M.F. CAVANAGH, J.
Plaintiffs, Citizens for Pre-Trial Justice, an unincorporated, nonprofit association located in Wayne County, and five named individuals, filed a class action in November, 1974, to challenge the legality of the business practices of defendants-appellants Goldfarb and defendant Mitchell, owners of bail bond agencies.
After hearing argument on all issues raised in the complaint and by motion,
The Class Action Issue
In addition to contesting the merits of the court's decision, defendants argue the inappropriateness of permitting the plaintiffs to pursue this suit as a class action. A brief explanation of the characteristics of a class action brought under GCR 1963, 208.1(3) is therefore warranted to provide an appropriate framework for discussion of the issues defendants raise.
GCR 1963, 208.1(3) provides:
"If persons constituting a class are so numerous as to make it impracticable to bring them all before the court, such of them, 1 or more, as will fairly insure the adequate representation of all may on behalf of all sue or be sued when the character of the right sought to be enforced for or against the class is * * * several, and there is a common question of law or fact affecting the several rights and a common relief is sought."
The type of action authorized by the rule is commonly known as a "spurious class action". By its terms, which have been elaborated upon in case law, the rule sets out several criteria to test the appropriateness of allowing a particular suit to proceed as a class action. (1) The number of plaintiffs holding similar claims against a defendant. Where this number is so large that it is impracticable to bring each claim individually, "at least one named plaintiff may represent the class before
Appropriateness as a Class Action — Numerousness
Defendants argue that plaintiffs have failed to show that the class members "are so numerous as to make it impracticable to bring them all before the court". GCR 1963, 208.1. Hence, contend defendants, this cause should not be allowed to proceed as a class action.
This argument notwithstanding, defendants estimate the potential number of class members to be 35,000.
Definition of the Class and Statute of Limitations
Defendants timely raised the affirmative defense of the statute of limitations. See GCR 1963, 111.7. During proceedings in the lower court this issue was subsumed in the controversy over the proper definition of the plaintiff class. Plaintiffs contended that the class should be defined to include all those whose claims accrued within the six years preceding the complaint's filing. Defendants responded that some of those persons' claims were time-barred by one or another statute of limitations. The lower court ruled in plaintiffs' favor and certified a class encompassing all those whose claims arose within six years before the complaint was filed. Defendants now challenge that ruling.
Plaintiffs' argument is in the alternative: their claims are governed either by the six-year contract statute of limitations, MCL 600.5807(8); MSA 27A.5807(8), or by the general six-year statute of limitations for personal actions for which no provision is made by other statute, MCL 600.5813; MSA 27A.5813.
Defendants argue that the appropriate statute of limitations for the claims of statutory overcharge is the three-year statute for "actions to recover damages for injuries to persons and property". MCL 600.5805(7); MSA 27A.5805(7). Defendants further assert that the count based on unlawful
Because the three counts joined in this complaint are all different, I will consider them separately.
Initially, I reject defendants' argument that the two-year statute for assault, battery and false imprisonment applies to the count alleging the unconstitutionality of the summary bond revocation permitted in MCL 765.26; MSA 28.913. Plaintiffs' complaint alleges a deprivation of due process by a statutory scheme which permits deprivation of liberty without notice and a hearing, and for arbitrary and capricious reasons. This injury is neither an assault, nor a battery, nor a false imprisonment, but the invasion of one or more constitutional rights. Since there is no statute of limitations directed explicitly to suits for denial of due process, the appropriate statute must be either the three-year statute on actions for injuries to persons or property, MCL 600.5805(7); MSA 27A.5805(7), or, if this is inapplicable, the general six-year statute for all other personal actions for which no provision is elsewhere made. MCL 600.5813; MSA 27A.5813.
Other cases have considered the scope of "actions * * * for injuries to persons and property" as used in MCL 600.5805(7); MSA 27A.5805(7). In Stringer v Board of Trustees of Edward W Sparrow Hospital, 62 Mich.App. 696; 233 N.W.2d 698 (1975), lv den, 395 Mich. 768 (1975), the Court rejected an argument that "injuries to persons" comprises only physical injuries. The Court adopted a foreign jurisdiction's construction of the phrase, under which were included:
Stringer, therefore, held that "injuries to persons and property" included an action for injuries "to one's good name and to advancement in one's chosen profession". 62 Mich.App. 696, 702.
Where Federal law specifies no statute of limitations for a Federal cause of action, the courts look to the most analogous state statute of limitations. See Note: A Limitation on Actions for Deprivation of Federal Rights, 68 Colum L Rev 763 (1968). Stringer found some support for its holding in such Federal cases. 62 Mich.App. 696, 701. Accord, Glowacki v Motor Wheel Corp, 67 Mich.App. 448, 459-460; 241 N.W.2d 240 (1976). I, too, have considered them and have found one case in particular to be helpful.
In Gordon v City of Warren, 415 F.Supp. 556 (ED Mich, 1976), the court considered the issue of which statute of limitations applied to a three-count action for damages with claims predicated on 42 USC 1983, 1985, the Fourteenth Amendment, and malicious prosecution.
As to the civil rights act count, the court examined at some length the various Federal circuits' divergent approaches to this question, and concluded:
"It is clear from both Krum
If a constitutional wrong is an injury to the person, then the denial of due process alleged in the instant case would be within the three-year statute of limitations. The Gordon court considered the Fourteenth Amendment count stated in that case and, albeit with apparent reluctance, reached the same conclusion:
"Plaintiffs, however, have also incorporated in their complaint a count premised on a Fourteenth Amendment due process violation through the federal question jurisdictional statute, 28 USC § 1331. * * *
"Although the Sixth Circuit in Foster v. City of Detroit, 405 F.2d 138 (1968), conditionally accepted the city's argument that the Michigan three-year statute applied to such "federal question' suits, it found a continuing wrong which eliminated the need to make an ultimate holding on the limitations question.
