18 Mich. App. 145

MILLER v. DEPARTMENT OF TREASURY, REVENUE DIVISION

*149Submitted Division 1 December 5, 1968, at Detroit.

(Docket No. 4,832.)

Decided June 26, 1969.

Leave to appeal granted August 21, 1969.

See 382 Mich 775.

*150Donald A. Miller, for plaintiffs.

Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and William D. Dexter, Richard Roesch, and James B. Saunders, Assistant Attorneys General, for defendant.

Amicus Curiae: Michigan Association of Retarded Children by Strom, Iloehn & Shipman (Thomas L. Butch, of counsel).

Before: Lesinski, C. J., and Holbrook and Levin, JJ.

Holbrook, J.

Plaintiffs are parents of a mentally retarded child who was formally committed to the Lapeer State Home and Training School by the Wayne county probate court in January, 1957, and are within the classification of relatives liable for the care and maintenance of their child under the provision of PA 1965, No 335 (MCLA § 330.651 et seq., Stat Ann 1365 Cum Supp § 14.870[101] et seq.). Pertinent portions of this act are reprinted in the footnote.1

*151Plaintiff brought this action against the Department of Revenue of the State of Michigan, in the circuit court for Wayne county, claiming that the *152act was unconstitutional for several reasons and requesting relief from its threatened enforcement.

Both parties moved for a summary judgment stating that there was no issue of fact present in the case and that the matter could be disposed of by ruling on the law. After being furnished thorough briefs by all counsel and hearing arguments, the learned trial judge found the act unconstitutional for several reasons. The State of Michigan appeals.

*153We need consider here only two reasons asserted concerning unconstitutionality of the act. Some of the other aspects of the case are. considered in our opinion in the case of In re Raseman Estate (1969), 18 Mich App 91, to which we make reference.

The plaintiffs, in the trial court and here, assert that the reimbursement statute violates the equal protection clauses of our State and Federal Constitutions. In the recent case of Fox v. Employment Security Commission (1967), 379 Mich 579, 588, 589, Mr. Justice T. M. Kavanagh states:

“This Court has held numerous times that the Michigan Const 1908, art 2, § 1, secures the same right of equal protection as does its counterpart in the Constitution of the United States. Gauthier v. Campbell, Wyant & Cannon Foundry Company (1960), 360 Mich 510, 514, and cases therein cited. The same provisions in Const 1963, art 1, §§ 1 and 2, must likewise be held to afford the same rights as the Federal equal protection clause.
“There is no doubt that State legislatures have a broad range of discretion in establishing classifications in the exercise of their powers of regulation. However, the constitutional guarantees of equal protection are interposed against discriminations that are entirely arbitrary. In determining what is within legislative discretion and what is arbitrary, regard must be had for the particular subject of the State legislation. There must be a relation between the classification and the purposes of the act in which it is found.” Smith v. Cahoon, Sheriff (1931), 283 US 553, 566 (51 S Ct 582, 587, 75 L Ed 1264, 1274); Morey v. Doud (1957), 354 US 457, 465 (77 S Ct 1344, 1350, 1 L Ed 2d 1485, 1491); Beauty Built Construction Corporation v. City of Warren (1965), 375 Mich 229; Palmer Park Theatre Company v. City of Highland Park (1961), 362 Mich 326.

In the case of People v. Chapman (1942), 301 Mich 584, a statute of this State was challenged as un'con*154stitutionally denying the defendant therein equal protection of the laws. Justice Starr, writing for the Court, stated (pp 597, 598):

