Alco Universal Inc. v. City of Flint

• Decision Date: 21 December 1971
• Docket Number: No. 52777,52777
• Citation: 386 Mich. 359,192 N.W.2d 247
• Parties: ALCO UNIVERSAL INCORPORATED, a Michigan Corporation, Plaintiff-Appellee, The CITY OF FLINT, a Michigan Municipal Corporation, et al., Defendants-Appellants.
• Court: Michigan Supreme Court

Page 247

192 N.W.2d 247

386 Mich. 359

ALCO UNIVERSAL INCORPORATED, a Michigan Corporation Plaintiff-Appellee, The CITY OF FLINT, a Michigan Municipal Corporation, et al., Defendants-Appellants.

No. 52777.

Supreme Court of Michigan.

Dec. 21, 1971.

Leo A. Farhat, Lansing, for plaintiff-appellee.

Robert E. Weiss, Edward H. Devoe, Flint, for defendants-appellants.

Edward C. King, Michael J. Barnhart, Michael B. Bixby, James W. Sisk, Jr., Detroit, Center For Urban Law and Housing, Wayne County Neighborhood Legal Services, amicus curiae.

Before the Entire Bench.

WILLIAMS, Justice.

My Brother Justice Thomas G. Kavanagh correctly observes the decision in this case turns on the construction of Section 11 of the Municipal Housing Facilities Act, 1933 (Ex.Sess.) P.A. 18, § 11; M.C.L.A. § 125.661; M.S.A. 5.3021; Section 11 provides:

'All deeds, contracts, leases, or purchases entered into by the commission shall be in the name of the city or village and shall be approved by the governing body of said city or village. Contracts for the purchase of necessary materials, leases with tenants and options need not be so approved.'

The Flint Housing Commission had been duly authorized and organized pursuant to the Municipal Housing Facilities Act. As far as this case goes, the Housing Commission had processed through the Federal Government and had taken other steps with respect to a proposal Plaintiff had submitted to construct a turnkey project.

The issue engendering this case arose when the Housing Commission submitted to the City Commission certain contracts to help the Housing Commission carry out steps it had to take to be in a position to bring the proposal to fruition and the City Commission voted to drop the project without giving any reason.

The issue revolves around an interpretation of 'shall be approved.' Does this mean, as Plaintiff contends, that the City must automatically 'rubber stamp' the Housing Commission's desired action? Or does it mean, as the City Commission contends, that the City must exercise its discretion and approve or disapprove?

The normal meaning of 'approve' with relation to government action implies the power to disapprove. For example, the language 'shall be approved by the local legislative body' in Section 17 of the Michigan Liquor Control Act, M.C.L.A. § 436.17, M.S.A. § 18.988 is recognized as requiring exercise of discretion. Lewis v. City of Grand Rapids, 6 Cir., 356 F.2d 276, 285 et seq. (1966), cert. den. 385 U.S. 838, 87 S.Ct. 84, 17 L.Ed.2d 71 (1966). See generally 6 C.J.S. p. 127 'Approve' and 'Approved': discretion not necessarily implied but normally is.

Furthermore, Section 11 of the Municipal Housing Facilities Act clearly suggests that with respect to certain lesser transactions it is not going to bother the City Council ('Contracts for the purchase of necessary materials, leases with tenants and options need not be so approved'). However, with respect to 'All deeds, contracts, leases, or purchases entered into by the commission,' the Michigan Legislature specifies, 'shall be in the name of the city or village and shall be approved by the governing body of said city or village.'

Does this mean the Legislature thought the City Commission should rubber stamp the transaction described in the first sentence but did not have to be bothered with the second?

We do not think so.

The Michigan Municipal Housing Facilities Act is quite different from those in California, Montana and New Jersey concerning which may brother Justice Thomas G. Kavanagh quotes court decisions. In fact, counsel for the City Commission claims in many respects the Michigan legislation is Sui generis. Whether that is true or not, the three jurisdictions relied on by my brother do seem to be part of a pattern from which Michigan is quite distinct.

Michigan is a strong Home Rule state. Our Constitution recognizes basic local authority. Art. 7, § 22. Legislation grants liberal powers. M.C.L.A. 117.4j; M.S.A. 5.2083; Conroy v. City of Battle Creek, 314 Mich. 210, 221, 22 N.W.2d 275 (1946). The dignity and power of a City Commission cannot be lightly construed away.

In addition to leaving the power to approve certain important transactions under the power of the City Commission in Section 11, the Legislature also left the power of eminent domain in the City Commission under Section 10.

A significant reason for all of this becomes evident in trying together the first part of the first sentence of Section 11 with other parts of the Municipal Housing Facilities Act. The critical words are 'All deeds, contracts, leases or purchases entered into by the commission Shall be in the name of the city . . .'