"This Court, however, must make such a determination. Unfortunately it knows of no decision which provides guidance on this question.
"In the context of this complaint, wherein a Fourteenth Amendment `federal question' is juxtaposed with
The quoted language carefully limits the holding to the case where the plaintiff also pleads a civil rights act count. Nevertheless, there is no argument to support a conclusion that a different statute of limitations would otherwise apply. Moreover, given the "constitutional wrong" analysis upon which decision of the civil rights act question was based, one would certainly expect the decisions of this and the due process issue to be consistent. Accordingly, on the strength of Stringer, supra, and Gordon, supra, I would hold that the three-year statute of limitations, MCL 600.5805(7); MSA 27A.5805(7), applies to this civil action for denial of due process.
Turning to the claim of statutory overcharge, I must reject plaintiffs' argument that the six-year statute of limitations for contract actions applies. MCL 600.5807(8); MSA 27A.5807(8). Plaintiffs premise this argument upon the rule that statutes in force at the time a contract is entered become part of the contract. State Highway Comm v Detroit City Controller, 331 Mich. 337, 352; 49 N.W.2d 318 (1951). Thus, runs the argument, the statute setting the maximum fee which can be charged for a bail bond (MCL 750.167b; MSA 28.364) was a part of the contract. Therefore, plaintiffs conclude, a suit for damages incurred when defendants
However, in the recent case of Huhtala v Travelers Ins Co, 401 Mich. 118, 126-127; 257 N.W.2d 640 (1977), the Supreme Court made it quite clear that the contracts statute of limitations does not apply unless the action is for breach of an express promise:
"Where the nature and origin of an action to recover damages for injury to persons or property is a duty imposed by law, this Court has held that it cannot be maintained on a contract theory when commenced beyond the three-year period. Coates v Milner Hotels, Inc, 311 Mich. 233; 18 N.W.2d 389 (1945), Baatz v Smith, 361 Mich. 68; 104 N.W.2d 787 (1960), State Mutual Cyclone Ins Co v O & A Electric Cooperative, 381 Mich. 318; 161 N.W.2d 573 (1968). Those cases do not control where the action is for breach of an express promise."
The question here is, therefore, whether plaintiffs' claim is for injury to persons or property. If answered in the affirmative, the three-year statute applies, and the form of the action becomes irrelevant:
"* * * it makes no difference what form of action the plaintiff institutes in seeking recovery for damages to property or person, but in all cases such action comes within the 3-year limitation rule."
State Mutual Cyclone Ins Co v O & A Electric Cooperative, 381 Mich. 318, 324-325; 161 N.W.2d 573 (1968). Accord, Parish v B F Goodrich Co, 395 Mich. 271, 280; 235 N.W.2d 570 (1975). If the injuries are not to persons or property, then the only statute applicable would be MCL 600.5813; MSA 27A.5813, which provides a six-year period for all actions "unless a different period is stated in the statutes".
Some cases have applied the general six-year statute to actions for pecuniary loss. See, e.g., Borman's, Inc v Lake State Development Co, 60 Mich.App. 175, 187-189; 230 N.W.2d 363 (1975), George v Petoskey, 55 Mich.App. 433, 437; 223 N.W.2d 6 (1974), Schenburn v Lehner Associates, Inc, 22 Mich.App. 534, 538; 177 N.W.2d 699 (1970). However, the damages sustained in those cases appear to be principally loss of future financial expectations, particularly where such loss was incurred through the defendant's alleged fraud. The damages in the case at bar were immediate, and there is no allegation of fraud. I conclude that the appropriate statute here is MCL 600.5805(7); MSA 27 A.5805(7).
Finally, I consider plaintiffs' count for "Unconstitutional Delegation of Authority and Denial of Equal Protection". The substance of this count is that defendants violated MCL 750.167b(3); MSA 28.364(2)(3) by requiring the posting of security over and above the statutorily allowed fee. Apparently anticipating that the statute would be construed to permit this practice, it is also alleged in this count that such a construction would unconstitutionally delegate the judicial prerogative of setting bail. In addition, it would violate criminal
Because the appropriate statute of limitations is three, rather than six years for each of the counts in plaintiffs' complaint, the description of the class certified must be amended to limit membership to those with claims accruing within three years preceding the filing of plaintiffs' complaint.
Ambiguity in the Court's Order Defining the Class
Defendants object that the description of the class includes all persons who purchased a bond from defendants within six years preceding the filing of the complaint, regardless of whether they paid fees or posted collateral which, separately or combined, exceeded 10% of the bond.
Plaintiffs concede that the class as presently defined is overbroad, and offer to stipulate to its redefinition.
All parties seem agreed that the court meant to
The class consists of all person in group "A", all persons in group "B", all persons in group "C", and all persons in group "D".
Group "A" includes all those who, within three years prior to the complaint's filing, or subsequent thereto, purchased a bond from defendants and did one of the following:
(1) paid fees exceeding 10% of the bond's face value; or
(2) posted collateral exceeding 10% of the bond's face value; or
(3) paid fees and posted collateral which together exceeded 10% of the bond's face value.
Group "B" includes all persons for whom a bond was purchased from defendants within three years prior to the filing of the complaint, or subsequent thereto, and for which purchase defendants charged as in "A" (1), (2), or (3).
Group "C" includes all persons who purchased a bond from defendants which bond was revoked pursuant to MCL 765.26; MSA 28.913 within three years prior to the complaint's filing, or subsequent thereto.
Group "D" includes all persons for whom a bond was purchased from defendants and which bond was revoked as in "C".
