MICHIGAN EDUCATION ASSOCIATION V DEPT OF STATE COMPLIANCE & RULES
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STATE OF MICHIGAN
COURT OF APPEALS
DEPARTMENT OF STATE COMPLIANCE and
RULES DIVISION and SECRETARY OF
STATE,
FOR PUBLICATION
April 30, 2002
9:10 a.m.
Petitioners-Appellants,
v
No. 225155
Ingham Circuit Court
LC No. 97-087542-AA
MICHIGAN EDUCATION ASSOCIATIONNEA,
Respondents-Appellee.
Updated Copy
August 2, 2002
Before: Gage, P.J., and Hoekstra and Meter, JJ.
HOEKSTRA, J.
Petitioners appeal by leave granted from a circuit court order vacating a hearing officer's
order that found respondent in violation of the Michigan Campaign Finance Act (MCFA), MCL
169.201 et seq. We affirm in part, reverse in part, and remand for further proceedings.
Respondent is a corporation that in 1994 sold political polling services to an independent
political committee1 (the committee) for $61,651.50. At some point, respondent sent the
committee a bill for these services dated December 31, 1994. The committee acknowledged the
debt for the first time in its July 1995 triannual campaign statement. Subsequently, the
committee's campaign statements filed for October 1995 and for April 1996 continued to show
the debt. These statements also showed that the committee paid thousands of dollars on other
debts, had other remaining outstanding debts in addition to the debt owed to respondent, and had
a net operating balance. The July 1996 statement reported that the committee paid $256,588.40
on other debts, leaving a debt balance of $61,650.50, and had an end balance of $39,121.84. The
October 1996 statement indicates no payments on debt, a debt balance of $61,651.50, and an end
balance of $80,977.52. Since the original bill dated December 31, 1994, respondent had neither
sent any other written demand to the committee for payment of the debt nor filed a lawsuit for
collection of the debt; however, respondent had not "forgiven" the debt. Further, Allan Short,
respondent's director of government affairs, testified that he had been in contact with the
1
The Michigan House Democratic Fund, formerly known as Hope for the Future of Michigan.
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committee on a monthly basis concerning payment of the debt, that respondent offered the
committee the possibility of installment payments, and that respondent expected to be paid.
In May 1996, petitioners received a complaint alleging that respondent may have violated
the MCFA by making a corporate campaign contribution. Petitioners notified respondent of the
complaint and thereafter initiated administrative proceedings. Those proceedings culminated in
a hearing officer's issuing a final decision and order on October 13, 1997, finding that respondent
had violated MCL 169.254(1) (subsection 54[1]) by making a contribution to the committee in
the form of a forbearance. The hearing officer acknowledged that petitioner Secretary of State
had no rules or standards to define "forbearance" under MCL 169.204(1) (subsection 4[1]). The
hearing officer further stated that petitioners had not applied a consistent standard regarding the
meaning of forbearance, having never commenced an enforcement action on the basis that a
committee has failed to pay a corporate debt for a period in excess of twenty-two months.
Nevertheless, the hearing officer found respondent to be in violation of the MCFA according to
the "plain and ordinary meaning" of "forbearance." Specifically, the hearing officer quoted
Black's Law Dictionary and Webster's New World Dictionary for the following definitions of
"forbearance":
"Refraining from doing something that one has a legal right to do. Giving
of further time for repayment of obligation or agreement not to enforce claim at
its due date. A delay in enforcing a legal right. Act by which creditor waits for
payment of debt due him by debtor after it becomes due.
"Refraining from action. The term is used in this sense in general
jurisprudence, in contradistinction to 'act.'
"Within usury law, term signifies contractual obligation of lender or
creditor to refrain, during a given period of time, from requiring borrower or
debtor to repay loan or debt then due and payable."[2]
* * *
"The act of forbearing, to refrain from; avoid or cease (doing, saying, etc.)
Law the act by which a creditor extends time for payment of a debt or forgoes for
a time his right to enforce legal action on the debt."[3]
Having found that respondent violated subsection 54(1), the hearing officer imposed a statutory
penalty pursuant to MCL 169.215(6)4 of a civil fine equal to the amount of the improper
contribution plus an additional $1,000, totaling $62,651.50.
2
This text, with the omission of case citations, is directly quoted from the hearing officer's
decision that in turn quotes Black's Law Dictionary (rev 6th ed).