The purpose behind all this becomes clear when examined in the light of later sections which make clear that revenue bonds to finance the housing projects are issued in the name of the City, not the Housing Commission (§§ 16, 17). The City also has the power to borrow money to develop housing projects. (§§ 47, 48). In other words the Legislature wanted to increase the saleability of housing revenue bonds by having them issued in the name of the City and likewise improve the credit of the obligor on the important transaction contracts specified in the first sentence of Section 11 by involving the city itself. This is why the legislature reserved the right to and imposed the duty of approval upon the City Commission. To do otherwise would be to give the Housing Commission a book of blank checks to write against the good name of the city.

In California, Montana and New Jersey the Housing Commissions have considerably more authority than in Michigan. For example, in California, Montana, and New Jersey the Commissioners can be dismissed only for misconduct after notice and hearing (41A West's Cal.Health & Safety Code Ann. § 34282; 3 R.C.M. 35--108; N.J.S.A. 55:14A--6). In Michigan the Commissioners may at any time be removed by the appointing authority.

More to the point, in California the Housing Authority may contract for services (41A West's Cal.Health & Safety Code Ann. § 34314) and may '(c) Purchase, lease, obtain option upon, acquire by gift, grant, bequest, devise, or otherwise any real or personal property or any interest in property.' (id., § 34315) The same is essentially true in Montana (3 R.C.M. 35--109) and in New Jersey (N.J.S.A. 55:14A--7(c) and (d)).

California, Montana and New Jersey Commissioners have the right of eminent domain and to issue their own bonds (41A West's Cal.Health and Safety Code Ann. § 34325 and § 34350; 3 R.C.M. 35--109, 35--111 and 35--114; N.J.S.A. 55:14A--10 and 55:14A--12).

As already indicated because of difference in statutory authority the cases of Housing Authority of City of Los Angeles v. City of Los Angeles, 38 Cal.2d 853, 243 P.2d 515 (1952), State ex rel. Great Falls Housing Authority v. City of Great Falls, 110 Mont. 318, 100 P.2d 915 (1940), and City of Paterson v. Housing Authority of City of Paterson, 96 N.J.Super. 394, 233 A.2d 98 (1967) are distinguished. In some, other facts as well are different as in the Los Angeles Case the City had already approved the contract once.

The Legislature by word and intention provided that the City Commission has the authority and responsibility to exercise its discretion in approving transactions of the nature described in the first sentence of Section 11. The Housing Commission was granted by the Legislature broad powers to construct, maintain and operate housing projects without supervision. Sections 27, 44, 44b among others. But the Legislature did reserve to the City Commission certain responsibilities and authority, one segment of which (Section 11) was in question here.

Answering the ringing words of Franklin Delano Roosevelt 'I see one-third of the nation ill-housed, ill-clad and ill-nourished' the Michigan Legislature in its wisdom provided this method to meet the crying human need of low cost housing. It is clear that they assumed that those elected by the people to represent them would be the most solicitous and most concerned about their welfare, and being nearest the people would exercise their judgment with understanding and compassion. Furthermore, where the representatives of the people in a democracy are untrue to their trust, then the people have the sacred right to substitute those who will.

The trial court is reversed. Mandamus does not lie.

T. M. KAVANAGH, C.J., and BLACK, SWAINSON and BRENNAN, JJ., concur.

T. G. KAVANAGH, Justice.

Defendant Flint Housing Commission (hereinafter called Housing Commission) was established by Ordinance No. 1788 passed by the Flint City Commission (hereinafter called City) on July 27, 1964 pursuant to P.A.1933 (Ex.Sess.), No. 18 (M.C.L.A. § 125.651 et seq.; Stat.Ann.1969 Rev. § 5.3011 et seq.) known as the Municipal Housing Facilities statute. The Ordinance provided in part:

'Said Flint Housing Commission shall have all the powers and duties vested or permitted to be vested in housing commissions by said Act No. 18, of the Extra Session of 1933, as heretofore or hereafter amended, and any laws heretofore or hereafter enacted which are supplemental thereto, it being the intention of this ordinance to vest in the Flint Housing Commission all powers and duties permitted by law.'

Pursuant to the Low-Rent Housing Act, 42 U.S.C.A. § 1401 et seq. the Housing Commission entered into a cooperation agreement with the City in December of 1967. The resolution said, in part:

'WHEREAS, the Municipality, acting by and through the Commission, shall endeavor to secure one or more contracts with the PHA for loans and annual contributions in connection with the development and administration of such low-rent housing projects, all pursuant to the United States Housing Act of 1937, as amended. . . .'

In December of 1968 the Housing Commission, as empowered by state statute ¹ and authorized ordinance, accepted Plaintiff's proposal to construct a turn-key project for...