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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6246

September 7, 1984

COUNTIES:

Optional unified county--payment of claim with county money upon order of the county board of commissioners

Optional unified county--audit of claims by county executive and county board of commissioners

Optional unified county--effect of county treasurer's signature upon county check or county warrant

Payment of a claim filed with an optional unified county may be made with county money only upon order of the county board of commissioners, signed by the clerk and the chairperson of the board.

In an optional unified county, both the county executive and the county board of commissioners are charged with the responsibility of auditing claims against the county filed with the county clerk at least before the fourth day of a regular meeting or before the second day of a special meeting, but the county executive is not required to submit a list of approved claims to the board.

The signature of a county treasurer upon a county check makes the check a negotiable instrument subject to the Uniform Commercial Code, and the signature of the county treasurer upon a county warrant, which is not a negotiable instrument, establishes a presumption as to validity of the claim for which payment is authorized by the warrant.

Honorable Jerome T. Hart

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion regarding three questions concerning the procedures for paying out county money applicable to the county treasurer and other county officials in Bay County which are subject to the optional unified form of county government authorized by 1973 PA 139, as amended; MCLA 45.551 et seq; MSA 5.302(51). As noted in your letter, OAG, 1981-1982, No 6009, p 467, 468, 470 (November 20, 1981), discusses the duties of the Bay County Treasurer regarding the payment of county money in the context of the treasurer's constitutional and statutory authority:

'[T]he functions of the department of finance under 1973 PA 139, Sec. 13(b), supra, may not invade the constitutional and statutory authority of the county treasurer. Cf. OAG, 1979-1980, No 5587, p 454 (October 26, 1979). Indeed, 1973 PA 139, supra, Sec. 4(4), provides '[t]he power vested in the office of . . . county treasurer . . . shall not be minimized or divested by this act,' In addition, 1973 PA 139, supra, Sec. 12(1), provides:

"(1) Upon the date an optional unified form of county government becomes effective, the following officials shall exercise the powers and functions as provided by law, . . ..

"(c) The treasurer.'

'The county treasurer and other officers specified in Const 1963, art 7, Sec. 4, are constitutional officers. OAG, No 5587, supra. . . .'

'In paying out county money, the county treasurer is instructed by RS 1846, ch 14, Sec. 40 supra, [MCLA 48.40; MSA 5.686] in pertinent part, as follows:

'[All] moneys received by him for the use of the county, shall be paid by him only on the order of the board of supervisors [now commissioners], signed by their clerk, and countersigned by their chairman, except when special provision for the payment thereof is, or shall be otherwise made by law.'

'In signing checks for payment of county moneys, the treasurer must verify, as noted above, that the payment order has been duly signed by the clerk and chairman of the board of commissioners, or is otherwise authorized by law. As stated in treasurer's report of April 29, 1980, supra, [Report of the Michigan Department of Treasury on examination Bay County internal controls and accounting systems] p 4, it is the [county] treasurer's general responsibility to determine from his records that there are sufficient moneys available in the respective fund to cover the disbursement. This responsibility for signing checks where there are sufficient moneys available arises out of the treasurer's duty to keep records of all deposits and investments of county moneys and out of a recognition that if moneys are not in a fund, the treasurer is not in a position to make disbursements out of that fund.'

You also note that 1973 PA 139, supra, Sec. 8(1)(i), as amended by 1980 PA 100, provides that a county manager or county executive shall:

'Audit all claims which are chargeable against the county. A warrant shall not be drawn for a claim, nor shall the claim be paid, until the claim has been audited by the county executive . . . or a designated representative of the county executive. . . .'

Your first question is:

'Does the audit of claims by the County Executive as provided by section 8(1)(i) of the Optional Unified Form of County Government, 1973 P.A. 139 as amended by 1980 P.A. 100 cause the provision of payment of county money only upon the order of the Board of Commissioners, signed by their Clerk and Countersigned by their Chairman; to be null, void and of no effect in those counties that have elected the Optional Form of County Government?'

1973 PA 139, Sec. 8(1)(i), supra, provides for the auditing of all claims against the county by the county executive or his or her designated representative. RS 1846, c 14, Sec. 40, MCLA 48.40; MSA 5.686, relates to the payment of county moneys by the county treasurer. In interpreting statutes, the rule in pari materia requires that two or more statutes affecting a person or subject should be read together and each given effect if such can be done without repugnancy, absurdity or unreasonableness. Rochester Community Schools Bd of Educ v State Bd of Educ, 104 Mich App 569, 578-579; 305 NW2d 541 (1981); 21 MLP, Statutes, Sec. 99, pp 113-118.

