author: Beasley, J. D. C. Riley, J.

text:
    FULLER CENTRAL PARK PROPERTIES v CITY OF BIRMINGHAM CLANCY MULDOON’S, INC v CITY OF BIRMINGHAM
    Docket Nos. 44179, 44227.
    Submitted February 14, 1980, at Detroit.
    Decided May 19, 1980.
    Fuller Central Park Properties and Clancy Muldoon’s Inc., hereinafter plaintiffs, brought separate actions seeking writs of superintending control against the City of Birmingham and the Birmingham City Commission, hereinafter defendants, after defendants denied approval of plaintiffs’ applications for liquor licenses to sell beer or wine and spirits for consumption on the premises of their respective businesses. Defendants counterclaimed in each action for a declaratory judgment determining that, the defendants had no obligation to approve the maximum number of licenses authorized by law, even though qualified applicants were seeking licenses.
    The cases were consolidated and in one opinion but separate judgments the Oakland Circuit Court, James S. Thorburn and Robert B. Webster, JJ., granted defendants summary judgments denying relief on plaintiffs’ complaints for superintending control and granting declaratory judgments on the counterclaims to the effect that the City of Birmingham was not obligated to approve issuance of licenses up to the maximum authorized by state law. Plaintiffs appeal. Held:

    1. A municipality is precluded from enacting an ordinance or resolution if: (1) it is in direct conflict with a state statutory scheme; or (2) if the state statutory scheme preempts the ordinance by occupying the field of regulation which the municipality seeks to enter even where there is no direct conflict between the two schemes of regulation.
    2. The Michigan Liquor Control Act does not mandate the issuance of available liquor licenses for selling beer and wine or spirits for consumption on the premises to otherwise qualified applicants in any municipality.

      References for Points in Headnotes
    [1, 3] 56 Am Jur 2d, Municipal Corporations, Counties, and Other
    Political Subdivisions §§ 374, 375.
    [2] 45 Am Jur 2d, Intoxicating Liquors § 27.
    [4, 5, 7] 45 Am Jur 2d, Intoxicating Liquors §§ 119, 134, 135.
    [6] 16A Am Jur 2d, Constitutional Law § 735 et seq.

      3. There are four factors to consider in determining whether a state statute has preempted an ordinance of a city by occupying the field of regulation which the municipality seeks to enter: (1) if the state law expressly provides that the state’s power to regulate in a specific area is exclusive, a municipal regulation is preempted; (2) preemption may be implied from the legislative history of the statute; (3) the pervasiveness of the state statutory scheme may indicate preemption; and (4) the nature of the regulated subject matter may demand exclusive state regulation to achieve uniformity.
    4. The State of Michigan has not preempted the field of regulation for the approval for liquor licenses to sell beer and wine or spirits for consumption on the premises.
    5. A city commission’s refusal to approve the issuance of a liquor license for selling beer and wine or spirits for consumption on the premises based on the city’s best interest does not constitute an abuse of discretion where a petitioner fails to show public need or convenience.
    6. The right to equal protection of the law is not denied by a state law or course of procedure where the same law or course of procedure would have been applied to any other person in the same state under similar circumstances and conditions.
    Affirmed.
    D. C. Riley, J., dissented. She would hold that a city may validly restrict the approval of the number of liquor licenses for selling beer and wine or spirits for consumption on the premises; however, the rationing procedure should be fair and equitable, capable of explanation and understanding, and determined and announced in advance of its being instituted. She would reverse and remand to the trial court for an order compelling approval of the issuance of the disputed licenses.
    Opinion of the Court
    1. Municipal Corporations — Ordinances — State Statutes — Preemption.
    A municipality is precluded from enacting an ordinance or adopting a resolution if: (1) it is in direct conflict with a state statutory scheme; or (2) if the state statutory scheme preempts the ordinance by occupying the field of regulation which the municipality seeks to enter, even where there is no direct conflict between the two schemes of regulation.

      2. Licenses — Liquor Control — Municipal Corporations.
    The Michigan Liquor Control Act does not require issuance of available liquor licenses for selling beer and wine or spirits for consumption on the premises to otherwise qualified applicants in any municipality.
    3. State — Municipal Ordinances — Preemption.
    There are four factors to be considered in determining whether a state statute has preempted the ordinance of a city by occupying the field of regulation which the municipality seeks to enter: (1) if the state law expressly provides that the state’s power to regulate in a specific area is exclusive, a municipal regulation is preempted; (2) preemption may be implied from the legislative history of the statute; (3) the pervasiveness of the state statutory scheme may indicate preemption; and (4) the nature of the regulated subject matter may demand exclusive state regulation to achieve uniformity.
    4. State — Liquor Regulation — Municipal Corporations — Preemption.
    The State of Michigan has not preempted the right of a municipality to limit the number of liquor licenses to sell beer and wine' or spirits for consumption on the premises which it approves to fewer licenses than the maximum which a state statute may permit.
    5. Municipal Corporations — Cities — Liquor Licenses — Abuse of Discretion.
    A city commission’s refusal to approve the issuance of a liquor license for selling beer and wine or spirits for consumption on the premises based on "the city’s best interest” does not constitute an abuse of discretion where a petitioner fails to show public need or convenience.
    6. Constitutional Law — Equal Protection.
    The right to equal protection of the law is not denied by a state law or course of procedure where the same law or course of procedure would have been applied to any other person in the same state under similar circumstances and conditions.
    Dissent by D. C. Riley, J.
    7. Municipal Corporations — Licenses — Liquor — Municipal Restrictions — Advance Notice.

      A city may validly restrict the number of liquor licenses it approves for issuance for the selling of beer and wine or spirits for consumption on the premises; however, the rationing proce

      dure should be fair and equitable, capable of explanation and understanding, and determined and announced in advance of its being instituted.

      August, Thompson, Sherr, Clarke & Shafer, P.C. (by Alan R. Miller), for plaintiff Fuller Central Park Properties.

      Simpson, Moran & Burnett (by James A. Simpson and C. Denton Wolf), for plaintiff Clancy Muldoon’s Inc.

      Beier, Howlett, McConnell, Googasian & Mc-Cann, for defendants City of Birmingham and Birmingham City Commissioners.
    Before: Bronson, P.J., and Beasley and D. C. Riley, JJ.
   Beasley, J.

Plaintiffs, each seeking to compel municipal approval for issuance of a liquor license by the Michigan Liquor Control Commission (hereinafter referred to as MLCC) brought separate actions against defendants for orders of superintending control after defendants denied approval of their applications. Defendants counter-claimed in each action for a declaratory judgment determining that the city commission had no obligation to approve the maximum number of licenses authorized by law, even though qualified applicants were seeking licenses. The cases were consolidated and, after remand to defendant commission to supplement the record regarding reasons for denial, the two trial judges to whom the cases were assigned joined together in one opinion denying plaintiffs the relief they sought.

Summary judgments were granted defendants, denying relief on the complaints for superintending control and granting declaratory judgments on the counter-claims, which hold that the statute does not require defendant city commission to approve the maximum number of licenses permitted under the statute. Plaintiffs now appeal as a matter of right.

In a referendum held on November 7, 1972, Birmingham voters approved the sale of liquor by the glass for consumption on the premises. Prior to the referendum, neither the legislative body (city commission) nor the electorate of the City of Birmingham had availed itself of the post-prohibition statutes which would have permitted sale of liquor by the glass for consumption on the premises within the city. On the contrary, both the city commission and the electorate had declined to take that legal step.

Under the quota provisions of MCL 436.19c; MSA 18.990(3), á total of 17 Class C liquor licenses are available for issuance in the City of Birmingham. Ten of the 17 available licenses have either been issued by the MLCC or approved by defendant city for issuance, 2 of the 10 such licenses being not currently operational.

Thus, there remain 7 licenses of the maximum of 17 still unissued and available. Each plaintiff-appellant has applied for one of the 7 unissued Class C licenses. For purposes of this appeal, no question has been raised as to the qualifications of each individual plaintiff as a licensee, nor with respect to the sites proposed for their respective establishments; that is, they are in locations which would meet defendant city’s code requirements regarding use.

Prior to the 1972 referendum, on October 23, 1972, defendant city adopted a resolution setting forth its policy regarding liquor licenses, if the referendum would pass. Subsequently, on October 30, 1978, defendant city adopted a further resolution indicating that it had decided, after review, that the best interest of the City of Birmingham and its citizens would be to decline the issuance of any further liquor licenses at that time. It is the October 30, 1978, resolution that gives rise to the within litigation.

Plaintiffs first argue that the Birmingham City Commission does not have the power to limit the number of liquor licenses which will be issued below the maximum number allowed by statute. Plaintiffs reason that the Legislature has preempted this field of regulation. We do not agree.

The Michigan Constitution provides that municipalities have the power to adopt resolutions and ordinances relating to their municipal concerns "subject to the constitution and law”. A municipality is precluded from enacting an ordinance (or adopting a resolution) if (1) it is in direct conflict with a state statutory scheme or (2) if the state statutory scheme pre-empts the ordinance by occupying the field of regulation which the municipality seeks to enter, even where there is no direct conflict between the two schemes of regulation.

Initially, we conclude that there is no direct conflict between the Birmingham resolution and the Michigan Liquor Control Act.

The pertinent section of the act, which plaintiffs allege is in direct conflict with defendant commission’s resolution, is as follows:

"(1) A public license shall not be granted for the sale of alcoholic liquor for consumption on the premises in excess of 1 license for each 1,500 of population or major fraction thereof.”