Standing of the Representatives and Adequacy of their Representation
By order dated November 21, 1975, the court determined that the proper parties to represent the plaintiff class would be Barbara Cartwright, Charles Holt, and Edward Attee.
Defendants argue that Barbara Cartwright, a named plaintiff on count I (alleging a statutory overcharge by excessive bond premiums) and count II (alleging a similar violation by retention of collateral security), is not a real party in interest. GCR 1963, 201.2, MCL 600.2041; MSA 27A.2041. Defendants point to Ms. Cartwright's affidavit, in which she stated that she was acting on behalf of Citizens for Pre-trial Justice when she purchased the bond and posted the security. On the force of this statement defendants would conclude that Citizens, rather than Ms. Cartwright, is the real party in interest on these claims.
However, defense counsel cross-examined Ms. Cartwright on this subject at her deposition, and her testimony there is enlightening. She stated that she personally, and not Citizens, had purchased the bond and posted the security. Both the bond premium and the collateral had come from her own funds. She had signed indemnity contracts
I am persuaded that this testimony and the statements in the affidavit raised a question of fact for the trial court as to whether Ms. Cartwright was a real party in interest. The court found that she was. This finding is not clearly erroneous, and, therefore, will not be set aside. See Moscone v Mitoff, 33 Mich.App. 259; 189 N.W.2d 763 (1971), lv den, 385 Mich. 781 (1971).
Defendants apparently concede that Charles Holt is a proper representative of the claim stated in count III, unconstitutional bond revocation procedures.
Edward Attee, complaining that defendants had demanded premiums and collateral security exceeding the maximum amount permitted by law (counts I and II of the complaint), was permitted to intervene as a plaintiff. The bond was purchased and the collateral was delivered in Michigan. However, the bond was posted in New York to procure Mr. Attee's release from New York authorities who were holding him in connection with proceedings in that state.
Defendants now assert that Attee is not a proper plaintiff. They contend that allowing this suit to proceed to judgment on claims, such as Attee's, which involve incarceration in another state would threaten an unconstitutional interference with interstate commerce. Defendants remind this Court that the lower court limited its preliminary injunction relief to transactions entered into in Michigan criminal cases. They would infer from this limitation that the trial court has accepted their argument regarding interstate commerce and, hence, that Mr. Attee is not a proper plaintiff.
In summary, the court has not been shown to have erred in naming Ms. Cartwright and Mr. Attee as representatives of plaintiffs' claims in counts I and II of the complaint. It is not contested that Mr. Holt is a proper representative of the claim stated in count III. Therefore, there is at least one named representative for each of the stated counts. I will now consider defendants' challenges to the adequacy of their representation.
Defendants assert that the named representatives are without the financial ability to carry on this suit, and argue that the representatives must be willing and able to give absent class members actual notice of this action's pendency.
"With reference to spurious class action the courts focus on two general requirements. `First, the representatives must share common issues and interests with the unnamed class members. Second, the court must be assured that the representatives will vigorously prosecute the rights of the class through qualified counsel.'" (Footnote and citations omitted.)
Careful analysis is due defendants' argument that the representatives must give, and must bear the costs of giving, actual notice to all absent class members. In Grigg v Michigan National Bank, 72 Mich.App. 358, 368-370; 249 N.W.2d 701, 706 (1976), lv gtd 401 Mich. 806 (1977), another panel of this Court held that the named plaintiff was not an adequate representative where, by her own declaration, she was unwilling to pay for notification to absent class members.
The holding in Grigg seems to rest on two propositions: (1) due process requires that absent class members be given notice of the action; and (2) it is the named representatives' duty to pay for the notification.
The first proposition was derived from Grigg's reading of Eisen v Carlisle & Jacquelin, 417 U.S. 156; 94 S.Ct. 2140; 40 L Ed 2d 732 (1974). In Eisen the Supreme Court held that, in spurious class actions under FR Civ P 23(b)(3), "Rule 23(c)(2) requires that individual notice be sent to all class members who can be identified with reasonable effort". 417 U.S. 156, 177.
"* * * referred to its decision in Schroeder v City of New York, 371 U.S. 208; 83 S.Ct. 279; 9 L Ed 2d 255; 89 ALR 2d 1398 (1962), which as the U.S. Supreme Court pointed out was decided prior to the promulgation of the amended FR Civ P 23, and explained that Mullane required rejection of notice by publication where the names and addresses of the affected persons were available." 72 Mich.App. 358, 369-370. (Emphasis in original.)
Therefore, concluded Grigg, due process requires individual notice to all absent class members.
Unquestionably, the cited authorities require individual notice to the absent class members "when notice is [those persons'] due". However, these authorities provide no support whatever for the conclusion that, in suits brought under GCR 1963, 208.1(3), the absent class members are due any notice at all. There is in fact nothing in Grigg itself to support this conclusion.
In Eisen, as previously observed, the Supreme Court held that individual notice was required in actions under FR Civ P 23(b)(3), and clearly cited Rule 23(c)(2) as the authority for so holding. 417 U.S. 156,
"In any class action maintained under subdivision (b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."
The rule further provides that those given notice, and not exercising an opportunity to opt out of the action, are bound by the judgment:
"The judgment in an action maintained as a class action under subdivision (b)(3), whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (c)(2) was directed, and who have not requested exclusion, and whom the court finds to be members of the class." FR Civ P 23(c)(3).
