author: J. E. McDonald, J.

text:
      In re MacLOUGHLIN
    Docket No. 77-186.
    Submitted October 13, 1977, at Detroit.
    Decided April 3, 1978.
    In 1968, a son was born to Jerry R. Elliott and Katherine R. Elliott, who had previously been married and divorced and who were at the time living together in Arizona, holding themselves out as husband and wife. The parties later separated, the mother took custody of the son, and later remarried. The mother, her new husband, and son moved to Michigan, and in 1973 she commenced an action in Washtenaw County Probate Court to terminate Mr. Elliott’s parental rights in the son. His rights were terminated after a hearing which he did not attend. In 1976, Mr. Elliott petitioned the Washtenaw County Circuit Court to set aside the probate court’s termination order, alleging that the order had been fraudulently obtained, and that he had not appeared in the probate action because the mother had assured him that she was not going to continue the action. At the time the present action was commenced none of the parties lived in Michigan. The circuit court, Ross W. Campbell, J., granted the mother’s motions for accelerated and summary judgment on the grounds that the court had no jurisdiction over the respondent and that the petitioner was not entitled to equitable relief because he had not taken the opportunity to contest the proceedings in the termination of rights- proceeding in probate court. Plaintiff appeals. Held:

    1. A defendant who is no longer a resident of Michigan is precluded from asserting that a Michigan court does not have jurisdiction over her where she had, while she was a Michigan resident, previously utilized the Michigan courts to take jurisdiction of and decide the same subject matter as that involved in the present action.
    2. The doctrine of laches must apply to a situation before the court after the facts have been presented and, therefore, the trial court’s reliance on laches was inappropriate where the court was granting a motion for summary judgment before the proofs of the parties were presented.

      References for Points in Headnotes

       20 Am Jur 2d, Courts §§ 147, 148.

       27 Am Jur 2d, Equity § 87.

       27 Am Jur 2d, Equity § 20.

       73 Am Jur 2d, Summary Judgment § 27.

      3. The defense of laches should not be available to the defendant where the claim against her arises from her own fraud and where the very success of her fraud placed the plaintiff in temporary ignorance of his rights.
    4. Summary or accelerated judgment was not appropriate because the plaintiff alleged fraud upon himself and upon the probate court, and the trial court should at least hear the basis for such claims and inquire into their validity.
    Remanded for further proceedings.
    1. Courts — Jurisdiction—Parties—Nonresident—Prior Action.
    A defendant who is not a resident of Michigan is precluded from asserting that a Michigan court does not have jurisdiction over her for the purposes of a hearing where she had, in a previous action, utilized the Michigan courts to take jurisdiction of and decide the same subject matter as that involved in the present action.
    2. Equity — Laches—Summary Judgment — Facts.
    The granting of a motion for summary judgment because of laches before the proofs of the parties have been presented is inappropriate because the doctrine of laches must cover the situation before the court after the facts have been presented.
    3. Equity — Laches—-Fraud—Availability of Defense.
    The defense of laches should not be available to a defendant where the claim against him arises from his own fraud and where the very success of his fraud placed the aggrieved parties in temporary ignorance of their rights and thus caused the lapse of time occurring prior to the assertion of the claim.
    4. Judgment — Summary Judgment — Accelerated Judgment— Fraud Upon Court.
    Summary or accelerated judgment is not proper in a case involving custody of a child where custody had previously been determined by the court where it is alleged that the previous action involved fraud upon the petitioner and upon the court; the court should at least hear the basis for such claims and inquire into their validity.

      O’Brien, Moran & Dimond (by Thomas H. Blaske), for petitioner.

      Forsythe, Campbell, Vandenberg, Clevenger & Bishop, P. C. (by Donald E. Shelton), for respondent.
    Before: D. E. Holbrook, P. J., and N. J. Kaufman and J. E. McDonald, JJ.

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

   J. E. McDonald, J.

Appellant Jerry Robert Elliott and appellee Katherine Renee MacLoughlin were previously married, but were divorced in 1966 in Arizona. Custody of the only child of the marriage, Sean, was granted to appellant-husband.

Subsequent to the divorce, the parties lived together and held themselves out as husband and wife, even though they did not remarry. During this period of cohabitation, a second son, Vaughn, was born on July 26, 1968.

In 1970, approximately two years after the birth of Vaughn, the parties separated and appellee-wife apparently took custody of Vaughn. After marrying her present husband, appellee-wife, her new husband and Vaughn moved to Michigan.

In 1973, appellee commenced an action in Washtenaw County Probate Court to terminate appellant’s parental rights in Vaughn, based upon the father’s alleged failure to support or visit the child since 1969.

Appellant, Vaughn’s father, did not attend the hearing on the petition to terminate his parental rights, and his parental rights were terminated in late 1973.

On August 25, 1976, approximately three years after the original termination order, appellant commenced this independent equitable action in Washtenaw County Circuit Court to set aside the previous probate order of termination of parental rights, stating it had been fraudulently obtained by appellee.

None of the parties were living in Michigan at the time of the commencement of the present case by appellant in the circuit court.

Appellant and his new wife, appellee and her new husband (Vaughn’s adoptive father) and Vaughn all reside in Arizona.

Appellant claims that the allegations made by the mother in her 1973 petition to the Washtenaw County Probate Court were fraudulent and that appellee knew they were fraudulent when she made them. Nevertheless, the father did not appear in the matter because appellee allegedly told him that she was not going to continue the action. Contrary to the alleged assurance of appellee, however, the termination hearing was held and appellant’s rights were terminated on November 29, 1973.

In 1974, the probate court entered another order confirming the adoption of Vaughn by appellee’s present husband.

Appellant did not appeal either order, nor did he seek to have the order set aside in the probate court.

Appellant alleges that there was fraud upon the probate court and invokes the equity powers of the circuit court to set aside the order terminating his parental rights.

Appellee filed a motion for accelerated judgment, claiming that the circuit court lacked personal jurisdiction over her and jurisdiction over the subject matter.

She also moved for summary judgment, alleging that appellant failed to state a claim upon which relief could be granted and that there was no genuine issue of a material fact upon which relief could be granted.

The transcript of the hearing on December 16, 1976, indicates that there were no exhibits offered and no witnesses testified, however, there were exhibits attached to the petition and affidavits in support of the motions. The hearing consisted entirely of argument by counsel.

On the 12th of January in 1977, there was an order entered entitled "Accelerated and Summary Judgment for Respondent”.

On January 19, 1977, a claim of appeal from the order of the circuit court was filed by appellant.

About a month later, on February 22, 1977, a written opinion and order granting respondent’s motion for summary judgment was filed by the circuit court.

At the conclusion of argument by counsel at the hearing on December 16, 1976, the court announced that it was ready to rule on the matter, and the transcript reads in part as follows:

"First on the question of jurisdiction, the Court does not feel that it does have personal jurisdiction over the defendant mother or the child for the reason that they are not domiciled in Michigan * * * .
"The Michigan Probate Code does make provisions for re-hearing in the Probate Court. It is true that Courts have the power to set aside actions which they have taken where they have been induced to take those actions by fraud. The Michigan legislature, for very good reason, has set a 20 day limit on re-hearings in Probate Court in adoption cases. I think this bespeaks public policy in these matters. The present action brought here in Circuit Court obviously is an attempt to circumvent or avoid the effect of that statute * * * .
"The plaintiff has slept on his rights. It is now three years later and it would take quite a bit for even on the merits, one would want to set aside a placement, adoptive placement of three years duration. I think that laches applies against the plaintiff * * * .
"Here there is no question but what the present plaintiff had — had notice and an opportunity to be heard * * * .
"So for the several reasons I have given under three major headings, specifically first, no jurisdiction; secondly, laches; thirdly, complaint does not state a cause of action. The motion for summary and accellerated (sic) judgment is granted * * * .
" * * * I don’t want to get caught in that abyss between the General Court Rule 116 and 117. I suggest be entitled an accellerated (sic) and summary judgment is granted so that we don’t have any more technical problems built in than — ’’,

There is no requirement that the appellee be physically present within the state or domiciled within the state before the courts can exercise limited personal jurisdiction over her.

