Miller v. State, Dept. of Revenue

• Decision Date: 26 June 1969
• Docket Number: Docket No. 4832,No. 1,1
• Citation: 171 N.W.2d 3,18 Mich.App. 145
• Parties: Donald A. MILLER and Geraldine B. Miller, his wife, Plaintiffs-Appellees, v. STATE of Michigan, DEPARTMENT OF REVENUE, Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 3

171 N.W.2d 3

18 Mich.App. 145

Donald A. MILLER and Geraldine B. Miller, his wife, Plaintiffs-Appellees, v. STATE of Michigan, DEPARTMENT OF REVENUE, Defendant-Appellant.

Docket No. 4832.

Court of Appeals of Michigan, Division No. 1.

June 26, 1969.

Released for Publication Oct. 9, 1969.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Richard R. Roesch, Asst. Atty. Gen., Lansing, James B. Saunders, Asst. Atty. Gen., Detroit, for appellant.

Donald A. Miller, McInally, Miller & Penirian, Detroit, for appellees.

Before LESINSKI, C.J., and HOLBROOK and LEVIN, JJ.

HOLBROOK, Judge.

Plaintiffs are parents of a mentally retarded child who was formally committed to the Lapeer State Home and Training School by the Wayne county probate court in January, 1957, and are within the classification of relatives liable for the care and maintenance of their child under the provision of P.A.1965, No. 335 (M.C.L.A. § 330.651 Et seq., Stat.Ann.1965 Cum.Supp. § 14.870(101) Et seq.). Pertinent portions of this act are reprinted in the footnote. ¹ Plaintiff brought this action against the Department of Revenue of the State of Michigan, in the circuit court for Wayne county, claiming that the act was unconstitutional for several reasons and requesting relief from its threatened enforcement.

Both parties moved for a summary judgment stating that there was no issue of fact present in the case and that the matter could be disposed of by ruling on the law. After being furnished thorough briefs by all counsel and hearing arguments, the learned trial judge found the act unconstitutional for several reasons. The State of Michigan appeals.

We need consider here only 2 reasons asserted concerning unconstitutionality of the act. Some of the other aspects of the case are considered in our opinion in the case of State, Revenue Division, Department of Treasury v. Raseman Estate (1969), 18 Mich.App. 91, 170 N.W.2d 503, to which we make reference.

The plaintiffs, in the trial court and here, assert that the reimbursement statute violates the equal protection clauses of our State and Federal Constitutions. In the recent case of Fox v. Michigan Employment Security Commission (1967), 379 Mich. 579, 588, 589, 153 N.W.2d 644, Mr. Justice T. M. KAVANAGH states:

'This Court has held numerous times that the Michigan Const.1908, art. 2, § 1, secures the same right of equal protection as does its counterpart in the Constitution of the United States. Gauthier v. Campbell, Wyant & Cannon Foundry Company (1960), 360 Mich. 510, 514, 104 N.W.2d 182, and cases therein cited. The same provisions in Const.1963, art. 1, §§ 1 and 2, must likewise be held to afford the same rights as the Federal equal protection clause.

'There is no doubt that State legislatures have a broad range of discretion in establishing classifications in the exercise of their powers of regulation. However, the constitutional guarantees of equal protection are interposed against discriminations that are entirely arbitrary. In determining what is within legislative discretion and what is arbitrary, regard must be had for the particular subject of the State legislation. There must be a relation between the classification and the purposes of the act in which it is found. Smith v. Cahoon, Sheriff (1931), 283 U.S. 553, 566, 51 S.Ct. 582, 587, 75 L.Ed. 1264, 1274; Morey v. Doud (1957), 354 U.S. 457, 465, 77 S.Ct. 1344, 1350, 1 L.Ed.2d 1485, 1491; Beauty Built Construction Corporation v. City of Warren (1965), 375 Mich. 229, 134 N.W.2d 214; Palmer Park Theatre Company v. City of Highland Park (1961), 362 Mich. 326, 106 N.W.2d 845.

In the case of People v. Chapman (1942), 301 Mich. 584, 4 N.W.2d 18, a statute of this State was challenged as unconstitutionally denying the defendant therein equal protection of the laws. Justice Starr, writing for the Court, stated (pp. 597, 598, 4 N.W.2d p. 24):

'It is well recognized that the legislature may make classifications of persons, provided such classifications are based on substantial distinctions and are in accord with the aims sought to be achieved. (Citing cases.) However, such classification must be neither arbitrary nor capricious, but must rest on reasonable and justifiable foundations. In Haynes v. Lapeer Circuit Judge ((1918), 201 Mich. 138, p. 141, 166 N.W. 938, p. 940, L.R.A. 1918D, 233), the rule is stated:

"'Legislation which, in carrying out a public purpose for the common good, is limited by reasonable and justifiable differentiation to a distinct type or class of persons is not for that reason unconstitutional because class legislation, if germane to the object of the enactment And made uniform 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 subclassification, it comes within the constitutional prohibition against class legislation."

