State Treasurer v. Schuster
| Decision Date | 21 January 1998 |
| Docket Number | Docket No. 105686,No. 18,18 |
| Citation | 456 Mich. 408,572 N.W.2d 628 |
| Parties | , 123 Ed. Law Rep. 342 STATE TREASURER, Plaintiff-Appellant, v. Jon N. SCHUSTER and Jane C. Schuster, Defendants-Appellees. Calendar |
| Court | Michigan Supreme Court |
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, E. David Brockman and Daniel M. Levy, Assistant Attorneys General, Detroit, for Plaintiff-Appellant.
Dickinson, Wright, Moon, Van Dusen & Freeman by Lawrence G. Campbell and Robert W. Powell, Detroit, and Karen Bush Schneider, Okemos, for Defendants-Appellees.
White, Przybylowicz, Schneider & Baird, P.C. by Karen Bush Schneider, Okemos, amicus curiae, for Michigan Education Association.
Appellant State Treasurer presents two questions of first impression for this Court. First, whether the Public School Employees Retirement Act, M.C.L. § 38.1301 et seq.; M.S.A. § 15.893(111) et seq., nonassignment provision, which protects a public employee's pension from legal process, has priority over the State Correctional Facility Reimbursement Act, M.C.L. § 800.401 et seq.; M.S.A. § 28.1701 et seq., reimbursement provision that specifically includes "pension benefits" as "assets" that may be subject to a prisoner's statutory obligation to reimburse the state for his incarceration costs. 1
The Court of Appeals found that the pension act's nonassignment provision prevailed over the reimbursement act's reimbursement provision and that the pension funds at issue were insulated from creditors even after dispensation to the fund recipient.
We reverse the Court of Appeals and hold that the reimbursement act has priority over the pension act in that the nonassignment provision does not insulate a public school employee's pension from the reimbursement provision.
On April 10, 1991, codefendant Jon Schuster was sentenced to two and one-half to fifteen years in prison, following his February 14, 1991, conviction of criminal sexual conduct. 2 Plaintiff brought this action under the State Correctional Facility Reimbursement Act, seeking reimbursement for the costs of incarcerating Schuster in a state correctional facility. Those costs totaled approximately $22,000 for the first sixteen months of incarceration, and would continue to accrue during the remainder of Schuster's incarceration.
The state claimed the only potential source of reimbursement, or "asset" as defined by the reimbursement act, 3 was Schuster's retirement allowance. Schuster was receiving in excess of $2,000 a month from his pension. The monthly pension checks were sent to Schuster's home address and were deposited in a bank account that was held jointly by Schuster and his wife under a power of attorney arrangement.
Pursuant to the reimbursement act, the state sought to obtain ninety percent of the deposited pension. 4 Schuster attacked the legality of the state's action, claiming that the pension funds in question were entirely protected from collection by legal process under the nonassignment provision of the pension act.
The circuit court judge held that Schuster's pension was an asset subject to the reimbursement scheme and could, therefore, be considered in evaluating Schuster's ability to reimburse the state for the costs of his incarceration, even though Schuster's pension was, in fact, his only asset. The circuit court further found that the state could attach these pension payments after they were paid to Schuster. Upon motion, the circuit court conducted two days of hearings 5 regarding Schuster's "assets" and his legal and moral obligations to his wife and dependents. On April 23, 1993, the judge ordered Schuster to pay fifty percent, rather than the petitioned ninety percent, of his pension monies, or $1,000 a month, to the state pursuant to the reimbursement act. 6 The court entered a final order to that effect on August 11, 1993, and later denied defendants' motion for reconsideration.
The Court of Appeals reversed the circuit court's order and opinion, and held that the nonassignment provisions of the pension act had priority over the reimbursement act. The Court of Appeals further held that the pension funds continued to be shielded from creditors even after payments were made to the fund beneficiary, in this case Schuster's wife.
We granted leave to appeal to decide whether the reimbursement act subjects Schuster's pension to reimbursement for the costs of his incarceration despite the pension act's nonassignment provision.
Resolution of this matter requires this Court to examine an apparent conflict between two legislative enactments.
