Marion v. Vaughn

163 N.W.2d 239, 12 Mich. App. 453, 1968 Mich. App. LEXIS 1214

• Court: Michigan Court of Appeals
• Decided: July 25, 1968
• Docket: Docket 2,290
• Status: Published

Opinions

J. H. Gillis, J.

Plaintiff, Buster Marion, obtained a judgment against Gerald B. Vaughn, principal defendant, who was a public school employee in the State of Michigan and as such was a member of the Michigan public school employees retirement system. Mr. Vaughn made contributions to the system by way of payroll deductions. After leaving the public school service, Mr. Vaughn applied to the garnishee defendant for a return of his accumulated contributions. Thereafter, plaintiff secured a writ of garnishment against the garnishee defendant in an attempt to reach funds of the principal defendant. .The garnishee defendant filed a disclosure denying that it had any assets belonging to the principal .defendant “except funds and/or benefits exempt from garnishment by § 25 of Act 136, PA 1945, as amended, being CLS 1961, § 38.225 (Stat Ann 1968 Rev § 15,893[25]).”

Plaintiff moved for trial of the statutory issue and the garnishee defendant moved for accelerated judgment. The court ruled that it had no jurisdiction over the property involved and granted accelerated judgment on June 8, 1966.

The sole issue for our determination is whether the accumulated contributions of the principal defendant are exempt from garnishment under this factual situation. Section 25 of the act provides:

“A pension, an annuity, or retirement allowance, any optional benefit, or any other benefits accrued or accruing to any person under the provisions of this chapter, the various funds created by this chapter, and all moneys and investments and income thereof,-are hereby exempt from any state, county, municipal, or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever; and the right of a member to a pension, an annuity, or retirement allowance, any optional benefit, or any other benefits accrued or accruing to any such member or beneficiary under the provisions of this chapter shall be unassignable except as in this chapter specifically provided.”

Plaintiff contends that the portion of the act exempting “any other benefits accrued or accruing under the provisions of this chapter” does not cover accumulated contributions, urging that the accumulated contributions are not benefits since the member has made the contribution himself. However, in deciding this case we need not look this far in the act in order to arrive at our determination. This act specifically exempts “the various funds created by this chapter, and all moneys and investments and income thereof.”

Section 12 of the act

* provides:

“The funds hereby created are the annuity accumulation fund, annuity reserve fund, pension accumulation fund, expense fund and general fund.”

The annuity accumulation fund is next defined in §12 subd (a) as:

“* * * the fund in which shall be accumulated the contributions from the compensation of members for the purchase of annuities.”

"While we have quoted a sufficient portion of the act to support the lower court decision, perhaps we should point out that the purpose of the exemption clause would be defeated were we to hold otherwise. Any accumulated contributions would be subject to garnishment up to the date that the employee enters into retirement. The existence of the fund is a well recognized incentive to faithful discharge of duties during the period of active service. It is of great benefit to the employees to have their accumulated contributions protected both during their working years and those years thereafter when they are unable to perform service in their profession.

Affirmed. Costs to appellee.

Lesinski, C. J., concurred with J. H. G-illis, J.

CL 1918, § 38.212 (Stat Ann 1968 Rev § 15.893[12]).