Plaintiffs reason that this statute provides, as applied to the City of Birmingham, that 17 liquor licenses must be issued. Plaintiffs argue that since there were seven licenses still unissued and available at the time defendant passed its resolution refusing to grant any more licenses, that resolution was in direct conflict with the statute.

If we were to adopt plaintiffs’ reasoning, we would have to find that MCL 436.19c; MSA 18.990(3) places a minimum as well as a maximum limit on the number of liquor licenses which can issue in each municipality. This we decline to do.

The primary rule of statutory construction is that the Legislature is presumed to have intended the plain meaning of the words used by it. In interpreting statutes, all words and phrases should be construed according to the common and approved usage of the language. Correct and proper interpretation means giving effect to every word of the statute. Every effort must be made to avoid declaring any portion of the Legislature’s language to be surplusage. The definition for the phrase "in excess of’ in Webster’s New Collegiate Dictionary (2nd College Edition, 1974) is "more than”.

If we accepted plaintiffs’ argument that this statute places both a ceiling on and a floor under the number of liquor licenses to be issued in each community, it would result in a finding that "not” and "in excess of’ are pure surplusage. Clearly, this was not the intent of the Legislature.

Accordingly, we conclude that the Birmingham commission’s resolution, which in effect limits the number of Class C liquor licenses, is not in direct conflict with the Michigan Liquor Control Act.

The question then becomes whether the state statute has pre-empted the city’s ordinance by occupying the field of regulation which the municipality seeks to enter. To determine if pre-emption has occurred, we must look at four factors.

First, if the state law expressly provides that the state’s power to regulate in a specific area is exclusive, a municipal regulation is pre-empted. Second, pre-emption may be implied from the legislative history of the statute. Third, the pervasiveness of the state statutory scheme may indicate pre-emption. Fourth, the nature of the regulated subject matter may demand exclusive state regulation to achieve uniformity.

Applying these four factors to the case at hand, we find that the state has not pre-empted the field of regulation which the City of Birmingham seeks to regulate.

First, we find that the Legislature has not expressly provided that the state’s power to regulate in this area is exclusive. MCL 436.1; MSA 18.971 provides, in part, as follows:

“Except as by this act otherwise provided, the commission shall have the sole right, power and duty to control the alcoholic beverage traffic and traffic in other alcoholic liquor within the state of Michigan, including the manufacture, importation, possession, transportation and sale thereof.” (Emphasis added.)_

This section clearly indicates that there are some exceptions to the control of the MLCC, those specified in the statute. Specifically, MCL 436.17; MSA 18.988 provides as follows:

"Applications for licenses to sell beer and wine or spirits for consumption on the premises, except in a city of 1,000,000 population or over, shall be approved by the local legislative body in which the applicant's place of business is located before being granted a license by the commission, * * *.” (Emphasis added.)

Accordingly, although the MLCC is granted broad power in issuing licenses, that power is subject to the requirement that certain cities (Birmingham included) approve licenses before they may issue. We find that the Legislature has not expressly provided that the power of MLCC to regulate in the area of issuance of liquor licenses is exclusive. Rather, cities of under 1,000,000 population are specifically given the power to approve applications for licenses.

Further indication that the power to regulate vested in the MLCC by the Legislature is not exclusive is the fact that after repeal of prohibition, home rule cities, like Birmingham, retained the power to prohibit sale of liquor by the glass within their boundaries. The effect of that right was to give the city the power to deprive the MLCC of power to issue any license for sale of liquor by the glass for consumption on the premises within the city’s boundaries._

Second, the legislative history of this statute may properly be understood only within the context of the full history of the effort in this state and in the nation to control the liquor traffic. For our purpose here, we need only remember that in Michigan liquor is and always has been treated specially and quite differently from other products. Going back as far as 1850, Michigan Constitutions have contained provisions dealing with intoxicating liquor. In 1933, after repeal of the National Prohibition Amendment (XVIIIth), the Michigan Constitution was amended to permit the licensing of persons to sell alcoholic beverages. As amended in 1978, Article 4, §40 of the 1963 Michigan Constitution provides as follows:

"The legislature may by law establish a liquor control commission which, subject to statutory limitations, shall exercise complete control of the alcoholic beverage traffic within this state, including the retail sales thereof. The legislature may provide for an excise tax on such sales. Neither the legislature nor the commission may authorize the manufacture or sale of alcoholic beverages in any county in which a majority of the electors voting thereon shall prohibit the same.”

We do not interpret this constitutional provision or the legislative history as showing an intent that the state pre-empt regulation in this phase of the liquor business. Moreover, although the liquor act is pervasive and deals with multiple facets of liquor control, there is no indication that the Legislature intended to pre-empt city action adopting a policy of approving fewer licenses than the maximum number permitted by statute. Rather, the Legislature specifically provided that the cities with populations less than a million have authority to approve license applications as a condition precedent to their issuance by the MLCC.

Lastly, we find that the nature of the regulated subject matter does not demand exclusive state regulation to achieve uniformity. We note that the Legislature has set the absolute maximum number of licenses which can be issued in a city the size of Birmingham at 17. While, in the name of uniformity, the Legislature may see fit to set a maximum number of such licenses which a city cannot exceed, there is no good reason why a city cannot choose to establish a lower, temporary-maximum number.

Therefore, we conclude that the City of Birmingham’s resolution limiting the number of liquor licenses to be issued at the present time is neither in direct conflict with the Michigan Liquor Control Act, nor pre-empted by the Legislature.

The question then becomes whether the City of Birmingham’s action in limiting the number of licenses was arbitrary and capricious. We find that it was not.

In this connection, we note that defendants argue that the courts may not review the city commission’s denial of plaintiffs’ applications for new liquor licenses. While we would tend to believe that the scope of judicial review of a denial of an application for a new liquor license is very narrow and limited, that question is not properly before this Court for review. Moreover, our decision in this case makes its discussion unnecessary.

Although home rule cities, like Birmingham, enjoy some power to control alcoholic beverage traffic, they cannot act arbitrarily and capriciously. The burden is on plaintiffs, however, to establish a showing of an abuse of discretion, or an arbitrary exercise of power on the part of the city commission. Plaintiffs have failed to show such an abuse of discretion or arbitrary exercise of power by defendant commission in this case. Defendant commission denied plaintiffs’ applications for liquor licenses on the ground that they believed it was in the city’s best interest that no new licenses currently issue and that plaintiffs had failed to establish the "public need or convenience” for such licenses to issue. We find no indication that adoption of this resolution was an abuse of discretion. This is a proper ground for the denial of such a license.

Plaintiff, Clancy Muldoon’s, Inc., argues that the denial of its application, while other licensees are permitted to operate in the city, constitutes a denial of equal protection. This argument is without merit.

The right to equal protection of the law is not denied by a state law or course of procedure where the same law or course of procedure would have been applied to any other person in the same state under similar circumstances and conditions.

In this case, plaintiff was treated identically with other liquor license applicants in similar circumstances. All were denied a license due to the decision of the city commission that the best interest of the city would be served by not issuing any more liquor licenses at this time.

The balance of plaintiffs claims are similarly without merit.

In summary, we find that the trial court’s judgment denying plaintiffs’ application for a writ of superintending control was proper. There was no clear legal duty requiring defendant Birmingham City Commission to approve plaintiffs’ applications for liquor licenses in this case.

Affirmed.

Bronson, P.J., concurred.

D. C. Riley, J.

(dissenting). I am in accord with the majority in their determination that the City of Birmingham may limit the number of liquor licenses to be issued, and that in so doing their resolution is not in conflict with the Michigan Liquor Control Act, nor preempted by the Legislature.

The right to ration such licenses carries with it the obligation, however, to do so in a manner that is neither arbitrary nor capricious. The rationing procedure should be fair and equitable, capable of explanation and understanding, and most of all, determined and announced in advance of its being instituted.

The city’s denial of the two applications before us was arbitrary and capricious, for the reason that these applications were pending prior to the city’s adoption of their limit. Again, basic fairness requires that notice be given of any limitation established. This was not done here. Therefore, the city cannot reject these applicants at the same hearing at which it announces the limitation on the basis of the limit set. Rather, they must treat these applicants as they had all others who preceded their limitation and give valid reasons for disqualification.

Inasmuch as it is stipulated that the two applicants herein involved were otherwise qualified and would have been issued licenses but for the disqualifying limitation which I find to have been arbitrarily imposed, I would reverse and remand to the trial court for an order compelling approval of the issuance of the disputed licenses.

       The resolution stated as follows:
      "WHEREAS, the electors of the City of Birmingham will, as the result of a petition filed with the City Clerk, vote on November 7, 1972, on the question of whether the sale of alcoholic beverages for consumption on the premises shall be permitted with the City, and
      "WHEREAS, citizens have expressed their concern as to the power of the City, through its City Commission, to regulate and control the licensing and operation of establishments for the sale and consumption on the premises of liquor, and
      "WHEREAS, the Commission deems it desirable to advise the electors as to what the City’s authority and policy is with regard to regulating and controlling such establishments.
      "NOW, THEREFORE, BE IT RESOLVED that the electors of the City of Birmingham be advised by this Commission as follows:
      "1. If sale of liquor for consumption on the premises is approved by the voters, under present state law, no license for the sale of liquor for consumption on the premises within the City may be issued by the State Liquor Control Commission unless first approved by this Commission.
      "2. This Commission has the authority to impose limitations and regulations which will permit the number of such establishments within the City, control their location, the type of establishment which may be licensed, and the physical facilities to be used. Each license must be renewed each year and the Commission has the same controls over renewals as it has over the original issuance of licenses.
      "3. This Commission is unalterably opposed to permitting any license to be issued to permit such an establishment in a residential zone or in any area presently zoned B-l — Neighborhood Business.
      "4. This Commission is unalterably opposed to approve the licensing of any such establishments unless it is a restaurant with complete dining facilities and it derives the major portion of its income from the sale of food.”