Eisen explained the intent of the rule's draftsmen:
"* * * individual notice to identifiable class members is not a discretionary consideration to be waived in a particular case. It is, rather, an unambiguous requirement of Rule 23. As the Advisory Committee's Note explained, the Rule was intended to insure that the judgment, whether favorable or not, would bind all class members who did not request exclusion from the suit. * * * Accordingly, each class member who can be identified through reasonable effort must be notified that he may request exclusion from the action and thereby preserve his opportunity to press his claim separately or that he may remain in the class and perhaps participate in the management of the action." 417 U.S. 156, 176.
The rationale of Eisen is, therefore, clear. The Federal rule requires that notice be given, and provides that all those given notice who do not opt
By contrast, the notice provisions of the Michigan court rule are discretionary:
"The court at any stage of an action under sub-rules 208.1 or 208.2 may require such security and impose such terms as shall fairly and adequately protect the interests of the class or association in whose behalf the action is brought or defended. It may order that notice be given, in such manner as it may direct, of the pendency of the action, of a proposed settlement, of entry of judgment, or of any other proceedings in the action, including notice to the absent persons that they may come and present claims and defenses if they so desire." GCR 1963, 208.4.
This rule of course presents the possibility that absent class members will go without notice of the action. However, this threatens no due process violation, because the rights of the absent and unnotified class members are not adjudicated:
"In reviewing adequacy of representation under GCR 1963, 208.1(3) our courts should limit themselves to a reasonable inquiry into the issue. Under a GCR 1963, 208.1(3) spurious class action, as under former FR Civ p 23 after which it was modeled, absent class members are not normally bound by the judgment of the court unless they affirmatively intervene in the suit. The absent class members have the benefit of `one way intervention'. They may silently await the final decision of the court. If that decision is favorable to their interests, they may then join in the class for the presentation of individual claims against the defendant. If, conversely, the decision is not favorable to their interests, and they have not joined the class suit, they are not legally bound by the findings of the court and are
"In contrast, when a court rule, such as present FR Civ P 23(c)(2), and/or the notice served on absent class members binds them to the class judgment, the court should closely assess the adequacy of representation. Hettinger v Glass Specialty Co, Inc, 59 FRD 286, 296 (ND Ill, 1973); Cf. Eisen v Carlisle & Jacquelin, 417 U.S. 156; 94 S.Ct. 2140; 40 L Ed 2d 732 (1974); Kratchman, Class Actions in Michigan, 53 MSBJ 175, 177 (1974)." Northview Construction Co v St. Clair Shores, (On Rehearing), 399 Mich. 184, 201, fn 4; 249 N.W.2d 290 (1976).
Therefore, I conclude that due process does not
Defendants raise another challenge to Mr. Holt's adequacy as a representative. Defendants assert that at trial he may be unable to prove that he ever had any contractual relationship with defendants. Defendants then suggest that, should they prevail on this issue, all class members would have their actions defeated.
There is no merit in this argument. Certainly the mere allegation that there is a defense against a named plaintiff's claim should not render him an inadequate representative. As was explained above, even if the representative should lose the class members would not be bound unless they had been given notice and intervened. Even if they had intervened, the court rule specifically provides that the court "shall order entry of judgment in such form as to affect only the parties to the action and those adequately represented". GCR 1963, 208.4. The rules also give the court power to "impose such terms as shall fairly and adequately protect the interests of the class" (GCR 1963, 208.4), and, "in furtherance of convenience or to avoid prejudice", to order separate trials of separate issues.
Defendants suggest that Mr. Attee is an inadequate representative because, at the time he filed a petition to intervene, he was on release on an appeal bond posted in New York. Defendants inquire of this Court whether such a person can provide adequate representation. Defendants have given neither authority, nor argument, nor reason to doubt that he may.
Finally, in their reply brief defendants, relying on Hansberry v Lee, 311 U.S. 32; 61 S.Ct. 115; 85 L Ed 22 (1940), contend that the named plaintiffs are not adequate representatives because their interests are in conflict with those of persons who, sometime in the future, may wish to purchase a bond and may prefer to surrender collateral in violation of the statute rather than go without the bond.
The reliance on Hansberry is misplaced, and the argument is meritless. The possible future purchasers whose wishes defendants would accommodate are not within the class certified by the lower court. Therefore the hypothecated conflict between those future purchasers and the named plaintiffs is not a conflict among the interests of class members which would impair the adequacy of representation.
I conclude that the representation afforded absent class members by the named plaintiffs is adequate.
Decision of Substantive Issues Without Notice to Absent Class Members
Defendants next contend that the court denied
Eisen's inapplicability to this Michigan action under GCR 1963, 208, has been discussed at some length above. That discussion need not be repeated here.
In Kass it was held that, where the lower court had exercised its discretion to order notice to absent class members, that notice must comply with Eisen and Mullane v Central Hanover Bank & Trust Co, supra; that is, it must be individual notice to all those who, with reasonable effort, can be identified. Kass did not purport to rewrite GCR 1963, 208, so that it compelled notice to absent class members before decision of any substantive issues. Whether notice is ordered remains discretionary with the trial court, and, the record before us manifesting no abuse, I find no error here.
Trial Court's Decision on the Merits; Statutory Overcharge by Excessive Premiums
This issue and the next concern the merits of plaintiffs' allegations that defendants violated MCL 750.167b(3); MSA 28.364(2)(3), which, in pertinent part, provides as follows:
"It shall be lawful to charge for executing any bond in a criminal case, but no person engaged in the bonding business, either as principal or clerk, agent or representative of another, either direct or indirectly, shall charge, accept or receive any sum of money or property, other than the regular prevailing fee for bonding, which shall not exceed 10% of the face value
The trial court, in its opinion and order, held that where defendant bondsmen charge, accept or receive any money or property which has a combined value greater than 10% of the face value of the bond written, they violate the provisions of MCL 750.167(b)(3); MSA 28.364(2)(3).
