People v. Hock Shop, Inc., No. 245777 (MI 6/18/2004)
| Decision Date | 18 June 2004 |
| Docket Number | No. 245777.,245777. |
| Parties | PEOPLE OF THE STATE OF MICHIGAN, Plaintiff-Appellant, v. HOCK SHOP, INC., Defendant-Appellee. |
| Court | Supreme Court of Michigan |
Appeal from St. Clair Circuit Court, LC No. 02-001040-AR.
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Mark E. Blumer, Assistant Attorney General, for the people.
Fletcher Galica Clark Tomlinson & Fealko, P.C. (by Gary A. Fletcher and John D. Monaghan), for the defendant. Port Huron.
Before: Cavanagh, P.J., and Gage and Zahra, JJ.
Defendant corporation was charged with two counts of sale of a firearm and ammunition to a felon, in violation of MCL 750.224f and MCL 750.223(4). The district court dismissed the charges and the circuit court affirmed the dismissal. The prosecution now appeals to this Court by leave granted. We affirm.
The issue presented in this case is solely a legal one and presents an issue of first impression. It was conceded at the preliminary examination that defendant's employee sold the firearm and ammunition to a felon and did so knowingly. The issue in dispute is whether a corporate employer can be held vicariously liable under the act for the criminal acts of its employees committed during the course of their employment.
There is no controversy concerning the facts in this case. In January 2001, defendant was the subject of an undercover investigation conducted by the Attorney General and the Michigan State Police concerning the illegal sale of firearms to convicted felons. On January 18, 2001, Ernesto Doxtader, a convicted felon, entered defendant's store with a female undercover Michigan State Police officer. Doxtader expressed interest in buying a 9 mm semiautomatic rifle, but when he told the sales clerk that he had a felony conviction, the sales clerk informed him that the conviction disqualified him as a buyer. Doxtader then asked the clerk if his friend could buy the gun in her name and the sales clerk said that she could do so. The undercover officer filled out the application and was approved. Doxtader paid cash for the weapon and some appropriate ammunition and left the store with the items in his possession.
On June 19, 2001, defendant was charged with two counts of knowingly selling a firearm and ammunition to a felon in violation of MCL 750.224f and MCL 750.223(4). In lieu of testimony, the parties agreed that the case would be decided on the basis of the police report, a videotape of the gun sale to Doxtader, and an affidavit of defendant's corporate president stating that the corporation's policies were to train employees thoroughly in regard to the applicable laws, to mandate compliance with all state and federal laws, and to strictly forbid illegal sales on penalty of immediate discharge. After finding that a corporation was not a "person" under MCL 750.223, the district court refused to bind defendant over on the charges. The prosecution moved for reconsideration, pointing out that both the Penal Code and the Code of Criminal Procedure include "corporation" in the definition of "person." However, the court refused to impose vicarious liability and denied the motion.
The prosecution appealed the decision to the circuit court. In a written opinion issued November 7, 2002, the court noted that the Penal Code states that a "person" includes a corporation "unless a contrary intention appears." The court essentially found that because MCL 750.223 requires that the firearm be "knowingly" sold to a felon, and does not include a provision imposing corporate vicarious liability, the language of the statute indicated that the Legislature did not intend that the corporation be held liable for the acts of its agent. Accordingly, the court concluded that the district court did not abuse its discretion in refusing to bind over defendant and it affirmed the district court's decision. The prosecution moved for reconsideration, arguing that the court erred in employing an abuse of discretion review standard and that a review de novo standard applied to questions of statutory interpretation. In an order entered December 12, 2002, the court granted reconsideration, but concluded that the application of a review de novo standard did not change its analysis, stating
"[T]he interpretation and application of statutes is a question of law that is reviewed de novo." People v Webb, 458 Mich 265, 274; 580 NW2d 884 (1998). Where statutory language is clear and unambiguous, judicial construction is precluded. People v Pitts, 216 Mich App 229, 232; 548 NW2d 688 (1996).
