City of Hazel Park v. Mun. Fin. Comm'n

• Decision Date: 17 April 1947
• Docket Number: Motion No. 352.
• Parties: CITY OF HAZEL PARK v. MUNICIPAL FINANCE COMMISSION.
• Court: Michigan Supreme Court

317 Mich. 582

27 N.W.2d 106

CITY OF HAZEL PARK

v.MUNICIPAL FINANCE COMMISSION.

Motion No. 352.

Supreme Court of Michigan.

April 17, 1947.

Mandamus proceeding by the City of Hazel Park, a Michigan municipal corporation, against the Municipal Finance Commission, a State of Michigan Commission, to compel defendant to approve a certain form of notice of sale of sewage disposal system bonds in the form submitted to the defendant by the plaintiff.

Writ denied.

Before the Entire Bench.

Carl A. Braun, of Pontiac, for plaintiff.

Eugene F. Black, Atty. Gen., Edmund E. Shepherd, Sol. Gen., of Lansing, and G. Douglas Clapperton, Asst. Atty. Gne., for defendant.

Bodman, Longley, Bogle, Middleton & Armstrong, of Detroit, amicus curiae, for Paul E. Worley, a taxpayer of Hazel Park, Michigan.

Miller, Canfield, Paddock & Stone, of Detroit, amici curiae.

William E. Dowling, Corporation Counsel of City of Detroit, Paul T. Dwyer, Chief Asst. Corporation Counsel, and John G. Dunn, Asst. Corporation Counsel, all of Detroit, amici curiae.

BOYLES, Justice.

Plaintiff has filed a petition asking that a writ of mandamus be issued directing the defendant State municipal finance commission to approve a certain form of notice of sale of $416,000 sewage disposal system bonds in the form submitted to it by said city. Order to show cause was issued, defendant's answer and return has been filed, and arguments heard in open court. Briefs have been filed by counsel for both parties, and also, by leave of court, briefs have been filed as amici curiae by the corporation counsel of Detroit, by counsel for a taxpayer of the plaintiff city, and by counsel engaged in giving opinions to municipalities and purchasers as to the validity of municipal bonds.

The facts are not in dispute. The plaintiff is a municipal corporation in the county of Oakland, State of Michigan, incorporated under the provisions of Act No. 279, Pub.Acts 1909, as amended, city homerule act, 1 Comp.Laws 1929, § 2228 et seq., as amended, Comp.LawsSupp.1940, § 2228 et seq., Stat.Ann. § 5.2071 et seq., pursuant to electoral vote on September 22, 1941. Its original charter was adopted at an election held on January 5, 1942, and contained a tax limitation of 15 mills for city purposes. On April 1, 1946, section 12.9 of the city charter was amended so as to provide for an extra 3-mill tax levy in addition to the 15 mills above mentioned, where such additional levy may be necessary in order to meet maturing bond principal and interest. At the same election on April 1, 1945, the electors of the city of Hazel Park approved the issuance of said $416,000 general obligation bonds for additions and extensions to the city sewage disposal system. On November 13, 1946, the city council authorized the issuance of the above-mentioned bonds. Pursuant to the requirements of Act No. 202, Pub.Acts 1943, as amended, Comp.LawsSupp.1945, § 2689-21 et seq., Stat.Ann.1946 Cum.Supp. § 5.3188 (1) et seq., application was made to the defendant municipal finance commission for permission to issue said bonds, and for approval of the form of the notice of sale thereof. The municipal finance commission granted permission for the issuance of the bonds, but refused to approve the form of the notice of sale as submitted by the city. It did, however, approve a notice of sale identical in form to that adopted by the city except for the deletion of the following sentence: ‘The bonds will be the general obligations of the city payable from ad valorem taxes within the 1.8% charter tax limit for city purposes,’ and the insertion of the following sentence in lieu thereof: ‘The bonds will be the general obligations of the city payable from ad valorem taxes without limitation as to rate or amount.’

