Bacon v. Kent-Ottawa Metropolitan Water Authority

• Decision Date: 13 October 1958
• Docket Number: KENT-OTTAWA
• Citation: 92 N.W.2d 492,354 Mich. 159
• Parties: Carter BACON, Plaintiff and Appellant, and City of East Grand Rapids, a Michigan municipal corporation, Intervening Plaintiff and Appellant, v.METROPOLITAN WATER AUTHORITY, Defendants and Appellee.
• Court: Michigan Supreme Court

Page 492

92 N.W.2d 492

354 Mich. 159

Carter BACON, Plaintiff and Appellant and City of East Grand Rapids, a Michigan municipal corporation Intervening Plaintiff and Appellant, v. KENT-OTTAWA METROPOLITAN WATER AUTHORITY, Defendants and Appellee.

Supreme Court of Michigan.

Oct. 13, 1958.

Vander Veen, Freihofer, Cook & Bryant, Grand Rapids, Stephen A. Bryant, Grand Rapids, of counsel, for plaintiffs and appellants.

Varnum, Riddering, Wierengo & Christenson (Clifford C. Christenson and Eugene Alkema), Grand Rapids, Miller, Canfield, Paddock & Stone (John H. Nunneley), Detroit, for defendant-appellee.

Before the Entire Bench.

BLACK, Justice.

This bill, in essence one for declaratory relief, was filed in the Kent circuit. The plaintiff, Carter Bacon, is a taxpayer of the city of East Grand Rapids. The city of East Grand Rapids, by petition for and duly authorized intervention, supports plaintiff's bill and prays for the same relief; that of enjoining defendant permanently from pursuit of resolved proceedings which, if valid, are made so by P.A.1957, No. 4. ¹ The bill, following due hearing below, was dismissed. Plaintiff, and the named intervenor, appeal from the decree of dismissal.

The defendant Kent-Ottawa Metropolitan Water Authority was organized as a 'municipal corporation' under the provisions of said act 4. The city of Zeeland, the city of Hudsonville, the city of Grandville, the city of East Grand Rapids, the Ottawa county township of Georgetown and the Kent county townships of Wyoming and Paris, compose--under § 2 of the act--the incorporating local units. Following such incorporation due proceedings under the act were pursued to adoption (September 19, 1957) of the resolution in question. The resolution declares intent to proceed with the acquisition and construction of public water supply facilities (featured by an intake leading from Lake Michigan through and to the component municipalities) at an estimated cost (this applies only to 'the first stages of said ultimate project') of $10,923,000. It goes on to declare intent 'To finance the initial cost of said project' by and through issuance of 'general obligation bonds of the authority' in a sum not exceeding $10,930,000, 'under and by virtue of the provisions of Act No. 4, Public Acts of Michigan, 1957.'

The decisive question before us it is whether:

(a) Looking at §§ 16 and 18 of the act (the 2 sections respectively authorize levy by the authority of property taxes 'to pay the principal and interest on the bonds maturing prior to the next tax collection period' and levy by the authority of property taxes to provide funds 'for administration expenses of the authority and such other purposes of the authority as may be determined to be necessary'), and

(b) With thought concentrated on the sentence in section 16 reading 'The tax for the purpose of paying the bonded indebtedness shall be unlimited as to rate or amount.';

the act by granting such general taxing power to the authority violates § 21 of article 10 (adopted in 1932 and amended in 1948), known as the 15 mill amendment of Michigan's Constitution.

First: Summary of Opinion and Legal Background

Through and by means of an attritional series of judicial decisions the 15 mill amendment has been bruised, beaten and backed to the brink of sterile and forceless words. No intervening act of the electorate brought this about. ² Bench law made of generated public necessity and pressured regression brings us this day to the last act and final scene. By the decree we are due to sign this Constitutional restriction of the power of property taxation either will live on, probably in its present atrophied form, or perish forever. So far as concerns the power to limit 'the total amount of taxes assessed against property for all purposes', the legislature--in event we sustain §§ 16 and 18 of said act 4--will reign over the Constitution.

In the case before us, the defendant authority, proclaiming under act 4 that it is a 'municipal corporation' within meaning of the last exception ³ set forth in the amendment and that it is armed with a 'charter' which exempts it from effect of the amendment, moves now that this Court push the already battered amendment into the abyss where it may be destroyed by and at the will of the legislature ⁴. We cannot support the motion. Our reasons are to follow.