There is nothing in the wording of 1973 PA 139, Sec. 8(1)(i), supra, to indicate any conflict with the requirements of RS 1846, c 14, Sec. 40, supra. The requirement of section 8(1)(i) is that in addition to the other statutory procedures to be observed by the county treasurer, he or she may not draw a warrant for, or otherwise pay, a claim against the county until the claim has been audited by the county executive or his or her designated representative.

In answer to your first question, it is my opinion that the provisions of RS 1846, c 14, Sec. 40, supra, requiring that county money be paid out only on order of the county board of commissioners, signed by the clerk and chairperson of the board of commissioners, remain in full force and effect, notwithstanding the requirement of 1973 PA 139, Sec. 8(1)(i), supra, as amended in 1980, that no claims against the county are to be paid until audited by the county executive.

Your second question is:

'If the answer to the first question is no, does the Executive submit his approved claims list to the Board of County Commissioners as specified in M.C.L.A. 46.5 and 46.11 subsections ninth and seventeenth; MSA 5.325 and 5.331 subsections ninth and seventeenth? Does the three day filing period for claims remain in effect?'

The sections referred to in your question are contained in 1851 PA 156, as amended; MCLA 46.1 et seq; MSA 5.321 et seq, which is an act to define the powers and duties of county boards of commissioners and those sections pertain to the auditing of claims against a county, as follows:

'Sec. 5. The books, records, and accounts of the county board of commissioners shall be deposited with its clerk. . . . The clerk shall designate upon each account upon which a sum shall be audited and allowed by the board, the amount audited and allowed, and the charges for which the same was allowed.' MCLA 46.5; MSA 5.325.

'Sec. 11. A county board of commissioners, at a lawfully held meeting, may perform the following:

'(i) . . . adjust claims against the county except in a county having a board of county auditors. The sum allowed in the adjustment of a claim shall be subject to appeal as provided by law.

'(q) . . . The county board of commissioners shall not audit or allow a bill, claim, or charge against the people or the county which has not been filed with the county clerk of the county before the fourth day of a regular meeting of the board, or before the second day of an adjourned or other meeting, except bills or claims which have been contracted by the board during the session of the board, and for mileage and per diem of the members of the board. The county clerk shall keep a book in which all claims in the order in which the claims are presented, giving the name of the claimant, the amount of the claim, and the date when presented. The book, after the time prescribed for the presentation of claims, shall be placed in the hands of the chairperson for the use of the board. At the October session the board, by a vote of 2/3 of the members, may receive and allow accounts which have wholly accrued during the session. . . .' MCLA 46.11; MSA 5.331. [Emphasis added.]

Until recently, Bay County had a board of auditors which audited claims against the county pursuant to 1907 LA 599, Sec. 6, as amended. OAG, 1979-1980, No 5493, p 168 (May 17, 1979). 1980 PA 100, which added Sec. 8(1)(i) to 1973 PA 139, supra, also repealed 1907 LA 599, effective April 19, 1980.

The responsibility of the county board of commissioners for auditing claims is also set forth in 1909 PA 58, Sec. 1, as amended; MCLA 46.71; MSA 5.521:

'It shall be the duty of the board of supervisors [now the board of commissioners] of each county, or the board of county auditors in counties having a board of county auditors, to adjust, allow and authorize the payment of all claims against the particular county, and any claims not adjusted and ordered paid by the said board of supervisors or board of county auditors, as the case may be, except as provided in this act, shall not be paid. Any claim or any part or portion thereof which may be adjusted or allowed by the board of supervisors or the board of county auditors shall be paid out of the county treasury in the manner provided by general law.'

Applying the rule in pari materia, it is apparent that both the county executive and the county board of commissioners are to audit the claims against a county subject to 1973 PA 139, supra, pursuant to the statutory provisions assigning them those responsibilities, and that the approval of each is necessary before the county treasurer may pay such a claim with county moneys. However, in reviewing these provisions, it is also apparent that there is no requirement that the county executive submit to the county board of commissioners a list of approved claims.

