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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. 6447

June 16, 1987

ESCHEATED ESTATES:

Residual moneys in officeholder expense fund

OFFICEHOLDER EXPENSE FUND:

Distribution of residual moneys upon departure from office

Upon departure of an officeholder from public office, residual moneys in the officeholder expense fund of the officer must remain in such fund and are subject to escheat to the State of Michigan.

Honorable Richard H. Austin

Secretary of State

State Treasury Building

Lansing, Michigan 48918

You have requested my opinion on the following question:

If residual funds remain in an officeholder expense fund upon departure of the officeholder from his or her public office, what disposition of the residual moneys is permissible?

The campaign financing and practices act, 1976 PA 388, Sec. 49, MCL 169.249; MSA 4.1703(49), authorizes an elected public official to establish an officeholder expense fund.

A letter opinion to Secretary of State Richard H. Austin, December 19, 1986, concluded that in the enactment of Act 388, Sec. 49, the Legislature did not authorize the public officer leaving his or her public office to expend moneys remaining in an officeholder expense fund for the personal use of the officeholder.

Act 388, Sec. 49, provides:

"(1) An elected public official may establish an officeholder expense fund. The fund may be used for expenses incidental to the person's office. The fund may not be used to make contributions and expenditures to further the nomination or election of that public official.

"(2) The contributions and expenditures made pursuant to subsection (1) are not exempt from the contribution limitations of this act but any and all contributions and expenditures shall be recorded and shall be reported on forms provided by the secretary of state and filed not later than January 31 of each year and shall have a closing date of January 1 of that year.

"(3) A person who knowingly violates this section is guilty of a misdemeanor and shall be punished by a fine of not more than $1,000.00 or imprisoned for not more than 90 days, or both."

While the foregoing provisions authorize an elected official to establish and maintain an officeholder expense fund, such provisions authorize that official to use such a fund only for expenses incidental to the office. Unfortunately, the Act is silent with regard to how moneys remaining in the officeholder expense fund shall be disposed of when the elected public official leaves or no longer occupies the public office. This contrasts with the provisions of 1976 PA 388, Sec. 45(2), MCL 169.245(2); MSA 4.1703(45)(2), which specifically authorizes three alternative methods of disposing of unexpended funds received by the "candidate committee" which is required to be formed by a candidate for public office.

It must be observed that 1976 PA 388, MCL 169.201 et seq; MSA 4.1703(1) et seq, envisions that all moneys received or expended from funds regulated by its terms must be scrupulously detailed and reported and kept in separate accounts in financial institutions. For example, a candidate committee must have a treasurer for receipt of contributions on behalf of the candidate, which receipts must be deposited in an account in a financial institute, pursuant to 1976 PA 388, Sec. 21(3), MCL 169.221(3); MSA 4.1703(21)(3):

"Except as provided by law, a committee shall have 1 account in a financial institution in this state as an official depository for the purpose of depositing all contributions which it receives in the form of or which are converted to money, checks, or other negotiable instruments and for the purpose of making all expenditures. The committee shall designate a financial institution in this state as its official depository. The establishment of an account in a financial institution is not required until the committee receives a contribution or makes an expenditure. Secondary depositories shall be used for the sole purpose of depositing contributions and promptly transferring the deposits to the committee's official depository."

See also, 1976 PA 388, Sec. 66(3), MCL 169.266(3); MSA 4.1703(66)(3), providing that qualifying candidates must keep matching funds received from the state campaign fund in a separate account and make expenditures only from such account.

This legislative intent has been recognized by the Secretary of State in the rules governing officeholder expense funds promulgated pursuant to the rule-making authority conferred by 1976 PA 388, Sec. 15(1)(e), MCL 169.215(1)(e); MSA 4.1703(15)(1)(e). 1982 AACS, R 169.39, provides, among other requirements, that an officeholder expense fund must be kept in an account in a "depository," i.e., a financial institution:

"(1) An elected officeholder shall indicate on the statement of organization, or on an amendment thereto, filed by the officeholder's candidate committee, the existence of an officeholder's expense fund.

