Wayne County v. State Treasurer, Docket Nos. 50415

• Decision Date: 09 April 1981
• Docket Number: Docket Nos. 50415,50416
• Citation: 306 N.W.2d 468,105 Mich.App. 249
• Parties: COUNTY OF WAYNE, a body corporate and politic, Plaintiff, v. STATE TREASURER and the Department of Treasury, State of Michigan, Defendants.
• Court: Court of Appeal of Michigan — District of US

Page 468

306 N.W.2d 468

105 Mich.App. 249

COUNTY OF WAYNE, a body corporate and politic, Plaintiff, v. STATE TREASURER and the Department of Treasury, State of Michigan, Defendants.

Docket Nos. 50415, 50416.

Court of Appeals of Michigan.

April 9, 1981.

Rehearing Denied June 11, 1981.

Released for Publication June 16, 1981.

Robert G. Schuch, George H. Cross, Detroit, for plaintiff.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Regina Ann King, Asst. Atty. Gen., for defendants.

Before BRONSON, P.J., and J. H. GILLIS and CYNAR, JJ.

BRONSON, Presiding Judge.

This is an original action for mandamus to compel the State Treasurer to distribute revenues collected and due under the Single Business Tax Act. M.C.L. § 208.1 et seq.; M.S.A. § 7.558(1) et seq. Plaintiff alleged that the amount of $11,856,233.90 became due it on February 1, 1980, and that the Department of Treasury refused to make the payment, claiming that plaintiff owed the state $7,917,363.19 as of April, 1979. According to defendants, this amount represented plaintiff's unpaid proportionate share of mental health care costs for its residents as provided by M.C.L. § 330.1302; M.S.A. § 14.800(302) and M.C.L. § 330.1304; M.S.A. § 14.800(304). ¹

Plaintiff contends that on numerous occasions it has complained to the Department of Mental Health concerning the accuracy of its residency determinations and billing amounts. Although plaintiff claims to have appropriated funds for the payment of its mental health care obligations, it refuses to pay until it receives a satisfactory accounting determining its liability.

The issue which we must resolve is whether plaintiff is entitled to a writ of mandamus compelling defendants to make payment of the withheld funds. Generally, mandamus lies only where there exists a clear legal duty incumbent upon the defendant and a clear legal right in the plaintiff to the discharge of such duty. The legal duty must usually be a specific act of a ministerial nature, although occasionally mandamus will lie though the act sought to be compelled is discretionary. Campbell v. Judges' Retirement Board, 378 Mich. 169, 182-183, 143 N.W.2d 755 (1966), Board of County Road Comm'rs. of the County of Oakland v. State Highway Comm., 79 Mich.App. 505, 508-509, 261 N.W.2d 329 (1977), lv. den. 402 Mich. 907 (1978). The State Treasurer, as a state officer, is subject to a mandamus action initiated in the Court of Appeals. Deneweth v. State Treasurer, 32 Mich.App. 439, 189 N.W.2d 10 (1971), aff'd. 385 Mich. 762 (1971).

Plaintiff relies on M.C.L. § 208.135; M.S.A. § 7.558(135) for the proposition that defendants have no discretion to withhold payments collected under the Single Business Tax Act. This provision provides:

"The department of treasury shall pay to each county by February 1 of each year, following the year the amount was calculated, an amount of money equal to the product of the state equalized value based upon inventory as certified by the department of treasury under section 132 times the county property tax rate for the county as reported to the department of treasury under section 138. The payments shall begin in 1977 for the previous year."

The use of the word "shall" in a statute connotes a mandatory duty or requirement. Twp. of Southfield v. Drainage Board for Twelve Towns Relief Drains, 357 Mich. 59, 76, 97 N.W.2d 821 (1959), Sears v. Dep't. of Treasury, 57 Mich.App. 218, 224, 226 N.W.2d 63 (1974). See, also, OAG 5206, p. 183 (August 4, 1977), interpreting a companion section of the Single Business Tax Act and finding that the Department of Treasury must make the required payments and has no authority to delay them.

Defendants' argument that the State Treasurer has the authority to set off single business tax revenues against amounts allegedly due the state also rests on statutory authority:

"The auditor general (now the state treasurer) shall state all accounts, and examine and liquidate the claims of all persons against the state, in cases provided for by law, and give his warrant therefor * * *." M.C.L. § 13.17; M.S.A. § 3.121.