We will first briefly address the argument concerning whether defendant is a person capable of incurring liability under the statute in question.
MCL 750.223 provides in relevant part:
(3) A seller shall not sell a firearm or ammunition to a person if the seller knows that either of the following circumstances exists:
* * *
(b) The person [as a convicted felon] is prohibited under section 224f from possessing, using, transporting, selling, purchasing, carrying, shipping, receiving, or distributing a firearm.
(4) A person who violates subsection (3) is guilty of a felony, punishable by imprisonment for not more than 10 years, or by a fine of not more than $5,000.00, or both.
"Seller" is defined in MCL 750.222(g) as "a person who sells, furnishes, loans, or gives a pistol to another person." Under the general provisions of the Penal Code, MCL 750.10, "person" includes corporations, copartnerships, and associations "unless a contrary intention appears . . . ." There is no provision in MCL 750.223 exempting corporations from the definition of "person." Therefore, under the plain language of the applicable statutes, defendant cannot escape liability simply because it is a corporation. Equally obvious, however, we note that the fact that defendant is a legal person does not automatically make it criminally liable for the acts of other persons.
There is no allegation in this case that the criminal act was committed by the corporation itself. Further, there is no allegation that the illegal gun sale was made pursuant to any policies of the defendant corporation. See, e.g., People v Gen Dynamics Land Systems, Inc, 175 Mich App 701; 438 NW2d 359 (1989) (). Instead, the prosecution alleges that defendant should be held criminally liable where its employee's misconduct was within the course of his employment and was undertaken for the sole benefit of defendant, even though it was contrary to defendant's policies. Consequently, in this case, even though the corporation is a person, any liability that may be imposed arises only through the doctrine of respondeat superior. See Cox v Flint Bd of Hosp Managers, 467 Mich 1, 11; 651 NW2d 356 (2002).
There are numerous civil cases holding that a corporation can be held vicariously liable for the tortious acts of its agents. However, there are far fewer cases addressing the extent of corporate respondeat superior liability in the context of criminal activity. Under vicarious liability, the principal "' is only liable because the law creates a practical identity with his [agents], so that he is held to have done what they have done.'" Id., quoting Smith v Webster, 23 Mich 298, 300 (1871). It is quite clear that while courts have been fairly liberal in allowing the imposition of vicarious liability in the context of tort actions, see Upjohn Co v New Hampshire Ins Co, 438 Mich 197; 476 NW2d 392 (1991), such liability has been substantially limited in the criminal context.
In 1 Restatement Agency, 2d, § 217D, 474, it is acknowledged that "[a] principal may be subject to penalties enforced under the rules of the criminal law, for acts done by a servant or other agent." However, the comments on that section make clear that in the absence of an express statutory provision imposing such liability, it will generally not be found to exist where the statute requires a specific criminal intent.1 See also LaFave & Scott, Criminal Law, § 32, pp 224-225.
Generally, where the agent is a manager, officer, or board member of the corporation, the agent's criminal intent can be imputed to the corporation itself. See People v American Medical Ctrs of Michigan, Ltd, 118 Mich App 135; 324 NW2d 782 (1982). In American Medical Ctrs, the corporate defendant was found criminally liable for Medicaid fraud where the president of the corporation authorized fraudulent billings. In this case, however, there is no evidence suggesting that any corporate officer was involved in the illegal sale. Thus, the Court in American Medical Ctrs did not resolve the key issue in this case, namely, whether a corporate defendant can be held vicariously, criminally liable for the acts of employees who are not high management officials.
In this case, we must determine the intent of the Legislature. Statutory language should be construed reasonably, keeping in mind the purpose of the act. People v Spann, 250 Mich App 527, 530; 655 NW2d 251 (2002). Nothing should be read into a statute that is not within the manifest intention of the Legislature as derived from the language of the statute itself. Id. at 532. This Court may not speculate regarding the probable intent of the Legislature beyond the language expressed in the statute. Pohutski v City of...
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