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Rayford v. Detroit

Michigan Court of Appeals
Feb 8, 1984
347 N.W.2d 210 (Mich. Ct. App. 1984)


In Rayford, plaintiff police officers attempted to bring suit under the UBAA after they lost their jobs as a result of a budget cutback instituted by the mayor without prior city council approval.

Summary of this case from Detroit Fire Fighters v. Detroit


Docket No. 74531.

Decided February 8, 1984.

Lawrence R. Green Associates (by Lawrence R. Green), and Paul Mahinske, of counsel, for plaintiffs.

Walter S. Nussbaum, P.C. (by Walter S. Nussbaum, Marcia S. Nussbaum, and Mara Kalnins-Ghafari), for intervening plaintiff.

Donald Pailen, Corporation Counsel, and Honigman, Miller, Schwartz Cohn (by James K. Robinson, Richard S. Soble, and Brian D. Figot), special counsel to defendant, for defendants.

Before T.M. BURNS, P.J., and MAcKENZIE and R.E. ROBINSON, JJ.

Former circuit court judge, sitting on the Court of Appeals by assignment.

After adoption by the Detroit City Council of the city budget for the fiscal year ending June 30, 1984, the Honorable Coleman Young, Mayor of the City of Detroit, faced with an excess of anticipated expenditures over anticipated revenues, and in order to avoid a budget deficit, implemented in late August of 1983 an austerity program which forced the layoff of personnel from various city departments, including 224 police officers. The individual plaintiffs herein are two of those officers. The Detroit Police Officers Association was permitted to intervene as a plaintiff.

The complaints allege that defendant, Mayor Young, implemented an amended budget without submitting such amended budget to the city council as required by law. Defendants characterize the mayor's action as a "savings plan", not a budget amendment.

Plaintiffs moved below for an order requiring the reinstatement of the laid-off officers, charging a violation of the Uniform Budgeting and Accounting Act, MCL 141.421 et seq.; MSA 5.3228(21) et seq. Defendants moved for accelerated judgment pursuant to GCR 1963, 116.1, subds (2), (3), (4), and (5), and for summary judgment pursuant to GCR 1963, 117.2, subds (1) and (3). The trial court denied defendants' motions and, treating plaintiffs' motion as one for summary judgment, granted it, on the ground that defendants had violated § 17 of the Uniform Budgeting and Accounting Act, MCL 141.437; MSA 5.3228(37). Defendants' motion for a stay of the trial court's order was denied by this Court and granted by the Michigan Supreme Court on November 4, 1983.

Although the individual plaintiffs claim a different basis for relief than does the intervening plaintiff, both claims come to this Court within the context of the Uniform Budgeting and Accounting Act.

Although defendants' appeal raises a variety of issues, we address only one, as we believe it is dispositive of this suit.

Do plaintiffs have standing, either as city employees or as city taxpayers, to bring this suit?

We think not. The pertinent provisions of the Uniform Budgeting and Accounting Act state:

"Sec. 17. Except as otherwise provided in section 19, a deviation from the original general appropriations act shall not be made without amending the general appropriations act. The legislative body of the local unit shall amend the general appropriations act as soon as it becomes apparent that a deviation from the original general appropriations act is necessary and the amount of the deviation can be determined. An amendment shall indicate each intended alteration in the purpose of each appropriation item affected by the amendment. The legislative body may require that the chief administrative officer or fiscal officer provide it with periodic reports on the financial condition of the local unit. If, during a fiscal year, it appears to the chief administrative officer, or the fiscal officer in local units which have not elected or designated a chief administrative officer, or to the legislative body that the actual and probable revenues from taxes and other sources in a fund are less than the estimated revenues, including an available surplus upon which appropriations from the fund were based and the proceeds from bonds or other obligations issued under the fiscal stabilization act or the balance of the principal of these bonds or other obligations, the chief administrative officer or fiscal officer shall present to the legislative body recommendations which, if adopted, would prevent expenditures from exceeding available revenues for that current fiscal year. The recommendations shall include proposals for reducing appropriations from the fund for budgetary centers in a manner that would cause the total of appropriations to not be greater than the total of revised estimated revenues of the fund, or proposals for measures necessary to provide revenues sufficient to meet expenditures of the fund, or both. The recommendations shall recognize the requirements of state law and the provisions of collective bargaining agreements." MCL 141.437; MSA 5.3228(37).