"When we keep in mind that we are dealing not with general jurisdiction which is provided for in another part of the statute (MCLA § 600.701 [Stat Ann 1962 Rev § 27A.701]) which would expose a nonresident to suit in Michigan for any cause wherever it arose, but rather with limited jurisdiction which exposes a nonresident to suit in Michigan only for a cause which arose out of the relationship serving as a basis for such jurisdiction we see no Federal Constitutional question.
"The courts of those states having 'long-arm’ statutes similar to that of Michigan which confer, specifically, limited personal jurisdiction over defendants based on 'the transaction of any business within the state,’ have generally construed their statutes as extending the state’s jurisdiction to the farthest limits permitted by due process.” Sifers v Horen, 385 Mich 195, 198-199; 188 NW2d 623 (1971).

The appellee made use of the courts of this state to hear her petition to terminate the parental rights of the appellant. Surely if commercial transactions may grant to the court limited personal jurisdiction, it is even more true that the use of the courts by this appellee precludes her assertion that the court does not now have jurisdiction over her for the purposes of a hearing on the very subject matter over which she sought to have the courts of Michigan take jurisdiction and decide.

"It is essential in each case that there be some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.” Shepler v Korkut, 33 Mich App 411, 414; 190 NW2d 281 (1971), citing Hanson v Denckla, 357 US 235; 78 S Ct 1228; 2 L Ed 2d 1283 (1958).

The doctrine of laches is elastic, and rightly so, for it must cover the situation before the court after the facts are presented, and here, since there has been no opportunity to present proof, the statement by the court that laches applies would appear inappropriate.

" 'A defendant should not be heard to interpose the defense of laches where the claim against him arises from his own fraud and where * * * the very success of his fraud places the aggrieved parties in temporary ignorance of their rights and thus causes the lapse of time occurring prior to the assertion of the claim. Chase v Boughton, 93 Mich 285, 302; 54 NW 44, 50 (1892). And so, where the equitable claim arises from the fraud of the defendant the defense of laches must fall with the proof of the fraud since the defendant may not thereafter lift himself by his own bootstraps of wrongdoing.’ ” Kita v Matuszak, 55 Mich App 288, 295-296; 222 NW2d 216 (1974).

Appellant has objected to the filing by the circuit judge of an opinion one month after the appellant has filed a claim of appeal from the order entered on the 12th of January, which granted both the accelerated and summary judgment of the appellee. The practice of filing opinions after there has been an appeal should not be encouraged, however, in this matter, the February opinion by the circuit court gives some insight into the basis of the decision which is helpful, and it is being considered for that reason.

The February opinion of the circuit court contains the following language:

" * * * the Court concludes that even if all the allegations contained in the petition are assumed to be true, that upon the facts of this case, equitable relief is not warranted. If all statements were made in the respondent’s petition for termination, the petitioner had every opportunity to contest their accuracy in the prior proceedings. The petitioner, however, chose not to contest the probate petition. No justification is now offered for this inaction.”

Appellant denies he "chose not to contest” the proceedings to terminate his parental rights. He claims he relied on the statement by appellee that there would be no hearing. He claims his detrimental reliance on this fraudulent statement by appellee is his justification for inaction.

The February opinion continues:

"If fraudulent allegations were made in the termination petition concerning petitioner’s alleged lack of support for his child, the petitioner should have contested the allegations in probate court. His unexplained failure to respond in the probate court must be weighed heavily against him as must his delay of over two years in commencing the present action. The petitioner offers no valid reason why he should now be allowed to litigate an issue which he should have contested in the prior proceeding.”

Again it is our understanding that the petitioner is alleging that the need to contest any allegations in the probate court was eliminated by the claimed assurance given him by the mother that the probate court hearing would not be held. We find it difficult to understand how the trial court can speak of this as an "unexplained failure to respond in the probate court”.

It appears that the petitioner alleges that his delay in beginning the present action was based on the fact that his relationship with his son, for all practical purposes, continued after the probate hearing as they had been prior to the probate hearing, in that he was granted visitation rights. Furthermore, petitioner says the "valid reason” why he should now be allowed to litigate this issue that was not contested in the prior proceedings is the alleged fraud on the part of the mother in advising him that the hearing proposed in probate court would not be held and that he relied on this to his detriment.

Further, the opinion of the trial court reads:

"The respondent, on the other hand, has presumably relied on the validity and finality of the unappealed probate order. Her position in a new re-married life in Arizona would be greatly disturbed if the petitioner’s request were granted.
More importantly, public policy favors the certainty and permanence of probate court adoption orders because of the psychological injury which may be caused to the adopted child if the adoption, after having been concluded, is undone.”

Public policy does favor the certainty and permanence of probate court adoption orders. However, public policy does not favor the securing of such orders by fraud on the petitioner or upon the court. Since fraud upon both the petitioner and the court is alleged by the petitioner, it would appear that the court should at least hear the basis for these claims and inquire into their validity at an appropriate hearing rather than summarily forming a conclusion at this stage of the proceedings.

The trial judge’s opinion goes on:

"The court is quite sympathetic to the natural parent who subsequent to tacit acquiescence in the termination of his legal relationship to the child, changes his mind. People change, and matters to which one was once indifferent can later become a cause for remorse and regret.”

Here again the claimed tacit acquiescence in the termination of his legal relationship by the petitioner is vigorously denied and he is claiming that he never has changed his mind; that the termination of his legal relationship was not with his acquiescence, but through the active and deliberate fraud of the mother upon both the petitioner and the court.

In Berry v Ferrell, 179 Mich 498; 146 NW 103 (1914), there was an action brought in circuit court to set aside an order of the probate court confirming the adoption of a minor, claiming the order had been obtained fraudulently.

When the complainant appeared in circuit court to offer proof of her charges, the defendant objected to having a hearing, claiming that the order of adoption made in the probate court had settled the matter and that no appeal had been taken. The circuit court sustained the objection by the defendant, declined to take any testimony, and dismissed the bill of complaint.

The plaintiff appealed and the Supreme Court said:

"We think the trial court should have proceeded to take the testimony.
"The case is remanded to the court below, with directions to hear the case upon its merits.” 179 Mich at 504.

We believe the trial court erred in granting appellee’s motions and the case is remanded for a hearing upon its merits.

       Hybrid motions for summary or accelerated judgment are not looked upon with favor by courts, Knapp v Dearborn, 60 Mich App 18; 230 NW2d 293 (1975).
      If courts look with disfavor upon a hybrid motion for accelerated and summary judgment, surely they cannot look with favor upon the granting of motions called "accelerated and summary judgment”.


source: Caselaw Access Project

author: J. H. Gillis, P. J.

license: Public Domain

text:
    FRATERNAL ORDER OF POLICE, LODGE #98 v KALAMAZOO COUNTY
    Docket No. 77-209.
    Submitted February 9, 1978, at Grand Rapids.—
    Decided April 3, 1978.
    The Sheriff of Kalamazoo County, upon reelection and before his second term of office commenced sent a letter to 11 deputies informing them that they would not be reappointed to their jobs as of January 1, 1977. The Fraternal Order of Police, Lodge #98 and the deputies brought an action against Kalamazoo County and the Sheriff for violation of the provisions of their collective bargaining agreement. The Kalamazoo County Circuit Court, Robert L. Borsos, J., issued an order temporarily restraining the dismissal of the deputies along with an order to show cause why the employment of the deputies should not be continued. The Sheriff took no action in response to the orders and failed to reappoint the plaintiff deputies. The defendant-Sheriff was found to be in contempt of court and appeals. Held:

    The trial court erred in refusing to grant defendant’s motion for adjournment in respect to the contempt hearing since the defendant had not been informed whether the proceedings against him were civil or criminal in nature, defendant’s attorney was not provided sufficient time to prepare for the proceedings, the contempt hearing could have been adjourned without interfering with any substantial public interest, and failure of the court to grant additional time under these circumstances denied defendant due process of law.
    Reversed.
    1. Contempt — Due Process — Notice of Charges — Hearing—Opportunity to Defend.
    Minimal due process safeguards require that a defendant charged with a contempt committed outside of the presence of the court be advised of the charges against him, be afforded a hearing upon those charges, and have a reasonable opportunity to meet the charges by defense or explanation.