"(2) Money given specifically to an officeholder's expense fund shall be designated for that purpose by the donor.

"(3) Money received by an officeholder's expense fund shall be kept in a depository account separate from the candidate committee's funds.

"(4) The treasurer of an officeholder's expense fund shall keep records of all receipts to, and disbursements from, the fund for a period of 1 year longer than the officeholder's term of office.

"(5) Receipts to, and disbursements from, the officeholder's expense fund shall be reported pursuant to the provisions of the act.

"(6) The officeholder's expense fund report shall be signed by the treasurer of the fund and by the officeholder on the lines indicated following the verification statement.

"(7) The officeholder's expense fund report shall be filed with the filing official designated by the act to receive the officeholder's candidate committee campaign statements.

"(8) Money may be transferred from the candidate committee of an elected public official to the officeholder expense fund of that public official in accordance with the provisions of the act." (Emphasis added.)

The doctrine of the law of escheats is applicable. It holds that where there is a lack of ownership of real or personal property, the state takes it over to conserve for any person who might ultimately establish his or her right, or otherwise, for the common benefit of the people of the state. Evans Products Co v State Bd of Escheats, 307 Mich 506, 520; 12 NW2d 448 (1944).

Inasmuch as an officeholder expense fund must be maintained as a separate account in a financial institution, such account is like any other account in the financial institution for the purposes of the application of the Michigan Code of Escheats, 1947 PA 329, MCL 567.11 et seq; MSA 26.1053(1) et seq. Pursuant to 1947 PA 329, Sec. 14, MCL 567.14; MSA 26.1053(4), property covered by the Michigan Code of Escheats and abandoned by its owner descends to the State of Michigan.

"Abandoned property" is defined in 1947 PA 329, Sec. 15(e), MCL 567.15(e); MSA 26.1053(5)(e), as "property against which a full period of dormancy has run." "Period of dormancy" is defined, in pertinent part, in 1947 PA 329, Sec. 15(f), MCL 567.15(f); MSA 4.1053(5)(f), as follows:

" 'Period of dormancy', except as provided in section 7a, means the full and continuous period of 7 years, during which an owner has ceased, failed, or neglected to exercise dominion or control over his or her property or to assert a right of ownership or possession; ...." (Emphasis added.)

Since neither the treasurer of an officeholder expense fund nor the elected official after departure from office is authorized to use or dispose and thus withdraw any residual moneys in such elected official's officeholder expense fund, i.e., all control over the fund ceases by operation of law at that time, it is my opinion that seven years after the office is vacated, the residual moneys in the officeholder expense fund of such official escheats to the State of Michigan in the same manner as other accounts in financial institutions escheat.

To summarize:

1. The campaign financing and practices act (a) limits the use of officeholder expense funds to "expenses incidental to the person's office" and (b) is silent with regard to how moneys remaining in the officeholder expense fund shall be disposed of when a public official who has established such a fund leaves office.

2. The Secretary of State has adopted rules governing officeholder expense funds, 1982 AACS, R 169.39, which provides that an officeholder expense fund must be kept in a financial institution.

3. The Michigan Code of Escheats is applicable to officeholder expense fund accounts maintained in a financial institution.

4. Neither the treasurer of an officeholder expense fund nor the elected official who maintains the officeholder expense fund can, after the official leaves office, use or dispose and thus withdraw any money in the officeholder expense fund account. Therefore, residual moneys remaining in an officeholder expense fund account after the official creating it leaves office escheat to the state pursuant to the Michigan Code of Escheats.

The Legislature may wish to amend the campaign financing and practices act, 1976 PA 388, to provide for the disposition of residual moneys remaining in an officeholder expense fund when the officeholder maintaining the fund leaves office.

It is my opinion, therefore, that upon departure of an officeholder from his or her public office, residual moneys in an officeholder expense fund must remain in such fund and are subject to escheat to the State of Michigan.

Frank J. Kelley

Attorney General


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