3
This text is directly quoted from the hearing officer's decision that quotes Webster's New World
Dictionary, Second College Edition (1980).
4
Now MCL 169.215(11).
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Respondent appealed the hearing officer's order to the circuit court.5 The circuit court
heard oral argument in October 1998, and in September 1999 issued its opinion vacating the
hearing officer's order.6 In its decision, the circuit court determined that the hearing officer's
order must be vacated because "it is not authorized by law, is arbitrary and capricious, and is not
supported by competent, material and substantial evidence on the whole record."
Specifically, the circuit court concluded that the term "forbearance" as used in the MCFA
is unconstitutionally vague, "not because it does not have definite and well-recognized meanings
but, rather, that there is no way to discern which particular meaning or meanings the Legislature
intended to employ in the MCFA." The circuit court found five distinct definitions in Black's
Law Dictionary (rev 6th ed) and two distinct definitions in Webster's New World Dictionary,
Second College Edition (1980). According to the circuit court, the Secretary of State "failed to
give corporations proper notice of its expectations of lawful corporate conduct in avoiding even
the appearance of forbearance on debts owed by political committees."7 The circuit court
concluded that the failure to adopt a rule further defining forbearance precluded enforcement
based on illegal forbearance and that, in the absence of administrative guidance, the hearing
officer's interpretation of forbearance was arbitrary and capricious. The circuit court also found
that the hearing officer's decision was based on insufficient evidence of respondent's specific
purpose to influence the electoral process, as subsection 4(1) requires, that the hearing officer
never even posed the question whether respondent had the requisite intent, and that the testimony
of Allan Short indicated that respondent had other reasons for not insisting on immediate
payment of the debt. Because the hearing officer made no finding whether the "forbearance"
was for "an illicit purpose," the circuit court found that the MCFA was not enforced as written.
Petitioners now appeal by leave granted the circuit court's order vacating the hearing officer's
order.
We first address petitioners' argument that the circuit court erred in holding that the
MCFA's prohibition against corporate political contributions in the form of forbearance is
unconstitutionally vague. The constitutionality of a statute is a question of law that this Court
reviews de novo. Tolksdorf v Griffith, 464 Mich 1, 5; 626 NW2d 163 (2001); Proctor v White
Lake Twp Police Dep't, 248 Mich App 457, 461; 639 NW2d 332 (2001).
"The 'void for vagueness' doctrine is derived from the constitutional guarantee that the
state may not deprive a person of life, liberty, or property, without due process of law." State
Treasurer v Wilson (On Remand), 150 Mich App 78, 80; 388 NW2d 312 (1986), citing US
Const, Am XIV; Const 1963, art 1, ยง 17. With regard to a challenge to the constitutionality of a
statute based on vagueness, this Court has explained:
5
The final decision and order of the Secretary of State is subject to judicial review pursuant to
chapter 6 of the Administrative Procedures Act, MCL 24.301 to 24.306. MCL 169.215(6), now
(12).
6
A final order consistent with the circuit court's opinion was entered on January 27, 2000.
7
See MCL 169.215(1)(e) (the Secretary of State shall "[p]romulgate rules and issue declaratory
rulings to implement this act . . . ."); see also MCL 169.215(2).
-3-
A statute may qualify as void for vagueness if (1) it is overbroad and
impinges on First Amendment freedoms, (2) it does not provide fair notice of the
conduct it regulates, or (3) it gives the trier of fact unstructured and unlimited
discretion in determining whether the statute has been violated. [Proctor, supra at
467, citing Ray Twp v B & BS Gun Club, 226 Mich App 724, 732; 575 NW2d 63
(1997).]
See also Hill v Colorado, 530 US 703, 722; 120 S Ct 2480; 147 L Ed 2d 597 (2000); People v
Lino, 447 Mich 567, 575-576; 527 NW2d 434 (1994).
To determine whether a statute is void for vagueness, a court should examine the entire
text of the statute and give the words of the statute their ordinary meanings. People v Piper, 223
Mich App 642, 645; 567 NW2d 483 (1997); In re Forfeiture of 719 N Main, 175 Mich App 107,
111; 437 NW2d 332 (1989). Substantive due process requires standards in a statute to be
"reasonably precise" in order to ensure that individuals are not held responsible by the state for
conduct that they could not reasonably understand to be proscribed. Sillery v Bd of Medicine,
145 Mich App 681, 686; 378 NW2d 570 (1985); K mart Corp v Dep't of State, 127 Mich App
390, 395; 339 NW2d 32 (1983). Stated another way, "[t]o give fair notice, a statute must give a
person of ordinary intelligence a reasonable opportunity to know what is prohibited or required."