      References for Points in Headnotes

       17 Am Jur 2d, Contempt § 96.

       17 Am Jur 2d, Contempt § 88.

       17 Am Jur 2d, Contempt § 5.

       17 Am Jur 2d, Contempt § 4.

      2. Contempt — Notice Requirements — Opportunity to Explain— Preparation of Defense.
    It is necessary to view the notice requirements in the context of the entire situation in determining what constitutes reasonable time for a defendant charged with contempt to meet the charges against him, to explain, or to prepare a defense to the charges.
    3. Contempt — Anticipation of Proceedings — Defense to Charges.
    The fact that a defendant charged with contempt may have anticipated legal proceedings is no reason to deny him adequate time in which to prepare a defense to the charges.
    4. Contempt — Public Interest — Resolution of Litigation — Adjournment — Defense to Charges — Due Process.
    Public interest in seeing that litigation is promptly resolved is no reason to deny a defendant charged with contempt an adjournment to prepare a defense to the charges where the matter could have been adjourned without interfering with any substantial public interest, and failure to grant additional time under these circumstances denies the defendant due process of law.
    5. Contempt — Civil Contempt — Criminal Contempt — Nature of Proceedings — Notice.
    A defendant, charged with contempt of court, is entitled to be informed as to whether the contempt proceedings filed against him are civil or criminal in nature.
    6. Contempt — Civil Contempt — Criminal Contempt — Definitions.
    The difference between civil and criminal contempt is that the former seeks to change respondent’s conduct by threatening him with a penalty if he does not change it, while the latter seeks to punish him for past misdoings which affront the dignity of the court; criminal contempt being for past misconduct, there is no way for one so convicted to purge himself of the contempt.

      Garvey, Kreis & Silverman, P. C., for defendant.
    Before: J. H. Gillis, P. J., and R. B. Burns and Allen, JJ.
   J. H. Gillis, P. J.

In November, 1976, the voters of Kalamazoo County reelected defendant to the office of sheriff of said county. Defendant was to commence his second term of office on January 1, 1977. Prior to that date, defendant sent a letter to 11 deputies who had served under him during his prior term, informing them of the fact that they would not be reappointed when defendant began his second term of office. After receiving this notification, the 11 deputies and the Fraternal Order of Police, Lodge #98 commenced an action against defendant and Kalamazoo County, alleging that the discharge violated the provisions of the collective bargaining agreement executed between Kalamazoo County and Lodge #98. As a result of this suit, a restraining order with order to show cause was issued by the Kalamazoo County Circuit Court. Upon receipt of the restraining order, defendant, through his attorney, filed a motion to dissolve the order and objected to the jurisdiction of the court to entertain the matter. The motion was granted.

Plaintiff-deputies then filed another proposed restraining order with an order to show cause and the court issued a second restraining order against defendant on December 31, 1976.

Following the issuance of this order, defendant took no action and did not reappoint any of the plaintiffs. Defendant contended that plaintiffs’ terms of employment expired on December 31, 1976, and, therefore, his failure to act did not violate the terms of the restraining order.

On January 7, 1977, a hearing was conducted which resulted in the restraining order being continued as a preliminary injunction until the entire matter could be heard on the merits on January 14, 1977.

A pretrial hearing was conducted on January 11, 1977, at which time a petition of contempt was filed against defendant for alleged violation of the restraining order. The matter was referred by the presiding judge to the judge who issued the original restraining order. An informal hearing was conducted at the home of the latter judge, which resulted in defendant being ordered to appear the following morning in court to show cause why he should not be held in contempt of court.

At the hearing, defendant was found to be in contempt of the court’s restraining order of December 31, 1976, and was sentenced to 30 days in jail along with being fined $250. Defendant was further ordered to pay damages to Kalamazoo County for the wages paid to the plaintiffs during the period of January 1, 1977, to January 11, 1977. Execution of sentence was postponed pending appeal.

Defendant now appeals as of right from the order finding him in contempt of court.

Defendant first contends that the trial court erred in refusing to grant his motion for adjournment in respect to the contempt hearing since defendant’s attorney did not have sufficient time to prepare for the proceedings.

It is well established that when a contempt is committed outside the presence of the court, the law requires that defendant be advised of the charges against him, afforded a hearing upon those charges, and given a reasonable opportunity to meet the charges by defense or explanation. In re Henry, 32 Mich App 654; 189 NW2d 96 (1971). These minimal due process safeguards require that defendant be given a reasonable time in which to prepare a defense to the charges.

In determining what constitutes a reasonable time for preparation, it is necessary to view the notice requirements in the context of the entire situation. Cross Co v UAW Local No. 155, 377 Mich 202; 139 NW2d 694 (1966).

In respect to whether or not defendant had adequate time to prepare for the hearing, the trial court concluded:

"Now, what is a reasonable time in this case? Could the sheriff have anticipated that legal proceedings, would flow from the letters that he has alleged to have written, and which the court will assume for the purposes of the motion of adjournment to be true. [Letters to deputy sheriffs that they would not be reappointed.] Could he have reasonably expected that legal proceedings would flow from these letters?
"The court feels that he certainly should have anticipated that legal proceedings would result, and that he could have anticipated within rather narrow limits the course of conduct, and the path that the litigation would take, because the legal issues involved are well known.”

In denying defendant’s motion for adjournment, the court also placed heavy emphasis on the fact that there was a great public interest in seeing that the matter be quickly resolved.

However, the fact that defendant may have anticipated the legal proceedings in the instant case is no reason to deny defendant adequate time in which to prepare a defense to the charges. Also, while the trial court was correct in concluding that the public had an interest in seeing that the litigation be promptly resolved, the fact that a full hearing on the merits was scheduled for January 14, 1977, leads us to the conclusion that the matter could have been adjourned without interfering with any substantial public interest.

The time period from 5:30 p.m. on January 11, 1977, to 9:30 a.m. on January 12, 1977, was certainly not a reasonable time in which defendant could prepare his defense, especially in light of the fact that defendant claimed he was not in violation of the restraining order.

Accordingly, we find that defendant should have been given.hiore time to prepare for the contempt proceedings, and the failure of the trial court to grant additional time denied defendant due process of law.

It should also be noted that when defendant was ordered to show cause why he should not be found in contempt of court, he was not informed as to whether the contempt proceedings filed against him were civil or criminal in nature. This is particularly important in light of the procedural safeguards due a defendant in a criminal proceeding as well as the quantum of proof necessary to find defendant guilty. In a criminal contempt case it is necessary to find defendant guilty beyond a reasonable doubt. People v Randazzo, 21 Mich App 215; 175 NW2d 333 (1970).

The difference between civil and criminal contempt has been pointed out in Jaikins v Jaikins, 12 Mich App 115, 120; 162 NW2d 325 (1968). There it was held:

"Essentially, the difference between civil and criminal contempt is that the former seeks to change respondent’s conduct by threatening him with a penalty if he does not change it, while the latter seeks to punish him for past misdoings which affront the dignity of the court. Criminal contempt being for past misconduct, there is no way for one so convicted to purge himself of the contempt.”

In the instant matter, none of the papers filed in or issued by the court informed defendant of the nature of the proceedings against him.

It should also be noted that the contempt hearing was noticed on the civil docket.

Under such circumstances, defendant could not be properly convicted of criminal contempt. See People v Johns, 384 Mich 325; 183 NW2d 216 (1971).

The other issues raised on appeal do not merit discussion by this Court.

Reversed. No costs, a public question being involved.

       The Fraternal Order of Police, Lodge #98, represents the plaintiffs in contract negotiations with Kalamazoo County.

       It appears that the county paid the wages of the plaintiffs between January 1, 1977, and January 11, 1977, believing that the restraining order required them to do so. The trial court held defendant liable for these wages since he prevented plaintiffs from working during this period.
      We do not pass on the validity of awarding such damages in the case at bar, but urge the trial judge to review MCLA 600.1721; MSA 27A.1721.


author: Bashara, P. J. Beasley, J.

text:
    MICHIGAN LICENSE BEVERAGE ASSOCIATION v BEHNAN HALL, INC.
    Docket No. 77-795.
    Submitted December 20, 1977, at Detroit.
    Decided April 3, 1978.
    The Michigan License Beverage Association brought an action against Behnan Hall, Inc., to permanently enjoin the defendant from renting premises to others for the consumption of alcoholic beverages and from further providing the food, bartenders, and assorted nonalcoholic beverages to be used with liquor on the rented premises, claiming a violation of the Michigan Liquor Control Act. The defendant argued that the plaintiff association lacked standing to maintain the action since it did not possess a liquor license and was not engaged in any commercial activity which would be affected by the outcome of the litigation. It also contended that equity jurisdiciton was not available in this instance to enjoin a violation of a criminal statute. The Oakland County Circuit Court, Robert B. Webster, J., found that the plaintiff did have standing to maintain the action as the representative of its liquor licensee members and, finding that equity jurisdiction was properly invoked, granted a permanent injunction prohibiting the defendant from providing food, and beverages to be used with liquor on the premises because such conduct was violative of the Liquor Control Act and damaging to the property rights of the liquor licensees represented by the plaintiff. Plaintiff appeals arguing that the injunction’s prohibition should have included a ban on the consumption of alcoholic beverages on the rented premises. Defendant cross-appeals, primarily contending that the plaintiff lacked standing to maintain the action. Held:

    The plaintiff nonprofit corporation, which did not possess a liquor license and was not engaged in any activity which would be affected by the outcome of the litigation and which was not constituted for representative litigation purposes according to its charter, did not have standing to maintain the action. The Court also found that the action was not properly brought because there was no indication of legal notice given to the plaintiff’s liquor licensee members which would have made the outcome of an adjudication binding upon them, and that equity jurisdiciton was not properly invoked to enjoin this violation of a criminal statute because plaintiff’s conclusory allegations of injury were not enough to meet its burden of demonstrating a public or private nuisance or injury to its property rights, directly traceable to the alleged unlawful conduct of the defendant.

