State Treasurer v. Schuster

547 N.W.2d 332 (1996) 215 Mich. App. 347

STATE TREASURER, Plaintiff-Appellee,
v.
Jon N. SCHUSTER and Jane C. Schuster, Defendants-Appellants.

Docket No. 168057.

Court of Appeals of Michigan.

Submitted December 6, 1995, at Detroit. Decided February 2, 1996, at 9:25 a.m. Released for Publication April 29, 1996.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, E. David Brockman and Daniel M. Levy, Assistant Attorneys General, for plaintiff.

Dickinson, Wright, Moon, Van Dusen & Freeman by Lawrence G. Campbell, Detroit, for defendants.

Before MICHAEL J. KELLY, P.J., and REILLY and SOSNICK,^[*] JJ.

MICHAEL J. KELLY, Presiding Judge.

Defendants Jon and Jane Schuster, husband and wife, appeal as of right from an order entered on August 11, 1993, by Ingham Circuit Judge Thomas Leo Brown granting in part plaintiff's motion for summary disposition and denying defendants' motion for reconsideration. Plaintiff brought this action under the State Correctional Facility Reimbursement Act (SCFRA), M.C.L. § 800.401 et seq.; M.S.A. § 28.1701 et seq., seeking reimbursement for the cost of defendant Jon Schuster's care while he is incarcerated in a state correctional facility. Plaintiff sought to obtain ninety percent of the proceeds from Jon Schuster's retirement allowance, which he is entitled to under the Public School Employees Retirement Act (PSERA), M.C.L. § 38.1301 et seq.; M.S.A. § 15.893(111) et seq.

On April 10, 1991, defendant Jon Schuster was sentenced to 2½ to 15 years in prison. Plaintiff, State Treasurer, alleged that the state had expended approximately $22,000 for Schuster's care and that it would continue to expend comparable costs during his confinement. Schuster received a retirement allowance of more than $2,000 a month from the Michigan Public School Employees' Retirement System. Defendants each moved for summary disposition under MCR 2.116(C)(8), claiming plaintiff could not "collaterally attack" Jon Schuster's retirement allowance received under the PSERA, because such benefits were not subject to garnishment, attachment, or other process of law. Defendant wife claimed she was not subject to suit under the SCFRA because she was not a prisoner.

In an opinion and order dated April 23, 1993, the court denied both motions. The court held that Jon Schuster's PSERA retirement allowance could be considered in evaluating his ability to pay for the expense of his incarceration, even though he did not have other assets to support his family in lieu of that retirement allowance. Further, the court held that although the retirement allowance was not subject to direct attachment or garnishment, plaintiff could obtain the funds after Jon Schuster received payment. Considering Jane Schuster's situation as "an innocent party to her husband's conduct," the court found "no reason to subject her to any greater hardship ... than is necessary." Thus, the court concluded that plaintiff could obtain only fifty percent of the retirement proceeds. The court also decided that Jane Schuster was a proper party because she had direct control over the receipt and deposit of the allowance proceeds.

In an order entered on June 11, 1993, the court incorporated its April 23, 1993, opinion and order and required defendants to pay $1,000 a month of the retirement allowance to the court clerk beginning July 1, 1993. The court entered a final order on August 11, 1993, granting in part plaintiff's motion for summary disposition and denying defendants' motion for reconsideration. The order also modified and supplemented the June 11, 1993, order and required that $1,000 be paid each month during the time Jon Schuster remained in prison and that the $25,666 arrearage be paid in $1,000 monthly installments after his release. Defendants appeal from this order. They contend that the court's holding violates the PSERA exemption and nonassignability clause.

This Court reviews de novo a trial court's grant of a motion for summary disposition brought under MCR 2.116(C)(8). Mieras v. DeBona, 204 Mich.App. 703, 706, 516 N.W.2d 154 (1994). The trial court erred in granting summary disposition in plaintiff's favor. The trial court should have granted summary disposition in defendants' favor, dismissing plaintiff's complaint for reimbursement under the SCFRA because the PSERA exemption and nonassignability clause is paramount.

In 1984, the Legislature amended various sections of 1935 P.A. 253, the Prison Reimbursement Act (PRA) and renamed it the State Correctional Facility Reimbursement Act (SCFRA). While the SCFRA retained the basic purpose of the PRA, it further defined the amount of property that could be used for reimbursement and the types of property subject to an action.

Although the original 1935 act did not specifically define the term "asset," it granted broad jurisdiction over "any estate" that a prisoner currently possessed or subsequently acquired, including "pension benefits" generally, but not school employees' pension benefits specifically. Significantly, the Legislature in 1984 exempted certain property from process, including a prisoner's homestead, money received on account of a claim against the Department of Corrections, and "money saved by the prisoner from wages and bonuses paid while the prisoner was confined to a state correctional facility." M.C.L. § 800.401a(a)(i)-(iv); M.S.A. § 28.1701(1)(a)(i)-(iv).

While the SCFRA allows the state to seek reimbursement from a prisoner's "pension benefits," M.C.L. § 800.401a(a); M.S.A. § 28.1701(1)(a), the PSERA, specifically protects a public school employee's retirement allowance from legal process. The section of the PSERA at issue, 1989 P.A. 194, M.C.L. § 38.1346(1); M.S.A. § 15.893(156)(1), currently provides 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, investment, 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.

