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
JENNIFER M. GRANHOLM, ATTORNEY GENERAL
CONSTITUTIONAL LAW:
CORPORATIONS:
GUARDIAN AND WARD:
PROBATE PROCEEDINGS:
Validity of section 51(2)(e) of the Banking Code of 1969 under Const 1963, art 4, � 25
For-profit, nonbanking corporations acting as guardian and conservator
Neither the Revised Probate Code nor the Banking Code of 1969 authorizes a for-profit, nonbanking corporation to act as guardian of a protected person or as conservator of the estate of a protected person.
Section 51(2)(e) of the Banking Code of 1969, which provides that nonbanking corporations may act as fiduciaries only if specifically authorized by another statute, does not violate Const 1963, art 4, � 25, which prohibits the Legislature from altering or amending a law unless the law is reenacted and published at length.
Opinion No. 7024
July 1, 1999
Honorable Gilda Z. Jacobs
State Representative
The Capitol
Lansing, MI
You have asked two questions concerning the eligibility of for-profit, nonbanking corporations to act as a guardian or conservator under the Revised Probate Code1 and the Banking Code of 1969. The Revised Probate Code (RPC), 1978 PA 642, MCL 700.1 et seq; MSA 27.5001 et seq, consolidates the laws regarding probate, guardianships, conservatorships, and related matters. The Banking Code of 1969 (Banking Code), 1969 PA 319, MCL 487.301 et seq; MSA 23.710(1) et seq, revises and consolidates the laws regarding banks, trust companies, and other financial institutions, and, inter alia, grants trust powers to banks and regulates the exercise of those powers.
Your first question asks whether the Revised Probate Code or the Banking Code authorizes a for-profit, nonbanking corporation to act as guardian of a protected person or as conservator of the estate of a protected person.
Section 51 of the Banking Code, which specifies the corporate structure required for engaging in banking and fiduciary activity, provides in part as follows:
Sec. 51. (1) A person shall not engage in the business of banking in this state unless authorized by this act, the laws of another state, the national bank act. . . .
(2) Except for acting as an escrow agent, only an individual or corporation may act as a fiduciary in this state. A corporation acting as a fiduciary may do so only if the corporation is 1 of the following:
(e) A nonbanking corporation to the extent that it may be specifically authorized to act as fiduciary in this state by another statute in this state. ***
(Emphasis added.)
Thus, a nonbanking corporation may act as a fiduciary in Michigan only to the extent that it is specifically authorized to do so by another Michigan statute. Nothing in the Banking Code authorizes a nonbanking corporation to act as a fiduciary. It is necessary, therefore, to examine the RPC to determine whether such specific authorization is found there.
Both conservators and guardians are "fiduciaries," as that term is used in the RPC. Section 5. See also, In re Bontea Estate, 137 Mich App 374, 376; 358 NW2d 14 (1984). The term "guardian" means a person appointed by the court, or designated as such in a will, to exercise powers over the person of a minor or of a legally incapacitated person. RPC, section 6(2). The term "conservator" means a person appointed by the probate court to exercise powers over the estate of a protected person. RPC, section 3(5). The term "person" includes an individual or other legal entity. RPC, section 9(2).
Section 470(1) of RPC, which authorizes the appointment of a corporation as a conservator, provides that:
The court may appoint an individual, or a corporation with general power to serve as trustee, as conservator of the estate of a protected person.
(Emphasis added.)
Therefore, in order to qualify for appointment as a conservator, a corporation must possess "general power to serve as trustee." The Banking Code provides that upon application, the banking commissioner "may grant to any bank or state foreign bank branch full trust powers." Section 181(1). (Emphasis added.) Neither the RPC nor the Banking Code provides for the granting of general trust powers to a nonbanking corporation. Since neither the Banking Code nor any other statute grants for-profit, nonbanking corporations general power to act as trustee, a for-profit, nonbanking corporation does not possess that power and, consequently, cannot qualify for appointment as a conservator under RPC, section 470(1).
Section 454(1) of the RPC, which authorizes the appointment of any competent person as a guardian, provides that:
Any competent person may be appointed guardian of a legally incapacitated person.
Thus, given the requirements of section 51(2)(e) of the Banking Code and section 454(1) of the RPC, a corporation must be both "competent" and "specifically authorized to act as a fiduciary" before it can qualify for appointment as a guardian. The probate court derives its jurisdiction to appoint guardians entirely from the statute which "must be strictly pursued." In re Williams Estate, 133 Mich App 1, 7; 349 NW2d 247 (1984). Neither the RPC nor the Banking Code specifically authorize a for-profit, nonbanking corporation to act as a guardian.