      References for Points in Headnotes
    [1, 3, 6, 7] 59 Am Jur 2d, Parties §§ 26, 27.

       45 Am Jur 2d, Intoxicating Liquors § 448.

       59 Am Jur 2d, Parties § 81.

       42 Am Jur 2d, Injunctions §§ 157, 161.

       45 Am Jur 2d, Intoxicating Liquors § 445 et seq.

       22 Am Jur 2d, Declaratory Judgments § 25.

      Reversed and dismissed.
    Judge Beasley partially dissented on the ground that judicial review of justiciable issues should be freely available to obviously interested parties to an action with the least judicial encumbrance. He would find that liquor licensees have a property right in their licenses which would justify equitable intervention on their behalf to enjoin criminal acts which would injure those rights, but concluded, as did the majority, that the plaintiff in this instance was not entitled to such relief because it had failed to make an evidentiary showing of pecuniary damages directly traceable to defendant’s allegedly wrongful conduct.
    Opinion op the Court
    1. Words and Phrases — Standing—Interest in Litigation — Advocacy.
    Standing is the legal term used to denote the existence of a party’s interest in the outcome of litigation, an interest that will assure sincere and vigorous advocacy.
    2. Parties — Standing—Licenses—Liquor Licensees — Intoxicating Liquors — Affected Activities.
    A nonprofit corporation which was formed for the stated purpose of educating liquor licensees as to their moral, ethical and civic responsibilities does not have legal standing to maintain an action for an injunction to bar a hall which rents its space and furnishes food and soft drinks to its tenants and their guests from profiting from the provision of these goods and services to be used in conjunction with liquor where the corporation itself does not possess a liquor license and is not engaged in any activity which would be affected by the outcome of the litigation.

      3. Parties — Litigation Representative — Corporate Purposes— Standing to Sue.
    A nonprofit corporation consisting of members who are liquor licensees may not assert representative legal rights under the liquor licenses of its members where the corporation was not constituted for representative purposes and where the facts indicate that its corporate purpose is unrelated to that of a litigation representative.
    4. Parties — Litigation Representative — Binding Adjudications— Notice.
    Economic utilization of judicial resources is a principal objective of representative litigation; it is therefore paramount that the outcome of an adjudication be binding upon those represented; those whose rights are to be determined by litigation must be given notice of its pendency and an opportunity to participate personally or through a class representative.
    5. Equity — Criminal Acts — Injunctions—Nuisance—Conclusory Allegations — Traceable Injury.
    It is a well-established general rule that only in cases of public or private nuisance or injury to property rights will equity jurisdiction be available to enjoin criminal violations; mere conclusory allegations of injury are insufficient; plaintiff must show as a pre-condition to obtaining equitable relief that the injury was directly traceable to the alleged unlawful conduct of the defendant.
    Partial Dissent by Beasley, J.
    6. Parties — Standing to Sue — Justiciable Issues — Claim of Right —Interested Parties — Judicial Encumbrance.

      The law should favor an interpretation which grants standing to a party to obtain resolution of an issue where there is a genuine justiciable issue raised by that party under a claim of right against one who has an interest in contesting it; judicial review of justiciable issues should be freely available with the least judicial encumbrance,

    7. Parties — Standing to Sue — Litigation Representative — Intoxicating Liquors — Licenses.

      A nonproñt corporation which was organized, according to its bylaws, for the mutual improvement, protection and beneñt of its liquor licensee members should be granted standing to bring a

      lawsuit to protect the license interests of those members, even where it does not itself possess such a license.

      8. Licenses — Intoxicating Liquors — Property Rights — Injunction —Criminal Acts.

      Liquor licensees have a property right in their liquor licenses which would justify equitable intervention on their behalf to enjoin criminal acts by a defendant which would injure those property rights.

    9. Equity — Injunction—Criminal Acts — Damage to Property Rights — Pecuniary Damages — Burden op Proof.

      Injunctive relief is not available to a plaintiff seeking to enjoin a criminal act which he alleges is causing damage to a property right where the plaintiff is unable to make an evidentiary showing of pecuniary damages directly traceable to the alleged unlawful conduct of the defendant.

    10. Actions — Declaratory Judgment — Statutes—Interpretation.

      An action for declaratory judgment is a proper means to seek an authoritative binding interpretation of a statute.

      Campbell, Kurzman & Plunkett, for plaintiff.

      Hyman, Gurwin, Nachman, Friedman & Winkle-man, for defendant.
    Before: Bashara, P. J., and Beasley and D. E. Holbrook, Jr., JJ.
   Bashara, P. J.

Plaintiff appeals from a trial court judgment granting injunctive relief against defendant, prohibiting pertain conduct alleged by plaintiff to be in violation of the Michigan Liquor Control Act. The contention of plaintiff is that the scope of the injunction’s prohibition does not enjoin all of the defendant’s allegedly unlawful conduct.

Defendant cross-appeals from the judgment. Its primary contention is that plaintiff lacked standing to maintain the action for injunctive relief. To sustain the argument, defendant asserts that plaintiff lacks any interest affected by the alleged unlawful conduct, and that plaintiff has failed to establish any basis upon which equity jurisdiction can be founded. Additionally, defendant contends that the conduct of which plaintiff complains is not violative of § 26c of the act.

This case was submitted to the trial court by stipulation of facts, which were adopted by the trial court. Those facts disclose that the defendant is in the business of operating a catering hall. That facility is rented to various persons and organizations for use in holding wedding receptions, banquets, and similar social gatherings. As part of its business services to those lessees, defendant provides food, a bartender, and assorted nonalcoholic beverages, some of which are used in conjunction with liquor, for an agreed upon price per person.

Any alcoholic beverages consumed on defendant’s premises by the lessees or their guests are furnished by the lessees. The lessees purchase the liquor, not from defendant, but from licensees under the act. Defendant does not sell liquor, derives no profit from its sale by others, nor is it licensed to do so under the act.

Proceedings were initiated by plaintiff, a nonprofit corporation whose members are licensees under the act, to enjoin the operation of defendant’s business insofar as it permitted the consumption of liquor on its premises. Suit was predicated upon allegations that such business activity violates § 26c of the act and injures the property rights of plaintiffs members in their liquor licenses.

Initially, we analyze the defendant’s contentions relative to plaintiffs standing to maintain the action and the existence of a basis for equity jurisdiction.

In the context of this case questions of standing and jurisdiction are closely related. Indeed, much of defendant’s argument denominated as pertinent to standing is actually aimed at the existence of equity jurisdiction. Therefore, the distinction should be clarified.

Standing is the legal term used to denote the existence of a party’s interest in the outcome of the litigation; an interest that will assure sincere and vigorous advocacy. Sierra Club v Morton, 405 US 727, 731-732; 92 S Ct 1361, 1364; 31 L Ed 2d 636, 641 (1972). Conceptually, standing was adeptly described by the Sierra Club Court in the following terminology:

"Whether a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy is what has traditionally been referred to as the question of standing to sue. * * * [T]he question of standing depends upon whether the party has alleged such a 'personal stake in the outcome of the controversy,’ Baker v Carr, 369 US 186, 204, 82 S Ct 691, 703, 7 L Ed 2d 663, as to ensure that 'the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution.’ Flast v Cohen, 392 US 83; 101, 88 S Ct 1942, 1953; 20 L Ed 2d 947.” Id.

See also Warth v Seldin, 422 US 490, 499; 95 S Ct 2197, 2205; 45 L Ed 2d 343, 354 (1975), and United States v SCRAP, 412 US 669, 687; 93 S Ct 2405, 2416; 37 L Ed 2d 254, 269 (1973).