People v Noble, 238 Mich App 647, 652; 608 NW2d 123 (1999) (internal citation omitted); In re
Gosnell, 234 Mich App 326, 334; 594 NW2d 90 (1999).
In addition to this general framework for analyzing whether a statute is unconstitutionally
vague, a heightened level of scrutiny is required because the MCFA implicates free speech.8 Our
Supreme Court has stated, in the context of the similar overbreadth doctrine,9 that when a statute
restricts political expression, which occupies the core of First Amendment protection, it will be
subjected to exacting scrutiny and will be upheld only if it is narrowly tailored to serve a
compelling state interest. In re Chmura, 461 Mich 517, 532-534; 608 NW2d 31 (2000); see
Buckley v Valeo, 424 US 1, 14-15; 96 S Ct 612; 46 L Ed 2d 659 (1976) (explaining the
importance of political speech). This Court too has recognized that where the First Amendment
8
The MCFA involves the regulation of conduct that the First Amendment protects. Austin v
Michigan Chamber of Commerce, 494 US 652, 657-658; 110 S Ct 1391; 108 L Ed 2d 652 (1990)
("The mere fact that the Chamber [of Commerce] is a corporation does not remove its speech
from the ambit of the First Amendment. . . . Although [the MCFA] requirements do not stifle
corporate speech entirely, they do burden expressive activity.").
9
With regard to the distinction between vagueness and overbreadth, this Court has noted:
Although both the void-for-vagueness and overbreadth doctrines are
concerned with curbing arbitrary and discriminatory enforcement, they are
nonetheless distinct jurisprudential concepts. When freedom of speech is
implicated, the doctrines even more closely parallel each other, given that each is
also concerned with the possibility that a statute or ordinance might
impermissibly chill the freedom of expression. [Plymouth Charter Twp v
Hancock, 236 Mich App 197, 199-200; 600 NW2d 380 (1999) (citations
omitted).]
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safeguards the activity to be regulated, the standard of permissible statutory vagueness becomes
more strict. United Pentecostal Church v 59th Dist Judge, 51 Mich App 323, 326; 214 NW2d
866 (1974). The United States Supreme Court has explained: "The general test of vagueness
applies with particular force in review of laws dealing with speech. '[S]tricter standards of
permissible statutory vagueness may be applied to a statute having a potentially inhibiting effect
on speech[.]'" Hynes v Mayor & Council of the Borough of Oradell, 425 US 610, 620; 96 S Ct
1755; 48 L Ed 2d 243 (1976), quoting Smith v California, 361 US 147, 151; 80 S Ct 215; 4 L Ed
2d 205 (1959). However, we also recognize that the United States Supreme Court more recently
stated that the standard of scrutiny for restrictions on contributions requires less compelling
justification than for restrictions on expenditures. Nixon v Shrink Missouri Government PAC,
528 US 377, 387; 120 S Ct 897; 145 L Ed 2d 886 (2000).
In the present case, petitioners argue on appeal that the circuit court erred in holding that
the prohibition against corporate political contributions in the form of forbearance is
unconstitutionally vague. In response, respondent maintains that the circuit court correctly
determined that "forbearance" is unconstitutionally vague because it has multiple meanings and
no guidance is provided concerning what conduct is proscribed. Keeping the above principles in
mind, we conclude that the circuit court erred in vacating the hearing officer's order because
there is no constitutional infirmity in the MCFA with respect to the term "forbearance" and its
meaning with respect to corporate political contributions.
Subsection 54(1) of the MCFA prohibits corporations from making a "contribution,"10 as
that word is defined in subsection 4(1) of the act:
"Contribution" means a payment, gift, subscription, assessment,
expenditure, contract, payment for services, dues, advance, forbearance, loan, or
donation of money or anything of ascertainable monetary value, or a transfer of
anything of ascertainable monetary value to a person, made for the purpose of
influencing the nomination or election of a candidate, or for the qualification,
passage, or defeat of a ballot question.