In answer to your second question, it is my opinion that in a county with the optional unified form of county government, both the county executive and the county board of commissioners are charged with the responsibility of auditing claims filed against the county. It is my further opinion that the time limits for review by the county board of commissioners of such claims are set forth in 1851 PA 156, Sec. 11(q), supra. It is also my opinion that the county executive is not required by law to submit to the board a list of claims approved by the county executive.

Your final question is:

'Does the County Treasurer's signature on all county checks (warrants) have any legal significance other than 'There are funds available to cover the amount specified in the check (warrant)'?'

Your question refers to the discussion of the treasurer's role in signing checks for the payment of county money in OAG, 1981-1982, No 6009, supra, which is set forth in the introduction to this opinion. In that discussion, it was noted that the treasurer must verify that: (1) the payment order has been duly signed by the clerk and chairman of the board of commissioners, (2) the payment is otherwise authorized by law, e.g., the audit of claims against the county by the county executive, and (3) there are sufficient monies available in the respective fund to cover the disbursement. In addition, the signature of the treasurer makes an otherwise completed check a negotiable instrument subject to the requirements of the Uniform Commercial Code, 1962 PA 174, as amended; MCLA 440.1101 et seq; MSA 19.1101 et seq.

As to warrants, a similar analysis applies, with the exception of that part of the analysis relating to a negotiable instrument under the Uniform Commercial Code, supra. In Field v Village of Highland Park, 141 Mich 69, 71; 104 NW 393 (1905), the court quoted with approval the following explanation of the nature of a warrant as an order by which the payment of a particular sum of money is authorized:

'Mr. Justice Field, in Wall v. County of Monroe, 103 U.S., at page 77, in speaking of warrants in every way similar to the one under consideration, said:

'They are orders upon the treasurer of the county to pay out of its funds for county purposes not otherwise appropriated the amounts specified. They establish prima facie the validity of the claims allowed and authorize their payment. But they have no other effect. . . . The warrants being in form negotiable are transferable by delivery so far as to authorize the holder to demand payment of them and to maintain in his own name an action upon them. But they are not negotiable instruments in the sense of the law merchant, so that, when held by a bona fide purchaser, evidence of their invalidity or defenses available against the original payee would be excluded. The transferee takes them subject to all legal and equitable defenses which existed to them in the hands of such payee."

Power v Gray, 186 Mich 646, 651; 153 NW 37 (1915). Thus, warrants are not negotiable instruments, but they do provide evidence of the validity of claims and an authorization for their payment. See also 15 McQuillin, Municipal Corporations (3d ed), Secs. 42.01-42.03, pp 414-421.

The signing of a check or warrant by the county treasurer in connection with the payment of county funds fulfills a statutory obligation of the county treasurer provided for in RS 1846, c 14, Sec. 40, supra. 1973 PA 139, supra, Sec. 4(4), provides that treasurer's powers of office are not to be minimized or divested by that Act.

The care to be exercised by the county treasurer as to these duties was discussed in OAG, 1977-1978, No 5352, p 573, 576 (August 11, 1978):

'In OAG, 1939-1940, p 81 (April 11, 1939) it was held that a county treasurer must pay certain bills duly approved by the county board of commissioners. That opinion stated in part, as follows:

'. . . [I]t appears that a county clerk or county treasurer is duty bound to pay an order duly authorized by the board of [commissioners]. . . .'

'Two later opinions dealt with an exception to this general rule and held that where the county treasurer knows that the purposes for the appropriation are unlawful, he may refuse disbursement. See, OAG, 1958, No 3194, p 84 (March 17, 1958); OAG, 1941-1942, No 19044, p 81 (March 5, 1941). However, both of the opinions suggested caution. The treasurer should not lightly undertake to make a determination as to the legality or propriety of the board action, and in case of any doubt whatsoever, he should seek the advice of the county prosecuting attorney.'

In answer to your final question, it is my opinion that in fulfillment of the county treasurer's responsibilities as to duly authorized payments with county moneys, the signature of the county treasurer on an otherwise appropriately completed check of the county makes the check a negotiable instrument subject to the Uniform Commercial Code, supra. It is my further opinion that the county treasurer's signature on a warrant, which is not a negotiable instrument, establishes a presumption as to the validity of the claim for which payment is authorized by the warrant.

Frank J. Kelley

Attorney General

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