Accordingly, the threshold question is whether plaintiff has an interest in the outcome of this litigation sufficient to invoke the controversy-resolving powers of the judiciary. The stipulation of facts discloses that plaintiff does not have a liquor license, nor is it engaged in any commercial activity that will be affected by the outcome of this litigation. As a corporation, a separate legal entity, plaintiff possesses no interest that we are able to discern that confers upon it the requisite standing to maintain this action.

Relying upon White Lake Improvement Assoc v City of Whitehall, 22 Mich App 262; 177 NW2d 473 (1970), plaintiff asserts that the commercial interests of its members constitute a sufficient basis to conclude that it has standing as a representative. In the White Lake case a non-profit corporation was held to have standing to represent its riparian landowner-members in a suit to enjoin the pollution of a lake. Id. at 271-274. This conclusion was obtained notwithstanding that the association itself was not a riparian landowner.

A circumstance in the White Lake case that distinguishes it from the facts before us is that the association in the former was constituted for solely representative purposes. Id. at 272; 177 NW2d at 477. In the case under review the facts indicate that plaintiff’s corporate purpose is unrelated to that of a litigation representative. Further, the cases upon which White Lake was premised involved associations that acted as a class representative or sought to establish rights in which they had a direct interest, or without which their existence would terminate. None of these factors characterize plaintiffs position in the instant litigation.

More importantly, since economic utilization of judicial resources is a principal objective of representative litigation, it becomes paramount that the outcome of the adjudication be binding upon those represented. Consistent with our conception of procedural due process, this imports that those whose rights are to be determined by litigation be given notice of its pendency and an opportunity to participate personally or through a class representative. See, e.g., Mullane v Central Hanover Bank & Trust Co, 339 US 306, 313; 70 S Ct 652, 656; 94 L Ed 865, 872-873 (1950).

The stipulation of facts indicates that plaintiff does not know whether any of its members has knowledge of the pendency of this litigation. Concomitantly, if plaintiff seeks to adjudicate the alleged property interests of its members by this action, the binding effect upon its members under the foregoing principle would be tenuous, at best. Consequently, since the plaintiff has neither a direct interest in the cause of action nor a properly constituted representative position, we must conclude that the requisite standing to pursue this litigation is absent.

Should plaintiff establish standing to maintain this action by assuming a proper representative status, under the facts shown by the record, equitable relief would nevertheless remain unavailable. Such result would obtain because of the absence of any grounds upon which the invocation of equity jurisdiction can be founded. Even if a party has standing to maintain a suit for injunctive relief, he must additionally allege and establish a basis for equity jurisdiction.

Violations of the act are, by the terms of § 50, deemed to be crimes. As a well-established general rule, only in the cases of public or private nuisanee or injury to property rights will equity jurisdiction be available to enjoin criminal violations. See e.g. State ex rel Washtenaw County Prosecuting Attorney v Western Union Telegraph Co, 336 Mich 84, 90; 57 NW2d 537, 540 (1953), Glover v Malloska, 238 Mich 216, 220; 213 NW 107, 108 (1927), Village of St Johns v McFarlan, 33 Mich 72; 20 AR 671 (1875). No allegations of nuisánce were made by plaintiff, nor does the act declare violations to be a nuisance. However, the interests of plaintiff’s members in their liquor licenses may constitute sufficient property rights to invoke equity jurisdiction. But we need not decide that issue.

Assuming, arguendo, the existence of. standing and property rights, the record is devoid of any evidentiary basis for finding that defendant’s alleged violations of the act resulted in any injury to those interests. Mere conclusory allegations are insufficient. Plaintiff must show, as a pre-condition to obtaining equitable relief, that the injury was "directly traceable” to the alleged unlawful conduct of defendant. Glover v Malloska, supra at 221.

This requirement of direct traceability was reasserted in United-Detroit Theaters Corp v Colonial Theatrical Enterprise Inc, 280 Mich 425, 430-431; 273 NW 756, 757 (1937). There, the Supreme Court reversed an order for injunctive relief because the record failed to show an injury to plaintiff’s property interest in their business. Id.

Accordingly, we conclude that the trial court erred in granting injunctive relief to the plaintiff. Further, it is our conclusion that the action should have been dismissed because plaintiff lacked standing to maintain the suit. Consequently, we need not reach an evaluation of the trial court’s interpretation of § 26c of the act.

Reversed and dismissed. Costs to defendant.

D. E. Holbrook, J., concurred.

Beasley, J.

(dissenting). I respectfully dissent.

In this case, plaintiff seeks interpretation of MCLA 436.26c; MSA 18.997(3), which provides:

"No person shall maintain, operate, lease or otherwise furnish to other persons any premises or place which is not licensed under this act, wherein such other persons may engage in the drinking of alcoholic beverages, for a fee or for any other consideration including the sale of food, mixers, ice or other fluids used with alcoholic drinks or the storage of alcoholic liquors: Provided, That the provisions of this section shall not apply to any hotel nor to any licensee under the provisions of this act: Provided further, That the provisions of this section shall not be construed to repeal or amend the provisions of section 26b of this act.”

Even a cursory reading of the above statute reveals plenty of room for differing interpretations. In a nutshell, plaintiff claims the statute prohibits unlicensed persons from furnishing premises for a fee where others engage in drinking alcoholic beverages on the premises.

Defendant says, an unlicensed person may furnish premises and food, including ice, mix and pop to another for a fee where the second person permits drinking of alcoholic beverages on the premises. An authoritative, binding interpretation of the statute should be made to resolve this issue.

Both at trial and on appeal, defendant urges that plaintiff is an improper party and lacks standing to bring this action. Defendant argues that violations of the Liquor Control Act are a crime, that plaintiffs position is essentially that defendant violates the Liquor Control Act by permitting and promoting liquor to be served in premises rented for a fee, that criminal activity may only be enjoined where it is either a public or private nuisance or where injury is caused to the property rights or pecuniary interests of another; that plaintiff does not have property rights in or pecuniary interests arising from a license, that, in addition, under the primary jurisdiction doctrine, administrative remedies in the Liquor Control Commission must first be exhausted, and that plaintiff nonprofit association is a separate entity distinct from its members, pays no taxes, and does not and cannot suffer injury because of defendant’s operations. Defendant concludes that plaintiff lacks standing to bring this action.

The trial court rejected defendant’s claim that plaintiff lacked standing, finding that, under Bundo and Bisco’s, plaintiffs members possessed valuable property rights in their liquor licenses. The trial court reasoned that since a property right was involved, violations of the Liquor Control Act could be enjoined as private nuisances. The trial court rejected defendant’s argument that bringing this suit was ultra vires under plaintiffs articles of incorporation, indicating this suit was for the purpose of mutual benefit. The trial court also declined to apply the doctrine of primary jurisdiction in the Liquor Control Commission to the facts of this case.__

In analyzing the standing issue, I would start with the proposition that where, as here, there is a genuine justiciable issue, that is, the assertion of a claim of right against one who has an interest in contesting it, the law should favor that interpretation which grants standing to obtain resolution of the issue. Judicial review of justiciable issues should be freely available with the least judicial encumbrance.

The justiciable issue is, does § 26c of the liquor law prohibit defendant from performing the acts delineated in the stipulated facts?

If standing is denied plaintiff, then who can raise the question as to whether defendant’s business is in violation? It is assumed that the police agencies listed in the statute are empowered to see that the law is enforced. It would also be assumed that a liquor licensee who was in economic competition with this unlicensed defendant would have standing to seek determination of whether this defendant is in violation of the liquor control law. But, plaintiff is neither. Plaintiff is a nonprofit corporation holding no liquor license of its own, but representing some 2,902 licensees statewide.

On appeal, the majority conclude that plaintiff lacks "standing” to bring this action. In Michigan, the leading case dealing with the subject of standing is White Lake Association v Whitehall, In that case, Judge (now Justice) Levin indicated that the standing of nonprofit corporations to challenge proposed action of administrative agencies has been recognized. Among other things, he said:

"No constructive purpose would be1 served by requiring the members of the plaintiff association who are riparian owners to maintain this action individually and thereby require that they seek in some other fashion financial and other support from the other affected landowners. Additionally, allowing the landowners to associate together for this purpose may avoid a multiplicity of suits; the difficulties that are likely to be encountered where there are a large number of plaintiffs are all too familiar to anyone who has had experience in such litigation. The most expedient way for the riparian owners to obtain a determination on the merits is to allow them to combine and join together for this purpose with others of a like interest under a single banner both before and at the time of suit;
"In other cases as well it has been recognized that a nonprofit corporation may have standing to maintain an action to vindicate the interests of its members.” (Footnote omitted.)

