Hertel v. Racing Com'r, Dept. of Agriculture

• Decision Date: 24 March 1976
• Docket Number: Docket No. 23814
• Parties: John HERTEL, Jr., et al., Plaintiffs, v. RACING COMMISSIONER, DEPARTMENT OF AGRICULTURE, State of Michigan, et al., Defendants.
• Court: Court of Appeal of Michigan — District of US

Page 526

242 N.W.2d 526

68 Mich.App. 191

John HERTEL, Jr., et al., Plaintiffs, v. RACING COMMISSIONER, DEPARTMENT OF AGRICULTURE, State of

Michigan, et al., Defendants.

Docket No. 23814.

Court of Appeals of Michigan.

March 24, 1976.

Released for Publication June 4, 1976.

Eric S. Wilson, Hazel Park, Zolton Ferency, East Lansing, Robert A. Hudson, Detroit, for plaintiffs.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Harry G. Iwasko, Jr., Asst. Atty. Gen., Sherwin M. Birnkrant, City Atty., Pontiac, for defendants.

Virtue & Carpenter, by Maxine Boord Virtue, Ann Arbor, for Authority.

Before KAUFMAN, P.J., and T. M. BURNS and CAVANAGH, JJ.

T. M. BURNS, Judge.

Plaintiffs bring an original mandamus action seeking in effect to have the state funding of the Pontiac Stadium cut off. The complaint requests various forms of relief, including a temporary restraining order, a preliminary injunction, and a permanent injunction against the City of Pontiac and the Pontiac Stadium Authority from spending further appropriations from the Legislature on the stadium; an order of mandamus against state officials from collecting more than 15 percent of wagers; a declaration that the pertinent statutes are unconstitutional; an order that the municipal defendants return appropriations already paid; and other equitable relief. ¹

This is the third legal challenge of the statutes which provide for financial assistance in the construction and maintenance of the Pontiac Stadium.

The conflict involves recent amendments to the state racing law, M.C.L.A. § 431.31 Et seq.; M.S.A. § 18.966(1) Et seq. The racing law provides for the regulation and licensing of racing meets and appropriation of funds derived from racing revenue. Under the act, a portion of racing revenue ('deducts') is returned to local government units for recreational purposes. Originally, § 12 of the racing law required racetrack operators to deduct 15 percent of wagers for operators' commissions and contributions to the state's general fund. The state's share of wagers has in the past been put to a number of purposes, primarily racetrack related. Generally, 20 percent would go to the city or township in which the track was located and differing amounts would go to various 4--H, county and state fair expenses, including purses, awards and maintenance of fairgrounds, particularly as those expenses related to horseracing.

The racing law amendment which is of principal interest in this suit is 1972 P.A. 5. Public Act 5 increased the race meeting licensee's 'deduct' from 15 percent to 16 1/2 percent of total wagers and added a section to the racing law (M.C.L.A. § 431.43(5); M.S.A. § 18.966(13)(5)) ² which provides for sharing a portion of the state's share of wagers with a city or county in or adjoining which a licensed track is located, for the payment of annual rentals on a sports stadium.

Plaintiffs also challenge the validity of various appropriations acts for the payment of rentals on the Pontiac Stadium and 1974 P.A. 13 which provides for the disposition of certain amounts of the 'deduct' deposited in the state's general fund so that such funds may be used to provide financial support for stadium authorities.

Does this Court have jurisdiction to grant the relief requested?

A. STANDING:

Lack of standing to sue has been the stumbling block for past legal challenges of state funding of Pontiac Stadium. In Jones v. Racing Commissioner, 56 Mich.App. 65, 223 N.W.2d 367 (1974), a bettor, a trxpayer, and a state representative sought a declaratory judgment and injunction prohibiting enforcement of the racing law as amended by 1972 P.A. 5. This Court reversed the judgment of the trial court, which found that the act was unconstitutional. We held that the plaintiffs had no standing to sue under GCR 1963, 201.2(3) because there were only three plaintiffs, nor under the common law since there was no showing that any plaintiff would sustain substantial injury or suffer loss.

Under either of the tests of standing recognized in Jones v. Racing Commissioner, plaintiffs herein have standing to challenge the expenditure of state funds under the racing law as amended. At least five of the plaintiffs are residents and property taxpayers. In addition, certain plaintiffs are either racetrack bettors or harness horse breeders who allege direct harm as a result of the racing law amendments. We hold, therefore, that plaintiffs as taxpayers and residents have standing to challenge the expenditure of state funds pursuant to the racing law. As bettors and harness horse breeders, plaintiffs have standing to challenge the legality of § 13 of the racing law as amended.