“It is well recognized that the legislature may make classifications of persons, provided such classifications are based on substantial distinctions and are in accord with the aims sought to be achieved. (Citing cases.) However, such classification must be neither arbitrary nor capricious, but must rest on reasonable and justifiable foundations. In Haynes v. Lapeer Circuit Judge (1918), 201 Mich 138, p 141, the rule is stated:
“ ‘ “Legislation which, in carrying out a public purpose for the common good, is limited by reasonable and justifiable differentiation to a distinct type or class of persons is not for that reason unconstitutional because class legislation, if germane to the object of the enactment and made uniform in its operation upon all persons of the class to which it naturally applies; but if it fails to include and affect alike all persons of the same class, and extends immunities or privileges to one portion and denies them to others of like kind, by unreasonable or arbitrary subclassification, it comes within the constitutional prohibition against class legislation.” ’
“See, also, Davidow v. Wadsworth Manfg. Co. (1920), 211 Mich 90, 97-102; Peninsular Stove Co. v. Burton (1922), 220 Mich 284, 286; Smith v. Wayne Probate Judge (1925), 231 Mich 409.” (Emphasis supplied.)

The legislature, under the provisions of the act, endeavored to require those of the class liable to reimburse the State in accord with their financial ability to do so. By making the net taxable income as shown by their Federal income tax return the criteria for the amount of reimbursement in all cases (insofar as maximum payment is concerned) the legislature has actually permitted an opposite re-*155suit. Our Federal income tax law has several legal economic incentive provisions exempting actual income of a taxpayer from being included in net taxable income inter-alia, all interest income from municipal bonds, 1/2 of income profit derived from long term capital gains, and partial depreciation credit and income depletion allowances for those in certain businesses. The inclusion of such actual income not reflected in net taxable income would require many of sufficient ability to reimburse the maximum amount set forth in the act even though their net taxable income may be less than $5,000. It is obvious that any reimbursement statute such as the one under consideration, to be uniform, should not exclude relatives who have actual ability to reimburse. A formula should not be tied to net taxable income shown by a Federal tax return that permits those of greater financial ability to reimburse the State less than others of lesser financial ability in the same class. It permits those more able to pay to reimburse the State less or possibly nothing at all.

We find that PA 1965, No 335 does not accomplish the purpose of the act, i.e., to fairly and uniformly charge those of sufficient ability to reimburse the State in a reasonable manner. Many illustrations of this truth can be made but we deem them unnecessary. Net taxable income under the Federal income tax law does not properly reveal the financial ability of the relative to be charged to reimburse the State for the costs of maintaining the patient.

We conclude that the act is arbitrary, unreasonable and in conflict with the equal protection clause of our constitution and therefore is invalid.

The plaintiffs also assert that the act is unconstitutional in that there is lack of due process in its operation.

*156The legislature has provided for liability, total or partial, on a formula based on the net taxable income of a relative as shown by his or her Federal income tax return. The law determining net taxable income of any individual is controlled by the Congress of the United States. Thus the legislature has delegated to the Congress the ultimate determination of the amount to be reimbursed by each such relative.

In Auditor General v. Hall (1942), 300 Mich 215, 224, Mr. Justice Butzel stated:

“In far more traditional forms of action both criminal and civil, length of sentences and the amount of damages may vary materially before different judges and juries. As long as there is not an abuse of discretion and a judge remains within the limits of the law, we find there is due process. In re Brewster Street Housing Site (1939), 291 Mich 313, 340, we approved of the following citation from Cincinnati, W. & Z. R. Co. v. Commissioners of Clinton County (1852), 1 Ohio St 77, 88, 89:
“ ‘The true distinction, therefore, is, between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.’ ”

In the case of Dearborn Independent, Inc. v. City of Dearborn (1951), 331 Mich 447, it is stated on pp 454, 455, as follows:

