*1 Appliance Sands v Wilson SANDSAPPLIANCE SERVICESv WILSON April 2, 1997, August Docket No. 190270. Submitted at Detroit. Decided appeal 28, 1998, sought. at 9:05 A.M. Leave to brought Services an action in the Sixteenth District against Christopher Wilson, seeking Court to recover the amount allegedly due under a “tuition contract” that the defendant had signed becoming plaintiff. pro- on of the The contract job pay training, vided that in consideration of the defendant would plaintiff three-year during training period; $50 a week the how- ever, provided the contract further that each week of continued employment beyond period payment training would serve as training period. Accordingly, for one week of the if the defendant plaintiff years, training had worked for the for six the cost of paid quit would have been considered in full. When the defendant years, plaintiff his after two and one-half invoked provision provided of the tuition contract that that termination any unpaid made tuition due full and com- $6,500 by menced its action to recover the then owed the defend- plaintiff’s proofs ant under the contract. At the close of at a bench trial, case, finding the district court dismissed the that the tuition illegal provisions contract was and void under the of subsection 8(1) wages fringe act, 408.478(1); of the benefits MCL MSA 17.277(8)(1). appealed Wayne Court, The to the Circuit affirmed, Callahan, plaintiff appealed which Michael J. J. The to the by Appeals granted. Appeals Court of leave The Court of issued an opinion; however, publication opinion, before the Court granted rehearing prior the defendant’s motion for and vacated its opinion. Appeals rehearing,
On the Court of held: plaintiff’s pre- 1. The claim that the defendant should have been relying by 8(1) cluded from on subsection as an affirmative defense failing plead reason of the statute before trial was waived its rejection of the trial court’s offer of additional time to meet that any prejudice arising affirmative defense its failure to show statutory from the defendant’s failure to assert the defense earlier. 231 any legislative history concerning 2. Because of the absence of 8(1), Legislature’s purpose must be determined from language a reasonable construction of the of the statute itself. corresponding 3. Because both subsection and the adminis- *2 rule, AACS, 408.9011, speak employer trative R in terms of an demanding receiving employee from an remuneration or consid- employment employ- eration as a condition of or continuation of ment, questionable 8(1) applicable it is whether subsection to the present arrangement liability payment in which the defendant’s for upon employment. arises the termination of his payment pursuant 4. Even if the to the tuition contract is consid- employment employ- ered to be a condition of or of continuation of ment, nothing suggest employers may there is in the statute to employees employ- not enter into contracts with their in which the agree pay employers ees to or to reimburse their for valuable ser- provided employees employers. plain- vices to the Here the agreed provide training exchange tiff to in for the defendant’s promise pay training by continuing employ- to for that either his three-year period beyond ment training period for a the end of the by payment any unpaid upon employ- balance termination of public policy justifies 8(1) ment. Neither nor subsection the district provisions court’s refusal to enforce the of the tuition contract as written. Any inequality bargaining power parties 5. in the of these at the they support time entered into the tuition contract is insufficient to finding that the tuition contract anwas adhesion contract. Reversed and remanded. J., dissenting, language stated that the broad of subsec- Bandstra, legislative prohibition tion evidences a intent that the should any employee must, any fashion, occasion where an payment privilege employment. make for the Because the con- required tract in this case the defendant to incur a debt that was payable plaintiff, applies to the the statute and the contract was
void and unenforceable. — — Employment Payment Contracts Contracts as Consideration for Employment. provision wages fringe prohibits The and benefits act that employer demanding receiving remuneration or con- employ- sideration as a condition of or continuation of prohibit employee agrees ment does not a contract in which an pay training supplied by if the period terminates before the end of a set (MCL408.478[1]; 17.277[8][1]). forth in the contract MSA Appuance v Wilson plaintiff. Thomas H. for the O’Connor, (John Lydick, Counsel), Dean Koulouras for the defendant. Markey, P.J.,
Before: and Hoekstra, Bandstra JJ. plain- P.J. In action, this breach of contract Markey, appeals by
tiff, Sands Services, leave granted from an October 1995 circuit court order affirming directing a June 1995 district court order Christopher verdict in favor of defendant Wilson. On appeal, plaintiff (1) raises two issues: whether defend- specifi- failing ant waived his contract defenses cally plead (2) answer, them his if not, parties’ whether the “tuition contract” was valid and enforceable. We reverse and remand. *3 Michigan corporation engaged
