Dukesherer Farms, Inc. v. Ball

• Decision Date: 06 January 1977
• Docket Number: Docket No. 26699
• Citation: 251 N.W.2d 278,73 Mich.App. 212
• Parties: DUKESHERER FARMS, INC., a Michigan Corporation, for itself and on behalf of all Cherry Producers in the State of Michigan, Plaintiff-Appellant, v. B. Dale BALL, Director of the Department of Agriculture, and the Michigan Cherry Promotion and Development Committee, Defendants-Appellees, and Michigan Association of Cherry Producers, Intervening Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 278

251 N.W.2d 278

73 Mich.App. 212

DUKESHERER FARMS, INC., a Michigan Corporation, for itself and on behalf of all Cherry Producers in the State of Michigan, Plaintiff-Appellant, v. B. Dale BALL, Director of the Department of Agriculture, and the Michigan Cherry Promotion and Development Committee, Defendants-Appellees and Michigan Association of Cherry Producers, Intervening Defendant-Appellee.

Docket No. 26699.

Court of Appeals of Michigan.

Jan. 6, 1977.

Released for Publication March 18, 1977.

Warner, Norcross & Judd by Ernest M. Sharpe, Grand Rapids, for plaintiff-appellant.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Harry G. Iwasko, Asst. Atty. Gen., Susan A. Harris (Dept. Ag.), Asst. Atty. Gen., for defendants-appellees.

Foster, Swift & Collins by James A. White, Lansing, for intervening defendant-appellee.

Before R. B. BURNS, P. J., and KELLY and HUGHES, ^* JJ.

KELLY, Judge.

Plaintiff appeals on behalf of itself and all other cherry producers in the State of Michigan. This action originally began in 1972 when plaintiff filed a class action seeking a permanent injunction against actions by the defendants in carrying out the Michigan Cherry Promotion and Development Program (hereinafter referred to as "Program") instituted pursuant to the Agricultural Commodities Marketing Act (hereinafter referred to as the "Act"), M.C.L.A. § 290.651, et seq.; M.S.A. § 12.94(21), et seq. The complaint further sought a declaration that the Act and Program are unconstitutional.

After the Michigan Association of Cherry Producers was permitted to intervene as a defendant, the circuit court granted defendants' and intervening defendant's motions for accelerated judgment on the ground that plaintiff's petition was untimely filed. This Court affirmed in Dukesherer Farms, Inc. v. Director of the Department of Agriculture, 53 Mich.App. 489, 220 N.W.2d 46 (1974). The Supreme Court reversed and remanded the case to the circuit court for consideration of the constitutional challenges. 393 Mich. 758, 223 N.W.2d 294 (1974).

In the circuit court plaintiff moved for summary judgment on the ground that the Act is unconstitutional on its face because it improperly delegates general legislative and taxing powers, and fails to state distinctly the tax it assessed, all in violation of the Michigan Constitution. The circuit court denied plaintiff's motion and granted summary judgment for defendants, holding the Act constitutional.

The Act provides the procedure to establish marketing programs for a variety of agricultural products. A marketing program is defined as:

"a program established by order of the director pursuant to this act, prescribing rules and regulations governing the marketing for processing, distributing, selling, or handling in any manner of any agricultural commodity produced in this state during any specified period and Section 3 of the Act specifies what the contents of the programs may contain:

which he determines would be in the public interest." Section 2.

"(a) Provisions for establishing advertising and promotional programs.

"(b) Provisions for establishing market development programs.

"(c) Provisions for establishing and supporting supplemental research programs designed to improve the market acceptability of the specific commodity and contribute to the effectiveness of the program.

"(d) Provisions for development and dissemination of market information.

"(e) Provision for contracting with organizations, agencies or individuals for carrying out any of the above activities.

"(f) Provisions for:

"(1) Establishing standards for quality, condition or size for agricultural commodities sold as fresh products for resale or processing and standards for pack and/or container for commodities sold for use as fresh products.

"(2) Inspection and grading of the fresh commodity in accordance with the grading standards so established.

"(g) Provision for determining the existence and extent of any surplus in any marketing period, for any commodity or product, or of any grade, size or quality thereof, and providing for handling and equitably sharing the cost of such surplus handling among the producers of the commodity. Before provisions under this paragraph are included in any marketing program, particular attention shall be given to determining that Michigan producers affected by the provisions produce a sufficient proportion of the product covered by the provisions for the program to be effective in the particular market toward which the provisions would be applicable.