The defendant municipal finance commission takes the position that the Michigan Constitution (1908), art. 10, § 21, as added in 1932, does not create a tax limitation for cities and villages but that they are excepted therefrom, and that the provision in Act No. 202, chap. 7, § 1a, Pub.Acts 1943, as added by Act No. 300, Pub.Acts 1945, Comp.Laws Supp.1945, § 2689-91a, Stat.Ann.1946 Cum.Supp. § 5.3188 (45a), requiring payment of maturing bond principal and interest from unlimited taxes notwithstanding any charter tax limitation, is not repugnant to the Constitution but is applicable to the city of Hazel Park and other cities and villages.

The plaintiff city of Hazel Park denies this contention and seeks in this action to secure a writ of mandamus requiring the municipal finance commission to approve the form of notice of sale as submitted, which notice provides that the bonds will be payable from ad valorem taxes within the 1.8 per cent charter tax limit for city purposes.

Counsel for the plaintiff phrases the question before us for decision as follows: ‘Do the provisions of section 21 of article 10 of the Michigan Constitution include city and village taxes within the 15 mill tax limitation but with the right of any such municipality to increase such limitation by a present or future charter provision?’

Section 21 of article 10 of the State Constitution, generally referred to as the 15-mill tax limitation, was adopted at the general election November 8, 1932, effective December 8, 1932. It is as follows: ‘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, 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 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 when provided for by the charter of a municipal corporation: Provided further, That this limitation shall not apply to texes levied in the year 1932.’

Plaintiff, relying mainly on what was said by this court in School District of City of Pontiac v. City of Pontiac, 262 Mich. 338, 247 N.W. 474, 787, contends that the said 15-mill tax limitation amendment as construed by this court places city and village taxes within the 15-mill tax limitation, but provides that as to such municipalities the limitation may be increased when provided for by the present or future charter of such municipal corporation. Plaintiff relies on that part of the opinion in the Pontiac case, supra, wherein it was said, (at page 351 of 262 Mich., at page 479 of 247 N.W.):

‘At the expense of repetition, we state again that (disregarding the exception of taxes levied for payment of debts), we think the amendment must be construed as though it read:

‘The total amount of taxes assessed against property for all purposes in any one year shall not exceed 1 1/2 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 5 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.

‘In the foregoing reference has been made to the so-called home rule cities, but we think the same result would follow as to cities having special charters with like provisions as to the exercise of the power of taxation. The result of the above construction is that the 1932 amendment neither increased nor decreased the charter power of a city to levy taxes for its municipal purposes.’

Simonton v. City of Pontiac, 268 Mich. 11, 255 N.W. 608, is not contrary to the conclusions reached in School District of City of Pontiac v. City of Pontiac, supra. In the Simonton case it was held that the city of Pontiac was bound to take care of its debt service for 1934, by the provisions of Act No. 273, Pub.Acts 1925; that the 15-mill amendment (Const.[1908], art. 10, § 21) did not apply. The defendant municipal finance commission refers to and relies on the following provision in the Municipal Finance Act, Act No. 202, chap. 7, § 1a, Pub.Acts 1943, as added by Act No. 300, Pub.Acts 1945: ‘No limitation in any statute or charter shall prevent the levy and collection of the full amount of taxes required by this section for the payment of debts, but nothing herein shall authorize the levy of a tax for any other purpose exceeding the existing statutory or charter tax limitation.’

The similar provision in the earlier statute formed the basis for decision in the Simonton case.

The 15-mill amendment was first construed by the court in School District of City of Pontiac v. City of Pontiac, supra [262 Mich. 338,247 N.W. 476]. The school district sought to enjoin the city from adoption of a proposed budget. After holding that the 15-mill amendment was legally adopted, the court considered the question ‘What is its proper construction in the particulars hereinafter noted?’ Mr. Justice North, writing for the court, discussed and construed three exceptions to the general limitation that the total amount of taxes for all purposes shall not exceed 1 1/2 per cent of the assessed valuation in any one year. The first exception was discussed as follows (at page 348 of 262 Mich., at page 478 of 247 N.W.): ‘At the outset the framers of the proposed amendment and later the people who considered its adoption were confronted with the legal proposition that contractual obligations could not be impaired and therefore the general exception to the proposed limitation of taxation was made by excepting ‘taxes levied for the payment of interest and principal on obligations heretofore incurred.’ We are not here conserned with this particular limitation, except to note that in drafting the amendment, as well as in its adoption, the people were mindful of existing conditions and...