“The requirement in said statute, above italicized, of admission by the post-office department as a second-class mail matter would make the validity of the publication of legal notices depend upon the future as well as present regulations of the United States post-office department. In that respect it offends against the Constitution of our State (1908), art 5, § 1, which, among other things, provides:
*157“ ‘The legislative power of the State of Michigan is vested in a senate and house of representatives.’
“The act in question unlawfully attempts to delegate to the United States post-office department the determination of the qualifications of a newspaper to publish legal notices. See King v. Concordia Fire Ins. Co. (1905), 140 Mich 258 (6 Ann Cas 87), (syllabus 5) as follows:
“ ‘The Michigan standard policy law of 1881 (Act No 149), providing for an insurance commission and authorizing it to prescribe a standard form for fire insurance policies, is unconstitutional because attempting to delegate legislative powers in violation of section 1 of article 4 of the Constitution.’
“At the time of the decision in the King Case the Constitution of 1850 was in effect, which, however, contained substantially the same delegation of the legislative power (Const 1850, art 4, § 1) as we have above quoted from the Constitution of 1908, which latter was in effect when the statute, above quoted (CL 1948, § 691.611), was enacted and also when the said statute was amended in 1933 in the form above quoted. See, also, In re Brewster Street Housing Site (1939), 291 Mich 313, in which, at page 340, the King Case, supra, is cited as establishing the law in this State upon the subject of unconstitutional delegation of legislative power. See, also, Colony Town Club v. Unemployment Compensation Commission (1942), 301 Mich 107, 113.
“ ‘The State legislatures cannot delegate their sovereign powers to the Federal government. While a statute is valid which adopts existing statutes, rules, or regulations of Congress by reference, an attempt to make future regulations of Congress part of the State law is generally held to be unconstitutional.’ 16 CJS, p 343.
“ ‘Since under the doctrine of the separation of the powers of government the lawmaking function is assigned exclusively to the legislature, it is a cardinal principle of representative government that except when authorized by the Constitution — as may *158be the case in reference to municipal corporations— the legislature cannot delegate the power to make laws to any other authority or body [citing decisions in 30 States]. Any attempt to abdicate legislative power in any particular field, although valid in form, is unconstitutional and void.’ 11 Am Jur 2d, pp 921, 922, § 214.”

Also, see, Sutherland Statutory Construction, § 520, p 551.

Although we realize that the Congress may not know or consider its direct power or discretion to vary liability under the act, it still violates the fundamental requirement of constitutional due process and for this reason is invalid.

The trial court ruled the act unconstitutional for other reasons which we deem unnecessary to consider,2 except to note that the statute fails to provide for a notice of hearing and a hearing before the administrative agency to determine in the first instance the liability of the relatives.3

Limited to the reasons set forth in this opinion, we affirm the trial court in its determination that PA 1965, No 335 is unconstitutional and invalid.

No costs, the construction of a statute being involved.

Lesinski, C. J., concurred.

Levin, J.

(dissenting). The plaintiffs claim that the act denies equal protection of the laws because it “soaks the rich.” The majority adopts plaintiffs’ conclusion and holds that the act does indeed deny equal protection but for a converse reason — because *159its impact can be avoided or reduced by those with tax-sheltered incomes. I find myself in disagreement with both views.)

The act, PA 1965, No 335 (MCLA § 330.651 et seq. [Stat Ann 1965 Cum Supp § 14.870(101) et seq.]), requires parents of mentally retarded minors residing in State institutions to reimburse the State for the cost of their care.1 The amount of the liability is “originally determined” by the use of a graduated schedule based on the parent’s taxable income as computed on his last Federal income tax return. Under the schedule those with a taxable income of less than $5,000 have no liability to make any reimbursement for the cost of caring for their children. Parents with a taxable income of $5,000 are required to pay $20 monthly. The schedule continues to graduate in increments of $500 of taxable income and monthly payments of $5 or $10 per increment so that those with a taxable income of $20,000 or more are required to pay $210 per month.2

If a parent believes that his monthly liability determined under the schedule “does not accurately reflect his current income status or his ability to pay due to changed circumstances or otherwise,” he may request a determination of liability by the department of revenue. If dissatisfied with the department’s determination, he may appeal to the probate court of the county of residence of the patient. The probate court’s determination is appealable “as in other eases.”3

The monthly payment determined by the department or the probate court may not in any event ex*160ceed that established by the statutorily prescribed schedule.4 This, of course, means, as the majority point out, that if a parent has insulated his income from Federal taxation he may significantly reduce or escape altogether his liability even though his real income is the same or greater than that of other parents whose income is not so tax sheltered.

