71 F.2d 477 (6th Cir. 1934), 6685, City of Allegan, Mich., v. Consumers' Power Co.

Docket Nº:6685.
Citation:71 F.2d 477
Case Date:June 06, 1934
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 477

71 F.2d 477 (6th Cir. 1934)




No. 6685.

United States Court of Appeals, Sixth Circuit.

June 6, 1934

Page 478

J. C. Bills, of Detroit, Mich. (Clare E. Hoffman, Leo W. Hoffman, and Carl E. Hoffman, all of Allegan, Mich., on the brief), for appellants.

Edgar Johnson, of Grand Rapids, Mich., and B. J. Onen, of Battle Creek, Mich. (Travis, Merrick, Johnson & McCobb, of Grand Rapids, Mich., and Weadock & Whiting, of New York City, on the brief), for appellee.

Before MOORMAN, HICKS, and SIMONS, Circuit Judges.

SIMONS, Circuit Judge.

The controversy arises out of the effort of the city of Allegan to amend its charter in order to increase its bonding limit for the purpose of completing an electric light and power plant, and the opposition to such project of the appellee as a property owner and municipal taxpayer. The appeal is from an interlocutory injunction restraining the city from borrowing money and issuing bonds.

The questions presented involve the validity of the attempted charter amendment, under the Constitution and laws of Michigan, the authority of the Federal Emergency Administration of Public Works to loan money to the city for the purpose indicated, and the constitutionality of Title 2 of the National Industrial Recovery Act (40 USCA 403), if applicable to the purchase of the proposed bonds. A number of subordinate questions are likewise involved.

The appellee, hereinafter called the 'utility,' is a Maine corporation, but a taxpayer in Allegan, owning property therein and supplying its inhabitants with electricity. The city is governed in many respects by the provisions of the so-called Fourth Class Cities Act, being Act No. 215, Pub. Acts 1895. On June 1, 1930, it issued general obligation bonds for the construction of an electric lighting plant in the sum of $185,000, of which $181,000 is still outstanding. It also voted to issue mortgage bonds totaling $300,000, to be secured by a franchise and mortgage upon the lighting plant. On April 6, 1931, the electors voted to borrow an additional $170,000 on general obligation bonds, which have not yet

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been issued. The Fourth Class Cities Act limits the city in borrowing for the purpose of erecting and maintaining a municipal dam and lighting works to a sum not exceeding 5 per cent. of the assessed value of the property in the city as shown by the last preceding tax roll. The total assessed valuation of the property in the city for the year 1931 was $3,649.315; for 1932, $3,518,090; and for 1933, $3,403,775.

The present Constitution of Michigan, ratified by the people in 1909, incorporates in article 8 certain so-called home rule provisions. They are:

'Sec. 20. The legislature shall provide by a general law for the incorporation of cities, and by a general law for the incorporation of villages; such general laws shall limit their rate of taxation for municipal purposes, and restrict their powers of borrowing money and contracting debts.

'Sec. 21. Under such general laws, the electros of each city and village shall have power and authority to frame, adopt and amend its charter and to amend an existing charter of the city or village heretofore granted or passed by the legislature for the government of the city or village and, through its regularly constituted authority, to pass all laws and ordinances relating to its municipal concerns, subject to the Constitution and general laws of this state.'

Following the ratification of the Constitution of 1909, the Legislature passed the so-called Home Rule Act (Pub. Acts 1909, No. 279). This, as amended by section 2231, C.L. 1929, permits each city to provide by its charter for the borrowing of money on the credit of the city, and issuing bonds therefor for any purpose within the scope of its powers, provided that the net bonded indebtedness incurred for all public purposes shall not at any time exceed per cent. of the assessed value of all real and personal property in the city. On April 6, 1931, a proposed amendment to the charter of the city was submitted to its electros and ratified, which purported to increase the total authorized indebtedness for the construction and maintenance of electric lighting works from 5 per cent. as limited by the Fourth Class Cities Act (Pub. Acts 1895, No. 215, c. 27, Sec. 4) to 10 per cent. of the assessed value of the city's property, being an attempt to incorporate into the city's charter one of the 'Permissible Charter Amendments' of the Home Rule Cities Act (section 2228 et seq.). The attempted enlargement by the city of its bonding limit is attacked as void, and the District Court so held it to be on the ground that the authority granted by the Constitution to the Legislature to limit the extent to which cities may incur indebtedness excludes the power of Home Rule Cities to legislate upon the same subject, citing as authority Harsha v. City of Detroit, 261 Mich. 586, 246 N.W. 849, 90 A.L.R. 853; City of Kalamazoo v. Titus, 208 Mich. 252, 175 N.W. 480; City Comm. of City of Jackson v. Vedder, 209 Mich. 291, 176 N.W. 557; Attorney General v. Lindsay, 178 Mich. 524, 145 N.W. 98. The city defends the validity of its charter amendment in reliance upon North Michigan Water Company v. Escanaba, 199 Mich. 286, 165 N.W. 847, and other cases.

We should be under the necessity at this point of analyzing the Michigan cases cited...

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