       The resolution stated as follows:
      "WHEREAS, the Birmingham City Commission has reviewed the following liquor license applications:
      Monahan’s Beef Buffet
      Pheonicia Restaurant
      P. J. Clarke’s
      Central Park Properties (Les Collisse)
      Clancy Muldoon’s (Studio 4)
      "WHEREAS, the Birmingham City Commission may elect to issue a liquor license to the most qualified applicant, above all others, on file at time of said hearing, and

        "WHEREAS, there exist two licenses which are not in operation at this time, and the full effect of these licenses on the community is not know, [sic]

      "NOW, THEREFORE, BE IT RESOLVED that the Birmingham City Commission, having reviewed the above applications, deems it in the best interest of the City of Birmingham and its citizens to decline the issuance of any liquor license at this time.”

       Const 1963, art 7, § 22.

        People v Llewellyn, 401 Mich 314, 322; 257 NW2d 902 (1977).

       MCL 436.1 et seq.; MSA 18.971 et seq.

       MCL 436.19c; MSA 18.990(3).

        Florentine Ristorante, Inc v City of Grandville, 88 Mich App 614; 278 NW2d 694 (1979), Gordon Grossman Building Co v Elliott, 382 Mich 596; 171 NW2d 441 (1969).

       MCL 8.3a; MSA 2.212(1); Bragg v Kalamazoo, 86 Mich App 700; 273 NW2d 530 (1978).

        Deshler v Grigg, 90 Mich App 49; 282 NW2d 237 (1979), Stowers v Wolodzko, 386 Mich 119; 191 NW2d 355 (1971).

       See, Smock v Coots, 165 Ind App 474; 333 NE2d 119 (1975).

       See, People v Llewellyn, supra.

         Id.

       We distinguish Noey v Saginaw, 271 Mich 595; 261 NW 88 (1935). In that case, the Court held that the City of Saginaw could not fix the closing hours of places licensed to sell liquor to a period shorter than that specified by the Michigan Liquor Control Commission. The Court found that the commission was granted the exclusive power to regulate and control alcohol beverage trafile subject only to specified statutory exclusions, and that no statutory exclusion was applicable.

         See, Stafford’s Restaurant of Bloomfield, Inc v West Bloomfield Twp Board, 82 Mich App 607; 267 NW2d 461 (1978), Beasley, J. dissenting.

       We note that the trial court held the city commission’s actions reviewable, and defendants have not taken an appeal from that decision.

         Bundo v Walled Lake, 395 Mich 679; 238 NW2d 154 (1976), Stafford’s Restaurant of Bloomfield, Inc v West Bloomfield Twp Board, supra.

       See, Smock v Coots, supra, Hobday v O’Dowd, 94 RI 172; 179 A2d 319 (1962).

       US Const, Am XIV; Const 1963, art 1, § 2.

        Moore v Spangler, 401 Mich 360; 258 NW2d 34 (1977).

       It is worthy to note that one of the applicants before us was rejected in April, 1978, because they did not have a full-service restaurant. They reapplied as such a restaurant in September, 1978, only to be rejected on October 30, 1978, because of the limit set coincident with the hearing.


source: Caselaw Access Project

author: M. J. Kelly, P. J.

license: Public Domain

text:
    REGENTS OF THE UNIVERSITY OF MICHIGAN v WASHTENAW COUNTY COALITION AGAINST APARTHEID
    Docket No. 44729.
    Submitted March 5, 1980, at Lansing.
    Decided May 19, 1980.

    Several members of a group known as the Washtenaw County Coalition Against Apartheid disrupted a meeting of the Regents of the University of Michigan to the extent that business could not be conducted. The same thing occurred a day later. The Regents sought a declaratory judgment and injunctive relief. The circuit court issued a temporary restraining order enjoining the Coalition from interfering with the meetings pending a hearing and authorizing the Regents to relocate the meeting and to admit only members of the press and other members of the public at the Regents’ discretion. The Coalition moved to dissolve the restraining order and counterclaimed for an injunction to restrain the Regents from further alleged noncompliance with the Open Meetings Act. The restraining order was dissolved. The Regents then moved for a declaratory judgment, seeking a ruling that the Open Meetings Act permits the relocation of the meetings and the exclusion from attendance of persons who breach the peace, and for summary judgment on the counterclaim. The Washtenaw Circuit Court, Ross W. Campbell, J., issued a declaratory judgment finding that the recess of the meeting for less than 36 hours and relocation of the meeting with an announcement of the new time and location to those present at the original place did not violate the Open Meetings Act. The court denied injunctive relief and the relief requested in the Coalition’s counterclaim was also denied. The defendants appeal, alleging, inter alia, that the trial court erred in its interpretation of the Open Meetings Act and in its dismissal of the counterclaim and that defendants are entitled to costs and attorney fees. Held:

      References for Points in Headnotes
    [1] 73 Am Jur 2d, Statutes § 187 et seq.

    [2] 73 Am Jur 2d, Statutes §§ 194, 195.
    [3] 2 Am Jur 2d, Administrative Law §§ 227-229.
    56 Am Jur 2d, Municipal Corporations, Counties, and Other Political Subdivisions § 156.
    [4] 56 Am Jur 2d, Motions, Rules, and Orders § 10.
    [5] 20 Am Jur 2d, Costs § 10 et seq.

    42 Am Jur 2d, Injunctions § 373 et seq.

      1. The Open Meetings Act does not require application of its notice rules on the occasion of a recess of less than 36 hours, and the relocation of a recessed meeting is not prohibited. The Regents complied with the restraining order by providing notice of the time and place of the reconvened meeting, which was within the spirit and purpose of the Open Meetings Act. There was no violation of the act.
    2. Dismissal of the counterclaim was proper. The defendants’ claim of surprise is untenable. Moreover, an injunction against further noncompliance with the Open Meetings Act is not possible where the court has found no noncompliance.
    3. Recovery of costs and attorney fees under the act is limited to the party commencing an action who succeeds.
    Affirmed.
    1. Statutes — Construction of Statutes.
    A subsection of a statute which deals with a distinct topic does not require interpolation of language from other clearly independent subsections except when expressly referred to.
    2. Statutes — Construction of Statutes — Plain Meaning.
    The plain meaning of a statute controls where the language is clear and unambiguous.
    3. Notice — Open Meetings Act — Recessed Meetings — Statutes.
    A public body that recesses a meeting for more than 36 hours must comply with the notice rules of the Open Meetings Act applicable to rescheduled meetings; a shorter recess is not subject to those rules and a public body did not violate the Open Meetings Act where, because of disruptions of its meeting by several persons to the extent that business could not be carried on, it obtained a temporary restraining order allowing it to move the location of its meeting and to exclude members of the disruptive group and posted people at the regular meeting place to direct members of the general public to the new location (MCL 15.265; MSA 4.1800[5]).
    4. Motions — Action — Dismissal of Counterclaim — Surprise.
    A defendant may not claim surprise at the dismissal of its counterclaim at a hearing on the plaintiffs motion for declaratory judgment where the plaintiffs motion adequately put the defendant on notice that the essential issue at stake would be argued and decided at the motion hearing and where the defendant was given ample opportunity at the hearing to assert its counterclaim.
    5. Costs — Attorney Fees — Open Meetings Act — Statutes.
    A defendant in an action concerning the Open Meetings Act who succeeds in dissolving a temporary restraining order is not entitled to costs and attorney fees because the Open Meetings Act provides for the recovery of costs and attorney fees only when the party commencing a civil action for injunctive relief under the act is successful (MCL 15.271; MSA 4.1800[21]).

      Davis & Fajen (Roderick K. Daane, General Counsel, University of Michigan, of counsel), for plaintiff.
    O’Brien, Moran & Dimond, for defendant.
    Before: M. J. Kelly, P.J., and D. F. Walsh and Beasley, JJ.
   M. J. Kelly, P. J.

Defendants appeal as of right from a declaratory judgment and order denying injunctive relief issued in Washtenaw County Circuit Court on April 11, 1979.

The Regents of the University of Michigan (the Regents), the governing body of that educational institution, is a Michigan constitutional corporation having substantial holdings in corporations which do business in South Africa. The Washtenaw County Coalition Against Apartheid (WCCAA) is an unincorporated voluntary association composed of unnamed officers and members (designated as John Doe, through 50, and Mary Roe, through 50), university students and others who are opposed to the apartheid racial policies of the government of South Africa.

The Regents meets every month (save Augúst) in Ann Arbor. On Thursday, March 15, 1979, the Regents held a scheduled meeting at its regular location, 503 Thompson Street, Ann Arbor. Approximately 50 unidentified members of the WCCAA, along with approximately 150 unidentified supporters, appeared at the meeting and disrupted it to the extent that the Regents could not conduct its business. On the following day, March 16, the WCCAA again appeared at and disrupted the Regents’ meeting; two arrests resulted from this confrontation.