The majority undertake to distinguish the within case from the White Lake case, saying that in the White Lake case the nonprofit association was constituted for solely representative purposes, while the corporate purpose of plaintiff nonprofit corporation is unrelated to that of a litigation representative.

Plaintiff was formed as a nonprofit corporation in 1946. Article II of the articles of incorporation provided:

"The purpose or purposes of this corporation are as follows: The purpose of educating licensees of the Michigan Liquor Control Commission as to their responsibilities to the public from a moral, ethical and civic standpoint of view and for the purpose of mutual benefit that accrues from such an understanding.”

The by-laws of plaintiff provide, among other things, as follows:

"Therefore, we, the Michigan Licensed Beverage Association, pledge ourselves to labor unitedly in behalf of the following principles:
"1. To affiliate all licensees into one state organization.
"2. To establish and perpetuate an organization for the purpose of mutual improvement, protection and benefit to promote a moral, social, intellectual improvement of the liquor licensees of the State of Michigan.
"3. To encourage, sustain and assist in the just and equitable enforcement of laws, and in the effort to defeat oppressive legislation, to promote beneficial legislation, and to maintain and support the objects of the organization.”

For this nonprofit corporation to attempt to secure a binding adjudication as to whether catering halls, like defendant, must obtain liquor licenses would seem clearly to be for the "mutual improvement, protection and benefit” of its members and, thus, not outside the contemplation of the articles of incorporation and by-laws of plaintiff.

Under these circumstances, the bringing of the within cause of action by plaintiff does not appear to be an ultra vires action.

Contrary to the majority, I would incline to believe that, for the same reasons delineated in White Lake Association, supra, plaintiff has standing to bring this action. The majority suggest that since plaintiff does not hold a liquor license and, thus, has no direct interest in the outcome of this litigation, equitable relief is not available for plaintiff. However, the members of plaintiff nonprofit corporation do have a direct interest in the outcome of this litigation.

Judicial notice is taken that there is direct economic competition between the liquor licensees who comprise plaintiff and catering halls similar to defendant. In the within case, the form of relief sought by plaintiff is in reality twofold; a sweeping injunction to enjoin "Defendant from operating his establishment in violation of the Michigan Liquor Control Act”, and, implicitly, a declaration that the interpretation of § 26c of the liquor statute urged by plaintiff is correct.

The majority say that since violations of the liquor statute are punishable as criminal acts, injunctive relief is only available if public or private nuisance or injury to property rights is established. They maintain that there has been no such showing in the within case.

To the contrary, I would conclude that the members of plaintiff have a property right in their liquor licenses, that that property right would be injured by violations of the liquor control law and that plaintiff represents its members in seeking to prevent such injury.

However, with the majority, I would acknowledge that plaintiff in the within case has apparently made no evidentiary showing of pecuniary damages "directly traceable” to the alleged unlawful conduct of defendant. Without a showing of direct traceability, injunctive relief is not available to plaintiff. Therefore, I would agree with the majority that injunctive relief was not proper in the within case on the facts indicated in the record. However, I would treat plaintiff’s cause as an action for declaratory judgment and would find standing in plaintiff to seek an authoritative, binding interpretation of § 26c of the Liquor Control Act as it relates to the allegedly unlawful activities of defendant. I would address that issue as to the statute’s meaning; but since this is a dissent, no good purpose will be served by further comment.

       MCLA 436.1, et seq; MSA 18.971, et seq.

       MCLA 436.26c; MSA 18.997(3). This section states as follows:
      "No person shall maintain, operate, lease or otherwise furnish to other persons any premises or place which is not licensed under this act, wherein such other persons may engage in the drinking of alcoholic beverages, for a fee or for any other consideration including the sale of food, mixers, ice or other fluids used with alcoholic drinks or the storage of alcoholic liquors: Provided, That the provisions of this section shall not apply to any hotel nor to any licensee under the provisions of this act: Provided further, That the provisions of this section shall not be construed to repeal or amend the provisions of section 26b of this act.”

       Plaintiffs corporate purpose is stated in its articles of incorporation to be as follows:
      "Article II — The purpose or purposes of this corporation are as follows: The purpose of educating licensees of the Michigan Liquor Control Commission as to their responsibilities to the public from a moral, ethical and civic standpoint of view and for the purpose of mutual benefit that accrues from such an understanding.”

       See White Lake Improvement Assoc v City of Whitehall, 22 Mich App 262, 273-274 and fn 12 and 14; 177 NW2d 473, 477-478 (1970).

       For example, in the cases reported in White Lake, at 274, fn 14 the association brought suit as a class action in Smith v Board of Education of Morrilton School District No 32, 365 F2d 770, 777 (CA 8, 1966), and litigated rights essential to its organizational existence or in which it had a direct interest, in the cases of Louisiana v NAACP, 366 US 293, 294; 81 S Ct 1333, 1334; 6 L Ed 2d 301, 303 (1961), and NAACP v Button, 371 US 415, 428-429; 83 S Ct 328, 335; 9 L Ed 2d 405, 415 (1963), respectively. See also NAACP v Alabama, 357 US 449, 459; 78 S Ct 1163, 1170; 2 L Ed 2d 1488, 1489 (1958).

       One means of instituting representative litigation is provided by the court rule governing class actions. See GCR 1963, 208. This rule enables the court to assure that all those who are to be bound by the judgment receive proper notice of the litigation. Rule 208.4 provides:
      "Protective Orders. The court at any stage of an action under sub-rules 208.1 or 208.2 may require such security and impose such terms as shall fairly and adequately protect the interests of the class or association in whose behalf the action is brought or defended. It may order that notice be given, in such manner as it may direct, of the pendency of the action, of a proposed settlement of entry of judgment, or any other proceedings in the action, including notice to the absent persons that they may come and present claims and defenses if they so desire. Whenever the representation appears to the court inadequate fairly to protect the interests of absent persons who may be bound by the judgment, the court may at any time prior to judgment order an amendment of the pleadings, eliminating therefrom all reference to representation of absent persons, and the court shall order entry of judgment in such form as to affect only the parties to the action and those adequately represented.”

       MCLA 436.50; MSA 18.1021, which states as follows:
      "PENALTIES. Any person, other than persons required to be licensed under this act, who shall violate any of the provisions of this act shall be guilty of a misdemeanor.
      "Any licensee who shall violate any of the provisions of this act, or any rule or regulation of the commission promulgated hereunder, shall be guilty of a misdemeanor, punishable by imprisonment in the county jail not more than 6 months or by a fine of not more than 500 dollars, or both, in the discretion of the court.
      "Any person, who shall do any act for which a license is required under this act without first obtaining said license or any person who shall sell any alcoholic liquor in any county which shall have prohibited the sale of alcoholic liquor under the provisions of section 57 hereof, shall be guilty of a felony, punishable by imprisonment in the state prison not more than 1 year or by a fine of not more than 1,000 dollars, or both, in the discretion of the court.
      “It is the intent of the legislature that the court, in imposing punishment under the provisions of this section, should discriminate between casual or slight violations and habitual sales of alcoholic liquor or attempts to commercialize violations of this act or any of the rules or regulations of the commission promulgated hereunder.”

        Bundo v Walled Lake, 395 Mich 679; 238 NW2d 154 (1976).

         Bisco’s, Inc v Liquor Control Commission, 395 Mich 706; 238 NW2d 166 (1976).

       Black’s Law Dictionary (4th ed), p 1004.

        See, 75 Harvard L Rev 255, 257-258 (1961), citing FCC v Sanders Brothers Radio Station, 309 US 470; 60 S Ct 693; 84 L Ed 869 (1940).

       MCLA 436.26c; MSA 18.997(3).

        Kirkby v Public Service Commission, 320 Mich 608; 32 NW2d 1 (1948), In re Azarewicz, 163 Pa Super 459; 62 A2d 78 (1948).

        White Lake Improvement Association v City of Whitehall, 22 Mich App 262; 177 NW2d 473 (1970).

         Id. at pp 272-273.

        Bundo, supra and Bisco’s, supra.

        Glover v Malloska, 238 Mich 216; 213 NW 107 (1927), United-Detroit Theaters Corp v Colonial Theatrical Enterprise, Inc, 280 Mich 425; 273 NW 756 (1937).

