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Opinion No. 5422

December 29, 1978


Contributions of corporate funds to defray cost of recount


Contributions of corporate funds to defray cost of recount


Contributions of corporate funds to defray cost of recount

A corporation may not contribute corporate funds to defray the expenses of conducting a recount.

Honorable Tom Holcomb

State Representative

Room 303

The Capitol

Lansing, Michigan 48909

You have asked whether a corporation may contribute funds for the purpose of defraying the expenses of conducting a recount of the votes cast at an election.

The current statutory provision relative to corporation political activity is 1979 PA 388, Sec. 54(1), MCLA 169.2541(1); MSA 4.1703(54)(1), which provides:

'Except with respect to the exceptions and conditions in subsections (2) and (3) (1) and section 55, and to loans made in the ordinary course of business, a corporation may not make a contribution or expenditure or provide volunteer personal services which are excluded from the definition of a contribution pursuant to section 4(3)(a).'

OAG, 1975-1976, No 5123, p 629 (September 30, 1976), ruled that 1954 PA 116, Sec. 919; MCLA 168.919; MSA 6.1919, (2) was unenforceable with regard to an election involving a ballot proposition. Subsequently, a letter opinion dated March 17, 1977 to the Honorable Thaddeus C. Stopczynski, ruled that the rationale of Opinion No. 5123, supra, was such that section 919 would not prohibit a corporation from contributing to the expense of recounting the votes cast at a school millage election. The rationale of those previous opinions would apply with like effect to the current statute and where the recount pertains to the votes cast at an election on a ballot question, section 54 does not apply.

The contribution of funds toward the expenses of recounting votes at elections other than those involving ballot questions, however, do not fall within the exceptions in the remaining subsections of section 54, nor within section 55, of 1976 PA 388, and thus the issue is whether, in contributing to the costs of recount of elections of candidates, a corporation is making a 'contribution' or 'expenditure.'

The term 'contribution' is defined in section 4 of 1976 PA 388, MCLA 169.204; MSA 4.1703(4). The operative subsection is subsection (1) which provides that 'contribution' means:

'. . . a payment, a gift, subscription, assessment, expenditure, contract, payment for services, dues, advance, forbearance, loan, donation, pledge or a promise of money or anything [sic] of ascertainable monetary value, whether or not conditional or legally enforceable, or a transfer of anything [sic] 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. An offer or tender of a contribution is not a contribution if expressly and unconditionally rejected or returned.' (Emphasis added)

The purpose of a recount is to determine whether the results of the first count of the ballots should stand or should be changed because of a fraud or mistake in the canvass of the votes or in the returns thereon made by inspectors. 1954 PA 116, Sec. 862, MCLA 168.862; MSA 6.1862. There are costs involved in holding a recount just as there are costs involved in seeking office. These costs may deter a person from seeking office, limit a candidate's campaign or influence a candidate who has apparently lost an election by a close margin from seeking a recount unless the candidate in all three instances receives financial assistance. Thus, a financial contribution to pay for a recount may affect the outcome of an election as much as expenditures made to finance the election campaign.

It may also be noted that the conduct of a recount frequently involves more than a simple technical procedure encompassing a second count of the votes cast. Often a recount develops into an adversary administrative proceeding requiring the assistance of specialists in the area of election law, and can also end in extensive litigation. Presumably part of the contribution will be used to finance payment for these services as well.

In Advisory Opinion on Constitutionality of 1975 PA 227 (Questions 2-10), 396 Mich 465, 492-493; 242 NW2d 3 (1976), the court stated:

'. . . The legislative intent in prohibiting financial involvement of corporations in the elective process was to prevent the use of corporate funds to impose undue influence upon elections. Large aggregations of capital controlled by a few persons could have a significant impact upon the nomination or election of a candidate. The possibility of misuse of corporate assets by persons acting on behalf of uniformed or unwilling shareholders and the attempts at influence or importunity which might be exerted upon a successfully elected candidate by a contributing corporation represent abuses which the passage of the corrupt practices act sought to eliminate.

'The state's interest in preserving the integrity of the elective process must be balanced against the assumed right to free expression of an artificial entity (i.e., a corporation) regarding the candidacy of persons seeking election to public office. Recognizing that the state must show a compelling interest to justify interference with the fundamental right of freedom of speech or press, it is our opinion that this test is met and that the Legislature can exercise its power to insure the integrity of the elective process by prohibiting any corporate contributions or expenditures made for the purpose of influencing either the nomination or election of a candidate. We need not discuss further those circumstances under which corporations may be afforded First Amendment protection.

'The prohibition against corporate contributions or expenditures for such purposes does not violate their right to equal protection under the law as guaranteed by art 1, Sec. 2. The United States Supreme Court in Buckley, supra, recently restated the established principle that:

"[A] 'statute is not invalid under the Constitution because it might have gone further than it did,' Roschen v Ward, 279 US 337, 339 [49 S Ct 336; 73 L Ed 722 (1929)], that a legislature need not 'strike at all evils at the same time,' Semler v Dental Examiners, 294 US 608, 610 [55 S Ct 750; 79 L Ed 1086 (1935)], and that reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind,' 489 [75 S Ct 461; 99 L Ed 563 (1955)].' (105.)'

Thus, the reasons expressed by the Supreme Court for sustaining legislation that prohibits corporate contributions to political candidates for their election campaigns apply with equal vigor towards prohibiting contributions to finance the costs of a recount.

It should also be noted that 1976 PA 388, Sec. 55, supra, authorizes a corporation to make an expenditure for establishment and solicitation of contributions to a separate segregated fund to be used for political purposes and that contributions to such a fund may only be made by stockholders, officers, directors and policy-making employees. This sole exception indicates legislative intent that corporate funds as such are not to be used to influence selection of candidates.

It is therefore my opinion that, inasmuch as a financial contribution to pay the expenses of a recount are for the purpose of influencing an election, a corporation is prohibited from making such a contribution to a candidate.

It is also necessary to consider whether an expenditure of that nature would be an 'expenditure' as that term is defined in subsection (1) of section 6 of 1979 PA 388, MCLA 169.206; MSA 4.1703(6), which defines 'expenditure' as:

'. . . A payment, donation, loan, pledge, or promise of payment of money or anything [sic] of ascertainable monetary value for goods, materials, services, or facilities in assistance of, or in opposition to, the nomination or election of a candidate, or the qualification, passage, or defeat of a ballot question. An offer or tender of an expenditure is not an expenditure if expressly and unconditionally rejected or returned.'

The descriptive language of section 6(1) is slightly different than the language of section 4(1) defining a 'contribution,' but the scope of the two provisions is functionally the same. For the reasons stated above in the course of analyzing section 4(1), I am also of the opinion that corporate expenditures made for the purpose of defraying the expense of conducting or participating in a recount of the votes cast at an election to nominate or elect a candidate is an 'expenditure' within the meaning of section 54(1).

Frank J. Kelley

Attorney General

(1) So in the act. Presumably reference to subsections (3) and (4) is intended.

(2) This provision was repealed but was substantially similar to 1976 PA 388, Sec. 54, supra.