. The opposing party must make a showing by opposing affidavits, testimony, depositions, admissions or documentary evidence on file that a genuine issue of disputed fact does exist. Rizzo v Kretschmer, 389 Mich 363, 371-372; 207 NW2d 316 (1973). Opinions, conclusory denials, unsworn averments, and inadmissible hearsay do not satisfy the court rule; disputed fact must be established by admissible evidence. Remes v Duby, (After Remand), 87 Mich App 534, 537; 274 NW2d 64 (1978). However, under some circumstances, a promise to produce evidence may suffice. Rizzo v Kretschmer, supra, 374. Upon review of the motion, the court must give every reasonable doubt to the opposing party, and should not grant the motion unless convinced that it is impossible for the claim to be supported at trial because of some deficiency which cannot be overcome. Id., 371-372. The court must avoid making findings of fact under the guise of determining that no issues of material fact exist. Partrich v Muscat, 84 Mich App 724, 730-731; 270 NW2d 506 (1978). Summary judgment should be sparingly granted in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of alleged conspirators, and hostile witnesses thicken the plot. Poller v Columbia Broadcasting System, Inc, 368 US 464; 82 S Ct 486; 7 L Ed 2d 458 (1962).

The trial court placed an impossible burden upon plaintiff by requiring him to oppose the motion through afffidavits from alleged coconspirators. Defendant may under the court rule establish disputed fact through deposition testimony. GCR 1963, 117.3, Rizzo v Kretschmer, supra. Summary judgment is premature if made before discovery on the disputed issue is complete. Johnston v American Oil Co, 51 Mich App 646, 650-651; 215 NW2d 719 (1974). The time limit for discovery had not passed. GCR 1963, 301.7. The trial court should have either delayed resolution of the motion until discovery was completed or accepted as a promise to produce evidence that which plaintiff sought to prove through hearsay. Cf., Rizzo v Kretschmer, supra. The trial court having prematurely granted the motion, we will on review assume that plaintiff could prove at trial by admissible evidence his hearsay allegations.

Defendant did not by affidavit deny that it was attempting to fix resale prices or that it stopped delivery of its goods to plaintiff as part of its attempt to fix resale prices. The sole issue raised by defendant’s affidavit is whether defendant conspired or combined with plaintiffs competitors to accomplish its alleged purpose of price fixing. There is no allegation that such price fixing was lawful under the "rule of reason”, see, e.g., Staebler-Kempf Oil Co v Mac’s Auto Mart, Inc, 329 Mich 351; 45 NW2d 316 (1951), or that it could be sustained under the now-repealed fair trade act, MCL 445.151; MSA 19.321, repealed, 1975 PA 211.

This action was brought under the state antitrust act, which makes unlawful any conspiracy or combination between two or more persons to restrict trade or fix prices, MCL 445.701; MSA 28.31, and authorizes private suits for injunctive and monetary relief by any person injured by a violation of the act, MCL 445.711; MSA 28.38. Plaintiff need only prove the existence of a trust or combination and that defendant belonged to it, or acted for or in connection with it. The character of a trust or combination may be established by proof of its general reputation as such. MCL 445.706; MSA 28.34. Conspiracy may and generally will be established by circumstantial evidence. McDonald v Hall, 203 Mich 431, 438-439; 170 NW 68 (1918).

The Michigan antitrust act is patterned after the Sherman Antitrust Act, 15 USC 1, and Federal court interpretations of the Sherman Act are persuasive authority as to the meaning of the Michigan act. Barrows v Grand Rapids Real Estate Board, 51 Mich App 75, 83; 214 NW2d 532 (1974). The United States Supreme Court has frequently discussed the circumstances under which attempted vertical price fixing may be unlawful.

The case which sets forth what is not unlawful price fixing is United States v Colgate & Co, 250 US 300; 39 S Ct 465; 63 L Ed 992 (1919). In that case the Supreme Court affirmed dismissal of an indictmént which failed to charge defendant with selling its products to dealers under agreements to resell at fixed prices, observing that a manufacturer may freely exercise his own independent discretion as to the parties with which he will deal, and may announce in advance the circumstances under which he will refuse to sell. Thus, if all that is shown is that a manufacturer announced suggested resale prices, and refused to deal with those who did not follow the suggestions, no violation of the Sherman Act has‘been demonstrated.

