Sprik v. Regents of University of Michigan

• Decision Date: 28 September 1972
• Docket Number: Docket No. 11671,No. 2,2
• Citation: 43 Mich.App. 178,204 N.W.2d 62
• Parties: Dale R. SPRIK et al., Plaintiffs-Appellants, v. REGENTS OF the UNIVERSITY OF MICHIGAN, a constitutional corporation, Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 62

204 N.W.2d 62

43 Mich.App. 178

Dale R. SPRIK et al., Plaintiffs-Appellants, v. REGENTS OF the UNIVERSITY OF MICHIGAN, a constitutional corporation, Defendants-Appellees.

Docket No. 11671.

Court of Appeals of Michigan, Division No. 2.

Sept. 28, 1972.

Leave to Appeal Granted Dec. 6, 1972.

Released for Publication Feb. 7, 1973.

Arthur E. Carpenter, Douvan, Harrington & Carpenter, Ann Arbor, for plaintiffs-appellants.

Roderick K. Daane, Gen. Counsel, Regents of the University of Michigan, Ann Arbor, for defendants-appellees.

Before LEVIN, P. J., and HOLBROOK and BRONSON, JJ.

BRONSON, Judge.

Defendant Regents maintain approximately 1,300 family units for housing married students on their North Campus. Some residents have children, some do not. In 1970, some 386 children from these units attended the Ann Arbor public schools. Plaintiffs are members of a class representing both the residents of this housing with children attending the Ann Arbor public schools and the residents who do not have children attending those schools. The lease agreements between the Regents and members of the plaintiffs' class read, in part, as follows:

'The University reserves the right to revise rental rates upward or downward during the term of this lease. In the event of a rent adjustment, the Lessee will be given a sixty-day notice of the increase prior to implementation.'

On May 15, 1970, the defendant passed a resolution providing for a rent increase of $6 per month per unit 'of married student housing'. ¹ This sum was to be part of a payment by the University to the Ann Arbor School District in lieu of taxes since university property is tax exempt. Some married student housing residents have children attending school in the Ann Arbor School District, others do not. Residents were informed to this increase by letter of May 25, 1970. The increase became effective August 1, 1970, and has been collected since.

Plaintiffs began this class action on March 5, 1971, in the Court of Claims. They requested a refund of the rental sum paid to defendant Regents for transmittal to the Ann Arbor Public Schools. Plaintiffs claimed that the defendant had no authority to collect this money or to make payments to the Ann Arbor School District.

Both parties moved for summary judgment agreeing there was no genuine issue of fact but disagreeing on the conclusion of law. The trial judge granted defendant's motion for summary judgment holding that defendant had authority to collect from the plaintiffs and to distribute the money to the Ann Arbor School District as a payment in lieu of taxes. Plaintiffs appeal this determination.

On appeal we are bound by the record as stipulated to by the parties which prevents this Court from adding to or supplementing the facts.

Plaintiffs' first contention is that defendant's general counsel could not represent the Regents in the Court of Claims as an unpaid Special Assistant Attorney General. When the hearing on this suit began, plaintiffs moved to strike the pleading submitted by defendant's general counsel, arguing that only the Attorney General or one of his assistants may represent the State's interest before the Court of Claims. M.C.L.A. § 600.6416; M.S.A. § 27A.6416.

Defendant argues that its general counsel was appointed a Special Assistant Attorney General to try this matter in the Court of Claims and that the trial judge correctly denied plaintiffs' motion.

The Court of Claims has exclusive jurisdiction over claims against the State. M.C.L.A. § 600.6419; M.S.A. § 27A.6419. As the University of Michigan is a State institution, this includes claims against the Regents. Fox v. Board of Regents of the University of Michigan, 375 Mich. 238, 134 N.W.2d 146 (1965). The Attorney General is the exclusive representive of the state before the Court of Claims. M.C.L.A. § 600.6416; M.S.A. § 27A.6416. Further, the Attorney General has the power to appoint assistants as he deems necessary. These assistants may appear before any court with powers and duties of the Attorney General subject to his orders and directions. Defendant's general counsel took the requisite oath and was appointed a Special Assistant Attorney General. There is nothing in the statute indicating that an assistant may not be appointed to perform only a single function. There is also no requirement that an assistant be paid by the Attorney General. 1 OAG, 1956, No. 2561, p. 583 (October 8, 1956). See, also, 1 OAG, 1955, No. 2249, p. 565 (October 25, 1955). Defendant's general counsel was legally qualified to practice before the Court of Claims.

