BOARD OF TRUSTEES OF THE POLICEMEN AND FIREMEN RETIREMENT SYSTEM OF THE CITY OF DETROIT v CITY OF DETROIT
Docket No. 67445
143 MICH APP 651
Submitted April 12, 1983, at Detroit. - Decided June 19, 1985.
Leave to appeal applied for.
- The boards of trustees of all public employеe retirement systems are authorized by statute to independently retain private legal counsel. The statute is clear and unambiguous on its face and should be enforced as written.
- The facts of the instant case clearly show that independent legal service is necessary, since there would be an obvious cоnflict of interest if the city represented the retirement system or appointed counsel for it.
- The fact that the city charter states that the city‘s corporation counsel must represent all of the city‘s administrative agencies is immaterial. Where a city charter provision conflicts with general statutory law, the statute controls in all matters which are not of purely local character. The trial court cor-
REFERENCES FOR POINTS IN HEADNOTES
[1, 2] 73 Am Jur 2d, Statutes § 142 et seq.
[3, 4] 60 Am Jur 2d, Pensions and Retirement § 39 et seq.
Employer‘s liability for action of trustees or similar body administering employer‘s pension plan. 54 ALR3d 189.
Affirmed.
R. M. MAHER, J., dissented. He disagrees with the majority holding that the statute at issue clearly and unambiguously endows an investment fiduciary with the independent authority to retain private legal counsel and to pay for that counsel with the income of the investment system even where a provision оf a city charter requires the investment fiduciary to follow other procedures to obtain counsel. He would hold that the Legislature, in enacting the statute, did not intend to set aside existing structures within individual retirement systems providing for the retention of legal counsel. Furthermore, while he agrees that there may be situations under which аn existing charter provision might unfairly create a conflict of interest, he does not think that the practicalities of a particular situation should affect the interpretation of a statute for all situations. He would reverse the decision of the trial court.
OPINION OF THE COURT
- STATUTES — JUDICIAL CONSTRUCTION.
A statute which is clear and unambiguous on its face should be еnforced as written.
- STATUTES — CITY CHARTERS — JUDICIAL CONSTRUCTION.
General statutory law takes precedence over a conflicting city charter provision in all matters which are not of purely local character.
- MUNICIPAL CORPORATIONS — PUBLIC EMPLOYEES — RETIREMENT SYSTEMS — RETENTION OF INDEPENDENT LEGAL COUNSEL.
The boards of trustees of all public employee retirement systems have statutory authority to retain independent legal counsel when necessary and to pay for that counsel with the income of the investment system even where a provision of a city charter requires a board to follow other procedures to obtain counsel (
MCL 38.1132 et seq. ;MSA 3.981[112] et seq. ).
DISSENT BY R. M. MAHER, J.
- MUNICIPAL CORPORATIONS — PUBLIC EMPLOYEES — RETIREMENT SYSTEMS — INVESTMENT FIDUCIARIES — RETENTION OF INDEPENDENT LEGAL COUNSEL.
Investment fiduciaries of public employee retirement systems are not clearly and unambiguously endоwed by statute with inde-
pendent authority to retain private legal counsel and to pay for that counsel with the income of the investment system where a provision of a city charter requires the investment fiduciary to follow other procedures to obtain counsel ( MCL 38.1133 ;MSA 3.981[113] ).
Ronald Zajac, for plaintiffs.
Donald Pailen, Corporation Counsel, Mark R. Ulicny, Deputy Corporation Counsel, and Frank W. Jackson, Kenneth G. King, and Linda C. Ragland, Assistants Corporation Counsel, for defendants.
Before: T. M. BURNS, P.J., and R. M. MAHER and CYNAR, JJ.
PER CURIAM. Defendants appeal from the trial court‘s оrder granting summary judgment in favor of plaintiff on defendants’ counterclaim.
