Sears v. Department of Treasury

• Decision Date: 05 December 1974
• Docket Number: Docket No. 18790,No. 2,2
• Citation: 226 N.W.2d 63,57 Mich.App. 218
• Parties: James William SEARS, Plaintiff-Appellant, v. DEPARTMENT OF TREASURY, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 63

226 N.W.2d 63

57 Mich.App. 218

James William SEARS, Plaintiff-Appellant, v. DEPARTMENT OF TREASURY, Defendant-Appellee.

Docket No. 18790.

Court of Appeals of Michigan, Division No. 2.

Dec. 5, 1974.

Released for Publication Feb. 20, 1975.

Stuart J. Dunnings, Jr., Dunnings & Gibson, Lansing, for plaintiff-appellant.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Richard R. Roesch, John W. Jackson, Asst. Attys. Gen., for defendant-appellee.

Before QUINN, P.J., and McGREGOR and O'HARA,* JJ.

McGREGOR, Judge.

Plaintiff brings this action for a writ of mandamus to compel the Michigan Department of Treasury either to return to plaintiff money seized pursuant to a jeopardy sales tax assessment, or to compel the State Board of Tax Appeals to hold the hearing required by M.C.L.A. § 205.7; M.S.A. § 7.657(7).

On April 26, 1973, plaintiff was arrested and charged with violation of the Michigan Controlled Substances Act, delivery of marijuana, M.C.L.A. § 335.341(1)(c); M.S.A. § 18.1070(41)(1)(c). Plaintiff was arraigned on this charge and released on bail.

On May 29, 1973, plaintiff was stopped by a Michigan state trooper for speeding. The officer directed plaintiff to accompany him back to the squad car; once there, the trooper instructed plaintiff to remain in the police car and, without advising the plaintiff of his rights or seeking permission to search plaintiff's car, the trooper returned to plaintiff's vehicle, searched under the front seat, and found a pistol. Plaintiff was then arrested, charged with carrying a concealed weapon, and taken to the Shiawassee County jail. At the jail, plaintiff was searched and $1,187.03 was removed from his person.

On May 30, 1973, plaintiff was served with a notice that $1,187.03 had been seized by the Department of Treasury for the State of Michigan and that the plaintiff had been assessed a jeopardy sales tax in that amount. The plaintiff had no knowledge as to how the department of revenue learned of the money he was carrying on his person at the time of his arrest, the day prior to the assessment.

On June 13, 1973, a preliminary examination was held pertaining to the concealed weapons charge. At the hearing, the trial court found that the search and seizure was unlawful and the arrest invalid, and therefore, dismissed the charge against the plaintiff.

Plaintiff filed an appeal with the State Board of Tax Appeals on June 26, 1973, pursuant to M.C.L.A. § 205.7; M.S.A. § 7.657(7). Under this statute, plaintiff is entitled to a hearing before the State Board of Tax Appeals to determine the validity of the jeopardy sales tax assessment within 60 days from the filing of the tax department's answer.

The basis for the jeopardy assessment warrant was information received from police officers, that plaintiff had sold marijuana on May 26, 1973, and an inference from plaintiff's prior convictions for sale of marijuana that he was engaged in the sale of marijuana, upon which no sales tax had been paid. The State Board of Tax Appeals informed plaintiff that his appeal had been bocketed and was one of almost 200 cases pending at that time. The board stated further that it was not obligated to conduct a hearing within 60 days.

On October 1, 1973, plaintiff filed a motion for order to show cause in Ingham County Circuit Court, to order the return of the funds seized, based on substantially the same argument as that raised in this Court. A motion for accelerated judgment of dismissal against plaintiff was granted in that cause on October 25, 1973.

Plaintiff then commenced this action for mandamus seeking to compel the defendant to return the money confiscated, contending that his right to due process was violated by the board's failure to conduct a hearing within 60 days. Plaintiff also alleges that he is entitled to the return of the money seized, since it is the fruit of an illegal search and seizure, contrary to his constitutional rights. On February 4, 1974, a panel of this Court issued a show cause order, requiring defendant to respond and show cause why plaintiff should not be granted the relief requested.

The procedures for protesting an allegedly illegal jeopardy tax assessment and warrant for sales taxes are set forth in Craig v. Detroit Police Department, 49 Mich.App. 599, 212 N.W.2d 235 (1973), lv. granted, 391 Mich. 785. In Craig, which both parties have cited as controlling, the Court listed three alternative methods of protest, as follows:

'(1) suit is in the Court of Claims, which generally has exclusive jurisdiction of claims against state agencies;

'(2) an action for mandamus directed to state officers commenced in the Court of Appeals after appropriate petitions before proper administrative officers have been rejected;

'(3) complaint filed in circuit court alleging unconstitutionality of a statute on its face.' ¹

Following the jeopardy tax assessment, plaintiff filed an appeal with the State Board of Tax Appeals, pursuant to M.C.L.A. § 205.7; M.S.A. § 7.657(7), which provides as follows:

'Any person, firm or corporation aggrieved by any assessment, decision, or order of the department of revenue may pursue any appropriate procedure provided by law for the judicial review of the issues involved or have an appeal from such assessment, decision or order to the state board of tax appeals hereby created at any time within 30 days after such assessment, decision or order. Such appeal shall be perfected by filing a sworn statement of the essential facts involved with the state board of tax appeals and serving a copy thereof upon the commissioner or any agent within the department of revenue designated by the commissioner as the agent of the department upon whom service of notice of appeal may be made and filing proof of such service with the state board of tax appeals, and depositing with the board as security for costs 2 per centum of the amount in controversy: Provided, however, That in no event shall said deposit be less than $25.00 or more than $100.00, said deposit to be considered as costs in such appeal. The board shall forthwith deposit same with the state treasurer, taking a receipt therefor. Such service may be made by the appellant or his attorney, either personally or by registered mail with return receipt demanded.

'Within 15 days following such service, the department shall answer the statement of appeal so filed. The state board of tax appeals, following the filing of such answer, shall have jurisdiction to review such assessment, decision or order and both the appellant and the department shall have the right to swear witnesses and to be represented by counsel before said state board of tax appeals. Said hearing shall be heard within 60 days after filing of said answer, as in a court not of record and the legal rules of evidence prevailing in the circuit courts of this state shall be enforced. The burden of proof in any appeal from any assessment, decision...