The point of contention in the present case is the alleged vagueness of the word "forbearance."
Because the MCFA does not define "forbearance," that word should be construed according to its
ordinary meaning. MCL 8.3a;11 Town & Country Dodge, Inc v Dep't of Treasury, 420 Mich 226,
10
We note that the United States Supreme Court already held "that application of [subsection]
54(1) to the Chamber [of Commerce] is constitutional because the provision is narrowly tailored
to serve a compelling state interest." Austin v Michigan Chamber of Commerce, 494 US 652,
655; 110 S Ct 1391; 108 L Ed 2d 652 (1990).
11
MCL 8.3a provides:
All words and phrases [in statutes] shall be construed and understood
according to the common and approved usage of the language; but technical
words and phrases, and such as may have acquired a peculiar and appropriate
meaning in the law, shall be construed and understood according to such peculiar
and appropriate meaning.
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240; 362 NW2d 618 (1984); In re Forfeiture, supra at 111. Resort to dictionary definitions is
appropriate in determining a word's common and approved usage, K mart, supra at 395, and a
court must also consider the context in which the word appears in order to determine which of
these ordinary meanings it carries in the statute under scrutiny, Bio-Magnetic Resonance, Inc v
Dep't of Public Health, 234 Mich App 225, 230; 593 NW2d 641 (1999).
Having reviewed the entire statute, paying particular attention to the subsections in
question here, we find that the term "forbearance" as used in the MCFA is not unconstitutionally
vague. A word used in a statute need not have but a single meaning to pass constitutional
muster. Subsection 4(1) provides a litany of concepts that equate to a contribution for the
purposes of the MCFA, and thus it is not difficult to glean from the statute that a broad
interpretation of the word "forbearance" is intended. Here, it is abundantly clear from the
context in which "forbearance" appears that the Legislature's intent was to prevent a corporation
from conferring something of monetary value for a prohibited purpose, which encompasses
many dictionary definitions of the word forbearance. This intent is particularly clear in light of
the words that forbearance is directly associated with in the definition of contribution. State ex
rel Wayne Co Prosecuting Attorney v Levenburg, 406 Mich 455, 466, n 8; 280 NW2d 810 (1979)
(the meaning of words may be known from, and take color from, the accompanying words).
Thus, it cannot be said that the MCFA, with regard to forbearance, does not provide fair notice of
the conduct that is proscribed. When determining whether a statute is void for vagueness, the
reviewing court need not set aside common sense, nor is the Legislature required to define every
concept in minute detail. Rather, the statutory language need only be reasonably precise.
Because the use of the word "forbearance," when read in the context of the MCFA, has a distinct
and readily apparent meaning, albeit a broader meaning than respondent would desire, the circuit
court erred in finding the MCFA unconstitutional in that respect.
Further, we reject the circuit court's conclusion that petitioners' failure to promulgate or
adopt a rule further defining "forbearance" precludes enforcement based on illegal forbearance.
First, we have concluded that use of the word "forbearance" in the MCFA is not
unconstitutionally vague, and therefore further definition is not necessary, although not
precluded. Moreover, although the Secretary of State has the power and duty to promulgate
rules enforcing the statute and carrying out its provisions, MCL 169.215(1)(e), this Court has
recognized that "an administrative agency need not always promulgate rules to cover every
conceivable situation before enforcing a statute." DAIIE v Comm'r of Ins, 119 Mich App 113,
117; 326 NW2d 444 (1982); K mart Corp, supra at 396; see also Sillery, supra at 687 (neither a
statute nor administrative rules promulgated thereunder need list each specific instance of
conduct encompassed by the statutory standard).12 In this regard, we believe that this case is
similar to that of Sillery, supra. There, this Court concluded that subsection 16221(a) of the
Public Health Code, MCL 333.16221(a), which provides grounds for disciplinary subcommittee
action, including a licensee's "negligence or failure to exercise due care," was sufficiently
12
Having determined that the term "forbearance" as used in the MCFA is not unconstitutionally
vague and that the lack of rules further defining that term does not preclude enforcement based
on forbearance, it follows that the hearing officer's decision was neither arbitrary and capricious
nor unauthorized by law on those bases. To the extent that respondent argues on appeal that
petitioners arbitrarily enforced the MCFA in this case, we agree with the circuit court that
respondent failed to demonstrate arbitrary enforcement.