The question before us, however, is not whether the reimbursement formula chosen by the legislature operates with absolute fairness or whether we can conceive of a case where a parent may escape its snare but rather whether it is a rational formula which produces generally fair results.5 The plaintiffs have not demonstrated, nor is there any evidence that the use of Federal taxable income as the “original” and maximum basis for determining liability to make reimbursement under this act has permitted particular parents to avoid or disproportionately reduce their reimbursement liability, let alone that this has occurred in such a significant number of cases as would justify this Court’s conclusion that the legislatively selected criterion is unconstitutional. The majority’s thesis, absent such a showing, is based on an unproven hypothesis. Important legislation should not be declared unconstitutional on theoretical grounds. “The point is that lack of equal protection is found in the actual existence of an invidious discrimination [citations omitted], not in the mere possibility that there will be like or similar cases which will be treated more leniently.” Queen-side Hills Realty Co., Inc. v. Saxl (1945), 328 US 80, 84, 85 (66 S Ct 850, 90 L Ed 1096).6

*161The annual redetermination of the parent’s liability provided for in this act is far superior to the practice under prior law of making a once-and-for-all determination, as is well illustrated by what occurred in the companion case of In re Raseman Estate (1969), 18 Mich App 91.7 For annual redetermination to be administratively feasible, accurate current information as to a parent’s financial status must be readily obtainable. One can well understand the legislature’s conclusion that in most cases the parent’s taxable income on his last Federal tax return is likely to reflect his ability to pay more accurately than any other readily available index.8 We should not lightly reject this legislative judgment.

Contrary to the plaintiffs’ contentions, the statute makes ample provision for administrative and judicial review at the instance of a parent who claims that application to him of the statutory schedule would require payment of an excessive amount. The standard on review, the parent’s current income status and ability to pay, is clearly enunciated as the *162controlling guideline.9 There are adequate safeguards for the protection of persons aggrieved by the administration of the act.10

Plaintiffs assert that the legislature may not confer on the probate court the power to review administrative determinations. However, the Constitution expressly provides that the jurisdiction, powers and duties of the probate court “shall be provided by law.” Const 1963, art 6, § 15. Since under this statute the probate court’s power of review is to be exercised judicially, we need not consider the question which evenly divided our Supreme Court in Buback v. Governor (1968), 380 Mich 209.

Nor can I accept the majority’s conclusion that because Congress may change the definition of taxable income, the incorporation by reference of the Federal definition was an unconstitutional delegation of power by the Michigan legislature. Again, this objection is entirely theoretical. Since the passage of the act now before us, there has been no change in the definition of the factors which when combined determine taxable income except for a *163few new concepts affecting a small number of taxpayers.11 It is improbable that any of tbe parents liable under this act would be affected by these somewhat esoteric changes and, if they are, their liability can easily be redetermined without regard to these changes.

If Congress should enact a significant change in the definition of taxable income, the Michigan legislature would have ample time in the legislative session following the year of the enactment of the Federal change and before the May 1 filing date prescribed by §§ 6 and 9 of this act either to (i) adopt the change in the Federal definition, or (ii) reject the change and formulate and enact a different basis of reporting income under this act. This would avoid both any delegation of legislative power and the infeasibility of requiring that reports from parents be based on the Federal law as it was before enactment of the change.