Plaintiff, in the major appliance repair, business of hired defendant appliance repair person May as an 1992. When years inexperienced, defendant, then nineteen old and applied job plaintiff, plaintiff’s rep- for a with he and resentative reviewed a document entitled “tuition provided contract,” which that “in consideration for job training,” pay plaintiff $50 defendant would three-year “training” period. week over a Each week training period of continued after the payment training. would constitute for one week of employed plaintiff if defendant Thus, remained with years, plaintiff for a total of six he would owe noth- money actually ing, change and no would hands. In plaintiff any “forgive” essence, would indebtedness training. relationship incurred for If the any reason,” however, terminated “for payments “the tuition paid owed at that time” were to be in full. 231 signed contract, plaintiff Defendant the tuition and day. hired him same At the beginning his $7 employment, defendant earned an hour. Defendant stopped working plaintiff 1994, November after years two employment, and one-half and his earn- had ings average escalated to an of approximately $975 Consequently, plaintiff a week. made deductions paychecks from defendant’s final two for tools, miss- ing uniforms, personal telephone and calls, and applied the balance toward defendant’s contract amount due owing. president now and Plaintiff’s stockholder, Ralph sole Parry, testified that in addi- tion paying defendant the agreed-upon wages, he provided defendant with six formal training sessions, by Parry constant instruction exper- other more study ienced technicians, and ques- books and review tions to training advance his prepare him for the federal Environmental Agency Protection exami- Parry nation. further allowed to a videotape access library and books in-shop and intensive instruction sessions. There was testimony plaintiff also sent with other service technicians on service calls, thereby requiring pay employees two to do job, one and that those service calls typically took longer because the defendant was receiving Parry instruction. training testified that this cost him $50 “ten payments times” a week agreed to under the contract. While employed defendant was with plaintiff, required he was never to make weekly payments under the contract. plaintiff’s
At the proofs, close the district court *4 plaintiff’s dismissed against claim defendant on the basis that the tuition contract was and illegal void as a “bond” and of $6,500.” “debenture The circuit court v Wilson dismissal, that the finding the district court’s affirmed permit- its discretion in court had not abused district defenses without to raise certain ting statutory provisions underlying the enumerating the that the contract contra- concluding defenses MSA We 408.478(1); 17.277(8)(1). vened MCL disagree. of his motion in the district designation
Defendant’s
for a directed verdict was misno-
court as motion
really
involuntary
a motion for
the motion was
mer;
in a
when
a motion utilized
bench trial
dismissal,
presentation
plain-
court is satisfied after the
plain-
that “on the facts and the law the
tiff’s evidence
no
to relief.” MCR
right
2.504(B)(2);
tiff has shown
Services,
Bros,
B
Inc v Wild
Begola
Samuel
210 Mich
Armoudlian v
NW2d 217
App 636, 639;
(1995);
Zadeh,
671-672;
With assertion that defendant precluded asserting should have been the stat- defense, an affirmative we believe that ute as by rejecting has waived this issue the trial court’s 408.478(1); of additional time to research MCL offer specified which was not in the 17.277(8)(1), MSA prejudice. to show defenses, failing affirmative Deihm, Phillips v App 389, 393-394; 213 Mich See (1995). NW2d 566 interpretation the district court’s
Concerning
MSA
we believe that
408.478(1);
17.277(8)(1),
MCL
neither void nor voidable
tuition contract
plaintiff’s
*5
App
410
231 Mich
405
Opinion of the Court
pursuant
to
statute. When reviewing statutes, our
primary
is to
goal
ascertain and give effect to the Leg
islature’s
intent,
the Legislature
presumed
to
have intended the meaning
plainly expressed.
it
Far
rington v Total Petroleum, Inc,
The statute at issue, subsection the wages and fringe benefits act, MCL 408.478(1); MSA provides: 17.277(8)(1), employer, agent An representative employer, or of an person having authority other employer hire, from the employ, or persons direct the services of other in the shall receive, not demand or directly indirectly employee, fee, gift, from an tip, gra-
tuity, or other consideration, remuneration or aas condi- Appliance v Wilson employment. This continuation of tion of employ- to fees collected does not state. under the laws of this agency licensed ment R rule, AACS, adxninistrative accompanying The condi- as which addresses 408.9011, “[r]enumeration pertinent part: reads in employment,” tion of *6 employer representative of an shall not (1) or An directly employee, receive, indirectly, an from demand any hire or continuation following as a condition of of the employment: of tips, gratuities.
