Genesee Merchants Bank & Trust Co. v. St. Paul Fire & Marine Ins. Co., Docket No. 14136--7

• Decision Date: 24 May 1973
• Docket Number: No. 2,Docket No. 14136--7,2
• Citation: 47 Mich.App. 401,209 N.W.2d 605
• Parties: GENESEE MERCHANTS BANK & TRUST CO. Plaintiff-Appellee, v. ST. PAUL FIRE & MARINE INSURANCE CO., Defendant and Third-Party Plaintiff-Appellant, v. Richard G. PERRY et al., Third-Party Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 605

209 N.W.2d 605

47 Mich.App. 401

GENESEE MERCHANTS BANK & TRUST CO. Plaintiff-Appellee, v. ST. PAUL FIRE & MARINE INSURANCE CO., Defendant and Third-Party Plaintiff-Appellant, v. Richard G. PERRY et al., Third-Party Defendants-Appellees.

Docket No. 14136--7.

Court of Appeals of Michigan, Division No. 2.

May 24, 1973.

Released for Publication Aug. 6, 1973.

Carl F. Schier, Jenkins, Fortescue, Miller & Nystrom, Lathrup Village, for St. Paul Fire and Marine Ins. Co.

Kittredge R. Klapp, Flint, for Genesee B&T.

Thomas L. Gadola, Flint, for Perry and McVey.

Before QUINN, P.J., and BRONSON and VanVALKENBURG, ^* JJ.

VanVALKENGURG, Judge.

The primary issue in this appeal concerns whether the provisions of 1966 P.A. 216 should be incorporated into a bond issued by defendant insurance company on December 2, 1966. The bond in question was the statutorily required bond necessary to acquire a motor vehicle dealer's license. Defendants Perry and McVey were motor vehicle dealers doing business as Perry Mobile Homes, Inc. Perry Mobile Homes, Inc., secured from defendant insurance company a bond in the amount of $300 in accordance with M.C.L.A. § 257.248; M.S.A. § 9.1948 as it read prior to its amendment by 1966 P.A. 216. The bond as issued was for the 1967 license. The purpose of the bond was to protect the designated class of persons from fraud and misrepresentation on the part of the dealer.

At some time after March 10, 1967, an employee of Perry Mobile Homes, Inc., defrauded company a bond in the amount of $3000 commercial paper. Plaintiff bank obtained a judgment against Perry Mobile Homes in the amount of $28,656.82 and sought to recover $10,000 from defendant insurance company. ¹ Plaintiff bank asserted that recovery should be in the amount of $10,000 since 1966 P.A. 216 required a bond in that amount. ² Defendant insurance company took the position that the bond was subject to the provisions of M.C.L.A. § 257.248, Supra, as it read prior to the amendatory language of 1966 P.A. 216; ³ and, therefore, the bank had no right to recover, or, in the alternative, that recovery was limited to $3000. The trial court granted judgment in favor of plaintiff and against defendant insurance company in the amount of $10,000.

The crux of the question is whether the bond as issued was controlled by the amendatory language of 1966 P.A. 216 or whether it was controlled by the provisions of the statute prior to the amendment. Plaintiff bank asserts that the newamendments control since the act provided in § 2 that: 'This act shall become effective for dealers licenses issued for the calendar year 1967 and thereafter'. For a clear understanding of the situation, a review of the chronology and history of 1966 P.A. 216, as found in the 1966 Senate Journal, pp. 910, 929, 2089--2090, 2306, and 2324 and the 1966 House Journal pp. 3271--3274 and 3342--3344, is necessary.

Senate Bill No. 861, being the genesis of the eventual 1966 P.A. 216, was introduced with the provision that the bond be in the amount of $20,000. When the bill was reported out of committee it was substantially as introduced; however, the committee of the whole reinstated the original bond amount of $3000 and inserted the above quoted § 2. Eventually the bill was passed by a 21 to 13 vote. The record is completely barren of any motion for immediate effect.

The House amended the amount required for the bond to $10,000, and the bill was brought for a third reading on June 10, 1966. The first attempt at passage resulted in a defeat by a vote of 47 to 49. Later the same day a motion for reconsideration was made, and approval was obtained by a vote of 56 to 39. Again there was no effort made to secure immediate effect.

The Senate concurred in the amendment as to the $10,000 figure and the bill was sent to the Governor by way of the regular processes; final approval being on July 11, 1966. For some unknown reason, although the act spoke of being effective for all dealer licenses issued for 1967, 1966 P.A. 216 was not given immediate effect.

Const.1963, art. 4, § 27 provides:

'No act shall take effect until the expiration of 90 days from the end of the session at which it was passed, but the legislature may give immediate effect to acts by a two-thirds vote of the members elected to and serving in each house.'

The language is clear and unequivocal. Unless two-thirds of the members of each house of the Legislature vote to give an act immediate effect, that act, or any part thereof, will not become effective until 90 days after the end of the session in which it was passed. In the instant case, since 1966 P.A. 216 was not given immediate effect and since the session ended on December 9, 1966, 1966 P.A. 216 did not become effective until March 10, 1967.

The rule with respect to the status of a statute between the time of its passage and the time it becomes effective is succinctly stated in 22 Callaghan's Michigan Civil Jurisprudence, Statutes, § 168, p. 549:

'A statute passed to take effect at a future day is to be understood as speaking from the time it goes into operation, and not from the date of its passage. The intervening period is allowed to enable the public to become acquainted with its provisions; but until it becomes operative as a law, they cannot be compelled to govern their actions by it.'

The holding in People v. Righthouse, 10 Cal.2d 86, 88, 72 P.2d 867--868 (1937), is also instructive:

'It has been uniformly held in this state that a statute has no force whatever until it goes into effect pursuant to the law relating to legislative enactments. It speaks from the date it takes effect and not before. Until that time it is not a law and has no force for any purpose. So where the Legislature passes an act to amend a statute then existing the latter remains in full force during the time between the passage of the amendatory act and the time when it becomes effective.' (Citations omitted.)

Also, see Rice v. Ruddiman, 10 Mich. 125 (1862); Price v. Hopkin, 13 Mich. 318 (1865); Wohlscheid v. Bergrath, 46 Mich. 46, 8 N.W. 548 (1881); Weaver v. Haney, 32 Mich.App. 424, 188 N.W.2d 905 (1971). ⁴

The bond executed on December 2, 1966 fulfilled the requirements of the law in force at that time. The bond properly limited its protection to $3000; said protection running to an actual purchaser, but not financing institutions. ⁵ The fact that the statute as amended required a larger bond, with protection running to a larger class of individuals, is immaterial. As stated in Hochevar v. Maryland Casualty Co., 114 F.2d 948, 952 (CA 6, 1940):

'The scope of a surety's undertaking is measured by the bond and statutes applicable when it is executed; there can be no expansion by subsequent statutory...