A nonbanking corporation must meet the conditions set forth in Banking Code section 51(2)(e), namely that it be specifically authorized by Michigan statute, in order to be eligible to act as a guardian or conservator. Neither the RPC nor the Banking Code specifically authorize a for-profit, nonbanking corporation to act as a guardian or conservator.
It is my opinion, therefore, in answer to your first question, that neither the Revised Probate Code nor the Banking Code of 1969 authorizes a for-profit, nonbanking corporation to act as guardian of a protected person or as conservator of the estate of a protected person.
Your second question asks whether section 51(2)(e) of the Banking Code, which provides that for-profit, nonbanking corporations may act as fiduciaries only if specifically authorized by another statute, violates Const 1963, art 4, � 25, which prohibits the Legislature from altering or amending a law unless the law is reenacted and published at length.
Const 1963, art 4, � 25, prohibits the Legislature from altering or amending a law unless the affected law is reenacted and published at length.
No law shall be revised, altered or amended by reference to its title only. The section or sections of the act altered or amended shall be re-enacted and published at length.
In Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich 441, 470; 208 NW2d 469 (1973), the Michigan Supreme Court noted the meaning of Const 1963, art 4, � 25:
Section 25 is worded to prevent the revising, altering or amending of an act by merely referring to the title of the act and printing the amendatory language then under consideration. If such a revision, alteration or amendment were allowed, the public and the Legislature would not be given notice and would not be able to observe readily the extent and effect of such revision, alteration or amendment.
While considering Const 1963, art 4, � 25, the Michigan Supreme Court, in Alan v Wayne County, 388 Mich 210, 285; 200 NW2d 628 (1972), recognized that where the Legislature enacts a law with the intent to amend a prior statute so that its operation is narrower or broader than previously stated, without reenacting the amended statute, an unconstitutional statutory amendment occurs. The court also concluded that if the intent of the Legislature is not to amend or alter another statute, it would treat both acts as in existence and "interpret them as they are written unaffected by subsequent statutes." Id.
The RPC was first enacted in 1978. Thus, at the time section 51(2)(e) of the Banking Code was enacted into law (1969), the RPC did not exist. As noted in Alan, supra, Const 1963, art 4, � 25, is implicated where the Legislature enacts a law with the intent to amend a prior statute, not one that is not yet in existence.
Moreover, any effect which section 51(2)(e) of the Banking Code has with respect to the eligibility of a for-profit, nonbanking corporation to serve as guardian or as conservator is constitutionally permissible. An act which is complete in and of itself does not violate Const 1963, art 4, � 25. People v Mahaney, 13 Mich 481, 497 (1865); Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich at 471-474. In such situations, the subsequent act has been held to amend the prior act by implication, which is permissible. See, Mahaney, 13 Mich at 496; Alan, 388 Mich at 270; Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich at 471-476. As the court noted in Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich at 477:
Amendments by implication are an inevitable by-product of the legislative scheme of government. It boggles the mind to contemplate the laws which would be rendered unconstitutional ab initio and the avalanche of litigation which would follow were we to construe � 25 in so extended a manner. . . .
In other words, Const 1963, art 4, � 25 is
[D]irected at preventing undesirable conduct with respect to amendment of a particular act. It does not seek to correct tangential effects which the amendment, revision or alteration may have on those statutes not directly affected.
Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich at 475.
Section 51(2)(e) of the Banking Code provides notice to a for-profit, nonbanking corporation that before it may serve as a guardian or conservator, another Michigan statute must specifically authorize it to act as a fiduciary. The Banking Code does not purport to revise, alter or amend the RPC. Its effect upon the RPC is tangential and merely an ordinary by-product of the legislative scheme of government. Thus, the Banking Code "is a complete act and does not confuse or mislead, but publishes in one act for all the world to see what it purports to do." Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich at 476.
It is my opinion, therefore, in answer to your second question, that section 51(2)(e) of the Banking Code of 1969, which provides that nonbanking corporations may act as fiduciaries only if specifically authorized by another statute, does not violate Const 1963, art 4, � 25, which prohibits the Legislature from altering or amending a law unless the law is reenacted and published at length.
JENNIFER M. GRANHOLM
Attorney General
1 Effective April 1, 2000, the Revised Probate Code is repealed and replaced by the Estates and Protected Individuals Code, 1998 PA 386. There are, however, no changes in the new law which are pertinent to your questions.