On July 1, 1982, the City of Detroit failed to pay a $39,983,039.24 contribution to the Policemen and Firemen Retirement System of the City of Detroit. The city also failed timely to pay a $92,454,926.08 contribution in 1981 and a $14,600,000 contribution in 1980, to the retirement system. Plaintiff, the Board of Trustees of the Policemеn and Firemen Retirement System of the City of Detroit, retained independent legal counsel to pursue litigation to collect these sums. During the course of that litigation, the city counterclaimed arguing that the Board of Trustees for the Retirement System could not retain independent legal counsel but had to rely on the city‘s сorporate counsel for legal advice. The city argues that since it was being sued, its corporation counsel would appoint the board of trustees’ counsel. The trial court granted summary judgment in favor of the board of trustees, finding that it could retain indepen-
The sole legal issue as presented by the trial cоurt and by both parties is whether 1982 PA 55,
We must first determine whether
Where a statute is clear and unambiguous on its
The city also relies on a provision of its charter which states that the city‘s corporate counsel must represent all of the city‘s administrative agencies. Where a city charter provision conflicts with general statutory law, the statute controls in all matters which are not of purely local character. Brimmer v Village of Elk Rapids, 365 Mich 6, 12-13; 112 NW2d 222 (1961). The statute and charter involved in the instant case conflict since the statute provides that plaintiff may choosе its own
Affirmed.
R. M. MAHER, J. (dissenting). I respectfully dissent. I do not agree with the majority that the language of 1982 PA 55, as contained in
In this case, 1982 PA 55 replaсed 1965 PA 314. 1965 PA 314 was enacted “to authorize the investment of funds of public employee retirement systems or plans created and established by the state or any political subdivision“. The act set out precise conditions and limitations under which a retirement system could invest its assets, including monetary and proportional limitations on the amount of assets which could be invested. See
I can also find nothing in the House analysis of 1982 PA 55 to suggest that the Legislature intended to abolish the existing municipal system with its various provisions which provide checks and balances within the management of an individual retirement systеm. The new act was devised to remedy the stultifying effects of the limitations on investment opportunities found in 1965 PA 314. As stated in the First Analysis of House Bill 4272 (which became 1982 PA 55): “[T]hese limitations are both restrictive and vague by modern standards. * * * Some persons feel that a great resource is being lost to the state and that large unnecessary cоsts are being borne by state and local governments in the form of retirement contributions because of the inadequacies of the present system. These people believe that laws governing the investment of public employee retirement funds should be consolidated, clarified, and adapted to the realities of the present investment market“. As stated in the House analysis, the changes to be accomplished by the new bill would include: (1) “a more thorough set of definitions than are now contained in law * * *“; (2) the implementation of a “prudence standard” and “investment guidelines” taken from the Employee Retirement Income Seсurity Act (ERISA) and from the Michigan law regulating trust funds in place of the former “prudence standard” of “all necessary diligence and care“; (3) the specific authorization for an investment fiduciary to consider “diversification, liquidity, and the enhancement of the general welfare of the state” in making invest-
“Funding
“An investment fiduciary would be authorized to pay the costs of investing and managing a system‘s funds by deducting up to one-tenth of one percent of the fund‘s assets annually, subject to a legislative appropriation.
“Fiscal Implications:
* * *
“The investment of retirement funds would be paid for by a ‘deduct’ оf one-tenth of one percent of the assets rather than being subject to the annual appropriations wars. Boilerplate language will have to be introduced into the general government appropriations bill annually to implement this funding system. One-tenth of one percent of the current state portfоlio is $6 million. This is a cap on administrative expenses which the treasury department does not expect to approach.
“The investment bureau of the treasury is presently staffed by 27 people, although they had requested a staff of 36 for this fiscal year. The demands of this bureau‘s expanded investment authority will necеssitate an increase in personnel. The venture capital investment authority in particular is likely to require substantial staffing. In future years, if this bill is enacted, the staff will have to grow but the treasury does not expect that it would ever exceed 50 people. Even this outside figure would remain well within the deduct cap and a fraction of the projected savings.
“Arguments:
* * *
“For:
“Allowing the investment bureau of the treasury to be funded by a ‘deduct’ will complement the flexibility of its investment program. Administrators must be able to hire sufficient skilled people to exploit opportunities and to oversee carefully new investments. To risk the loss of such personnel for short-term budget cuts is dangerous.”
It is clear that these comments address the subject of funding, rather than the subject of legal counsel. In light of the absence of any mention of independent legal counsel or an intent to set aside existing structures within individual retirement systems providing for the retention of legal counsel, I can only conclude that the Legislature did not, in fact, set aside those structures.
I agree with the majority that there may be situations under which the existing charter provisions might unfairly create a conflict of interest. Where that is the case, the charter itself may certainly be challenged. However, I do not believe that the practicalities of a particular situation should affect our interpretation of a statute for all situations. I would reverse the decision of the trial court.