There is no need to invalidate this statute. It can and should be saved. See Alaska Steamship Co. v. Mullaney (CA 9, 1950), 12 Alaska 594 (180 F2d 805), where the court of appeals for the ninth circuit rejected a similar attack on an Alaska statute holding that it would be time enough to consider the claim of unlawful delegation of power when the Federal tax definition is in fact changed.12

*164The plaintiffs challenge sections 6 and 9 of the act13 which require a parent to submit a signed copy of his most recent Federal income tax return, claiming that this violates the confidentiality provisions of the Internal Revenue Code (26 USC §§ 6103, 7213 [a]). The question of whether the Federal confidentiality provisions protect against production of tax returns in private civil litigation has been the subject of diverse judicial decisions.14 Most courts have concluded that the confidentiality provisions prevent only the Federal government from disclosing income tax returns and, accordingly, a private litigant can be required to produce a copy of his Federal income tax return.15 The United States Supreme Court has intimated it would adopt this view. St. Regis Paper Co. v. United States (1961), 368 US 208, 219 (82 S Ct 289, 7 L Ed 2d 240, 249).

I see no basis for a distinction between production compelled by a court in private litigation and production compelled by a State statute in connection with an administrative determination. Since it is our duty to uphold the constitutionality of this act if at all possible, we ought to adopt the construction of the Federal confidentiality provisions — a construction adopted by most courts — which would *165sustain the Michigan legislative requirement.16 Accordingly, I would hold that the requirement that a parent furnish a copy of his last Federal income tax return does not violate the Federal confidentiality provisions.

The plaintiffs’ primary contention is that the graduation provided for in the act’s reimbursement schedule is unfair and is an unconstitutional classification denying equal protection of the laws to those who, because they have higher taxable income, are required to pay greater monthly amounts than others less fortunate.

I can think of no basis of classification for social legislation with greater reality and general acceptance than one based on economic differences. No one would seriously argue that the legislature may not provide free social services to indigent persons. Nevertheless, persons who desire and can afford the same service must themselves pay for the desired service. If the service is a necessity required for a person’s support, a court could compel someone of sufficient financial ability, obligated to provide such support, to furnish the necessity.17 Similarly, if the State provides the needed service, the State can demand reimbursement from the financially able person owing the support obligation.

Nor is the legislature’s choice limited to the two extremes, no reimbursement or full reimbursement. It may, as it did in this case, require partial reimbursement on a graduated basis according to ability *166to pay. If the graduated amounts are reasonable the hind of invidious discrimination and irrationality which alone would justify a declaration of unconstitutionality is absent. Cf. Mallatt v. Luihn (1956) 206 Or 678 (294 P2d 871), where the Oregon Supreme Court considered at length many of the arguments advanced by the plaintiffs in this case and sustained as constitutional a reimbursement statute providing for graduated liability based on the relative’s gross income disclosed in his State income tax return.18

Since the reimbursement requirement is an obligation imposed upon one liable to provide support for services rendered, the act does not impose a tax. Accordingly, plaintiffs’ arguments premised on the supposition that the reimbursement requirement is a tax need not be further considered.

Equally without merit is the argument that the provision in the act which exempts parents of a mentally retarded child who has attained the age of 21 from liability discriminates against parents whose children are still minors. The responsibility of parents to provide for the care and support of their minor children is a universal ethic.19 Classifications distinguishing adults and minors have been *167judicially approved in many cases.20 Generally, competent adults are emancipated and no longer a financial burden on their parents. The legislature need not require parents of retarded adults to make reimbursement in order to require reimbursement from parents of a retarded minor.21

Nor is there anything irrational in the legislative judgment that parents whose mentally retarded children have been patients in public institutions for 15 years should be relieved of further responsibility even if the child has not attained 21 years of age.22 The legislature could rationally conclude that, after 15 years of institutionalization, it is too much to expect even a parent to continue to contribute to the child’s support and that the State should assume full responsibility. The Constitution does not bar this humane dispensation by requiring, in the name of equal protection, that the parents of children institutionalized for shorter periods be relieved of all financial responsibility.23 Adoption of plaintiffs’ contention might well constrain the legislature to eliminate this dispensation altogether, a result without benefit to the plaintiffs or other parents liable to make reimbursement.