       GCR 1963, 521, Kuhn v East Detroit, 50 Mich App 502, 504; 213 NW2d 599 (1973).


author: T. M. Burns, P. J.

text:
    PEOPLE v GIVENS
    Docket No. 77-893.
    Submitted January 18, 1978, at Detroit.
    Decided April 3,1978.
    Cornell C. Givens was convicted, on his plea of guilty, in Detroit Recorder’s Court, Donald S. Leonard, J., of assault with intent to rob while armed and subsequently pled guilty to violation of his probation. Defendant’s probation was extended and new terms of probation imposed. Again, defendant was charged with violation of probation, and at a hearing before Recorder’s Court Judge Clarence Laster, Jr., the defendant’s probation was revoked. Defendant appeals. Held:

    1. Defendant was denied his due process right to confrontation where the only charged violation was failure to report to his probation officer and defendant’s probation officer did not appear at the revocation hearing, the people’s only evidence being a statement by a representative of the probation department that he had spoken to defendant’s probation officer and was told that defendant had failed to report.
    2. The trial court erred in its apparent failure to consider the defendant’s explanation for his failure to report to his probation officer.
    3. The trial court erred when, in making the decision to revoke the defendant’s probation, it did not limit itself to the defendant’s failure to appear, but also considered allegations of misconduct which were not charged in the notice of probation violation.
    Revocation order set aside, sentence vacated, and remanded.
    1. Criminal Law — Probation—Revocation of Probation.
    A proceeding for the revocation of probation has two steps: (1) a factual determination that the violations charged in the notice of probation violation have occurred, and (2) a discretionary determination that the proven charges warrant revoking probation.
    References for Points in Headnotes
    [1-4] 21 Am Jur 2d, Criminal Law §§ 567, 568.
    Right to notice and hearing before revocation of sentence, parole, conditional pardon, or probation. 29 ALR2d 1074.

      2. Criminal Law — Constitutional Law — Right to Confrontation —Probation—Revocation of Probation.
    A defendant charged with violation of his probation was denied his due process right to confrontation where the only charged violation was failure to report to his probation officer and where the probation officer did not appear at the revocation hearing and the people’s only evidence was a statement by a representative of the probation department that he had spoken to defendant’s probation officer and was told that defendant had failed to report.
    3. Criminal Law — Probation—Revocation of Probation.
    A trial court erred in revoking a defendant’s probation based upon the defendant’s failure to meet with his probation officer where it appears that the court did not consider the defendant’s explanation of his failure to report.
    4. Criminal Law — Probation—Revocation of Probation — Notice of Probation Violation.
    A trial court’s decision to revoke probation cannot be based on conduct which is not charged in the notice of probation violation.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Edward R. Wilson, Principal Attorney, Appeals, and Daniel J. Petrella, Assistant Prosecuting Attorney, for the people.

      Price, Williams & Rucker (by David M. Cato), for defendant on appeal.
    Before: T. M. Burns, P. J., and M. F. Cavanagh and D. C. Riley, JJ.
   T. M. Burns, P. J.

Defendant appeals a judgment revoking his probation and imposing a sentence of 5 to 15 years in prison. The facts leading up to the revocation are unusual and are set forth here to illustrate the reasons for the ultimate conclusion that defendant is entitled to another revocation hearing.

In September of 1974, defendant pled guilty to assault with intent to rob while armed, MCLA 750.89; MSA 28.284, before Recorder’s Court Judge Donald S. Leonard, and was placed on probation. A bench warrant charging a violation of this probationary order was issued on August 5, 1976. Defendant was arraigned on this warrant on November 21, 1976. Defendant waived counsel and pled guilty to the charged violations the next day.

On December 9, defendant again appeared before Judge Leonard, this time with counsel, and again admitted the charged violation. Probation was not revoked. Instead, the judge extended probation and issued a new probationary order under which defendant was to seek immediate psychiatric care, enter into a program of alcoholic rehabilitation, report weekly to his probation officer and stay away from a named female individual.

A warrant charging defendant with failure to meet with his probation officer on December 15, 1976, and December 29, 1976, was issued on January 4, 1977. Defendant was arrested and subsequently a revocation hearing was held on January 13, 1977. It is this hearing which led to revocation of defendant’s probation and this appeal.

Because of Judge Leonard’s death on December 18, 1976, Judge Clarence Laster, Jr. presided at the January 13 hearing. As is apparently the practice in Recorder’s Court, the people were not represented by an assistant prosecutor at this proceeding, but rather, by someone from the probation department. When defendant pled not guilty to the charges contained in the notice of violation, the only evidence presented by the people was this representative’s statement that he had spoken with defendant’s probation officer and that defendant had, in fact, failed to appear on the dates mentioned.

Defendant was sworn as a witness and admitted that he had failed to appear on December 15 and 29. He explained, however, that on the 15th he was at Mt. Sinai Hospital arranging for the psychiatric care ordered by the court and that when he reached the probation office at 5 p.m., it had already closed. He testified that he appeared on the 22nd, his next scheduled appointment, but the probation office was again closed, this time for Judge Leonard’s funeral. Defendant stated that on the 29th he called the probation office and was told his probation officer was not available that day. Defendant claims someone took his name to verify the fact that he had called before appearing.

Defendant’s claims were not refuted, nor was any attempt made to verify defendant’s claimed phone call on the 29th. Instead, the probation officer present "responded” to defendant’s claim by alleging that defendant had failed to keep appointments with psychiatrists in September and October of 1975 (which may have been a reference to those months in 1976) and recommended that defendant’s probation be revoked. The court found defendant guilty of violating his probation at that point. The court went further, referring to several episodes of misconduct with defendant’s girl friend and allegations of threats attributed to defendant in a report prepared by his probation officer. At that point, the court announced its intention to proceed to sentence, and did so.

Review of the proceedings described above begins with a reaffirmation of the principle that a revocation proceeding has two steps: (1) a factual determination that the violations charged in the notice have occurred, and (2) a discretionary determination that the proven charges warrant revoking probation. See, People v Clements, 72 Mich App 500; 250 NW2d 100 (1976). This proceeding trips on both steps.

Defendant claims he was denied his right to confrontation both in establishing the charged violations and in the other acts of misconduct which were not alleged in the notice of violation, but relied upon by the judge in revoking his probation. Defendant was denied his due process confrontation rights. People v Smith, 66 Mich App 639; 239 NW2d 431 (1976). Where the only charged violation is failure to report to a probation officer, the least the court could expect would be that the probation officer would appear and assert facts based on his personal knowledge. Defendant’s due process rights must be recognized even in a summary and informal proceeding such as probation revocation.

This brings us to the problems with the second step in the revocation hearing. If revocation was based solely on defendant’s failure to meet with his probation officer, defendant was entitled to have his explanation for failing to appear considered by the court. People v Clements, supra. It does not appear that it was. The court made no response to defendant’s explanation or his counsel’s argument based on that explanation.

An even more serious question arises from the court’s apparent reliance on misconduct which is not charged in the notice of violation, and which occurred before probation was extended by Judge Leonard on December 9. In fact, defendant’s failure to keep prior appointments with the psychiatrist was the basis of the prior revocation proceeding which ended with probation being extended.

The decision to revoke probation cannot be based on conduct which is not charged in the notice of violation. As Justice, then Judge, Levin stated in People v Elbert, 21 Mich App 677, 681; 176 NW2d 467 (1970):

"Under the statute (MCLA 771.4; MSA 28.1134) a probationer is entitled to a written copy of a charge of probation violation and to a hearing thereon. Only evidence relating to the charge may be considered and on the basis of that evidence alone is the decision whether to terminate or revoke the probationary order to be made.” (Footnotes omitted.)

See also, People v Hill, 69 Mich App 41; 244 NW2d 357 (1976).

The court did not limit itself to defendant’s failure to appear as required in making its decision to revoke defendant’s probation. If these other allegations of misconduct were to be raised at the hearing, they should have been included in the notice of violation served on defendant so that he could prepare to defend against them. It also seems wise (if not required by a due process or double jeopardy analysis) not to bring up alleged violations which have been the basis of a prior revocation hearing which ended in probation being extended. Defendant is entitled to a proper revocation hearing.

This disposition renders discussion of the other issues raised by defendant unnecessary.

