STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6602

October 4, 1989

COLLEGES AND UNIVERSITIES:

Regulation of progress payments to contractors on construction contracts

PUBLIC AGENCIES:

Retainage of progress payments to contractors on construction contracts

The Legislature has not included state universities granting baccalaureate degrees within the purview of 1980 PA 524, which regulates the retainage by public agencies of progress payments to contractors on construction contracts.

Honorable Michael J. Griffin

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion on a question which may be phrased as follows:

et seq, regulates the payment and retainage of progress payments by public agencies to contractors and provides for the resolution of certain disputes. "Public agency" is defined in Sec. 1(h) of 1980 PA 524, MCL 125.1561(1)(h); MSA 5.2949(101)(1)(h), as the:

Although this statute expressly exempts junior or community colleges, it is silent on whether the statute applies to Michigan's public universities granting baccalaureate degrees. Thus, we turn to other relevant authorities.

Const 1963, art 8, Sec. 5, provides, in pertinent part, that the respective controlling boards of the University of Michigan, Michigan State University, and Wayne State University "shall have general supervision of its institution and the control and direction of all expenditures from the institution's funds." Const 1963, art 8, Sec. 6, provides, in pertinent part, that:

All public universities in Michigan that grant baccalaureate degrees have the same constitutional powers and rights so far as the general supervision of the respective institution is concerned and the expenditures from that institution's funds. Bd of Control of Eastern Michigan University v Labor Mediation Bd, 384 Mich 561, 565; 184 NW2d 921 (1971).

The matter of construction contracts between contractors and public universities has been reviewed by the appellate courts of this state. In Weinberg v Regents of University of Michigan, 97 Mich 246; 56 NW 605 (1893), the plaintiff argued, in part, that it was the duty of the defendant public university to require a performance bond pursuant to a performance bond statute 1883 PA 94, Sec. 1, as amended by 1885 PA 45, which provided, in pertinent part, as follows:

The court held that the performance bond statute did not apply to the public university. In reaching that result, the majority opinion noted that the general supervision of the university is vested in the regents by the Constitution and that this statute did not expressly include the university. Id at 253.

In Wm C Reichenbach Co v Michigan, 94 Mich App 323; 288 NW2d 622 (1979), the court had before it the issue of whether 1963 PA 213 was applicable to Michigan State University. Section 1 of that act, MCL 129.201; MSA 5.2321(1), required, in pertinent part, as follows:

The court noted that the defendant public university is a corporation established by Const 1963, art 8, Sec. 5, and that the public university's Board of Trustees has general supervisory power over the university and control and direction over expenditures from the university's funds. In holding that the performance bonding statute did not apply to the defendant public university, the court found that the term "public educational institution," as that term is used in the statute, applies to only those colleges and universities whose governing boards are not created in the Constitution. Id at 335-336.

The court in Weinberg, supra, held that the provisions of a performance bonding statute, which included the state among covered entities, but did not expressly include public universities, was not applicable to the defendant public university. In similar manner, the court in the Reichenbach case held that the provisions of a performance bonding statute, which included public educational institutions among covered entities, was not applicable to the defendant public university.

The Legislature is presumed to use particular words in a statute in the sense in which they have been interpreted by the courts. People v Powell, 280 Mich 699, 703; 274 NW 372 (1937), Groth v Stillson, 20 Mich App 704, 707; 174 NW2d 596 (1969). Because the Supreme Court has defined the term "state" as used in a construction contract statute requiring performance bonds not to include constitutional universities, Weinberg, supra, it may be concluded that the Legislature did not include constitutional universities within the purview of 1980 PA 524, MCL 125.1561 et seq; MSA 5.2949(101) et seq.

It is my opinion, therefore, that 1980 PA 524 does not apply to construction contracts between contractors and Michigan's public universities that grant baccalaureate degrees.

Frank J. Kelley

Attorney General