"He shall also examine, adjust and settle the claims of all persons indebted to the state; and when there shall be any account liquidated, showing any amount to be due to any person, for the payment whereof an appropriation shall have been made by law, he shall draw his warrant on the treasurer therefore." M.C.L. § 13.18; M.S.A. § 3.122.

"No moneys shall be paid out of the state treasury, except on the warrant of the auditor general; and all receipts for money paid to the treasurer, shall be taken to the auditor general, who shall countersign the same, and enter them in the proper book in his office for that purpose, to the credit of the person by whom such payment shall be made, and no such receipt, unless countersigned, shall be evidence of such payment." M.C.L. § 13.19; M.S.A. § 3.123.

Defendants contend that the above statutory provisions implicitly empower the State Treasurer to exercise discretion in the disbursement of funds to protect the various accounts of the state by setting off amounts due the state against amounts owed the state.

This same type of administrative setoff based on implied powers from specific statutory provisions, was attempted in Castro v. Goemaere, 53 Mich.App. 78, 218 N.W.2d 395 (1974), by the Secretary of State. There, Castro was injured in an accident with an uninsured motorist and sought damages from the motor vehicle accident claims fund. Subsequently, Castro, also an uninsured motorist, injured another driver in an automobile accident. The Secretary of State paid the judgment against Castro and informed him that his claim against the fund was being set off in the amount of the judgment against him. This Court refused to allow the setoff, noting provisions in the Motor Vehicle Accident Claims Act which required the Secretary of State to make the payments by use of the word "shall". M.C.L. § 257.1107(1); M.S.A. § 9.2807(1) and M.C.L. § 257.1119; M.S.A. § 9.2819. The Castro Court also noted that the Legislature had explicitly empowered other administrative agencies to set off competing claims, while no such authority was extended to the Secretary of State. Id., fn.4. The Single Business Tax Act provides no right of setoff in the State Treasurer. In accord, Smith v. Lloyd, 56 Mich.App. 576, 224 N.W.2d 670 (1974).

Defendants contend that Castro and Smith are no longer viable precedent in light of Secretary of State v. Greco, 85 Mich.App. 498, 271 N.W.2d 291 (1978), lv. den. 405 Mich. 819 (1979). In Greco, this Court allowed the Secretary of State to compel a judicial setoff of competing claims by proceeding via a writ of garnishment against the State Treasurer where an uninsured motorist on whose behalf the claims fund had paid a judgment subsequently obtained a judgment against another uninsured motorist which the claims fund was obligated to pay. In Greco, both the claim by Greco and against Greco had been reduced to sums certain via judgments.

Defendants' reliance on Greco is misplaced. The key to that decision is that the Secretary of State did not administratively set off the competing judgments but, rather, sought a judicial setoff. Clearly, if defendants received a judgment against plaintiff specifying a sum certain as due for its aliquot share of mental health care costs whether by consent or otherwise they would be entitled to set off the claims. This is not the case, however. Plaintiff disputes the amount of its indebtedness to the state as its share of mental health costs for its residents, and the State Treasurer has never sought to have judicially determined the actual amount due.

Defendants also rely on Sumeracki v. Stack, 269 Mich. 169, 256 N.W. 843 (1934), in which the Supreme Court refused to issue a writ of mandamus to compel the Auditor General to pay over to Wayne County certain motor vehicle weight and gasoline taxes. Sumeracki involved circumstances in which both the State of Michigan and County of Wayne were collecting tax revenues for the other. It was undisputed that the state owed Wayne County $5,104,971.05 for motor vehicle weight taxes and gasoline taxes in the hands of the State Treasurer. However, it was also undisputed that Wayne County had collected and converted to its own use $6,503,841.46 in taxes it had collected on behalf of the state. The Sumeracki holding was premised upon statutory provisions now set forth in M.C.L. § 211.87; M.S.A. § 7.141, which provided that accounts between the state and counties shall be adjusted on the basis of crediting and paying to each the taxes collected by and for each. Defendants do not deny the Court's reliance on the statutory provisions. Instead, they point to the following language appearing in Sumeracki suggesting that equitable considerations were also important to the holding:

"Wayne county, having collected and converted to its own use and benefit $6,503,841.46 belonging to the State, that being an amount of money in excess of the amount owing by the State to the county of Wayne, ought not to be permitted to compel the State to pay...