On March 16, 1979, the second day of disruptions, the Regents filed a complaint seeking a declaratory judgment, an injunction and other relief, alleging that the WCCAA disruptions were violent in nature, threatened the public peace and safety, and caused irreparable harm. The complaint also requested issuance of a temporary restraining order authorizing the Regents to move the location of its meetings, to close the meetings to those persons who should be excluded in the discretion of the Regents, and to restrain the WCCAA from interfering with the Regents’ meetings. Following a brief hearing at which a portion of a tape recording of the disruptions was aired and the testimony of two of the Regents’ witnesses was taken, Judge Van Domelen issued an ex parte temporary restraining order. The ex parte temporary restraining order enjoined the WCCAA from interfering with the Regents’ meetings in any way pending a hearing; authorized the Regents to relocate its meetings from the Regents Room at 503 Thompson Street to another safe location pending further order of the court; and gave permission to the Regents to admit only members of the press and other members of the public within the discretion of the Regents, and to lock the meeting room doors. The order recited that it was granted without notice because of the immediacy required to preserve public peace and safety and to prevent injury. Pursuant to the TRO, the Regents conducted its afternoon session of the March 16 meeting in the smaller President’s Room on the second floor of the building at 503 Thompson. According to the Regents, officials were posted at the Regents Room to advise the press and members of the general public of the room change. The WCCAA claims that the afternoon session was held in an undisclosed location and was not open to members of the public.

On March 20, 1979, the WCCAA moved to dissolve the temporary restraining order and counterclaimed for an injunction to restrain the Regents from alleged further non-compliance with the provisions of the Michigan Open Meetings Act and for damages. After hearing argument from counsel for both parties on March 23, Judge Kent noted that the TRO had enabled the Regents to accomplish its objective of holding an orderly meeting and ordered the TRO dissolved without deciding its constitutionality or legality. Judge Kent declined to pass on either the Regents’ request for an injunction to restrain disruptions at future meetings, or the WCCAA’s counterclaim and motions for an injunction against "further” violations of the Open Meetings Act.

On April 3, 1979, the Regents moved for a "partial summary declaratory judgment” asking the trial court to rule that the Open Meetings Act permits the Regents to recess, move its location and exclude from attendance those persons who breach the peace, and requesting summary judgment on the WCCAA’s counterclaim on grounds that there existed no genuine issue of material fact. A hearing on the motion was held on April 9, 1979, before Judge Campbell. On Aprill 11, Judge Campbell issued a declaratory judgment and order denying injunctive relief. In his written opinion, the trial judge reasoned that the fundamental purpose of the Open Meetings Act, to extend to the public the opportunity to observe public business and to address public bodies, does not give the general public the right to participate in the bodies’ deliberations or to disrupt a meeting, no matter how worthy the cause. The court declared that the procedure proposed by the Regents, a recess of less than 36 hours followed by removal of the meeting to a new location and an announcement of the new location and time of reconvening of the meeting to all who are present at the original place, was within the spirit of, and would not violate, the Open Meetings Act. The Regents’ request for an injunction was denied in view of the adequate legal remedy afforded.. The damages and injunction prayed for in the counterclaim filed by the WCCAA were likewise denied as "[t]he pleadings * * * do not allege facts sufficient to support the defendant’s claim that the plaintiff has failed or will hereafter fail to comply with the Open Meetings Act”.

Of the five issues raised in the appellate briefs, only those which were actual questions in controversy below will be address by this Court. To the extent that the lower court opinion discusses areas not originally disputed by the parties, we decline to decide: whether the lower court’s definition of "breach of the peace” is unconstitutionally vague and overbroad, whether a public body may condition admission to a public meeting upon a consensual search for weapons, or whether a public body must make every reasonable attempt to accommodate the number of people who may wish to attend its meetings.

The first issue for our consideration is whether the trial court erroneously interpreted the Open Meetings Act, MCL 15.261 et seq.; MSA 4.1800(11) et seq., to permit plaintiff to exclude from a meeting those members of the general public committing a breach of the peace, to recess the meeting for a brief period of time, and to remove the meeting to another location conditioned upon an announcement of the new location and time of reconvening. The Open Meetings Act clearly provides for exclusion of a person from a public meeting for a breach of the peace actually committed at the meeting. MCL 15.263; MSA 4.1800(13). At issue here is the "recess and remove” procedure for exclusion employed by the Regents. Defendants’ major contention is that when a public body recesses its meeting for a brief time it cannot remove to a new location without satisfying the notice requirements pertaining to "rescheduled” meetings. The act’s notice provisions are as follows:

"Sec. 5. (1) A meeting of a public body shall not be held unless public notice is given as provided in this section by a person designated by the public body.
"(2) For regular meetings of a public body, there shall be posted within 10 days after the first meeting of the public body in each calendar or fiscal year a public notice stating the dates, times, and places of its regular meetings.
"(3) If there is a change in the schedule of regular meetings of a public body, there shall be posted within 3 days after the meeting at which the change is made, a public notice stating the new dates, times, and places of its regular meetings.
"(4) For a rescheduled regular or a special meeting of a public body, a public notice stating the date, time, and place of the meeting shall be posted at least 18 hours before the meeting. The requirement of 18 hour notice shall not apply to special meetings of subcommittees of a public body or conference committees of the state legislature. A conference committee shall give a 6 hour notice. A second conference committee shall give a 1 hour notice. Notice of a conference committee meeting shall include written notice to each member of the conference committee and the majority and minority leader of each house indicating time and place of the meeting.
"(5) A meeting of a public body which is recessed for more than 36 hours shall be reconvened only after public notice, which is equivalent to that required under subsection (4) has been posted. If either house of the state legislature is adjourned or recessed for less than 18 hours, the notice provisions of subsection (4) are not applicable. Nothing in this section shall bar a public body from meeting in emergency session in the event of a severe and imminent threat to the health, safety, or welfare of the public when 2/3 of the members serving on the body decide that delay would be detrimental to efforts to lessen or respond to the threat.” MCL 15.265; MSA 4.1800(15).

Defendants argue that because subsection (5) above does not expressly permit a change of location of a recessed meeting, it is forbidden and that the change of location that occurred here converted the meeting from "recessed” to "rescheduled” under the act. Principles of statutory construction do not support this position. Each of the above five subsections deals with a distinct topic and does not require interpolation of language from the other clearly independent provisions except when expressly referred to. See 2A Sutherland, Statutory Construction (4th ed), § 47.02, p 71. Furthermore, the language of subsection (5), which pertains to recessed meetings, is clear and unambiguous; the plain meaning controls. Sutherland, supra, § 46.01, p 48. A meeting that is recessed in excess of 36 hours must comply with the notice rules applicable to rescheduled meetings; a shorter recess, as occurred here, does not trigger application of those rules. As the trial court opinion correctly points out, a multitude of reasons might necessitate a meeting’s brief recess and relocation: fire, cessation of utility service, unrelated noise interference, etc. Viewed in this context, defendants’ position is clearly untenable; the act does not contemplate 18-hour notice requirements under such circumstances. We find no support for the position advanced by defendants that relocation changes the meeting’s categorization from "recessed” to "rescheduled”.

We do, however, share the concern obviously felt by defendants and the trial court that a meeting which is recessed remain open to the public. In order to remain faithful to the spirit and purpose of the Open Meetings Act the Regents were required to provide notice of the new time and place of the reconvened meeting. Plaintiff complied with the court order to this effect by posting officials at the Regents Room to advise the press and members of the general public of the room change. Therefore, we find no conflict with MCL 15.268; MSA 4.1800(18), which permits closed sessions only for the limited purposes specified therein.

A construction of the act as outlined above does not do violence to its spirit or purpose; rather, it represents a comfortable balancing of the public’s need to know and the public body’s duty to make decisions and effectively carry out its tasks. Certainly, the Regents should not be required to have demonstrators who breach the peace at a meeting physically and forcefully expelled by law enforcement officials. Confrontation is not mandated by the act. We hold that a peaceful alternative, such as "recess and remove” is an appropriate expedient.

Defendants also claim error in the trial court’s decision to dismiss their counterclaim for damages and injunctive relief against alleged further noncompliance with the Open Meetings Act. We are not persuaded by defendants’ claim of surprise with regard to the trial judge’s dismissal of their counterclaim against the Regents. The Regents’ "motion for partial summary declaratory judgment and alternative motion for speedy hearing of action for declaratory relief’, although somewhat ambiguously titled, adequately put the WCCAA on notice that the essential issue at stake — whether the act permitted the Regents to "recess and remove” to exclude members of the WCCAA who breached the peace — would be argued and decided at the motion hearing. The WCCAA was given ample opportunity at the hearing to assert its counterclaim against the Regents, and cannot be heard to complain that its claim was ignored by the trial judge. Moreover, any error is harmless, since the declaration by the trial court that the Regents’ actions were authorized by the act effectively precludes recovery by the WCCAA on its counterclaim, i.e., it cannot enjoin "further” noncompliance where there was never a failure to comply, nor can it recover damages for action taken by the Regents that was legal in all respects.

We also reject the WCCAA’s claim that it is entitled to costs and attorney fees. MCL 15.271; MSA 4.1800(21) provides for such recovery only when the party commencing a civil action for injunctive relief succeeds in that action. The WCCAA’s dissolution of the ex parte TRO entered in behalf of the Regents does not fall within the class of actions for which costs and attorney fees may be obtained as outlined above.