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specific and did not require further delineation in the statute or in rules. According to the Sillery
Court, "[s]uch a task would require an exhaustive enumeration of countless instances of conduct
which obviously came within the purview of this standard." Sillery, supra at 687. The Sillery
Court also noted that persons might be able to escape regulations, even if they have committed
egregious acts, simply because of oversight or the inability to articulate all possible forms of
negligence. Id. Similarly, we believe that promulgating rules to define when a forbearance
might occur is unnecessary because the task could not possibly articulate every possible instance
of forbearance and the result would be that some instances of forbearance could evade
enforcement. "Substantive due process requires only that the standards be as reasonably precise
as the subject matter requires or permits." Id.; accord Osius v St Clair Shores, 344 Mich 693,
698; 75 NW2d 25 (1956); Krohn v Bd of Medicine, 98 Mich App 129, 133; 296 NW2d 57
(1980). Here, we are satisfied that "forbearance" is sufficiently precise even under the
heightened scrutiny required for restrictions on political expression.
Petitioners also argue that the circuit court erred in concluding that the hearing officer's
decision was not supported by competent, material, and substantial evidence. With regard to an
appellate court's review of a circuit court's review of an administrative agency decision, in Boyd
v Civil Service Comm, 220 Mich App 226, 234-235; 559 NW2d 342 (1996), this Court held
that when reviewing a lower court's review of agency action this Court must
determine whether the lower court applied correct legal principles and whether it
misapprehended or grossly misapplied the substantial evidence test to the
agency's factual findings. This latter standard is indistinguishable from the
clearly erroneous standard of review that has been widely adopted in Michigan
jurisprudence. As defined in numerous other contexts, a finding is clearly
erroneous when, on review of the whole record, this Court is left with the definite
and firm conviction that a mistake has been made.
"Substantial evidence is any evidence that reasonable minds would accept as adequate to support
the decision; it is more than a mere scintilla of evidence but may be less than a preponderance of
the evidence." Michigan Ed Ass'n Political Action Committee v Secretary of State, 241 Mich
App 432, 444; 616 NW2d 234 (2000).
Here, the evidence presented before the hearing officer unquestionably established that
respondent made a contribution in the form of a forbearance to the committee. No matter how
respondent's conduct is parsed, respondent gave something of value to the committee without
receiving payment for it for an extended period. In fact, the circuit court acknowledged that the
circumstances in the present case are "certainly forbearance according to some definitions."
However, as the circuit court recognized, the inquiry with regard to whether a violation of the
MCFA occurred does not end at this point. To meet the definition of a contribution pursuant to
subsection 4(1), the forbearance must have been given for a specific purpose. The relevant
purposes, as defined in subsection 4(1), are for "influencing the nomination or election of a
candidate, or for the qualification, passage, or defeat of a ballot question." The hearing officer
made no findings of fact concerning respondent's purpose. According to the circuit court, this
omission was the "gravest flaw" of the hearing officer's decision. The circuit court felt that there
was no evidence at all on this point, stating that "[t]he question [whether respondent had any
political motive, let alone the specific purpose of influencing the electoral process] was not even
posed much less resolved in [the] proceedings below."
-7-
It might be inferred that the transfer of the polling information to the politically oriented
committee could be for no purpose other than to influence in some way an election or ballot
question. However, the hearing officer never expressly stated whether he made such an
inference. As a result, it is not apparent from the record whether the hearing officer neglected to
consider this "purpose" requirement of subsection 4(1) or did in fact make such an inference
before concluding that respondent violated subsection 54(1) by making a prohibited contribution.
Thus, it appears that further factual findings are necessary. Because fact finding is within the
province of the administrative agency, see Gordon v Bloomfield Hills, 207 Mich App 231, 232;
523 NW2d 806 (1994) (a reviewing court may not invade the province of exclusive
administrative fact finding); Freiberg v Big Bay De Noc School Dist Bd of Ed, 91 Mich App 462,
465; 283 NW2d 775 (1979), remand to the hearing officer is required.
Affirmed in part, reversed in part, and remanded to the circuit court with direction to
remand to the hearing officer for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Joel P. Hoekstra
/s/ Hilda R. Gage
/s/ Patrick M. Meter
-8-
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