Plaintiffs argue that defendant has no power to make payments to the Ann Arbor School District and that the rent increase is an illegal tax. Defendant, on the other hand, argues that it has merely raised the rent in compliance with the terms of the lease and that plaintiffs have not been granted a voice in the management of these premises. Central to this controversy is whether this increased monthly payment is a tax or a rent.

A tax is an enforced proportioned burden, charge, or contribution from persons and property, levied by the State, by virtue of its sovereignty, for the support of government in discharge of its various functions and duties for all public needs. Cooper, Wells & Co. v. St. Joseph, 232 Mich. 255, 205 N.W. 86 (1925); Employment Security Commission v. Patt, 4 Mich.App. 228, 144 N.W.2d 663 (1966). Rent is the return which the tenant makes to the landlord for use of the premises. Munson v. Menominee County, 371 Mich. 504, 124 N.W.2d 246 (1963); Marsh v. Butterworth, 4 Mich. 575 (1857). The two differ in that a tax is an enforced payment to a governmental unit for the public good which is uncertain as to amount and time of payment. 52 C.J.S. Landlord and Tenant § 463, pp. 347-348. The payment exacted here is being made to the University in its status as a landlord, is certain as to time and amount, and is being used to make a voluntary payment to a governmental unit. The governmental unit which will ultimately receive the money, the Ann Arbor School District, cannot enforce payment. The essence of this payment is that it is in return for the right to remain on the premises. The defendant is correct in its assertion that this exaction is merely an increase in rent. The fact that it is being used for a specific purpose does not change the nature of the payment. Munson v. Menominee County, Supra.

The lease in question allows the defendant to raise rent provided a 60-day notice is given prior to implementation. Defendant complied with this provision. Plaintiffs concede this but argue that rent may be raised only for legitimate purposes connected with housing occupied by the plaintiff class. They contend that this increase was not within the parties' contemplation and violates public policy. Lease provisions which violate public policy are void. Skutt v. Grand Rapids, 275 Mich. 258, 266 N.W. 344 (1936); Feldman v. Stein Building & Lumber Co., 6 Mich.App. 180, 148 N.W.2d 544 (1967). Defendant argues that the increase is valid under the lease's terms and that the lease does not grant plaintiffs a voice in managing University funds.

It is settled that courts attempt to effectuate the intent of the parties to a lease as it is set forth in the agreement. Detroit Trust Co. v. Howenstein, 273 Mich. 309, 262 N.W. 920 (1935). It is clear from the lease's language and the surrounding circumstances that defendant may raise rents for any legal purpose. ²

It is true that words used in a lease should be given a reasonable construction, if possible, which will not give one party an unreasonable advantage over the other. Bortz v. Norris, 248 Mich. 247, 226 N.W. 860 (1929). This is especially important, where, as here, the parties do not have equal bargaining power. The general rule does not mean that this Court must accept the lessee's theory of what the lease means. McComb v. McComb, 9 Mich.App. 70, 155 N.W.2d 860 (1967). We do not agree with plaintiffs that the increase in question is for an illegal purpose.

The University of Michigan is a corporation established by the Constitution of this State. Const.1963, art. 8, § 5. The Board of Regents has general supervisory control over the University and controls and directs all expenditures from University funds. Const.1963, art. 8, § 5. It is well established that this section gives the Regents the entire control and management of University affairs, including the management of property and expenditure of funds, to the exclusion of all other departments of the State. Weinberg v. Regents of the University of Michigan, 97 Mich. 246, 56 N.W. 605 (1893). As the Legislature may not encroach on the Regents' power, once State funds are appropriated to the University, only the Regents may direct how they are spent. Sterling v. Regents of University of Michigan, 110 Mich. 369, 68 N.W. 253 (1896); Board of Regents of the University of Michigan v. Auditor General, 167 Mich. 444, 132 N.W. 1037 (1911). The Legislature may put certain conditions on money it appropriates for the University which are binding if the Regents accept the money. These conditions may not interfere with the Regents' management of the University and may be applied only to State appropriated funds. Regents v. Auditor General, Supra; State Board of Agriculture v. Auditor General, 180 Mich. 349, 147 N.W. 529 (1914); State Board of Agriculture v. Auditor General, 226 Mich. 417, 197 N.W. 160 (1924). As the funds in question are not State appropriations, the defendant may spend the money for any object which is not subversive of its purpose. Bauer v. State Board of Agriculture, 164 Mich. 415, 129 N.W. 713 (1911). We may interfere with University control only if the proposed expenditure violates our Constitution or public policy.

Prior to 1969, the University operated a primary and secondary school which was attended by children of many Ann Arbor residents. This has been phased...