"Sec. 20. A violation of sections 17 to 19 by the chief administrative officer, the fiscal officer, an administrative officer, employee, or member of the legislative body of the local unit disclosed in an audit of the financial records and accounts of the local unit in the absence of reasonable procedures in use by the local unit to detect such violations shall be filed with the state treasurer and reported by the state treasurer to the attorney general. For local and intermediate school districts, the report of a violation shall be filed with the state superintendent of public instruction instead of the state treasurer. The attorney general shall review the report and initiate appropriate action against the chief administrative officer, fiscal officer, administrative officer, employee, or member of the legislative body. For the use and benefit of the local unit, the attorney general or prosecuting attorney may institute a civil action in a court of competent jurisdiction for the recovery of funds of a local unit, disclosed by an examination to have been illegally expended or collected as a result of malfeasance and not accounted for as provided in sections 17 to 19, and for the recovery of public property disclosed to have been converted or misappropriated." MCL 141.440; MSA 5.3228(40).

It is assumed, for purposes of this opinion, that the mayor's "savings plan" is in reality an attempt by him to amend the Detroit city budget without council approval.

The substantive purposes of the Uniform Budgeting and Accounting Act, as expressed in its title, are "* * * to provide a uniform budgeting system for local units; and to prohibit deficit spending by a local unit of government".

The mere fact that a statute designates a public official or body as its enforcer does not deprive an individual of a private right of action seeking its enforcement. Pompey v General Motors Corp, 385 Mich. 537, 557-559; 189 N.W.2d 243 (1971). The test as applied by both the federal and Michigan courts is whether the statute is designed to protect the public or the private sector. If the latter, then generally a private right of action exists. As early as 1916, the federal courts applied the test to find a private right under the Federal Safety Appliance Acts for an injured railroad employee. The purpose of the act, expressed in its title, was "to Promote the Safety of Employees and Travelers".

"A disregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover damages from the party in default is implied * * *." Texas Pacific R Co v Rigsby, 241 U.S. 33, 39; 36 S Ct 482; 60 L Ed 874 (1916).

The federal courts have continued to apply the "especial benefit" test in Cort v Ash, 422 U.S. 66; 95 S Ct 2080; 45 L Ed 2d 26 (1975), where the Court found no private right in a stockholder suing under a criminal statute prohibiting corporations from making expenditures in connection with federal elections; and in Cannon v University of Chicago, 441 U.S. 677; 99 S Ct 1946; 60 L Ed 2d 560 (1979), where the Court found an implied private right of action under a federal law prohibiting sex discrimination.

The Cannon Court, as did its predecessors, implied the creation of the private right by looking to the language of the statute which provided "[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program". 441 U.S. 681-682. (Emphasis added.) The Cannon Court further recognized the special benefit test as the threshold factor to be considered among the four factors delineated in Cort, supra. The following comment sheds further light on the Court's reasoning:

"There would be far less reason to infer a private remedy in favor of individual persons if Congress, instead of drafting Title IX with an unmistakable focus on the benefitted class, had written it simply as a ban on discriminatory conduct by recipients of federal funds or as a prohibition against the disbursement of public funds to educational institutions engaged in discriminatory practices." Cannon, supra, pp 690-693.

Contrary to the opinion of the learned trial judge, the federal courts have not abandoned the "especial benefit" test as the threshold factor to be considered, in favor of the legislative intent test (the second factor established in Cort, supra). An examination of the cases relied on by him, i.e., Northwest Airlines, Inc v Transport Workers Union of America, AFL-CIO, 451 U.S. 77; 101 S Ct 1571; 67 L Ed 2d 750 (1981), and Middlesex County Sewerage Authority v National Sea Clammers Ass'n, 453 U.S. 1; 101 S Ct 2615; 69 L Ed 2d 435 (1981), reveals that in each case the Court first considered the "especial benefit" factor before considering the legislative intent factor.

We agree with the trial judge, however, that the mere fact that federal courts may find a private right under a federal law does not mean that state courts must of necessity find a state right under a state law. This is, in essence, the fourth factor considered in Cort, supra:

"And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?" Cort, supra, p 78.

And that is the case before us, there being no question but that the management of local budgets is a matter of only state concern.

The "especial benefit" test crops up early in Michigan law. In Taylor v Lake Shore M S R Co, 45 Mich. 74, 77; 7 N.W. 728 (1881), plaintiff sued under an ordinance requiring owners or occupants of realty to keep the adjoining sidewalks free of snow. The Court, examining the duty which the ordinance imposed on the owner, said:

"The nature of the duty and the benefits to be accomplished through its performance must generally determine whether it is a duty to the public in part or exclusively, or whether individuals may claim that it is a duty imposed wholly or in part for their especial benefit."

To like effect are Sterling v Union Carbide Co, 142 Mich. 284; 105 N.W. 755 (1905), Lepard v Michigan Central R Co, 166 Mich. 373; 130 N.W. 668 (1911), Sorenson v Kalamazoo Auto Sales Co, 201 Mich. 318; 167 N.W. 982 (1918), Bolden v Grand Rapids Operating Corp, 239 Mich. 318; 214 N.W. 241 (1927), and Pompey v General Motors, supra.