The order revoking defendant’s probation is set aside, the sentence vacated, and defendant is remanded to the Recorder’s Court without prejudice to the court’s power to conduct a proper hearing. If another hearing is held, a different judge should preside.


author: D. F. Walsh, J.

text:
    RAMBLEWOOD ASSOCIATES v CITY OF WYOMING
    Docket Nos. 77-958, 77-959.
    Submitted February 7, 1978, at Lansing.—
    Decided April 4,1978.
    Ramblewood Associates petitioned the Michigan Tax Tribunal for a redetermination of the assessed valuation of their property within the City of Wyoming and for a property tax refund. The Tax Tribunal redetermined the valuation and ordered a refund less than that sought by the petitioners. Petitioners appeal, questioning: (1) the Tax Tribunal’s use of an income figure based on market rental rather than capitalizing actual income when it determined the actual cash value of the property using the capitalization of income approach, (2) the Tribunal’s failure to adjust its valuation to reflect the property’s disadvantages of location, and (3) the Tribunal’s use of an appraisal based on average rent per square foot of alleged comparable property without proof of size of the comparable apartments. Held:

    1. Any method for determining true cash value which is recognized as accurate and reasonably related to fair market valuation is an acceptable indicator of true cash value. Therefore, although the Tribunal was required to consider actual rental in determining true cash value, it was not precluded from making appropriate adjustments where, in its judgment, market rental in comparable properties or other relevant considerations made the capitalization of an adjusted income figure a more reliable indicator of true cash value.
    2. The relevant statute only requires consideration of the property’s location and no adjustment was necessary where the Tribunal found that any disadvantages of location were balanced by other variables that contributed to the value of the subject property.
    3. The record indicates that the Tax Tribunal did consider the size disparities between the petitioner’s units and those relied upon by the Tribunal in arriving at an average rent per square foot figure and did make appropriate adjustments in the valuation of the petitioner’s property.

      References for Points in Headnotes

       72 Am Jur 2d, State and Local Taxation §§ 754, 759.

       72 Am Jur 2d, State and Local Taxation §§ 760, 761.
    Income or rental value as factor in evaluation of property for purposes of taxation. 96 ALR2d 666.

      Affirmed.
    1. Taxation — Property—Assessment—True Cash Value — Constitutional Law.
    Property is to be assessed according to its true cash value for purposes of taxation (Const 1963, art 9, § 3).
    2. Taxation — Property—Assessment—True Cash Value — Selling Price — Fair Market Value.
    The standard for determining the "true cash value” of property for the purpose of tax assessments is the usual selling price or fair market value of the property; any method for determining true cash value which is recognized as accurate and reasonably related to fair market valuation is an acceptable indicator of true cash value.
    3. Taxation — Property—Assessment—True Cash Value — Tax Tribunal — Apartment Building — Rental—Capitalization op Income — Statutes.
    The Tax Tribunal, in determining the assessed valuation for an apartment building, is required to consider actual rental in determining true cash value; however, this does not preclude the Tribunal from making appropriate adjustments where, in its judgment, market rental in comparable properties or other relevant considerations make the capitalization of an adjusted income figure a more reliable indicator of true cash value (MCLA 211.27; MSA 7.27).
    4. Taxation — Property—Assessment—Location op Property — Tax Tribunal — Statutes.
    Consideration of the location of a piece of property is required for determining the assessed valuation for tax purposes; however, this does not require an adjustment in valuation where the Tax Tribunal finds that any disadvantages of location are balanced by other variables that contribute to the value of the subject property (MCLA 211.27; MSA 7.27).

      Travis, Warren, Nayer & Burgoyne, P. C., for petitioner.

      Peter W. Steketee, for respondent.

      Before: N. J. Kaufman, P. J., and D. E. Holbrook, Jr. and D. F. Walsh, JJ.
   D. F. Walsh, J.

Petitioner appeals from an order of the Michigan Tax Tribunal establishing the value of petitioner’s apartment complex for the years 1974 through 1976. The case presents three questions:

(1) In determining value using the capitalization of income approach did the Tribunal err in capitalizing an income figure based on market rental rather than capitalizing actual income?

(2) Did the Tribunal err in failing to adjust its valuation to reflect the property’s disadvantages of location?

(3) Did the Tribunal err in utilizing an appraisal based on average rent per square foot of alleged comparable property without proof of similarity of size of the comparable apartments?

For purposes of taxation property is to be assessed according to its true cash value. Const 1963, art 9, § 3. The standard for determining "true cash value” is the usual selling price or fair market value of the property. Any method for determining true cash value which is recognized as accurate and reasonably related to fair market valuation is an acceptable indicator of true cash value. CAF Investment Co v State Tax Commission, 392 Mich 442; 221 NW2d 588 (1974).

In the instant case the Tribunal determined that the actual rent charged by petitioner was below the market rental for comparable property. It therefore utilized an amount somewhat in excess of actual rent in its capitalization of income calculations in order to make what was, in its judgment, a more accurate determination of the fair market value of the property.

Petitioner, however, argues that MCLA 211.27; MSA 7.27 requires that actual income must be the basis for calculating true cash value by the capitalization of income approach. As authority for its position, petitioner cites CAF Investment Co v State Tax Commission, supra, and CAF Investment Co v Saginaw Twp, 79 Mich App 559; 262 NW2d 863 (1977) (hereinafter CAF v Saginaw). Our reading of these cases leads us to a different conclusion.

The precise issue decided in CAF Investment Co was described by the Supreme Court as follows:

"The principal question of jurisprudential significance on this appeal is whether, under Michigan law, the tax commission was entitled to consider and give weight to evidence of valuation based upon a rate of return which comparable, unencumbered property could earn in the present marketplace in the face of an existing unfavorable long-term lease with an actual rate of return which is substantially less than the present 'going rate’ ”. CAF Investment Co v State Tax Commission, supra, at 447. (Emphasis added.)

The Court rejected the Tribunal’s valuation in CAF Investment Co because in view of the unfavorable long-term lease, the Tribunal’s approach bore "insufficient relation to true cash value as defined by the constitution and by statute”. Id. at 454-455. The requirement of using actual rental income, therefore, was limited to the facts of that case.

"It is only because in this case the record indicates that long-term lease rental fairly reflects economic circumstances at the outset of the lease term and bears a demonstrable relation to true cash value that we require its consideration.” Id. at 456, fn 6. (Emphasis added.)

In CAF v Saginaw, this Court did nothing more than apply the "law of the case” doctrine and impose the aforementioned requirement in that case.

In the case at bar, petitioner’s property is not subject to an unfavorable long-term lease. The apartments were rented for an initial lease of one year and thereafter on a month-to-month basis. The property was not so encumbered by those leases that a potential purchaser could not alter the rental structure if market conditions warranted. In this case, therefore, utilization of an adjusted rental figure in the capitalization of income process may have resulted in a more accurate determination of the "usual selling price” of the property.

Thus, although the Tribunal was required to consider actual rental in determining true cash value, it was not precluded from making appropriate adjustments where, in its judgment, market rental in comparable properties or other relevant considerations made the capitalization of an adjusted income figure a more reliable indicator of true cash value. CAF Investment Co, supra, at 455, fn 4.

Petitioner’s second contention is that the Tribunal violated MCLA 211.27; MSA 7.27 by failing to adjust the valuation to reflect the disadvantages of the property’s location. We disagree.

The statute only requires consideration of the property’s location. The Tribunal’s opinion indicates that it did consider location but no adjustment was made because the Tribunal found that any disadvantages of location were balanced by other variables that contributed to the value of the subject property.

Petitioner’s final argument is that the market rental relied upon by the Tribunal was based upon the rent per square foot of complexes comprised of smaller apartment units. Demonstrating a statistical inverse correlation between area per unit and average rent per square foot, petitioner argues that the market rental figure was artificially high because it was not based on apartment complexes with comparably sized units.

In its opinion the Tribunal acknowledged this argument and reduced the respondent’s gross income figure, which was based on market rental, by $220,000 per year. Although the Tribunal did not explain the reasoning underlying the adjustments it made in respondent’s valuation of petitioner’s property, it is apparent from the opinion that petitioner’s arguments were considered by the Tribunal and compensations were made for the disparities noted in those arguments.

Affirmed. No costs, a public question being involved.

      " 'Cash value, means 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. * * * In determining the value the assessor shall also consider the advantages and disadvantages of location, quality of soil, zoning, existing use, present economic income of structures, including farm structures and present economic income of land when the land is being farmed or otherwise put to income producing use, quantity and value of standing timber, water power and privileges, mines, minerals, quarries or other valuable deposits known to be available therein and their value.”

       MCLA 211.27; MSA 7.27.

       MCLA 211.27; MSA 7.27 requires that in determining value the assessor shall consider the "present economic income” of structures. In CAF Investment Co v State Tax Commission, supra, at 454, the Court concluded "that 'economic income’ as used in MCLA 211.27; MSA 7.27 means actual income”.