The issue here is whether the court erroneously ruled in favor of plaintiffs with respect to count I of their complaint, which alleged that defendants violated the statute by charging premiums which exceeded 10% of the bond's face value.
Defendants' argument that they did not violate the statute is based on MCL 28.613(2); MSA 4.450(13)(2):
"(2) On and after the effective date of this act, there shall be levied an assessment as additional cost in an amount equal to 10% of every fine, penalty and forfeiture imposed and collected by the courts for criminal offenses, other than a fine, penalty or forfeiture for a violation of the Michigan vehicle code or any local ordinance relating to stopping, parking or operation of a vehicle, and other than for a violation of the conservation laws. When a fine is suspended, in whole or in part, the assessment shall be reduced in proportion to the suspension."
Defendants assert that the legislative intent behind the statute limiting the bond premium to 10% of the bond's face value was to allow the bondsman to charge 10% of his risk. When MCL 28.613(2); MSA 4.450(13)(2) was subsequently enacted, it raised the bondsman's risk to 110% of the
Before considering the merits of this argument, it is important to mark its limited reach.
First, even if correct, the argument could only justify premiums of 11%. Defendants make no effort to justify the greater premiums which plaintiff alleges were charged in some cases.
Second, defendants concede that the imposition of the surcharge was terminated in Recorder's Court in 1975.
Third, and finally, in 1976 MCL 28.613(2); MSA 4.450(13)(2) was repealed. 1976 PA 422, Eff. January 11, 1977.
In summary, there is no arguable legal basis for justifying 11% premiums after 1975, and there is no argument made in support of premiums greater than 11% of the bond's face value.
I turn now to the merits of the court's decision. That decision was based upon alternate grounds.
The court's first rationale was based on People v Barber, 14 Mich.App. 395; 165 N.W.2d 608 (1968). Barber held that MCL 28.613(2); MSA 4.450(13)(2) was unconstitutional. Although the issue in Barber was the 10% surcharge as applied to fines, the lower court herein held that Barber applied to bond forfeitures, as well. That is, the 10% surcharge on bond forfeitures was unconstitutional; defendants' risk was, therefore, only 10% and 11% premiums were, therefore, unlawful.
Secondly, the court held that, when the Legislature,
In construing a statute, it is our duty to give effect to the legislative intent. Posselius v First National Bank — Detroit, 264 Mich. 687, 689; 251 NW 429 (1933). However, to discover that intent one must first look to the plain meaning of the statute's words. Chrysler Corp v Washington, 52 Mich.App. 229, 234; 217 N.W.2d 66 (1974), lv den 399 Mich. 859 (1977). Where the statute's meaning is clear and unambiguous the statute speaks for itself, and our task is at an end. Lansing v Lansing Twp, 356 Mich. 641, 649; 97 N.W.2d 804 (1959). The term "face value" as applied to a bail bond is unambiguous and explicit. Its meaning may in some circumstances define a sum equal to the bondsman's risk, but this does not persuade me to depart from the term's plain meaning where these two values are unequal. The lower court did not err.
Because I agree with this second, alternative rationale, I will not consider the constitutional issue. See Rosenbaum v Dep't of Treasury, 77 Mich.App. 332, 337-338; 258 N.W.2d 216 (1977), lv den 402 Mich. 826 (1977), Mask v Shell Oil Co, 77 Mich.App. 25, 32; 257 N.W.2d 256 (1977), lv den 402 Mich. 835 (1977).
Overcharge by Taking Collateral
Defendants next contend that the court also erred in determining that defendants violated the statute by taking collateral which, alone or with the premium charged, exceeded 10% of a bond's face value. Defendants maintain that the statute applies only to payments of premiums, at which time title to the property changes hands, and not
However, nothing in the statute's wording expresses an intent to limit it to transactions involving a transfer of title. On the contrary, the sweep of its language is broad:
"[N]o person engaged in the bonding business * * * shall charge, accept or receive any sum of money or property, other than the regular prevailing fee for bonding, which shall not exceed 10% of the face value of the bond." MCL 750.167b(3).
The trial court thoughtfully analyzed this language in light of pertinent authority and concluded that "charge, accept or receive" comprehend the transfer of property as collateral.
Constitutionality of MCL 765.26; MSA 28.913
Lastly, defendants challenge the court's ruling by way of order that MCL 765.26; MSA 28.913, which establishes the procedure for a bondsman's rearrest of his bailed principal and summary revocation of the bond, is unconstitutional because it violates the provisions of the due process clauses of the state and Federal constitutions. After carefully weighing the precedents involved, I would affirm the trial court's decision.
In the court below, plaintiffs argued that the statutory procedures for arrest of a principal by a bondsman constituted a deprivation of liberty without due process of law as required by the 14th Amendment to the United States Constitution. On
The statute under attack provides in part:
"In all criminal cases where any person or persons have entered into any recognizance for the personal appearance of another and such bail and surety shall afterwards desire to be relieved from his responsibility, he may with or without assistance, arrest the accused and deliver him at the jail or to the sheriff of said county. In making such arrest he shall be entitled to the assistance of the sheriff, chief of police of any city or any peace officer. The sheriff or keeper of any jail in said county is authorized to receive such principal and detain him in jail until he is discharged in due course of law. Upon delivery of his principal at the jail by the surety or any officer, such surety shall be released from the conditions of his recognizance." MCL 765.26; MSA 28.913.
It is noteworthy that, by its terms, the statute does not require the surety to articulate his reasons for desiring "to be relieved of his responsibility" nor establish standards to define the circumstances in which such a desire may be justified. The statute also entitles bondsmen to the assistance of state officers in effecting the arrest.