Affirmed.


author: V. J. Brennan, J.

text:
    PEOPLE v ROBINSON
    Docket No. 44753.
    Submitted February 5, 1980, at Lansing.
    Decided May 19, 1980.
    Janet M. Robinson was charged with larceny over $100 by false pretenses. Evidence produced at the preliminary hearing indicated that defendant obtained nine unemployment benefit checks when she was employed. To obtain each of the nine checks, eight for $84 and one for $63, she had to swear falsely that she was not employed. When she first had applied for benefits she was unemployed, and only after having rightfully received benefits did she become employed. Over defendant’s objection that she should have been charged under the penalty section of the Employment Security Act she was bound over to the Washtenaw Circuit Court on the larceny charge. Defendant moved to quash the information on that basis and for the reason that the aggregation of the checks to meet the "over $100” requirement was improper. The court, Henry T. Conlin, J., held that the aggregation was improper and granted the motion. The people appeal. Held:

    1. A prosecuting attorney has broad discretion in determining under which of two possible applicable statutes a prosecution shall be instituted. However, that discretion is not unlimited. A defendant must be charged under the more specific statute where two statutes prohibit the same conduct. Where the two statutes require different elements of proof, the prosecutor may, if the facts fit both, choose which to charge, so long as he doesn’t overcharge. The penalties prescribed in the Employment Security Act are not exclusive and it is not improper, where the facts fit both, for a prosecutor to charge under the statute prohibiting, generally, larceny by false pretenses rather than the crime proscribed by the Employment Security Act.
    2. The test for whether separate acts constitute a single crime or multiple crimes is whether the acts occurred in a continuous time sequence and displayed a single intent and goal. The facts here do not indicate a single intent or goal in a continuous time sequence.

      References for Points in Headnotes
    [1] 63 Am Jur 2d, Prosecuting Attorneys §§ 25, 26.
    [2, 3] 41 Am Jur 2d, Indictments and Informations § 226 et seq.

    [4, 5] 21 Am Jur 2d, Criminal Law §§ 8, 183.
    50 Am Jur 2d, Larceny § 4.
    Series of takings over a period of time as involving single or separate larcenies. 53 ALR3d 398.

      Affirmed.
    1. Criminal Law — Prosecutors — Discretion — Instituting Charges.
    A prosecuting attorney has broad discretion in determining under which of two possible applicable statutes a prosecution shall be instituted; however, that discretion is not unlimited.
    2. Criminal Law — Prosecutors — Discretion — Statutes — Instituting Charges.
    A defendant must be charged under the more specific statute where two statutes prohibit the same conduct; where the two statutes require different elements of proof, the prosecutor may, if the facts fit both, choose which to charge, so long as he doesn’t overcharge.
    3. False Pretenses — Statutes — Prosecutors — Discretion — Instituting Charges.
    The penalties prescribed in the Employment Security Act are not exclusive and it is not improper, where the facts fit both, for a prosecutor to charge under the statute prohibiting, generally, larceny by false pretenses rather than the crime proscribed by the Employment Security Act (MCL 421.54[b], 750.218; MSA 17.558[b], 28.415).
    4. False Pretenses — Aggregation.
    It was improper to charge larceny over $100 by false pretenses where the defendant was issued unemployment checks aggregating over $100 but none was over $100 by itself and where each check was issued only upon a false statement that she was unemployed.
    5. Criminal Law — Single Transaction Test.
    The test for whether separate acts constitute a single crime or multiple crimes is whether the acts occurred in a continuous time sequence and displayed a single intent and goal.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William F. Delhey, Prosecuting Attorney, and Randall C. Roberts, Assistant Prosecuting Attorney, for the people.

      V. Carl Shaner, Public Defender, and Don Ferris, Senior Assistant Public Defender, for defendant.
    Before: Cynar, P.J., and V. J. Brennan and M. F. Cavanagh, JJ.
   V. J. Brennan, J.

On October 19, 1978, defendant was charged with larceny by false pretenses over $100, MCL 750.218; MSA 28.415. Over defense counsel’s objections that defendant should have been charged under the penalty section of the Employment Security Act, MCL 421.54(b); MSA 17.558(b), defendant was bound over as charged to the circuit court. In circuit court, defendant moved Judge Conlin to quash the information on two grounds: (1) the district court judge abused his discretion in binding over the defendant on the false pretenses charge since there is a more specific penalty provided for in the Employment Security Act which covers the same subject matter as the false pretenses statute; and (2) assuming, arguendo, that false pretenses is a proper charge, the district court judge abused his discretion when he merged nine distinct and separate transactions in order to reach the $100 figure necessary for the felony charge. The circuit judge did not address whether defendant was bound over on the wrong charge but did find that the district court judge abused his discretion in merging the nine transactions together and dismissed the felony charge against defendant.

The people appeal from the circuit court’s dismissal of the felony charge.

The relevant facts are not in dispute. The charges arose out of defendant’s continued misrepresentation of herself as unemployed and her receipt of unemployment benefits while in fact she was employed as a salesperson by the Dayton Hudson Corporation. Ms. Claretha Seed, a MESC certifier of claimants for unemployment benefits, testified at the preliminary examination that according to MESC’s ledger cards, the defendant was given unemployment benefit checks from June 1, 1977, through September 1, 1977. Ms. Janet Hayes testified that she personally worked with the defendant at a Hudson store from June 1, 1977. And Carolyn Walters, a Hudson’s payroll clerk, corroborated Ms. Hayes’ testimony that defendant was employed there from the week ending May 21, 1977, through the end of August, 1977, in addition to the third week in September, 1977.

The people make two arguments on appeal. First they claim that it was neither an abuse of prosecutorial discretion nor a violation of the general rules of statutory construction to charge defendant under the general false pretenses statute rather than the Employment Security Act.

The prosecutor has broad discretion in determining under which of two possible applicable statutes a prosecution shall be initiated. People v Heber, 42 Mich App 582, 589; 202 NW2d 571 (1972), People v Lombardo, 301 Mich 451, 453; 3 NW2d 839 (1942), People v Thrine, 218 Mich 687; 188 NW 405 (1922). Prosecutorial discretion is not, however, unlimited. People v LaRose, 87 Mich App 298, 302; 274 NW2d 45 (1978), People v Birmingham, 13 Mich App 402, 406-407; 164 NW2d 561 (1968). Where a claim of abuse of prosecutorial discretion in charging is made, it is necessary to distinguish between cases where two possible applicable statutes prohibit the same conduct and those cases where the statutory crimes are distinct. Where two possible applicable statutes prohibit the same conduct, the defendant must be charged with the more specific, most recently enacted statute. People v LaRose, supra.

The false pretense statute, MCL 750.218; MSA 28.415 provides:

"Sec. 218. Any person who, with intent to defraud or cheat, shall designedly, by color of any false token or writing or by any false or bogus check or other written, printed or engraved instrument, by spurious coin or metal in the similitude of coin, or by any other false pretense, cause any person to grant, convey, assign, demise, lease or mortgage any land or interest in land, or obtain the signature of any person to any written instrument, the making whereof would be punishable as forgery, or obtain from any person any money or personal property or the use of any instrument, facility or article or other valuable thing or service, or by means of any false weights or measures obtain a larger amount or quantity of property than was bargained for, or by means of any false weights or measures sell or dispose of a less amount or quantity of property than was bargained for, if such land or interest in land, money, personal property, use of such instrument, facility or article, valuable thing, service, larger amount obtained or less amount disposed of, shall be of the value of $100.00 or less, shall be guilty of a misdemeanor; and if such land, interest in land, money, personal property, use of such instrument, facility or article, valuable thing, service, larger amount obtained or less amount disposed of shall be of the value of more than $100.00, such person shall be guilty of a felony, punishable by imprisonment in the state prison not more than 10 years or by a fine of not more than $5,000.00.”

And the penalty section of the Employment Security Act, MCL 421.54(b); MSA 17.558(b) states:

"(b) Any employing unit or an officer or agent of an employing unit or any other person who makes a false statement or representation knowing it to be false, or knowingly and wilfully with intent to defraud fails to disclose a material fact, to obtain or increase a benefit or other payment under this act or under the unemployment compensation law of any state or of the federal government, either for himself or any other person, to prevent or reduce the payment of benefits to an individual entitled thereto or to avoid becoming or remaining a subject employer, or to avoid or reduce a contribution or other payment required from an employing unit under this act or under the unemployment compensation law of any state or of the federal government shall be deemed guilty of a misdemeanor, notwithstanding any other penalties imposed under this act or any other statute of this state or of the United States, and upon conviction thereof shall be punished by imprisonment in the county jail for not more than 90 days or by a fine of not more than $100.00, or by both such fine and imprisonment.”

The people argue that since the two crimes are distinct the prosecutor did not abuse his discretion in electing to charge the felony. Section 54 of the Employment Security Act is directed at the making of a false statement with an intent to defraud to obtain or increase a benefit by a person charged with violating the act. The general false pretenses statute, however, includes a false pretense and an intent to defraud in addition to the elements of reliance on the false pretense, and resulting injury, i.e., the fraud accomplished. Attorney General v Recorder’s Court Judge, 92 Mich App 42; 285 NW2d 53 (1979). People v Wilde, 42 Mich App 514, 517; 202 NW2d 542 (1972), People v Wakely, 62 Mich 297; 28 NW 871 (1886). Crimes can be distinguished by the different elements of proof required, People v LaRose, supra, People v Graves, 31 Mich App 635; 188 NW2d 87 (1971). Accordingly, since the general false pretenses statute prohibits conduct distinct from that proscribed by § 54 of the Employment Security Act, the prosecutor can, where the facts fit both, choose which to charge, so long as he doesn’t overcharge. People v Carmichael, 86 Mich App 418, 422; 272 NW2d 667 (1978). People v Feldman, 87 Mich App 157, 161; 274 NW2d 1 (1978).