"(h) Provision for payment for all usable products purchased from producers according to established grades.

"(i) Provision for exemption of nonparticipating producers."

The funding for any and all such programs established is through special assessments collected "from each producer of any marketable agricultural commodity * * * directly affected by a marketing program", M.C.L.A. § 290.655; M.S.A. § 12.94(25)(a). These assessments, as stated in the Act, are to be used to defray program and administrative costs. Furthermore, each marketing program must specify the maximum assessment needed to cover the program's expenses, M.C.L.A. § 290.655; M.S.A. § 12.94(25)(b).

Section 8(a) of the Act provides:

"Any moneys collected pursuant to this act shall not be state funds and shall be deposited in a bank or other depository in this state, allocated to the marketing program under which they are collected, and disbursed only for the necessary expenses incurred with respect to each such separate marketing program, in accordance with the rules established under the program."

And, Section 9 contains the refund procedure in the case of excess funds at the close of any marketing season.

Sections 10 through 12 of the Act detail the procedure to be followed in the institution of a marketing program. The Director of the Michigan Department of Agriculture (defendant) must receive a petition signed by a certain percentage of producers of the commodity calling for adoption of a particular marketing program. The director must then notice up and hold a public hearing on the proposed program.

Within 45 days of the close of the hearing the director must issue a decision based on his or her findings and recommend approval or disapproval of the proposed findings. This recommendation must contain the text of the proposed program and be supported by evidence obtained at the hearing.

If the director recommends adoption of a program, a referendum of affected producers and processors is required within 45 days. The program becomes effective:

"(a) If 662/3% or more by number of those voting representing 51% or more of "(b) If 51% or more by number of those voting representing 662/3% or more of the volume of the affected commodity produced by those voting assent to the proposal." M.C.L.A. § 290.661; M.S.A. § 12.94(31).

the volume of the affected commodity produced by those voting assent to the proposal. (or)

Section 15 of the Act requires that adopted marketing programs include a definition of terms, statement of purpose of the program, maximum rate of assessment, method of collection, nominating procedure, qualifications, representation and size of the committee and other necessary provisions.

All parties to this case agree that the Michigan Cherry Promotion and Development Program presently under attack meets all of the requirements specified in M.C.L.A. § 290.665; M.S.A. § 12.94(35). It provides for an assessment of $3.75 per ton for tart cherries; $3.00 per ton for sweet cherries; $1.25 per ton for both tart and sweet cherries when sold for juice purposes. The program provides the assessments be collected by the cherry processors and remitted to the Michigan Cherry Promotion and Development Committee. The provisions of the program, including the assessments, received the approval of the requisite number of cherry producers in a referendum conducted in March, 1972. The program was put into effect and operated until this suit was filed.

I TAX OR ASSESSMENT

The key to determining the constitutionality of the Marketing Act is to decide whether the funds collected in support of the cherry program are "assessments" or "taxes". Knott v. City of Flint, 363 Mich. 483, 109 N.W.2d 908 (1961).

The Marketing Act establishes the statutory basis for the cherry program. The funding provision, M.C.L.A. § 290.655; M.S.A. § 12.94(25) states:

"(a) Assessments shall be collected from each producer of any marketable agricultural commodity produced in this state and directly affected by a marketing program issued for the commodity to defray all program and administrative costs . . . .

"(b) Each program shall specify the maximum assessment to be collected to cover program and administrative costs.

"(c) For convenience the processors, distributors or handlers of the commodity may be required to collect and remit producer assessments. Processors, distributors or handlers paying the assessments for any producer may deduct the amount from any moneys which they owe to the producers."

Taxes are imposed for a public purpose, not the private purposes motivating assessments; taxation is a means of raising revenue for the general benefit of the public as a whole. People ex rel. the Detroit & Howell R. Co. v. Salem Township Board, 20 Mich. 452, 574 (1870), Knott, supra.

On the other hand:

"Special assessments * * * are made upon the assumption that a portion of the community is to be specially and peculiarly benefited, in the enhancement of the value of property peculiarly situated as regards a contemplated expenditure of public funds; and, in addition to the general levy, they demand that special contributions, in consideration of the special benefit, shall be made by the persons receiving it." Fluckey v. City of Plymouth, 358 Mich. 447, 453, 100 N.W.2d 486, 489 (1960), relying on 2 Cooley, Taxation (3d Ed.), pp. 1153, 1154.

Plaintiff-appellant cites Miller v....