(a) Fees, gifts, Security deposits. (b) employee completes the the
(c) to ensure that Bonds employment period. by specified required as in sub-
(d) the Uniforms (2) this rule. rule of by specified required in subrule Equipment as
(e) (3) this rule. or considerations.
(f) forms of remuneration Other by employ- (4) rule does not to fees collected This Michigan agency under law. ment licensed that authority, without citation to argues, Plaintiff rule were and the administrative subsection money extorting from prevent employers intended jobs” the Great by “selling during employees any also unable to offer Defendant is Depression. rationale behind the of or authority regarding origins denies that the Moreover, plaintiff 8(1). specified enumer- contract involved tuition instead con- 8(1) and items under subsection ated was to allow of the contract purpose tends that the money portion of the recoup a small 412 Mich Opinion the Court employees to train educate expended certain employment relationship prema- should the terminate turely. Defendant counters the tuition contract is equivalent the of indentured servitude and constitutes a bond under the administrative rules. long courts
Michigan
recognized
presump-
have
tion that a contract
legal purpose.
has a
Stillman v
Goldfarb,
App 231, 239;
from consideration, or or fee, gift remuneration or other any tips gratuities received portion or any part of or employer, employment of said employee while in the such employment or a condition such or as in consideration of perform any person such services hiring or employing person continue permitting of said for such Cal employment, guilty a misdemeanor. of [1917 in such added).] 172, 1, p 257(emphasis Stat, § ch Farb, in In re Henning court observed that The down it had struck (1918), P 320 592; 174 Cal of ‘substantive principles of “as violative 1917 statute ” Hen- of contract.’ specifically ‘freedom process,’ due decision, 1270. After the Farb supra at ning, in 1929 Legislature the California response, apparent amendment statute. The 1929 subsequent enacted that mirrors the language 351 deleted § California’s receipt” of i.e., the “demand 8(1), our subsection a condition of consideration,” “as “remuneration so as language and redrafted employment,” such tips gratuities only the treatment to address employers disallow receive and to employees tips. Hen- employees’ the benefit of obtaining supra at 1270-1275. ning, the same appears to address
Our subsection Legislature by the California expressed concerns statute. nearly identically worded 351, a § California’s language is buttressed This conclusion *8 414 231 405 Opinion Court virtually obscure and never Michigan invoked crimi- nal 351 statute, Michigan’s Code, § Penal MCL 28.583,2 MSA which is identical also to the 750.351; original civil statute struck down in Our Farb. § 351 reads as follows:
Any representative employer agent employer or or of an or person authority having other hire, from his employ, persons direct or the services of other in the employment employer, of said who shall or demand receive directly indirectly any person employ- or in the when employer, any fee, gift ment of said or other remuneration consideration, any part portion or tips or or gra- or employe tuities employ- received such while [sic] employer, ment of said in consideration or aas condition of hiring perform such employing person permitting per- such services such or of said son to guilty continue in such of a misdemeanor.
Nothing contained in this section shall be construed to employment agencies employment agents operating [Empha- licensed and under laws of state. this sis added.]
After reading both Michigan statutes, 351 and sub- § section 8(1), considering their and factual legal histories, apparent it is that these criminal and civil statutes address the same concern as that addressed by the California Legislature California’s 351: tip- § ping practices. California case law and the evolution of its 351 provide § some insight and for us guidance as we our statutes, look at similar have which no illu- minating histories. appears penal rarely, §Our to be an obscure that has statute if ever, invoked, reported been discussing inasmuch can as we find no cases provision.