The success of plaintiffs' Fourteenth Amendment due process claim rests upon the outcome of this Court's threshold determination concerning the existence or lack of state action, i.e., that in
At the outset, I would emphasize that the mere fact that the bondsman's arrest power existed at common law does not prevent the making of such a finding. The Fourteenth Amendment makes void:
"`State action of every kind' which is inconsistent with the guaranties therein contained, and extends to manifestations of `State authority in the shape of laws, customs, or judicial or executive proceedings.'" Shelley v Kraemer, 334 U.S. 1, 14; 68 S.Ct. 836; 92 L Ed 1161 (1947).
It would seem, therefore, that not the source itself of the bondsmen's power to arrest but rather the posture of the state with regard to that power is determinative of the state-action issue. For example, Shelley v Kraemer, supra, made it clear that state authority in the form of judicial enforcement of a common-law rule constituted state action.
Taylor v Taintor, supra, which defendants and my brothers cite as authority for the proposition that the statute is derivative of the common law and thus, no state action exists, does not compel
The most recent Supreme Court authority on the concept of state action as it relates to the Fourteenth Amendment, Jackson v Metropolitan Edison Co, supra, carefully delineates a "nexus" test for determining whether private conduct is to be considered state action with the ambit of the Fourteenth Amendment:
"* * * the inquiry must be whether there is a sufficiently close nexus between the State and the challenged action of the regulated entity [in the instant case, of the bondsmen] so that the action of the latter may be fairly treated as that of the State itself." 419 U.S. 345, 351.
The Jackson opinion further points out that "[t]he
It is clear, first of all, that the mere fact a particular entity is heavily regulated or licensed, Jackson, supra, Moose Lodge No 107, supra, is not by itself sufficient for a finding of state action. Thus, state action cannot be predicated upon the fact that the State of Michigan extensively regulates the business practices of professional bondsmen. Nor can such a finding be premised on the statute's "encouragement" of the rearrest procedures. Compare Northrip v Federal National Mortgage Association, 372 F.Supp. 594 (ED Mich, 1974), with Turner v Impala Motors, 503 F.2d 607 (CA 6, 1974). In discussing the merits of the case, however, the Jackson court isolated other factors which, if present, could raise the level of private conduct to state action. The court indicated that the furnishing of services or exercise of powers traditionally associated with the sovereign, the existence of a symbiotic or interdependent relationship between the state and the private party and the overt or covert approval of the practice by the state, were significant. Jackson, supra. See also, Northrip, supra, p 597.
Defendants would contend that the positions of professional bondsmen and the utility company in Jackson are analogous, and here, as there, no state action exists. I disagree, and find the two situations distinguishable. The utility company's activities failed to meet the criteria listed above; thus, its actions did not rise to the level of state action. Application of those same factors to the instant case, however, compel the opposite result.
First, the Court in Jackson found that the furnishing
Secondly, unlike the State of Pennsylvania's attitude towards the utility's termination policies, Michigan, through action of its Legislature, has "approved" of the rearrest procedures. This "approval" may be discerned on two levels. MCL 765.26; MSA 28.913, is identical to 1929 CL 17188, which significantly altered the prior statutory scheme concerning the surrender of a bailed individual by his surety by allowing the surety to directly arrest his principal. The former statute required a surety, upon affidavit, to apply to a justice of the peace for a mittimus to be served upon the individual by a sheriff or other third party who was then authorized to make the arrest.
Finally, the Jackson decision found no evidence of a "symbiotic" relationship between the state and the utility company to persuade the court that state action existed. Jackson, supra, p 357. Existence of this relationship, whether described as a symbiosis, interdependence or partnership, has long been considered significant to establish the required nexus between the state and private conduct. See, Moose Lodge No 107, 407 U.S. 163, 175-177, Reitman v Mulkey, 387 U.S. 369; 87 S.Ct. 1627;
"By permitting a defendant to be released into the custody of a private surety, the state saves the expense that it would otherwise incur in constructing additional jail facilities, feeding and clothing the prisoner, and using its own governmental personnel to guard the defendant and insure his appearance in court. In maintaining custody over a defendant, therefore, the bail bondsman is performing an important public function."
See also, Dill, Discretion, Exchange and Social Control: Bail Bondsmen in Criminal Courts, 9 Law and Soc Rev 639 (1975).
Merely concluding that state action is present in the instant case, however, does not resolve the question of whether the requirements of due process in general apply to the bondsman's rearrest and surrender of an individual released on bail. This inquiry turns on whether or not "the nature of the interest is one within the contemplation of the `liberty or property' language of the Fourteenth Amendment". Morrissey v Brewer, 408 U.S. 471, 481; 92 S.Ct. 2593; 33 L Ed 2d 484 (1972), Fuentes v Shevin, 407 U.S. 67; 92 S.Ct. 1983; 32 L Ed 2d 556 (1972).
The court below found a close parallel between the liberty interest of the individual released on a bail bond and that of the parolee scrutinized by the Supreme Court in Morrissey, supra. I find no error in the trial court's analysis and would agree that, although the bailed accused's freedom is conditional, he enjoys the core values of liberty protected by the due process clause of the Fourteenth Amendment. The nature of the procedural safeguards to which he is entitled, however, calls for a balancing process between the liberty interest and the state's interests in rearresting a bailed defendant. Morrissey, supra, pp 481-483. While the present statutory system perhaps deters bail-skipping, and affords an alternative means to insure a defendant's appearance, the state primarily benefits because the bondsman's summary arrest methods
I recognize, of course, that both the state and the bondsmen have an interest in assuring the appearance of the accused for trial. In affirming the trial court, I hold here only that the current statute implementing this interest fails to meet due process requirements of the Fourteenth Amendment and is therefore unconstitutional.