The defendant argues, however, that the instant case should be governed by People v LaRose, supra. In LaRose defendant presented an insufficient funds check to a bank in the amount of $150, and pled guilty to obtaining money in an amount over $100 by false pretenses with intent to defraud. MCL 750.218; MSA 28.415. The gist of defendant’s argument is that the insufficient funds statute, MCL 750.218; MSA 28.415, is analogous to § 54 of the Employment Security Act since it only requires intent to defraud by false pretenses and not the additional elements of reliance and injury. Despite the fact that the false pretenses statute includes elements not found within the insufficient funds statute, the LaRose Court found that the defendant should have been charged under the latter.

We disagree. The LaRose Court based its conclusion in large part on the intent of the Legislature.

"It was clearly the Legislature’s intent, in enacting the insufficient funds statute, to carve out an exception to the false pretenses statute and to provide for a lesser penalty for the particular type of false pretense involved in presentation of an insufficient funds check.” 87 Mich App 298, 304.

See also People v Richard Ford, 95 Mich App 412; 291 NW2d 60 (1980). We do not find that legislative intent evidenced here.

While the title to the Employment Security Act states that a purpose of the act is to provide penalties for violations of the act, unlike LaRose, there is no indication that the penalties set forth within are to be exclusive. In fact, §§ 54 and 62(b) both clearly imply that violators of the act may be charged under other criminal statutes. Thus, given such a clear expression of the legislative intent that the penalties prescribed within the Employment Security Act are not to be exclusive, defendant’s reliance upon LaRose is inapposite.

As to the second issue, however, we find the charge of larceny by false pretenses over $100 defective on other grounds. In order to be so charged it must be shown that property with a value of over $100 was taken. According to MESC records, defendant received a separate benefits check commencing June 1, 1977, every two weeks until September 21, 1977. Defendant was issued nine separate checks, eight in the amount of $84 and one in the amount of $63. In his finding of facts, the district court judge aggregated the amount of these checks in order to reach "the over $100” limit of the statute.

The prosecution contends that since all the crimes occurred within a six-month period, June 1, 1977, to September 21, 1977, under the authority of MCL 767.60; MSA 28.1000, the money taken could be aggregated to reach the sum of $100. This contention is without merit. The six-month rule of MCL 767.60 has typically been interpreted and applied as relating to the due process notice due defendant as to the date of his wrongdoing. People v Jakiel, 92 Mich App 754; 285 NW2d 448 (1979), People v Breckenridge, 81 Mich App 6; 263 NW2d 922 (1978), People v McLendon, 51 Mich App 543; 215 NW2d 742 (1974), and is not applicable to the instant case.

The people also contend that defendant had a continuing contractual relationship with the MESC from the time she first applied for benefits. Even if a person receiving unemployment benefits can be said to have a contractual relationship with the MESC, the record shows that when the defendant first applied she was entitled to the unemployment benefits she received. Thus, People v Pickett, 15 Mich App 1; 166 NW2d 24 (1968), relied on by the prosecutor, is distinguishable on its facts. In Pickett, the defendant’s false pretense was accomplished when he applied for employment with the Detroit Board of Education and falsely represented that he had never been convicted of a crime and that he was one Jacob Cook. In the instant case, defendant’s first false statement was not made until after she began working for the Dayton Hudson Corporation.

Defendant, however, argues that the same transaction test should be utilized in determining whether the nine individual checks issued to the defendant were properly aggregated to meet the "over $100” requirement. The crux of the "same transaction” test, usually applied to insulate a defendant from the perils of double jeopardy, is whether the series of acts were in a continuous time sequence and displayed a single intent and goal. Crampton v 54-A Dist Judge, 397 Mich 489; 245 NW2d 28 (1976), People v White, 390 Mich 245; 212 NW2d 222 (1973).

Although Michigan appellate courts have not previously addressed this question, we are not without guidance in determining the merits of defendant’s argument. In People v Johnson, 81 Mich 573; 45 NW 1119 (1890), the Court found that defendant was properly charged with one count of larceny over $50 where he stole property valued at $24.50 from one man and property valued at $26.50 from another. The Court stated, "[a] single offense of larceny may be charged in one count, where the articles stolen are of different values, and belong to different owners. The criterion is, was the larceny one act, committed at one time and place?” 81 Mich 573, 576.

We are of the opinion that in the instant case defendant’s individual and separate acts did not meet the criterion of the same transaction test, viz., occurring in a continuous time sequence and displaying a single intent and. goal. Initially, we note that there was a two-week interval between each of defendant’s nine larcenies. Furthermore, as each act necessitated an additional false statement, they were not the result of a single intent and goal. Every two weeks, defendant had to make another false statement in order to get an additional separate and distinct benefits check. Since defendant could only receive another check after falsely swearing anew that she had not worked and thus was still eligible for unemployment benefits, each of the misrepresentations was distinct and separate.

We affirm the circuit court’s dismissal of the charge.

       MCL 750.218; MSA 28.415.

       MCL 421.54(b); MSA 17.558(b).

       Section 62(b) of the Employment Security Act states:
      “(b) If the commission determines that a person has intentionally made a false statement or misrepresentation or has concealed material information to obtain benefits, whether or not the person obtains benefits by or because of the intentional false statement, misrepresentation, or concealment of material information the person shall, in addition to any other applicable penalties, have all of his or her uncharged credit weeks with respect to the benefit year in which the act occurred canceled as of the date the commission receives notice of, or initiates investigation of, possible false statement, or misrepresentation or concealment of material information whichever date is earlier. The person shall thereafter suffer a penalty disqualification of the first 6 weeks for which benefits would otherwise he payable for any week within 52 weeks following his completion of restitution required under subsection (a) and in addition the person’s maximum amount of benefits as provided in section 27(d) shall be reduced by an equivalent number of penalty disqualification weeks. The penalty disqualiñcation does not apply to an individual who has been convicted under section 54 or any other criminal statute if prosecution thereunder was based upon a violation of the provisions of this act.” (Emphasis added.) MCL 421.62(b); MSA 17.566(b).

         MCL 767.60; MSA 28.1000 provides:
      "In any prosecution for the offenses of embezzlement, larceny, larceny by conversion, or obtaining money or property by false pretenses under the statutes of this state, it shall be sufficient to allege generally in the information or indictment the embezzlement, larceny, larceny by conversion or obtaining by false pretenses of personal property to a certain amount without specifying the particulars of such embezzlement, larceny, larceny by conversion or obtaining by false pretenses, and on the trial evidence may be given of any such embezzlement, larceny, larceny by conversion or obtaining money or property by false pretenses within six [6] months next after the time stated in the information or indictment, and it shall be sufficient to maintain the charge in the information or indictment and shall not be deemed at variance if it shall be proved that any personal property was fraudulently embezzled, stolen or obtained by false pretenses within the said period of six [6] months.”


author: M. J. Kelly, P.J.

text:
    EARL DUBEY & SONS, INC v MACOMB CONTRACTING CORPORATION
    Docket No. 44894.
    Submitted March 5, 1980, at Lansing.
    Decided May 20, 1980.
    Leave to appeal applied for.
    Earl Dubey & Sons, Inc., and its insurer Sentry Insurance Company received a judgment against Macomb Contracting Corporation for breach of contract on a highway construction project and, pursuant to that judgment, served a writ of garnishment on the State of Michigan. The State Treasurer disclosed indebtedness to Macomb and issued a warrant in payment of the indebtedness. Travelers Indemnity Company, Macomb’s surety, and the Western Bank of Houston, Texas, which held a security interest in "all property and assets” of Macomb, notified the State Treasurer of their claims to the garnished funds. The State Treasurer stopped payment on the warrant and deposited the funds with the circuit court. Dubey and Sentry filed a motion for turnover of the funds and Travelers and Western Bank filed a motion for summary judgment. The Macomb Circuit Court, Robert J. Chrzanowski, J., ordered the funds turned over to Dubey. Travelers and Western Bank appeal. Held:

    1. Dubey’s rights to the funds attached as of the date of service of the writ of garnishment. The date of default, which is the date on which Travelers became obligated to perform on its surety bond, was after the service of the writ. Therefore, Travelers may not recover under a theory of subrogation, because it had not been called upon to expend any funds for completion of the project until after the garnishment.
    2. The fact that the state stopped payment on its warrant is not determinative of the parties’ rights. The payment was stopped because of the actions of Travelers and Western Bank and their actions in bringing about the stop payment may not now serve as the basis for a successful claim to the funds.

      References for Points in Headnotes
    [1-4J17 Am Jur 2d, Contractors’ Bonds §§ 42, 107-109, 111-113.
    [2] 73 Am Jur 2d, Subrogation § 46.
    [5] 13 Am Jur 2d, Building and Construction Contracts § 130.
    [6] 68 Am Jur 2d, Secured Transactions § 172 et seq.

    [7] 69 Am Jur 2d, Secured Transactions § 479.