this v Wilson
Opinion of the Court support plaintiffs find no the- Initially, we can Although of this statute. ory concerning genesis the any event, fact, archaic. In our sub- plausible, is, it in 390, promul- with 1978 PA originated section 8(1) fifty years after the 1929 stock approximately gated accurate historical market crash. Because we have no we are left with the task 8(1), rationale for subsection juncture, it. At this we reading interpreting and construction, aided com- apply must a reasonable accomplish the sense, Legislature’s mon order to supra; VanGessel, supra. purpose. Marquis, an prohibits demanding The statute any “remuneration or receiving employee or from an employment as a condition of or con- consideration, R employment.” AACS, 408.9011(c) tinuation of prohibit receipt the demand or from an (f) employee to ensure that the “[b]onds completes employment period” the or “forms of remu- neration or consideration” as condition of hire or employment. continuation of Even assuming, argu- endo, plaintiff pursuant that the reimbursement seeks to the tuition contract constitutes “remuneration or employment, consideration” or a “bond” to ensure query employment whether a condition of or of con- truly tinued at issue here. In other words, we do not believe the contract at issue even plain wording runs afoul of the of the statute. to do with patent nothing It is that this contract has seriously question tips gratuities, accordingly we Legislature whether the intended that subsection contemplated have an affect on or that subsection type of factual situation. In 8(1) would to this the terms fact, this lawsuit was instituted to enforce ex-employee. of a tuition contract and collect from 231 Mich By very its not terms, contract could be sustained against prospective either a employee. current plaintiff’s
Defendant’s that contention admission it would not have hired he defendant had not signed contract and of itself con- stitutes violation of 8(1) ignores subsection plain reading of the The case, statute. situation in this in fact, constitutes opposite exact con- situation templated in empha- It is 8(1). critical to size that under contract, the terms of the paid nothing nothing, demanded either at inception during the term of defendant’s *10 employment. Plaintiff received rights certain when it and defendant signed contract, the but none of those rights were during enforceable the tenure of defend- employment. ant’s Although may signing contract have required been of this particular before he would be hired, the of terms the contract would come play only into his upon premature departure from the company. very The facts of this spe- case are cific and strongly support the fact that each of the parties to this contract understood its terms and will- ingly entered it. into agreed Plaintiff train defend- ant, and defendant agreed that he would reimburse plaintiff in part small of cost that were he training to leave its employ year’s before six time. Plaintiff tes- tified that not all prospective employees were told about they tuition contract hired, before were only required those who training they before could productive. become we
Were plain- conclude that the contract right tiff received is a condition of employment, then noth- ing distinguishes this contract from right any other agreed-upon contract that right inures to the benefit v Wilson
Opinion Court an example, although For employer. of an may require it company’s telephone bills, may pay a personal calls. to reimburse it for their employees its usually employee like this are included Provisions they when are employees receive handbooks receipts employees typically sign hired, and new they received, read, have under- acknowledging that poli- cases, agree in some to abide and, stood to the terms of Agreeing set forth in the manual. cies certainly employee manuals can be considered these employment” or “continuation either a “condition employment.” justifiable distinguishing can find no means for We certain condi- employer’s right an contractual under repayment to receive a of the cost of intensive tions on-the-job untrained, to an given instruction that employer’s an employee right new contractual employee’s personal an receive reimbursement telephone Thus, calls. were we to find that con- tract demanded of its right compensation constitutes “remuneration or consider- employment,” ation as a condition of it then could be nearly all argued instances that con- tracts are void under subsection We will not 8(1). interpretation a nul- apply an that renders the statute *11 lity application or its ludicrous. specific support
Nor do the facts of this case an argument plaintiff indirectly that demanded prohibited fees, gifts, tips, or other items set forth rule. either in subsection the administrative is, plaintiff paid fairly begin- The fact at the handsomely end, and at its so ning of his be asserted that defendant was “indi- it cannot even 231
Opinion the Court rectly” plaintiff paying by accepting pre- than a less vailing wage. required
If the tuition contract’s terms defendant to repay plaintiff years beginning $50 a for week three year paycheck, the fourth from his plaintiff i.e., if check, were to “dock” defendant’s that paying would an constitute indirect means of a “fee,” “security deposit,” contrary, Here, or “bond.” to the plaintiff simultaneously specifically agreed forgive to any repayment training pay for and to defendant a salary employ- substantial for each week of continued beyond years. ment three policy public against allowing Moreover, we find no prematurely employee departing par- agree to to tially specialized training, reimburse performed without which an could not have job—exactly training his the nature of the plain- defendant received in the instant case. We liken agreement provide tiff’s to defendant with the knowl- edge perform job agreement he needed to his to an provide requisite job. him with the tools for the For example, necessary including tools, without voltage wrenches, wires, meters, forth, so defend- repair appliances. ant be would unable to So, if agreed instead had to sell defendant the tools appliances, agreed he to fix needed and defendant repay job if were he to leave his wanted to take the him, tools with we would find no arrangement, employ- reason to void such an i.e., 8(1). contract, ment under subsection In other words, accept plaintiff’s knowing defendant was free to offer, early departure that his would result in financial obli- gations. example Applying this context, the current plaintiff provided the “tools” that defendant were the *12 v Wilson
Opinion of the Court
defendant
knowledge
that
and
requisite
training
job. Alternatively, defendant
his
perform
needed
community
college
tuition to
paid
have
could
necessary
the
institution to obtain
learning
other
that
training
Thus,
repair appliances.