Similarly, the fact that the legislature does not require reimbursement from financially able parents of blind24 and deaf25 children for services provided their children does not preclude requiring reim*168bursement from a mentally retarded child’s parents of sufficient ability. The services provided one group of afflicted children differ from those provided the other groups. The cost of the several programs differs both in relative and absolute amounts. Without the supplementation to State funds that parental reimbursement contributions provide, the legislature might decide to curtail the current program for the care of mentally retarded children. Faced annually with the need to provide appropriations to finance the program for mentally retarded children, the legislature may in its wisdom seek parental financial assistance for one program even though a similar reimbursement requirement is not imposed as to all State programs for the care of the handicapped.

“Evils in the same field may be of different dimensions and proportions, requiring different remedies. Or so the legislature may think. Or the reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. The legislature may select one phase of one field and apply a remedy there, neglecting the others. The prohibition of the equal protection clause goes no further than the invidious discrimination.” Williamson v. Lee Optical Co. of Oklahoma, Inc. (1954), 348 US 483, 489 (75 S Ct 461, 99 L Ed 563).26 (Citations omitted.)

Plaintiffs also argue that Const 1963, art 8, § 827 obligates the State to provide for the mentally handicapped, that this obligation is nondelegable *169and, thus, that the State cannot require reimbursement from relatives. In a companion case we considered and rejected that argument. See In re Raseman Estate, supra. We concluded that Const 1908, art 11, § 15 (the predecessor of Const 1963, art 8, § 8) is not self-executing.28

Plaintiffs also argue that a classification of taxpayers based on whether they are parents of mentally retarded minors is an unreasonable classification. Starting with that premise, the plaintiffs contend that the State cannot require parents of mentally retarded minors alone among taxpayers to reimburse the State for the child’s care. This argument was also considered and rejected in Baseman. We said there that a similar classification in a reimbursement statute, i.e., relatives of a mentally diseased person, was a proper and reasonable one having in mind the special benefit to and moral duty of those upon whom the burden of making reimbursement was imposed.

Assuredly, the State has, as plaintiffs contend, an interest in and responsibility for providing for the care of the mentally retarded. But this does not mean that the State has the exclusive responsibility for providing such care. Surely parents of a mentally retarded child are no less concerned than the State in the child’s protection and development.

It is the primary responsibility of the legislature, not of the judiciary, to establish priorities and allocate available governmental resources. In a more abundant society government may well be able to assume total responsibility for the care of all the handicapped and helpless.

It has never been thought that just because the government provides free service to the indigent it *170must • also provide free corresponding service to those financially able to care for themselves. The State is not obliged to dole out free food to the citizen of well nourished substance because it feeds the hungry poor.

In this connection I recognize that the expenditure of public funds has been required where the United States Supreme Court has concluded that equal opportunity is a transcendent value29 and that if a government decides to make services and facilities available it may not do so in an arbitrary manner and deprive some potential recipients of benefits on legally irrelevant or legally impermissible grounds.30 Recognizing these limitations on the power of government, it seems to me that at this time in the development of the law we cannot properly say that the Michigan legislature enacted an unconstitutional statute when it required contributions for the support of State institutionalized, mentally retarded children to be made by those parents of such children who can afford to do so.

. We have not yet reached the era when governments have the resources to do all things that should or might be done, when governments have *171the legally enforceable duty to lift the burden of affliction from those who, like the plaintiffs and their child, are its accidental victims, when governments have the legally enforceable duty when they do act to distribute funds appropriated to relieve a particular misfortune to each according to his need and to each without regard to his need, when the right which plaintiffs seek to establish can be judicially recognized.

I would reject plaintiffs’ attack on the constitutionality of this act.

Miller v. Department of Treasury
18 Mich. App. 145

Case Details

Name
Miller v. Department of Treasury
Decision Date
Jun 26, 1969
Citations

18 Mich. App. 145

Jurisdiction
Michigan

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