The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). The courts presume that the Legislature is familiar with the rules of statutory construction; thus, when it promulgates new laws, the Legislature is charged with knowledge of existing laws on the same subject and is presumed to have considered the effect of new laws on all existing laws. Walen v. Dep't of Corrections, 443 Mich. 240, 248, 505 N.W.2d 519 (1993); Joe Dwyer, Inc. v. Jaguar Cars, Inc., 167 Mich.App. 672, 683, 423 N.W.2d 311 (1988). Statutes relating to the same subject or sharing a common purpose are in pari materia and must be read together as one, even if they contain no reference to one another and were enacted on different dates. Brown v. Manistee Co. Rd. Comm., 204 Mich.App. 574, 577, 516 N.W.2d 121 (1994), citing Feld v. Robert & Charles Beauty Salon, 174 Mich.App. 309, 317, 435 N.W.2d 474 (1989). If two statutes lend themselves to a construction that avoids conflict, that construction should control. Dodak, House Speaker v. State Administrative Bd., 441 Mich. 547, 568-569, 495 N.W.2d 539 (1993); Baxter v. Gates Rubber Co., 171 Mich.App. 588, 590, 431 N.W.2d 81 (1988). Finally, "[w]hen two statutes conflict, and one is specific to the subject matter while the other is only generally applicable, the specific statute prevails." Brown, supra at 577, 516 N.W.2d 121, accord Gebhardt v. O'Rourke, 444 Mich. 535, 542-543, 510 N.W.2d 900 (1994); Jenkins v. Carney-Nadeau Public School, 201 Mich.App. 142, 145, 505 N.W.2d 893 (1993). The specific statute is treated as an exception to the general one, even if enacted before the general statute. Bauer v. Dep't of Treasury, 203 Mich.App. 97, 100, 512 N.W.2d 42 (1993), citing Imlay Twp. School Dist. v. State Bd. of Ed., 359 Mich. 478, 102 N.W.2d 720 (1960).

Although the statutes at issue here do not share a common purpose, e.g., Jennings v. Southwood, 446 Mich. 125, 142, 521 N.W.2d 230 (1994), they do involve one common subject, i.e., retirement benefits. The distinction, however, is that the SCFRA is general in scope (i.e., it deals with the ability of the state to seek reimbursement for costs from a prisoner's real and personal property in general), whereas the PSERA specifically deals with a public school employee's retirement benefits. Because the exemption from legal process under the PSERA is more specific, the PSERA prevails and plaintiff is precluded from seeking reimbursement from defendant Jon Schuster with respect to this asset. E.g., Brown, supra at 577, 516 N.W.2d 121.

Further support for this interpretation can be found in the legislative history. In 1955, the Legislature enacted § 46 of the PSERA, allowing an exemption from legal process. In 1984, when the Legislature amended § 404a of the original 1935 reimbursement act, it did not expand the list of property subject to legal process—basically, every type of property was and is subject to the act. Instead, the amendment excluded certain assets from process, such as a prisoner's homestead. M.C.L. § 800.401a(a)(i)-(iv); M.S.A. § 28.1701(a)(i)-(iv). Because the Legislature is presumed both to know of existing laws on the same subject and to have considered the effect of new laws on existing laws, Walen, supra, this Court concludes that the Legislature intended in 1955 that retirement benefits under the PSERA would be exempt from attachment in a proceeding brought under the reimbursement act. See Hill v. Dep't of Treasury, 202 Mich.App. 700, 704, 509 N.W.2d 905 (1993) (holding that, if the statutes are in pari materia, the general rule that a more recently enacted law has precedence "is particularly persuasive when one statute is both the more specific and the more recent"). Under this interpretation, the purpose of the exemption provision of the PSERA is fulfilled, and the Attorney General may still seek reimbursement under the SCFRA based upon the prisoner's other assets. A contrary conclusion would elevate the purpose of the SCFRA while negating the PSERA exemption provision.

Plaintiff next argues, and the court found, that even if the pension itself is not subject to attachment, the money generated thereby is subject to attachment once the payment has been received by the PSERA retirant. This argument ignores the definition of "retirement allowance." Because "retirement allowance" is defined, in part, as "a payment," the act must be read to specifically exclude retirement allowance payments from legal process. M.C.L. § 38.1346; M.S.A. § 15.893(156). Further, plaintiff's proposed interpretation would subject retirement allowance payments to taxation and bankruptcy or insolvency proceedings once such payments landed in the retirant's hands. Such interpretation defeats the purpose of the act as expressed by its plain language.

Finally, defendant Jane Schuster argues that she is not a proper party to this action. The court specifically has the authority to order a person possessing a prisoner's property to turn it over to the state. Because the Attorney General alleged that Jane Schuster acted under a power of attorney when cashing the retirement allowance checks, he properly named her as a party because the court could hold her individually liable for the proceeds of the check. See M.C.L. § 440.3402(1); M.S.A. § 19.3402(1). Additionally, joining her as a party also protected any right she may have asserted to the proceeds independent of her husband's interest. See M.C.L. § 38.1346(4)-(6); M.S.A. § 15.893(156)(4)-(6) (alimony, child support, or an eligible domestic relations order); M.C.L. § 800.404(5); M.S.A. § 28.1704(5) (requiring court to consider the SCFRA defendant's legal obligations to support a spouse, minor children, or other dependents and any moral obligation to provide support for dependents). Therefore, Jane Schuster's argument that she is not a proper party is without merit.

Further issues raised in this appeal need not be addressed because this Court finds the trial court erred in granting summary disposition for plaintiff and reverses that order. The defendants' motion for summary disposition is granted.

Reversed and remanded for entry of summary disposition for defendants.

NOTES

[*] Edward Sosnick, 6th Judicial Circuit Judge, sitting on Court of Appeals by assignment pursuant to Const. 1963, Art. 6, Sec. 23, as amended 1968.