      3. The builders’ trust fund act, which establishes a trust fund for the benefit of laborers and materialmen, does not apply to public, as opposed to private, construction projects.
    4. The money held by the state is within the Uniform Commercial Code’s definition of an account, and pursuant to the security agreement between Macomb and Western Bank, Western Bank has an interest in Macomb’s accounts. Because that security interest was perfected prior to service of the writ of garnishment Western Bank’s interest is superior to that of Dubey, a lien creditor.
    Reversed.
    1. Suretyship and Guarantee — Default — Assumption of Obligation.
    A surety of a contractor on a construction project is entitled to receive funds owed by the owner upon the assumption of a financial obligation in completing the project after the default of the contractor.
    2. Subrogation — Accrual of Right — Payment of Debt.
    The right to subrogation accrues upon payment of the debt.
    3. Suretyship and Guarantee — Default — Declaration of Default.
    No formal declaration of default is required in order to entitle a surety to prevail over competing creditors of a defaulting contractor; it is necessary only that the contractor be in default in fact and that the surety be obligated under its bond to perform.
    4. Suretyship and Guarantee — Default — Notice of Default.
    The date of notice of default of a contractor is the proper date for determining the rights of creditors and sureties where there is no evidence of an actual default requiring payments by the contractor’s surety prior to the date of formal acknowledgement.
    5. Statutes — Builders’ Trust Fund Act — Private Construction Projects.
    The builders’ trust fund act applies only to private, not public, construction projects (MCL 570.151; MSA 26.331).
    6. Secured Transactions — Words and Phrases — Accounts — Statutes.
    Money held by the state and reserved for progress payments to a contractor on a highway construction project is within the Uniform Commercial Code’s definition of an "account” (MCL 440.9106; MSA 19.9106).
    7. Secured Transactions — Lien Creditors — Statutes.
    An unperfected security interest is subordinate to the rights of a person who becomes a lien creditor before the security interest is perfected; conversely, one who becomes a lien creditor after another’s security interest is perfected is subordinate to that perfected security interest (MCL 440.9301; MSA 19.9301).

      Tolley, Fisher & Verwys, for plaintiffs.

      Jenkins, Nystrom & Sterlacci, P.C. (by Ronald A. Deneweth), for Travelers Indemnity Company and Western Bank of Houston, Texas.
    Before: M. J. Kelly, P.J., and D. F. Walsh and Beasley, JJ.
   M. J. Kelly, P.J.

Plaintiffs Earl Dubey & Sons, Inc. and Sentry Insurance Company brought this action against defendant Macomb Contracting Corporation seeking rescission and restitution for breach of contract. A judgment was entered in favor of plaintiffs on April 26, 1976, which was subsequently affirmed by this Court. Earl Dubey & Sons, Inc v Macomb Concrete Corp, 81 Mich App 662; 266 NW2d 152 (1978), lv den 403 Mich 811 (1978), cert den 441 US 944; 99 S Ct 2163; 60 L Ed 2d 1046 (1979). Pursuant to the judgment plaintiffs served a writ of garnishment upon defendant State of Michigan. See GCR 1963, 738. The State Treasurer disclosed indebtedness to Macomb Contracting Corporation in the amount of $110,010.74.

Intervening defendant Travelers Indemnity Company, Macomb’s payment and performance bond surety, and intervening defendant Western Bank, which held a security interest in "all property and assets” of Macomb, made claim to the funds that were the subject of the garnishment. Due to these conflicting claims the State of Michigan deposited the funds with the circuit court, pending the court’s determination as to which party was entitled to the funds. Plaintiffs filed a motion for turnover of the funds; Travelers and Western Bank filed a motion for summary judgment.

A hearing was held on the above motions on March 5, 1979. An opinion and order was entered directing the turnover of the funds to plaintiff Earl Dubey & Sons, Inc. On April 17, 1979, an order was entered denying the intervening defendants’ motion for rehearing and affirming the grant of plaintiffs’ motion for turnover. Intervening defendants (hereinafter "defendants”) appeal as of right.

The dates on which several events occurred are crucial to the outcome of this case. On March 13, 1978, Western Bank filed with the Michigan Secretary of State in Lansing a financing statement reflecting its security agreement with Macomb. Western also recorded a financing statement covering all present and after-acquired assets and property of Macomb with the Macomb County Register of Deeds on March 27, 1978. Plaintiffs served a writ of garnishment upon the State of Michigan on July 31, 1978. On August 18, 1978, Macomb formally acknowledged its default to the State of Michigan on the Southfield Freeway construction project. On the same date the State Treasurer filed its first amended disclosure indicating its $110,010.74 indebtedness to Macomb and enclosed a warrant payable to it or the clerk of the Macomb County Circuit Court. On August 23, 1978, attorneys for Travelers and Western Bank sent a telegram to the State Treasurer and made claim to the garnished funds as surety and as a secured party, respectively. Before the proceeds of the warrant were paid to plaintiffs, the Department of Treasury stopped payment and notified plaintiffs’ counsel of the action and sought to have the circuit court resolve the conflicting claims to the funds.

Defendants submit that the trial court erred in ruling that service of the writ of garnishment upon the State of Michigan prior to Macomb’s acknowledgment of default precluded defendants’ claim of right to the funds held by the state. As defendants point out, we are not presented here with the usual situation in which the primary lending bank (Western) and payment and performance bond surety (Travelers) are competing for state-held funds reserved for progress payments to laborers, suppliers, etc. Western and Travelers are unusually aligned on the same side in this action due to an indemnity agreement running from Travelers to Western. Travelers’ claim of right to the contested funds is based upon its indemnity agreement with Macomb, a surety’s right of subrogation and the builder’s trust fund act, MCL 570.151; MSA 26.331.

I

On July 22, 1977, Macomb entered into a general agreement of indemnity with Travelers which states in part:

"[I]n the event of the abandonment, forfeiture or breach of the contract, or the breach of any bond given in connection therewith, or the failure, neglect or refusal to pay for labor or materials used in the prosecution of the contract, to take possession of the work under the contract and, at the expense of the Indemnitors, to complete the contract, or cause, or consent, to the completion thereof. The Indemnitors hereby assign, transfer, and set over to the Company (to be effective as of the date of any such bond, but only in the event of a default as aforesaid), all of their rights under the contract, including their right, title and interest in and to all subcontracts let in connection therewith; all machinery, plant, equipment, tools and materials which shall be upon the site of the work or elsewhere for the purposes of the contract, including all materials ordered for the contract, and any and all sums due under the contract at the time of such abandonment, forfeiture, breach, failure, neglect or refusal, or which may thereafter become due * * (Emphasis added.)

Defendants rely heavily on the above emphasized language in supporting their position that since, upon default, the assignment of contract rights relates back to the date of execution of the bond, Travelers’ claim predates the date of the writ of garnishment and thus entitles them to superiority. It is equally clear from the contractual language that default, requiring completion of the project at Travelers’ expense, triggers Travelers’ right to claim, by assignment, Macomb’s rights to those funds in the hands of the state. As of that date, as to any monies retained or coming due, Travelers would prevail over any competing creditor subsequently seeking payment whose interest attached after September 29, 1977, the date on which Travelers issued its payment and performance bonds.

Plaintiff Dubey’s rights to the contested funds attached July 31, 1978, the date of service of the writ of garnishment. Mary v Lewis, 399 Mich 401; 249 NW2d 102 (1976). The question then becomes whether, due to Macomb’s default, Travelers had incurred expenses in the completion of the project as of July 31, 1978; if so, by virtue of the relation back clause of the indemnification agreement, Travelers’ interest in the funds held by the state must be elevated over plaintiffs claim. The date of default is important as it fixes the time at which the surety was obligated to perform; it is the assumption of financial obligation in completing the construction project that entitles the surety to receive those funds owed by the state.

A number of cases, including those cited by defendants, impel the conclusion that Travelers, as performance bond surety, had no contractual rights to the funds subject to the turnover order granted plaintiff because, as of the date of plaintiff’s writ of garnishment, Travelers was not obligated to perform under its surety contract. E.g., R C Mahon Co v R S Knapp Co, 268 Mich 67, 70; 255 NW 453 (1934), Gray v Travelers Indemnity Co, 280 F2d 549 (CA 9, 1960). If in fact, Travelers had become so obligated, then either under the terms of its indemnification agreement with Ma-comb or under equitable subrogation principles its rights would be superior to plaintiffs’. The right to subrogation accrues upon payment of the debt. "The doctrine of relation back cannot be used by the subrogee for the purpose of recovering money paid to persons having no notice, in satisfaction of just claims, prior to the maturing of the right to subrogation.” 83 CJS, Subrogation, § 14, p 613.

Defendants argue that Macomb was in default prior to the date of the writ of garnishment and that the trial court erred in accepting the date of Macomb’s formal declaration of default as the key date for establishing the rights of the parties. We agree with the trial court that under the facts of this case the date of default and thus the date that Travelers became obligated to perform as surety was August 28, 1978.

The precise time of default is determined by the facts in each case. In order for the surety to prevail over competing creditors it is necessary that the contractor be in default as a matter of fact, and that the surety be obligated under its bond to perform; no formal declaration of default is required. Travelers Indemnity Co v West Georgia National Bank, 387 F Supp 1090 (ND Ga, 1974). In First Alabama Bank of Birmingham v Hartford Accident & Indemnity Co, Inc, 430 F Supp 907 (ND Ala, 1977), the court held that the completing surety was entitled to the funds it received from the owner even though the contractor was still working and had not acknowledged default. Despite the absence of formal acknowledgment, the contractor had requested that the surety assume payments to unpaid subcontractors and suppliers. This procedure was agreed upon at a meeting between contractor, surety, and owner. The surety performed in accordance with this agreement and therefore was the proper recipient of project monies from the owner since the contractor was in default as a matter of fact.

