Burton Tp. of Genesee County v. Speck

• Decision Date: 24 August 1966
• Docket Number: No. 5,5
• Citation: 144 N.W.2d 347,378 Mich. 213
• Parties: BURTON TOWNSHIP OF GENESEE COUNTY, State of Michigan, by Joseph E. Uvick, Legal Agent, Plaintiff and Appellant, v. John L. SPECK, Paul A. Rauch, Joseph P. Richvalsky, Stephen Dodge, Herbert Winstanley, Inez McPhee, and Jack Keene, Defendants and Appellees.
• Court: Michigan Supreme Court

Page 347

144 N.W.2d 347

378 Mich. 213

BURTON TOWNSHIP OF GENESEE COUNTY, State of Michigan, by Joseph E. Uvick, Legal Agent, Plaintiff and Appellant, v. John L. SPECK, Paul A. Rauch, Joseph P. Richvalsky, Stephen Dodge, Herbert Winstanley, Inez McPhee, and Jack Keene, Defendants and Appellees.

No. 5.

Supreme Court of Michigan.

Aug. 24, 1966.

Joseph P. Uvick, Detroit, for appellant; Harold Goodman, Detroit, of counsel.

Milliken & Magee, David S. Magee, Flint, for appellees.

Before the Entire Bench, except SMITH, J.

ADAMS, Justice.

On July 1, 1963, a new supervisor of Burton township, Genesee county, brought this suit to recover money that defendants members of the Burton township board prior to April, 1963, had obtained from the township.

Beginning April 1, 1946, the electors or the township board annually voted a Fixed expense allowance to board members. C.L.1948, § 41.75 (Stat.Ann.1961 Rev. § 5.67) provides in part:

'No accounts shall be audited by such board, except such as are made in writing, Giving the particular items of such account, and verified by oath or affirmation of the claimant or some one in his behalf.' (Emphasis supplied.)

Expense allowances were paid from April, 1946, until April, 1957, even though the members filed no itemized accounts.

On April 15, 1947, the township board created four commissionerships which were designated as health officer; purchasing agent and fire commissioner; public safety and park commissioner; and chairman of study commission; and later designated as commissioner of fire; commissioner of police; commissioner of buildings, parks and grounds; and commissioner of building inspection, zoning regulation and enforcement. These positions were paid expense allowances or salaries that ranged from $150 a year in 1947 to $175 a month in 1963.

Beginning in 1957, at the annual town meeting the electors, on motions made by defendant board members, authorized appointment of and salaries for commissioners. Appointments were then made by the supervisor with board approval. Electors are authorized by statute to determine the compensation of members of the township board. C.L.S.1961, § 41.95 (Stat.Ann.1961 Rev. § 5.82).

Prior to April, 1959, the township treasurer received his statutory collection fee for the collection of taxes. Until April, 1957, the township board also voted and paid him a fixed expense allowance and an annual salary which was contrary to the requirement of C.L.1948, § 211.44 (Stat.Ann.1950 Rev. § 7.87) that:

'All fees collected by the township treasurer in townships where the treasurer shall receive a salary, shall be credited to the contingent fund of the township.'

In April, 1959, the treasurer was placed on a salary in lieu of fees. C.L.1948, §§ 211.44, 211.44a (Stat.Ann.1950 Rev. §§ 7.87, 7.88), as amended.

At the conclusion of plaintiff's case, defendants moved for a judgment as to all claims occurring prior to July 1, 1957, because of the running of the six-year statute of limitations. The trial judge found that the expenses were matters of public record and granted the motion. Defendants then moved for judgment as to the remainder of the claims. The trial judge found there was no incompatibility in holding both the offices of trustee and commissioner and granted the motion. The Court of Appeals affirmed. Burton Township v. Speck, 1 Mich.App. 339, 136 N.W.2d 731. Leave to appeal was granted by this Court.

I.

Was the statute of limitations suspended?

Plaintiff maintains that the statute of limitations does not operate when the same person is on both sides of a claim and that operation of the statute was suspended because the former supervisor represented both sides of these claims. This rule has been applied in many cases in other jurisdictions. See 54 C.J.S. Limitations of Actions § 111, p. 16; 34 Am.Jur., Limitation of Actions, § 114, p. 93.

A corollary of the rule was applied in Parks v. Norris, 101 Mich. 71, 59 N.W. 428, where it was held that until an administrator of an estate was appointed no person was authorized to bring an action for the estate.

Until plaintiff was elected to the township board, the board members were all participants in the actions upon which this suit is based. Of their number was the supervisor who, by law, was the township agent for the transaction of its legal business. C.L.1948, § 41.64a (Stat.Ann.1961 Rev. § 5.56). He was on both sides and obviously would not be disposed to sue himself.