The amendment as adopted by the people in 1932 read this way:

'Sec. 21. The total amount of taxes assessed against property for all purposes in any one year shall not exceed 1 and 1 1/2 per cent of the assessed valuation of said property, except taxes levied for the payment of interest and principal on obligations heretofore incurred, which sums shall be separately assessed in all cases; Provided, that this limitation may be increased for a period of not to exceed 5 years at any one time, to not more than a total of 5 per cent of the assessed valuation, by a 2/3 vote of the electors of any assessing district, or when provided for by the charter of a municipal corporation; Provided further, that this limitation shall not apply to taxes levied in the year 1932.'

In 1933 it was rewritten by the court (School Dist. of City of Pontiac v. City of Pontiac, 262 Mich. 338 at page 351, 247 N.W. 474, at page 476), to read this way:

'The total amount of taxes assessed against property for all purposes in any one year shall not exceed one and one-half per cent of the assessed valuation of said property * * *: Provided, that this limitation may be increased for a period of not to exceed five years at any one time, to not more than a total of five per cent of the assessed valuation, by a two-thirds vote of the electors of any assessing district, or (that this limitation may be increased) when provided for by the (present or future) charter of a municipal corporation.'

From the first parenthetical insertion shown in the quotation just made it will be noted that the final exception was thereby freed from the halter of the specified 50-mill limit (See Stason comment, quoted infra). The assault was on but not over. Next and in succession it was held that special assessments do not come within the scope and purpose of the all-inclusive and easily understood phrase: 'The total amount of taxes assessed against property for all purposes' (Graham v. City of Saginaw, 317 Mich. 427, 27 N.W.2d 42, 44) ⁵ that the legislature could at will modify or amend the charters of municipal corporations, thus authorizing legislation enlarging or diminishing the taxing powers of such corporations without regard for the limitation (City of Hazel Park v. Municipal Finance Comm., 317 Mich. 582, 27 N.W.2d 106; Saginaw Council v. Board of Trustees, 321 Mich. 641, 32 N.W.2d 899); that charter townships are 'municipal corporations' within the meaning of said final exception (Charter Tp. of Warren v. Municipal Finance Comm., 341 Mich. 607, 67 N.W.2d 788); and finally that school districts are 'municipal corporations' within meaning of such exception (Hall v. Ira Township, 348 Mich. 402, 83 N.W.2d 443; Kent County Bd. of Ed. v. Kent Tax Bd., 350 Mich. 327, 86 N.W.2d 277). ⁶ This case presents the close for the kill.

Other decisions affecting scope of the amendment require no discussion because they do not relate to or premonish the final step defendant proposes; a holding that since the legislature stands free to set up governmental authorities or entities at will, it may--merely by calling each such authority or entity a 'municipal corporation' and by providing in a legislative 'charter' for each the power to tax property without regard for the 15 mill limitation--hand to each such authority or entity the power to utterly nullify the amendment within its charter-defined area. To put it another way: If such lawfully may be done in the case of this Kent-Ottawa authority, so can it be done in the case of every like 'authority' which, by legislative act, is now or hereafter assigned a public task. Indeed, and for example: Should we pronounce lawful the power of property taxation as provided by said act 4, there is no reason why legislation declaring the Mackinac bridge authority a 'municipal corporation', and providing it with a legislative 'charter' authorizing levy by it--without limit as to rate or amount--of a state-wide property tax with which to pay its outstanding bonded indebtedness, cannot also be enacted without offense to the Constitution. The illustration may be impertinent, yet it serves to show the lengths to which we are asked to go in this case of Bacon.

The amendment having been voted into the Constitution as an express limitation of the legislative as well as local power of taxation, it becomes our clear duty to protect whatever remains of the electorintended right of property taxpayers (mostly home owners) to say when and to what extent they are to pay more than the amendment-declared maximum millage-amount. This must be so unless by the interpretation presently sought we are obliged to hold that the final exception was intended to be construed as referring to any instrument or agency of government which has been or will be organized and branded a 'municipal corporation' by present or future act of the legislature. This brings us to the direct question of interpretation.

Second: Interpretation of the Constitutional

Exception--'When provided for by the charter of a

municipal corporation'--as Applied to Act 4

As we shall see, our duty in exploring this question is to scrutinize the prevailing conditions and the 'existing laws' which unitedly formed the circumstances under which this amendment of 1932 was conceived and voted into the Constitution. The burden of unrestricted property taxation had grown to the point of confiscation. The people were aroused and determined to restrict--permanently--the power of property taxation which then reposed generally in legislative (state and local) hands. Added to their tax troubles, the...