Cases setting forth what does violate the Sherman Act indicate that, as a practical matter, price fixing will rarely be sustainable under Colgate. A manufacturer may not enter into agreements with its customers obligating them to sell at fixed prices. Dr Miles Medical Co v John D Park & Sons Co, 220 US 373; 31 S Ct 376; 55 L Ed 502 (1911). An agreement may be express or implied from a course of dealing or other circumstances. United States v A Schroder’s Son, Inc, 252 US 85; 40 S Ct 251; 64 L Ed 471 (1920). Whether a particular course of dealing or other circumstances indicate unlawful agreement or combination presents a jury question. Frey & Son, Inc v Cudahy Packing Co, 256 US 208; 41 S Ct 451; 65 L Ed 892 (1921). Where a manufacturer engages in tactics to fix prices which go beyond simple refusal to sell goods to persons who will not sell at stated prices, a combination is formed, even absent an agreement between the manufacturer and its customers. Thus, where a manufacturer attempted to fix the prices of both its wholesalers and retailers by: using markings on packages of its products, and salesmen and agents to report violations of its resale price guidelines; publishing blacklists of violators; organizing boycotts of violators; relying upon reports of competitors of violators to cut off violators; and otherwise suppressing competition by coercion of its customers, the Sherman Act was violated. Federal Trade Comm v Beech-Nut Packing Co, 257 US 441; 42 S Ct 150; 66 L Ed 307 (1922). Similarly, it was unlawful for a distributor to fix prices by requiring its wholesalers to deal only with licensed retailers, who could be licenced only if they complied with prevailing local prices, to enforce licensing requirements by surveillance and to enforce resale price lists for wholesalers by putting wholesale price lists in the hands of all wholesalers and retailers. It did not matter whether the combination to fix prices occurred by agreement or by acquiescence of the wholesalers coupled with assistance in effectuating its purpose. United States v Bausch & Lomb Optical Co, 321 US 707; 64 S Ct 805; 88 L Ed 1024 (1944). As stated in United States v Parke, Davis & Co, 362 US 29; 80 S Ct 503; 4 L Ed 2d 505 (1960), when a manufacturer goes "beyond mere announcement of his policy and the simple refusal to deal, and he employs other means which effect adherence to his resale prices”, he has put together a combination. Whether a combination is proved is determined by what the parties actually did rather than what they said. 362 US 29, 44. Thus, it is unlawful for a manufacturer to secure compliance by retailers by giving offending retailers’ names to wholesalers in order to cut off the retailers, or to seek assurances from retailers that they will comply and threatening to cut them off if they don’t comply, 362 US 29, 45-46. It is also unlawful for a manufacturer to solicit customers away from an offending retailer and give them to a competing retailer, for by doing so the manufacturer has gone beyond mere announcement of his policy and simple refusal to deal. Albrecht v The Herald Co, 390 US 145; 88 S Ct 869; 19 L Ed 2d 998 (1968).

Applying the foregoing principles to the facts in this case, we are not convinced that it is impossible for plaintiff’s claim to be supported at trial because of some deficiency which cannot be overcome. Rizzo v Kretschmer, supra.

There is some indication that defendant may have combined with large retailers to fix prices. Plaintiffs statement that large stores control resources may qualify as reputation of combination. MCL 445.706; MSA 28.34. Evidence that Mr. Kasmer told persons that defendant won’t stand still for discounting because big stores won’t suggests an actual or tacit agreement that defendant must fix prices in order to do business with large stores. This inference is supported by evidence of Kasmer’s fear of losing Hudson’s account if he sold to Mr. Stephen Konop, coupled with a warning to Konop not to discount.

There is some evidence of acquiescence by other retailers coupled with assistance in effectuating defendant’s price fixing. United States v Bausch & Lomb Optical Co, supra. Plaintiff testified that other retailers called him to complain about his discounting. Plaintiff may be able to prove that Mr. Bernstein called defendant and had Mr. Morrie Konop cut off because he resold to plaintiff.

Evidence that Mr. Kasmer warned Mr. Stephen Konop not to discount suggests pressure tactics beyond mere announcement of policy and refusal to deal. United States v Parke, Davis & Co, supra.

Evidence that defendant detected and cut off retailers who supplied plaintiff suggests the presence of a system of surveillance. United States v Bausch & Lomb Optical Co, supra, Federal Trade Comm v Beech-Nut Packing Co, supra.

Evidence that defendant’s sales representative agreed with Mr. Victor to cut off plaintiff would clearly establish an unlawful agreement to restrict competition. Dr Miles Medical Co v John D Park & Sons Co, supra.

Reversed and remanded. Costs to plaintiff.