The State Correctional Facility Reimbursement Act provision at issue was originally enacted in 1935 as part of the Prison Reimbursement Act. The basic purpose of the act was to ensure that prisoners shoulder the burdensome cost of their incarceration, to the extent possible, rather than law-abiding taxpayers. In 1984, the act was amended and renamed the State Correctional Facility Reimbursement Act, with the same intent to "provide procedures for securing reimbursement to the state of the expenses incurred by the state for the cost of care of certain prisoners in state correctional facilities...." 7 As amended, the reimbursement act contained the following sweeping definition of a prisoner's "assets" subject to the act:
(a) "Assets" means property, tangible or intangible, real or personal, belonging to or due a prisoner or former prisoner including income or payments to such prisoner from social security, worker's compensation, veteran's compensation, pension benefits, previously earned salary or wages, bonuses, annuities, retirement benefits, or from any other source whatsoever, but does not include any of the following:
(i) The homestead of the prisoner up to $50,000.00 in value.
(ii) Money received by the prisoner from the state as settlement of a claim against the department from the prisoner.
(iii) A money judgment received by the prisoner from the state as a result of a civil action in which the department was named defendant and found to be liable.
(iv) Money saved by the prisoner form wages and bonuses paid the prisoner while he or she was confined to a state correctional facility. [M.C.L. § 800.401a; M.S.A. § 28.1701(1) (emphasis added).]
According to the plain language above, the Legislature, in 1984, decided to subject all pension payments to the reimbursement scheme specifically, and without exception. Moreover, the Legislature declined to include pension payments in the list of express statutory exceptions to the reimbursement act, which was revised by 1996 P.A. 286. M.C.L. § 800.401a(a)(i), (ii); M.S.A. § 28.1701(1)(a)(i),(ii).
Nonetheless, Schuster claims that his pension payments are not subject to the reimbursement act. Indeed, he maintains that the nonassignment provision of the pension act has priority.
The Public School Employees Retirement Act was created in 1945 to establish and govern the pensions of public school employees. 8 Such pensions are expressly insulated from creditor attack through "legal process" by the following:
Except as otherwise provided in this section, a retirement allowance, an optional benefit, or any other benefit accrued or accruing to a person under this act, the reserves created by this act, and the money, investments, or income of those reserves are exempt from state, county, municipal, or other local tax and are not subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law. The right to a retirement allowance, an optional benefit, or any other benefit accrued or accruing to a person under this act is unassignable, except as specifically provided in this act. [M.C.L. § 38.1346(1); M.S.A. § 15.893(156)(1) (emphasis added).]
In 1991, the Legislature amended this provision to specifically subject pension payments to alimony, child support orders, and eligible domestic relations orders. 9 The Legislature has not, however, expressly subjected pensions to the reimbursement provisions.
Given this apparent conflict between the State Correctional Facility Reimbursement Act and the Public School Employees Retirement Act, this Court is asked to resolve the relative priority of the two enactments and whether the reimbursement act subjects Schuster's pension payments to reimbursement for incarceration costs, regardless of their source.
The Court of Appeals resolved this conflict in favor of the pension act, finding Schuster's pension payments were entirely insulated from creditors and the reimbursement provision . 10 The Court awarded the pension act priority status because it found, as between the two statutes, that it was the more specific and was the most recently amended. We find this reasoning to be unpersuasive in this case. An application of the argument that priority rests with the most recently enacted or amended statute would, in this case, belittle the very serious inquiry into legislative intent that this task demands. As both statutes have been revised several times without reference to the other, reliance on the statutory construction rule that the most recent amendment controls would ultimately result in inconsistent determinations of relative priority over time.
Moreover, any inquiry into relative recency of amendments should include only pertinent or relevant amendments. In this case, both statutes have been revised several times and for reasons unrelated to the issues at hand. If our inquiry, however, is limited to relevant statutory changes, it would appear that the reimbursement act controls as the most recently amended with regard to the provisions at issue. While the act's predecessor, the Prison Reimbursement Act, was originally enacted in 1935, ten years before the pension act, the Legislature significantly revised the reimbursement act in 1984 P.A. 282, and for the first time specifically...
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