Defendants say, however, that since any taxpayer could have brought a suit on the authority of C.L.1948, § 129.61 (Stat.Ann.1958 Rev. § 5.3281), there were people who could have sued and so the statute of limitations continued to run. C.L.1948, § 129.61 provides:

'Any person or persons, firm or corporation, resident in any township or school district, paying taxes to such political unit, May institute suits or actions at law or in equity on behalf of or for the benefit of the treasurer of such political subdivision, For an accounting and/or The recovery of funds or moneys misappropriated or Unlawfully expended by any public officer, board or commission of such political subdivision. Before such suit is instituted a demand shall be made on the public officer, board or commission whose duty it may be to maintain such suit followed by a neglect or refusal to take action in relation thereto. Security for costs shall be filed by the plaintiff or plaintiffs in any such suit or action and All costs and expenses of the same shall be paid by the person or persons instituting the same unless and until a recovery of such funds or moneys be obtained as the result of such proceedings.' (Emphasis supplied.)

The requirements of this statute are onerous. Any finding that the permission granted to a taxpayer to sue provided a substitute party for the supervisor, the township's designated agent, must meet all possible objections.

In Nahikian v. Mattingly, 265 Mich. 128, 251 N.W. 421, an individual shareholder's right to bring suit on behalf of a corporation against its president did not cause the statute of limitations to run where the president dominated the corporation, was in a position of trust, and held assets that belonged to the corporation. The principle of estoppel was relied upon in Nahikian with the result that a small shareholder was not required to assert a claim within the statutory time because he could only minutely benefit. In the case of the ordinary taxpayer, his interest is even more minute. Such minimal interest is one reason why the supervisor's duty to represent the township should not be shifted.

Even if a taxpayer's right to sue did continue the running of the statute of limitations, the statute was tolled in this case because there was an insufficient disclosure for such a suit. The trial judge and the Court of Appeals found that because the public had access to the minutes of the annual town meeting and the township board meetings, and because taxpayers were allowed freely to attend all meetings, there was a full disclosure. However, as already noted, C.L.1948, § 41.75 (Stat.Ann.1961 Rev. § 5.67) provides:

'No accounts shall be audited by such board, except such as are made in writing, giving the particular items of such account, and verified by oath or affirmation of the claimant or some one in his behalf.'

It also provides:

'All accounts audited by such board shall be filed and preserved by the clerk, for the inspection of any of the inhabitants of the township or of any persons liable to pay taxes therein, and shall be produced at the next annual township meeting and there read by him, if the same shall be required by the meeting.'

No itemized and verified accounts were filed so as to be available for inspection. Yet the township records gave every appearance of regularity on their face, being open records that were presumably kept in accordance with the law. While, as a general rule, concealment must be designed to mislead and must be accompanied by affirmative steps to that end (McNaughton v. Rockford State Bank, 261 Mich. 265, 268, 269, 246 N.W. 84), there is an exception as to one in a fiduciary or confidential relationship. Johnson v. Provincial Insurance Company of Toronto, 12 Mich. 216, 222, 223; Tompkins v. Holister, 60 Mich. 470, 479, 27 N.W. 651; Barrett v. Breault, 275 Mich. 482, 491, 267 N.W. 544; Comment note: What constitutes concealment which will prevent running of statute of limitations, 173 A.L.R. 576, 588. In such a case, silence can amount to fraudulent concealment. Barrett v. Breault, supra.

A public office is a public trust. Defendants were public officers. They owed, at the least, a duty of loyalty to the public no less than that of an agent to his principal. People ex rel. Plugger v. Township Board of Overyssel, 11 Mich. 222, 225; 43 Am.Jur., Public Officers, § 261, p. 78; Comment note, supra, p. 606. The duties of a township board are: (1) to meet annually (C.L.1948, § 41.72 (Stat.Ann.1961 Rev. § 5.64,)), (2) to hold at least one regular meeting every three months (C.L.1948, § 41.72a (P.A. 1951, No. 46) (Stat.Ann.1961 Rev. § 5.64(1))), and (3) to examine and audit accounts (C.L.1948, § 41.73 (Stat.Ann.1961 Rev. § 5.65)). The duty to examine and audit accounts was that of the board, not of a taxpayer. The township board, having been appointed the watchdog of the township purse with the duty to audit correctly all accounts, may not escape the consequences of its failure to perform that duty, particularly as to its own expenses and salary, merely because a taxpayer might sue. To come to such a result would only encourage dereliction of duty in public office.

In any event, a public record does not necessarily cause the statute to run if it is insufficient to put the taxpayers on notice. This Court has held:

'We recognize the general rule that the running of the statute will not be postponed if the defrauded person may discover the fraud from public records. This rule...