B. COLLATERAL ESTOPPEL:

Defendants contend that we lack jurisdiction over this action because the various statutes challenged in this suit were held valid by the Wayne County Circuit Court in Hertel v. Governor (WCCC Docket #74--24551--CZ). This argument is without merit as in the action in the lower court there was no adjudication on the merits of the substantive issues raised.

C. MOOTNESS:

Defendants City of Pontiac and City of Pontiac Stadium Authority are correct in their contention that the issue of the validity of the previous appropriations acts ³ challenged by plaintiffs is moot. Public funds paid out of a mistake of law or prior to a judicial determination that the underlying act is unconstitutional may not be recovered because paid out under a claim of right at the time. ⁴ This does not, of course, preclude plaintiffs from challenging the statute under which such appropriations have been made.

D. MANDAMUS AS REMEDY:

The Attorney General contends that mandamus is not available in this case before plaintiffs seek to prevent state officers from obeying, rather than following, the law.

This action, however, has as its thrust the challenge on constitutional grounds of legislative enactments which affect the duties of a state officer. Mandamus actions may be brought to decide constitutional questions of this nature. Deneweth v. State Treasurer, 32 Mich.App. 439, 442, 189 N.W.2d 10 (1971). ⁵

Does M.C.L.A. § 431.43(5); M.S.A. § 18.966(13)(5) deny plaintiffs equal protection of the laws?

Plaintiffs contend that the statute creates a classification which is arbitrary and unreasonable. Under the statutory scheme, they argue, only Wayne, Oakland and Jackson counties could get stadium funding and because of the December 1, 1971 time limit, only the Pontiac and Detroit stadium authorities would have been able to benefit. This, plaintiffs argue, is unreasonable discrimination in favor of southeastern Michigan communities and against all other Michigan communities.

Generally, legislative classification is not invalid if it is reasonable, not arbitrary, rests on some valid distinction, and has a fair and substantial relation to the object of the legislation so that all persons within the class are treated alike. Local No. 1644 v. AFSC & ME, AFL-CIO Oakwood Hospital Corp., 367 Mich. 79, 116 N.W.2d 314 (1962).

The classifications challenged by plaintiffs are based upon geographical location of proposed stadia and time of creation of an authority which has undertaken to construct a stadium.

As for the geographical classification, plaintiffs' argument must fail. Legislation is not constitutionally invalid simply because it affects only one locality within the state. See Tribbett v. Village of Marcellus, 294 Mich. 607, 618, 293 N.W.2d 872 (1940). ⁶ Nor does the scheme of fund distribution under the pre-amendment racing law upset equal protection standards. Rohan v. Detroit Racing Association, 314 Mich. 326, 22 N.W.2d 433 (1946). Plaintiffs' true argument against this legislation concerns its propriety, not its constitutional validity. On that point, plaintiffs' complaint is with the Legislature, not this Court. Wiles v. Liquor Control Commission, 59 Mich.App. 321, 325, 229 N.W.2d 434 (1975).

We do find, however, one part of the statute to be constitutionally defective. Appropriations under the act are limited to stadium authorities which were organized before December 1, 1971. As a practical matter, the class created by the act was narrowed by the time limit to one city--Pontiac, as it maintains the only existing stadium authority which was created by that date. There is nothing wrong per se with the fact that one city alone benefits from legislation. But the act creates a class of several members who are entitled to equal treatment. Class legislation must be

'(U)niform in its operation upon all persons of the class to which it naturally applies; but if it fails to include and affect alike all persons of the same class, and extends immunities or privileges to one portion and denies them to others of like kind, by unreasonable or arbitrary sub-classification, it comes within the constitutional prohibition against class legislation.' Haynes v. Lapeer Circuit Judge, 201 Mich. 138, 141--142, 166 N.W. 938, 940 (1918). ⁷

It is generally recognized that local classifications must be created so as to include future members who might qualify and they may not be based on existing circumstances only so as to exclude members of the class who might qualify in the future. ⁸

No rational basis has been demonstrated for distinguishing between stadium authorities created before December 1, 1971 and those that may be created thereafter. Such time limitation, therefore, is unconstitutional. We find the provision, however, to be severable; ⁹ the remainder of 1972 P.A. 5 is valid.

Does M.C.L.A. § 431.43; M.S.A. § 18.966(13) embrace more than one object in its title in violation of Const.1963, art. IV, § 24?

Plaintiffs argue that the above section of the racing law is unconstitutional because the title of the statute does not notify the Legislature or the public of the object of providing state financing to a locally situated sports stadium.

Certainly, the title of an act need not serve as an index of all the...