Defendants call attention to the so-called "disappointed bidder" cases wherein Michigan has routinely rejected the complaint of the losing bidder suing to enforce an ordinance which requires the municipality to accept the lowest responsible bid. The Court's rationale is that the loser is not within the class of persons intended to be benefitted by the legislation. See Talbot Paving Co v Detroit, 109 Mich. 657; 67 N.W. 979 (1896), Detroit v Wayne Circuit Judge, 128 Mich. 438; 87 N.W. 376 (1901), and Attorney General ex rel Allis-Chalmers Co v Public Lighting Comm of Detroit, 155 Mich. 207; 118 N.W. 935 (1908), where the Court ruled that:

"[t]he proceeding [by the Attorney General] is the proper one to determine the question, and the only one by which any action could be taken. The public represented by the proper officer is the real complainant before the court." Id., p 211.

It disturbs us that the plaintiffs and the intervening plaintiff's members are forced out of employment, but they are without standing to maintain this suit under the Uniform Budgeting and Accounting Act. Its purpose is to promote uniform budgets and to avoid deficit spending, not to afford security of employment. Any action under this statute must be initiated by the Attorney General (or the prosecuting attorney if assets are to be recovered). Oleksy v Sisters of Mercy of Lansing, Michigan, 74 Mich. App. 374; 253 N.W.2d 772 (1977).

Plaintiffs further cite several sections of the Detroit City Charter in support of their claim. The only sections which touch on the questions raised by plaintiffs are § 7-1103, which imposes on the Board of Police Commissioners the duty of reviewing and approving the departmental budget before its submission to the mayor, and § 7-1106, which empowers the police commissioner to discharge employees for disciplinary reasons. We find neither of these sections helpful in resolving the question of plaintiffs' standing in this suit.

It is also urged that the plaintiffs have standing to sue as taxpayers. Plaintiffs did not assert this claim in their complaint, but voice it for the first time in their appeal brief.

There are many cases where taxpayer suits have been maintained, and the trial judge makes this point in his opinion. The attitude of courts in general toward taxpayer suits is set forth in 18 McQuillin, Municipal Corporations (3d ed), § 52.13, p 24:

"it is generally held, unless otherwise provided by statute, that a taxpayer cannot sue to enjoin an illegal or unauthorized act on the part of a municipality unless such act will result in an increase of his taxes or will otherwise result in direct or indirect pecuniary injury to him."

This is the view adopted by the Michigan Courts: Nichols v State Administrative Board, 338 Mich. 617; 62 N.W.2d 103 (1954), Menendez v Detroit, 337 Mich. 476; 60 N.W.2d 319 (1953), Grand Rapids Independent Publishing Co v Grand Rapids, 335 Mich. 620; 56 N.W.2d 403 (1953), and Kaminskas v Detroit, 68 Mich. App. 499; 243 N.W.2d 25 (1976), lv den 399 Mich. 826 (1977). Plaintiffs nowhere assert that their taxes will be increased or that as taxpayers they will suffer any pecuniary loss as a result of the mayor's action.

We should not end this discussion without recognizing Slavin v Detroit, 262 Mich. 173; 247 N.W. 145 (1933). Defendants cite this case in support of their position that there was no common-law remedy available to plaintiffs before the enactment of the Uniform. Budgeting and Accounting Act. Since Slavin was heard on its merits, it could be argued that it does in fact point to the existence of a common-law remedy prior to adoption of the Uniform Budgeting and Accounting Act. We note, however, that the question of whether plaintiffs had standing to sue was not raised or decided in that case.

Reversed. No costs, a public question being involved.

Summaries of

Rayford v. Detroit

Michigan Court of Appeals
Feb 8, 1984
347 N.W.2d 210 (Mich. Ct. App. 1984)

In Rayford, plaintiff police officers attempted to bring suit under the UBAA after they lost their jobs as a result of a budget cutback instituted by the mayor without prior city council approval.

Summary of this case from Detroit Fire Fighters v. Detroit

In Rayford, the plaintiffs brought suit pursuant to the UBAA, in an attempt to require the city to reinstate laid-off police officers.

Summary of this case from Detroit Fire Fighters v. Detroit

In Rayford, two police officers and their union brought suit claiming the officers had been illegally laid off to avoid a budget deficit.

Summary of this case from Fire Fighters Ass'n v. Detroit
Case details for

Rayford v. Detroit

Case Details


Court:Michigan Court of Appeals

Date published: Feb 8, 1984


347 N.W.2d 210 (Mich. Ct. App. 1984)
347 N.W.2d 210

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