'See, also, Davidow v. Wadsworth Manfg. Co. (1920), 211 Mich. 90, 97--102, 178 N.W. 776, 12 A.L.R. 605; Peninsular Stove Co. v. Burton (1922), 220 Mich. 284, 286, 189 N.W. 880; Smith v. Wayne Probate Judge (1925), 231 Mich. 409, 204 N.W. 140, 40 A.L.R. 515.' (Emphasis supplied.)

The legislature, under the provisions of the act, endeavored to require those of the class liable to reimburse the State in accord with their financial ability to do so. By making the Net taxable income as shown by their Federal income tax return the criteria for the amount of reimbursement in all cases (insofar as maximum payment is concerned) the legislature has actually permitted an opposite result. Our Federal income tax law has several legal economic incentive provisions exempting actual income of a taxpayer from being included in net taxable Income inter alia, all interest income from municipal bonds, 1/2 of income profit derived from long term capital gains, and partial depreciation credit and income depletion allowances for those in certain businesses. The inclusion of such actual income not reflected in net taxable income would require many of sufficient ability to reimburse the maximum amount set forth in the act even though their Net taxable income may be less than $5,000. It is obvious that any reimbursement statute such as the one under consideration, to be uniform, should not exclude relatives who have actual ability to reimburse. A formula should not be tied to Net taxable income shown by a Federal tax return that permits those of greater financial ability to reimburse the state less than others of lesser financial ability in the same class. It permits those more able to pay to reimburse the State less or possibly nothing at all.

We find that P.A.1965, No. 335 does not accomplish the purpose of the act, I.e., to fairly and uniformly charge those of sufficient ability to reimburse the State in a reasonable manner. Many illustrations of this truth can be made but we deem them unnecessary. Net taxable income under the federal income tax law does not properly reveal the financial ability of the relative to be charged to reimburse the State for the costs of maintaining the patient.

We conclude that the act is arbitrary, unreasonable and in conflict with the equal protection clause of our constitution and therefore is invalid.

The plaintiffs also assert that the act is unconstitutional in that there is lack of due process in its operation.

The legislature has provided for liability, total or partial, in a formula based on the Net taxable income of a relative as shown by his or her Federal income tax return. The law determining Net taxable income of any individual is controlled by the Congress of the United States. Thus the legislature has delegated to the Congress the ultimate determination of the amount to be reimbursed by each such relative.

In Auditor General v. Hall (1942), 300 Mich. 215, 224, 1 N.W.2d 516, 519, 139 A.L.R. 1022, Mr. Justice BUTZEL stated:

'In far more traditional forms of action both criminal and civil, length of sentences and the amount of damages may vary materially before different judges and juries. As long as there is not an abuse of discretion and a judge remains within the limits of the law, we find there is due process. In Re Brewster Street Housing Site (1939), 291 Mich. 313, 340, 289 N.W. 493, we approved of the following citation from Cincinnati, W. & Z.R. Co. v. Commissioners of Clinton County (1852), 1 Ohio St. 77 (88, 89):

"The true distinction, therefore, is, between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made."

In the case of Dearborn Independent, Inc. v. City of Dearborn (1951), 331 Mich. 447, on pp. 454, 455, 49 N.W.2d 370, on p. 376, it is stated as follows:

'The requirement in said statute, above italicized, of admission by the postoffice department as a second-class mail matter would make the validity of the publication of legal notices depend upon the future as well as present regulations of the United States postoffice department. In that respect it offends against the constitution of our state (1908), art. 5, § 1, which, among other things, provides:

"The legislative power of the state of Michigan is vested in a senate and house of representatives; * * *'

'The act in question unlawfully attempts to delegate to the United States postoffice department the determination of the qualifications of a newspaper to publish legal notices. See King v. Concordia Fire Ins. Co. (1905), 140 Mich. 258, 103 N.W. 616, 6 Ann.Cas. 87, (syllabus 5) as follows:

"The Michigan standard policy law of 1881 (Act No. 149), providing for an insurance commission and authorizing it to prescribe a standard...