Numerous United States and Michigan Supreme Court pronouncements have provided instructive guidelines concerning the procedure necessary whenever Fourteenth Amendment due process interests are involved. See, for example, Morrissey v Brewer, supra, pp 485-488, Fuentes v Shevin, supra, pp 96-97, Mitchell v W T Grant Co, 416 U.S. 600; 94 S.Ct. 1895; 40 L Ed 2d 406 (1974), Bundo v Walled Lake, 395 Mich. 679; 238 N.W.2d 154 (1976). From these cases, it is clear that, at minimum, judicial participation prior to these occurrences and the opportunity for a hearing is required.
I am hesitant, however, to usurp the Legislature's function by mandating a comprehensive procedure, consistent with due process, to govern bond revocation and rearrest. I therefore would leave to the Legislature's wisdom and experience the development of a system compatible with due process and with the needs of the Michigan courts, the individuals seeking bonds and the professional bondsmen.
A response to the position taken by the majority on the constitutionality of bondsman's rearrest
"This traditional right to freedom before conviction permits the unhampered preparation of a defense, and serves to prevent the infliction of punishment prior to conviction. See Hudson v. Parker, 156 U.S. 277, 285 (1895). Unless this right to bail before trial is preserved, the presumption of innocence, secured only after centuries of struggle, would lose its meaning." Stack v Boyle, 342 U.S. 1, 4; 72 S.Ct. 1; 96 L Ed 3 (1951).
The majority's elevation of a contractual right to an absolute subordinates this right to the whim of the bondsman. At the very least, the rearrest clause in the bail bond contract impermissibly interferes with a public policy that has been embodied in every constitution of this state since 1835.
Having declared the bail-bond fee, collateral, and revocation practices of which plaintiffs complained unlawful, the court issued a preliminary
The purpose of a preliminary injunction, and the ground upon which it should be granted, were discussed by the Supreme Court in Niedzialek v Journeymen Barbers, Local 552, 331 Mich. 296, 300-301; 49 N.W.2d 273 (1951):
"In granting or withholding injunctive relief pendente lite in a case of this character it is highly proper and quite essential for a court to consider whether the rights of the respective litigants will best be subserved by granting temporary injunctive relief if sought. If the personal rights or property rights involved will be best preserved by granting temporary injunctive relief in a suit presenting issues of controverted merit, such relief should be granted." (Citations omitted.)
The general standard of review was stated in
"Granting or dissolving an interlocutory injunction is discretionary with the trial court; and this court will rarely interfere with the exercise of such discretionary power and then only upon a showing of a palpable abuse thereof." (Citations omitted.)
See also Seifert v Buhl Optical Co, 276 Mich. 692, 699; 268 NW 784 (1936).
However, although the court enjoys very broad discretion in granting or withholding injunctive relief, the plaintiff must be able to show a threatened interference with his rights. Benton Harbor v Michigan Fuel & Light Co, 250 Mich. 614, 624; 231 NW 52 (1930). It is not sufficient that the defendants' conduct threatens third-party rights. See 42 Am Jur 2d, Injunctions, § 29, pp 764-766; 43 CJS, Injunctions, § 40, p 852.
Furthermore, in the instant case the court had ruled that defendants' fee and collateral charges violated a criminal statute. Hence, its injunction against those practices enjoined commission of a crime. With regard to such orders, the law in this jurisdiction is well settled. That the conduct enjoined is a crime is not sufficient to invoke equity's jurisdiction; there must be an allegation of injury to the plaintiff's property or person. However, where there is such an allegation, it does not defeat equity's jurisdiction that the conduct enjoined is criminal. See Twp of Warren v Raymond, 291 Mich. 426, 428; 289 NW 201 (1939), United-Detroit Theaters Corp v Colonial Theatrical Enterprise, Inc, 280 Mich. 425, 431; 273 NW 756 (1937), Seifert v Buhl Optical Co, supra, p 700, Glover v Malloska, 238 Mich. 216, 220; 213 NW 107 (1927).
In the instant case there is certainly a basis for finding that the acts enjoined threaten injuries to personal or property rights. However, the rights are not those of the litigants. The class of plaintiffs includes only those persons who have already suffered the overcharges. As to these persons the injunction's protection comes too late. Because the preliminary injunction benefits only people who are not parties to the litigation, its issuance was error.
The court also enjoined defendants' summary revocation of bonds pursuant to the statute. Unlike the injunction against overcharges, this order may protect plaintiff class-members' rights. The class is not so broadly defined that it includes all persons who are free on a bond written by defendants, and hence threatened with their bond's revocation. However, it does include persons free on bonds for which they were charged too much in fees and/or collateral. Limited to the benefit of these persons the injunction is not an abuse of discretion.
In conclusion, I would affirm the trial court's decision in part, and reverse in part and remand to the lower court for proceedings not inconsistent with this opinion.
V.J. BRENNAN, J. (concurring in part, dissenting in part).
We concur with Judge CAVANAGH'S opinion except that portion holding MCL 765.26; MSA 28.913 unconstitutional.
Judge CAVANAGH bases his opinion on "a balancing process" between the liberty interests "of the bailed defendant" and the state's interest in "rearrest" and holds that the bailed defendant is entitled
A bail-bond arrangement essentially places the principal (bailed defendant) in the custody of the surety (bail bondsman) thus imposing on the surety the obligation and responsibility to produce the principal at various court proceedings. At common law the surety had the right to surrender the principal at any time to the state and thus discharge the obligation. No process was ever necessary to authorize the arrest of the principal by the surety. Anno: Surrender of principals by sureties on bail bond, 3 ALR 180, supplemented by 73 ALR 1369. This common-law rule was expressed and given effect by the United States Supreme Court in Taylor v Taintor, 83 US (16 Wall) 366, 371-372; 21 L Ed 287 (1873), as follows:
"When bail is given, the principal is regarded as delivered to the custody of his sureties. Their dominion is a continuance of the original imprisonment. Whenever they choose to do so, they may seize him and deliver him up in their discharge, and if that cannot be done at once, they may imprison him until it can be done. They may exercise their rights in person or by agent. * * * The seizure is not made by virtue of new process. None is needed. It is likened to the rearrest by the sheriff, of an escaping prisoner. [Citations omitted.] In Anonymous, 6 Modern [P 231] it is said: `The bail have their principal on a string, and may pull the string whenever they please, and render him in their discharge.'"