skills to
tools
has real value. Defendant’s
received
defendant
certainly
Moreover,
job.
his
perform
him to
permit
into the
willing
and
to enter
was aware of
defendant
his
one forced or coerced
signed.
he
No
agreement
certainly
free to seek
and he was
assent,
plaintiff’s terms.
unhappy
he
with
elsewhere were
public policy nor
Thus, neither sound
to make
parties’ rights
requires
ignore
us to
cir-
to their needs and
specific
contracts
and enforce
that
short,
training
without
cumstances.
In
interrupted apprentice-
his
during
received
defendant
been unable to earn
he would have
ship
plaintiff,
with
paid
had
appliances unless he
repairing
good living
community
at a
col-
the same skills
acquire
tuition to
appli-
had located another
center or
training
lege
at a reduced
him,
to train
either
shop willing
ance
training,
Without
expense.
own
pay
rate of
or at its
“tools,”
necessary skills,
lacked the
his current
job
pursue
this
perform
needed to
repair person.
appliance
livelihood as
was
tuition contract
Finally,
disagree
we
& Co v
Rehmann, Robson
contract.
an adhesion
43-44;
Bandstra, J. (dissenting). statutory (an language at issue broad The indirectly, directly receive, not demand or “shall gift, tip, gratuity, or other remuneration fee, ... legislative ”) intent that . . . evidences consideration any prohibition where occasion should payment fashion, make must, *14 provide an of consideration to some sort employment. privilege case, In this under for the signed, he defend- the “tuition contract” the terms of plaintiff a result of his indebted to as ant became payment plain- employment. $50 a He had to make alternatively, employed or, was for each week he tiff provide by plaintiff continuing to work an a benefit to three-year beyond years “train- three additional ing” promise period. of defendant’s In consideration if defendant would him; hired effect, to this promised, hired. he would not have been have so not clearly applies, cor- lower courts and the The statute rectly unen- contract was that the tuition decided void. forceable and majority agree might this is a I with the
While today’s policy it is market, labor I think in bad result required by language Moreover, I statute. of the by Bandstra, Dissent J. majority’s precedents find the on reliance California construing provision of the California Labor Code inapposite. nothing to be There is to indicate that the Michigan Legislature considered the California statute interpretation by or its the California courts when enacting Michigan of the statute, MCL 408.478(1); 17.277(8)(1). MSA if Further, we some- interpret how assume that we should the clear lan- guage Michigan statute on the basis of the Cali- history, fornia statute and its we would be led ato directly contrary major- result ity. to that reached majority history As the summarizes the of the Cal- broadly ifornia statute,1 ante at 412-413, it was enacted in 1917 to to “other remuneration or consideration” received “tips as well as gratuities.” In 1918, California court was presented argument with an not raised in this case consequently, application and, ruled that this broad principles pro- was “violative of of ‘substantive due specifically cess,’ ‘freedom of contract’ ”. Id. As a result, 1929, the statute was amended to delete the language “remuneration or consideration” and “was only tips redrafted to address the treatment of gratuities.” Id. Michigan Legislature contrast,
In when first forty years enacted the statute at issue here some including later, 1970,it did so the “other remunera- language. language tion or consideration” This has by legislative ensuing not been removed action in the thirty years. history legislative almost This evidences *15 rehearing, argues majority In the motion for has incor rectly history. assuming meritless, summarized this Even this claim is history majority support of the California statute adduced does not regarding Michigan its conclusion statute. v Wilson J. Dissent Bandstra, concerns rejection of the constitutional apparent courts. by the California raised of subsection any event, language the broad In “seriously question I no reason to remains intact. see that subsection Legislature intended” whether only “tips gratui- application have 8(1) should Ante at 415. agreement. ties”