Department of Treasury v. Psychological Resources, Inc.

• Citation: 147 Mich.App. 140,383 N.W.2d 144
• Decision Date: 21 March 1986
• Docket Number: Docket No. 76860
• Parties: State of Michigan, DEPARTMENT OF TREASURY, Revenue Division, Plaintiff-Appellee, v. PSYCHOLOGICAL RESOURCES, INC., Defendant-Appellant.
• Court: Court of Appeal of Michigan (US)

Page 144

383 N.W.2d 144

147 Mich.App. 140

State of Michigan, DEPARTMENT OF TREASURY, Revenue Division, Plaintiff-Appellee, v. PSYCHOLOGICAL RESOURCES, INC., Defendant-Appellant.

Docket No. 76860.

Court of Appeals of Michigan.

Submitted Feb. 5, 1985.

Decided Oct. 11, 1985.

Released for Publication March 21, 1986.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and E. David Brockman and Paul L. Bricker, Asst. Attys. Gen., for plaintiff-appellee.

Rickel, Earle & Wokas by Donald L. Bramlage, Jr., Detroit, for defendant-appellant.

Before BRONSON, P.J., and KELLY and LATREILLE ^*, JJ.

PER CURIAM.

Defendant appeals as of right from a February 21, 1984, order of the Oakland County Circuit Court which compelled defendant to produce certain corporate tax records for examination pursuant to 1941 P.A. 122, Sec. 3, as amended by 1980 P.A. 162 and 1981 P.A. 138; M.C.L. Sec. 205.3(a); M.S.A. Sec. 7.657(3)(a). Defendant objects to plaintiff's use of defendant's former bookkeeper as an assistant to its treasury agents in their examination of defendant's records. We affirm.

Initially, defendant refused to comply with a subpoena duces tecum, issued by plaintiff on November 15, 1983, for production of certain financial records of defendant covering the calendar years 1979-1982, to be delivered to plaintiff's offices for examination. Plaintiff filed an action on January 6, 1984, to enforce its subpoena. A hearing was held on February 1, 1984, in the circuit court. The subsequent order, which is the basis of this appeal, provided that defendant produce the following records for examination on defendant's premises:

"[F]or the calendar years 1979, 1980, 1981 and 1982: general ledger, check register, cash disbursements, cash receipts income records, day book, bank statements, cancelled checks, payroll records, commission payments (1099), employee expense and income records."

The order further stated that defendant's former bookkeeper, Gladys Johnson:

"may assist the treasury agents in their examination of the books, records and papers of the Defendant, by personal access to same on the premises of the Defendant."

Although not clear from the record on appeal, the examination of defendant's records apparently occurred on May 4, 1984, and was conducted by Byrl Claxton, an assistant administrator with the Special Investigation Division of the Michigan Department of Treasury. We assume for purposes of this appeal that Johnson did assist Claxton in his examination, as provided for in the lower court order.

Defendant raised two main objections to plaintiff's subpoena below. First, defendant argued that no ongoing investigation was being conducted by plaintiff concerning defendant, and that such an investigation was a prerequisite to plaintiff's subpoena power under M.C.L. Sec. 205.3(a); M.S.A. Sec. 7.657(3)(a). Defendant has chosen not to pursue this objection on appeal; therefore, we will not further address this issue.

Defendant's second objection to the subpoena below is the sole question on appeal. The specific objection was to plaintiff's intention to permit Johnson to assist treasury agents in their examination of the records. Johnson had embezzled $31,000 from defendant during her employment with defendant as a bookkeeper from April, 1979, to July, 1980. Johnson was prosecuted for embezzlement and convicted of this offense. A second criminal prosecution was brought against Johnson for tax evasion in which she pled guilty to embezzlement and received probation. Plaintiff has indicated that an investigation was commenced involving defendant upon allegations by Johnson that she only embezzled from defendant because "they" had been cheating on "their" taxes. She apparently claimed that the books and records of defendant, if properly shown in relation to each other, would expose and lead to proof of tax fraud by defendant, its officers and shareholders.

Defendant argues on appeal that the lower court erred in entering its order because Johnson is not authorized by statute to assist plaintiff in its examination.

M.C.L. Sec. 205.3(a); M.S.A. Sec. 7.657(3)(a) states in pertinent part:

"The commissioner or any of the duly appointed agents of the commissioner may examine the books, records, and papers touching the matter at issue of any person or taxpayer subject to any tax, unpaid account, or amount the collection of which is charged to the department." (Emphasis supplied.)

Since Johnson is neither a commissioner of the Department of Treasury nor a duly appointed agent of the commissioner, defendant argues that the court erred in allowing her to assist in the examination of defendant's records. To support its position, defendant relies upon the statutory interpretation maxim of "Expressio unius est exclusio alterius", which means that the expression of one thing is the exclusion of another. When certain persons are specified in a statute, an intention to exclude all others from the statute's operation may be inferred. Sebewaing Industries, Inc. v. Sebewaing, 337 Mich. 530, 545, 60 N.W.2d 444 (1953). This maxim, however, is only an aid to interpreting legislative intent. It cannot govern when the legislative intent is opposed to its application. Chesapeake & O R Co v. Public Service Comm, 59 Mich.App. 88, 228 N.W.2d 843 (1975), lv. den. 394 Mich. 818 (1975).

When applied to the instant case, the above-cited maxim does not aid defendant. The primary object of judicial interpretation of statutes is to ascertain and give effect to the intention of the Legislature. Franks v. White Pine Copper Div, Copper Range Co, 122 Mich.App. 177, 183, 332 N.W.2d 447 (1982). When a statute is unambiguous on its face, interpretation and construction of its terms are unnecessary. However, if an ambiguity exists, this Court must give effect to the intention of the Legislature in enacting the statute. Sneath v. Popiolek, 135 Mich.App. 17, 23, 352 N.W.2d 331 (1984).

The language of the statute is the best source for ascertaining the legislative intent. Statutes must be construed according to the ordinary and approved usage of the language. A resort to a dictionary definition is an appropriate method of achieving this result. In re Condemnation of Lands, 133 Mich.App. 207, 211, 349 N.W.2d 261 (1984). The operative word in the statute, with regard to this appeal, is "examine". "The commissioner or any of the duly appointed agents of the commissioner may examine the books * * *." M.C.L. Sec. 205.3(a); M.S.A. Sec. 7.657(3)(a). Webster's Seventh New Collegiate Dictionary (1975) defines "examine" as "a: to inspect closely b: to test the condition of c: to inquire into carefully". Johnson cannot examine defendant's records within the meaning of the statute if she is not the commissioner or a duly appointed agent of the commissioner. However, there is nothing in the statute to prohibit Johnson's presence to aid the agents in their examination.

Expression of the commissioner's or his agents' authority does exclude similar authority on the part of others. Had the court here ordered Johnson to examine the records and report to the commissioner or duly appointed agents, the statute's express intent clearly would have been violated. However, Johnson was not permitted to examine the books, but was only allowed to aid those who did have the authority to examine them.

Even if M.C.L. Sec. 205.3...