See also Carlson v Landon, 342 U.S. 524, 547; 72 S.Ct. 525; 96 L Ed 547 (1952), United States v Goodwin, 440 F.2d 1152, 1156 (CA 3, 1971), Fitzpatrick v
This conception of the bail-bond contract has not been lost to the antiquity of the 19th century. In the recent case of Allied Fidelity Corp v Comm of Internal Revenue, 572 F.2d 1190, 1193 (CA 7, 1978), the court cited Taylor, supra, for the broad powers of a surety on a bail contract and further pointed out that although an accused may be at large due to bail, "in contemplation of law he (the accused) remain[s] in custody".
In Outzs v Maryland National Ins Co, 505 F.2d 547, 551 (CA 9, 1974), the court quoted with approval the following from Fitzpatrick v Williams, supra:
"The right of the surety to recapture his principal is not a matter of criminal procedure, but arises from the private undertaking implied in the furnishing of the bond. * * * It is equally true that the surety, if he has the right, is not required to resort to legal process to detain his principal for the purpose of making surrender."
The statute under attack in the present case represents the State of Michigan's return to the common-law rights and liabilities on a bail-bond contract. The essence of the bail-bond contract is a private undertaking between the bondsman and the bailed defendant imposing rights and obligations running both ways. The bondsman's right to recapture and surrender the bailed defendant represents a significant factor in the bondsman's undertaking. The bondsman's authority to surrender does not directly affect the bailed defendant's right to bail since the latter is still free to post bond or to employ another surety for that purpose. We are not unmindful that economic realities may preclude
It is noted that the surety's function on the bail-bond contract operates to relieve the state from policing court attendance of bailed defendants and thus furthers the state's interests. In addition, state regulation of bail-bond practices protects against abuses of the system. In balancing the interests of the various parties, taking into account the minimal effect of surrender on the bailed defendant's right to bail, we find the surety's right to surrender not offensive to due process. We hold MCL 765.26; MSA 28.913 constitutional and do not enjoin its employment.
D.E. HOLBROOK, P.J. concurs.
"A. All those who purchased a bail bond from the defendant within six years from the date of filing of complaint herein or paid fees or posted collateral totaling more than ten (10%) per cent of the face value of the bond written.
"B. All those for whom the defendant posted bond in return for fees and collateral in excess of ten (10%) per cent of the face value of the bond posted within six years from the date of filing of the complaint herein.
"C. All individuals who purchased a bail bond and who paid fees or posted collateral totaling more than ten (10%) per cent of the face value of the bond written subsequent to the filing of the bill of complaint.
"D. All individuals who purchased bonds and had them revoked under the revocation statute." Order of the court filed November 21, 1975.
Some cause for disagreement may be found in Theisen v Dearborn, 5 Mich.App. 607; 147 N.W.2d 720 (1967), aff'd 380 Mich. 621; 158 N.W.2d 483 (1968). In Theisen retired city employees brought an action for increased retirement benefits, seeking an accounting and discovery of the city's financial records. This Court held that a prior class action brought on behalf of the same employees, raising the same claims of increased benefits from the same defendant and resulting in a money judgment for plaintiffs, was res judicata and binding on the class. The Supreme Court affirmed, agreeing that the decision in the prior case was conclusive on the same issue in the second case.
Although Theisen seems to imply that absent class members are bound by a spurious class action judgment, it is submitted that this reading of the case would be overbroad. Theisen is silent as to whether the absent class members in the prior case were notified as to its pendency. However, the judgment in that case was for a specific sum ($195,936.19), and this strongly suggests that the members of the class were ascertained and notified, and that they presented their claims.
"In all criminal cases where any person or persons have entered into any recognizance for the personal appearance of another, and such bail and surety shall afterwards believe that his principal intends to abscond, or has absconded, such bail or surety, on application to any justice of the peace in the county in which the recognizance is taken, or in which such principal resides, and, producing evidence of his being bail or surety, and verifying the reason of his application by oath or otherwise, it shall be the duty of such justice forthwith to grant a mittimus, directed to the sheriff, his deputy, or constable, or other person of the county in which such application shall be made, commanding such officer or other person forthwith to arrest such principal, if he is to be found within this state, and bring him before such justice, that other and sufficient security may be taken, and, in failure so to do, commit him to the keeper of the common jail in said county, who is hereby authorized to receive such principal and retain him in jail until he is discharged by a due course of law."
An identical provision may be found in 1897 CL 11872, 1871 CL 7877, 1857 CL 6009, 1840 PA 98.
* * *
"Some law-enforcement officials claim that the most important service the bondsman renders to the state is in retrieving defendants who have absconded." Dill. supra, p 667.
"Counsel called attention of the Court to the Court's omission of a reference in its grant of injunctive relief to its holding that the present statutory procedures deny procedural due process. We did make such omission. We had intended to provide as to injunctive relief, injunctive relief against defendant's denial of due process in its administration of revocation procedures. Therefore, any judgment entered must provide such interim injunctive relief." Supplement to First Opinion, November 24, 1975.