The Fifth Circuit Court of Appeals reached a different result in Fidelity & Deposit Co of Maryland v Scott Brothers Construction Co, 461 F2d 640 (CA 5, 1972). The contractor’s formal declaration of default was deemed the operative fact due to the absence of evidence of actual default prior to formal notice. Although Scott deals with the more common dispute between surety and lending bank, the reasoning is equally applicable here in establishing priority among competing claimants:

"The District Court, in resolving the issue, correctly perceived and followed the distinction between, on the one hand, retainages and earned but unpaid progress payments and, on the other hand, progress payments that already have been paid before the contractor defaults. As to the former category of contract funds a surety enjoys a claim superior to that of an assignee bank, whereas the bank’s rights take priority of the surety’s as to contract payments made before default. (Citations omitted.)
"The distinction reflects the theory that a surety 'is not only a subrogee of the contractor, * * * but also a subrogee of the [Owner] and entitled to any rights the [owner] has to the retained funds.’ Trinity Universal [Ins Co v United States, 382 F2d 317 (CA 5, 1967)], supra, 382 F2d at 320. 'But for the surety’s completion of the work, the obligee on the bond, be he owner or prime contractor, would have been entitled to apply the funds against the cost of completion. It is the surety’s performance which frees the funds, and, * * * the surety is entitled to them.’ American Fire & Cas Co v First National City Bank of NY, 411 F2d 755, 758 (1st Cir, 1969). See also Lloyd Wood Construction Co v Con-Serv, Inc, 285 Ala 409, 232 So 2d 649, 654-655 (1970). Any payments made by the owner prior to default, however, are attributable to the contractor’s performance, not the surety’s, and the owner, to whom the surety becomes subrogated, may not rightfully withhold such payments so long as the contractor is in material compliance with its obligations under the contract. American Cas Co of Reading, Pa v Line Materials Indus, 332 F2d 393, 395 (10th Cir, 1964).
"What matters, however, is that F & D had no obligation to begin performance under its bond with Scott, and thus no rights to contract payments as subrogee, until Scott either stated that it could no longer continue on the job or until Scott materially failed in its performance.” 461 F2d 642-643. (Emphasis added.)

In the instant case we have no evidence of actual default, i.e., payments made by the surety, prior to the date of formal acknowledgment; therefore, as in Scott, supra, the date of notice is the proper date in determining rights of the parties. A letter from Mr. John Woodford, Director of the Michigan Department of State Highways and Transportation, dated August 25, 1978, addressed to the manager of the surety division of Travelers and to the president of Macomb, signalled the date of default as August 18, 1978, and called upon Travelers as surety to complete the highway construction project in accordance with the terms of its bonded undertaking. The letter further stated that all contract funds were being held available for the surety for completion of the job. The affidavit of Mr. Richard Seaman, assistant manager of Travelers’ surety division, noted that as of February 23, 1979, a substantial sum was spent by Travelers in the process of completing the South-field Freeway project and that there remained a sum of $226,179.83 to be paid to Travelers upon full and final completion of the project. We find no indication that any of the listed expenses were incurred prior to July 31, 1978. Since the right to subrogation accrues on payment of the debt, Travelers’ argument is without merit.

II

Now, we address the argument that payment was not made to plaintiffs herein due to the fact that the state stopped payment on the warrant after being advised of the present contest. Even accepting defendants’ argument that payment could not be effected until the warrant was honored by plaintiffs, the prevention resulted solely from defendants’ intervention. Their own conduct in bringing about the stop payment order cannot now serve as the basis for a successful claim to the challenged funds. The fact remains that plaintiffs garnished the funds held by the state, thereby fixing the point in time of the legal claim to those particular funds, and that the state issued a warrant establishing the validity of the claim and authorizing payment. Defendants’ interference with the procedure wherein plaintiffs would certainly have honored the warrant in satisfaction of the debt has no effect on the above analysis pertaining to accrual of subrogation rights and rights under the indemnification agreement. When Ma-comb acknowledged default and Travelers was subsequently called upon to perform its bonded obligation, it was entitled under both its indemnification agreement and principles of subrogation to all retainages and sums to be allocated for future progress payments. Proceeds of the warrant issued to satisfy debts incurred prior to that time cannot now provide the source of payment to Travelers.

Ill

We also reject defendants’ argument that by virtue of the builders’ trust fund act, MCL 570.151; MSA 26.331, the payments due Macomb were encumbered by a trust for the benefit of the laborers and materialmen who were and are being paid by Travelers. Although defendants correctly state the purpose of the act, the Supreme Court has clearly ruled that it is inapplicable to public, as opposed to private, construction projects. National Bank of Detroit v Eames & Brown, Inc, 396 Mich 611; 242 NW2d 412 (1976). Although the Sixth Circuit Court of Appeals recently ruled to the contrary in Parker v Klochko Equipment Rental Co, Inc, 590 F2d 649 (CA 6, 1979), we believe Judge Lively’s dissent correctly sets forth the law of Michigan:

"This court decided but one question in General Insurance Company [of America v Lamar Corp, 482 F2d 856 (CA 6, 1973)] — that the Michigan builders’ trust act does not apply to public projects. This decision was based upon a careful analysis of Michigan law which I consider sound.
"The majority opinion states, 'Michigan courts have not been called upon to rule upon the question of the applicability of the statute in the context of a public construction project.’ This may be literally true. However, in National Bank of Detroit v Eames & Brown, Inc, 396 Mich 611, 242 NW2d 412 (1976), the Supreme Court of Michigan quoted Judge McCree’s language from General Insurance Company in describing the purpose of the builders’ trust fund act. 396 Mich at 619-20, 242 NW2d at 415-16. The Michigan court, after summarizing several of its own holdings then stated:
" 'The purpose of the Act is to create a trust fund for the benefit of materialmen and others under private construction contracts. 396 Mich at 622, 242 NW2d at 417.’ (Emphasis added.)
"I can perceive no valid reason or authority for departing from a holding of this court subsequently approved by the highest court of Michigan in a matter clearly controlled by Michigan law. I would affirm the judgment of the district court insofar as it holds that the Michigan builders’ trust fund act has no application to public construction projects.” 590 F2d 654.

IV

With respect to intervening defendant Western Bank’s claim to the contested funds, we find that under the priority provisions of the Uniform Commercial Code its interest is superior to that of plaintiffs. Although the record does not include the security agreement between Western and Macomb, a copy of the filed financing statement indicates Western’s interest in all property and assets of Macomb, including accounts. The money held by the state, reserved for progress payments to Ma-comb, clearly falls within the UCC’s definition of an account:

" 'Account’ means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper whether or not it has been earned by performance.” MCL 440.9106; MSA 19.9106.

Defendants contend that since Western Bank perfected its security interest prior to the date that plaintiffs achieved lien creditor status by judgment and writ of garnishment Western should prevail. MCL 440.9301; MSA 19.9301 provides in part:

"(1) Except as otherwise provided in subsection (2), an unperfected security interest is subordinate to the rights of:
"(b) A person who becomes a lien creditor before the security interest is perfected.”

Conversely, one who becomes a lien creditor after another’s security interest is perfected is subordinate to that perfected security interest. Rocky Mountain Ass’n of Credit Management v Hessler Mfg Co, 553 P2d 840 (Colo App, 1976), Walker Bank & Trust Co v Smith, 501 P2d 639 (Nev, 1972). A recent amendment to the code, though not in effect at the time this dispute arose, confirms defendant’s position:

"A person who becomes a lien creditor while a security interest is perfected takes subject to the security interest only to the extent that it secures advances made before he becomes a lien creditor or within 45 days thereafter or made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien.” MCL 440.9301(4); MSA 19.9301(4). (Emphasis added.)

Western Bank perfected its security interest in Macomb’s accounts approximately four months prior to the date of plaintiff’s service of the writ of garnishment.

Whether Macomb’s default occurred before or after service of the writ is immaterial. It is correctly argued that until default is a reality the secured party cannot claim possession or otherwise assert rights in the collateral securing the loan, MCL 440.9501; MSA 19.9501; however, another creditor who subsequently perfects an interest in the same collateral takes that security subject to the interest of the first secured party. When Ma-comb did default in its payments to Western Bank, Western appropriately pursued its remedy under the UCC by seeking discharge of Macomb’s obligation via the collateral (accounts). To deprive Western of its priority status would contravene the express provisions and purpose of the Uniform Commercial Code. Plaintiffs’ interest in Macomb’s accounts is second in time and right to that of Western Bank; therefore, the order granting turnover of the funds to plaintiffs is reversed.

Reversed.

       "Lien Creditor” is defined at MCL 440.9301(3); MSA 19.9301(3):
      "A 'lien creditor’ means a creditor who has acquired a lien on the property involved by attachment, levy or the like * *

       This version of the UCC became effective January 1, 1979. The 1964 version reads as follows:
      "(b) A person who becomes a lien creditor without knowledge of the security interest and before it is perfected.”
      Our inquiry is not affected by the amended portion of this provision.

       "Except as provided in subsection (1) [dealing with filing of continuation statements], transactions validly entered into before the effective date of this amendatory act and the rights, duties and interests flowing from them remain valid thereafter and may be terminated, completed, consummated, or enforced as required or permitted under the provisions of the uniform commercial code repealed or amended by the provisions of this amendatory act.” MCL 440.11102; MSA 19.11102.
      In any event, Western had completed its advancement of funds as of May, 1978, two months before plaintiffs became lien creditors.