City of Highland Park v. Clark

• Decision Date: 11 February 1942
• Docket Number: Motion No. 23.
• Citation: 2 N.W.2d 479,300 Mich. 501
• Parties: CITY OF HIGHLAND PARK et al. v. CLARK, Drain Commissioner of Oakland County, et al.
• Court: Michigan Supreme Court

300 Mich. 501

2 N.W.2d 479

CITY OF HIGHLAND PARK et al.

v.CLARK, Drain Commissioner of Oakland County, et al.

Motion No. 23.

Supreme Court of Michigan.

Feb. 11, 1942.

Proceeding by the City of Highland Park and others for a writ of mandamus directing Earl L. Clark, Drain Commissioner of Oakland County, and Board of Supervisors of Oakland County to perform such acts as will result in the levy, certification and spread of all unpaid portions of installments of taxes levied for a drain, and supplemental or deficiency assessments as shall be sufficient to pay all outstanding bonds of a drain district in the county.

Writ denied.

Before the Entire Bench.

Earl B. Young, of Highland Park, Levin, Levin & Dill, Voorhies, Long, Ryan & McNair and Dykema, Jones & Wheat, all of Detroit (Thomson, Wood & Hoffman, of New York City, of counsel), for relators.

Herbert J. Rushton, Atty. Gen., and Edmund E. Shepherd, Sol. Gen., for the State.

Charles L. Wilson, Pros. Atty., and Harry J. Merritt, Corp. Counsel, both of Pontiac, for respondents.

Thomas F. Chawke and Joslyn, Joslyn & Joslyn, all of Detroit, for International Typographical Union and others.

Alex J. Groesbeck, Hugh Francis, and Bernard F. Powell, all of Detroit, Bert V. Nunneley, of Mount Clemens, Charles Retzlaff, of East Detroit, John H. Yoe, of Detroit, and Kenneth J. McCallum, of East Detroit, amici curiae.

Hill, Hamblen, Essery & Lewis, of Detroit, amici curiae.

John P. O'Hara, of Detroit, amicus curiae in opposition to issuance of writ of mandamus.

BUSHNELL, Justice.

Relators, who claim to be bona fide holders for value of bonds issued by Royal Oak No. 7 Storm Sewer Drain District in the Township of Royal Oak, Oakland County, Michigan, seek a writ of mandamus directing and commanding respondents, the drain commissioner of Oakland county and the board of supervisors of that county, to severally and collectively perform such acts as will result in the levy, certification and spread of all unpaid portions of the installments of taxes levied for this drain, and such supplemental or deficiency assessment as shall be sufficient to pay all outstanding bonds of the district. We issued an order to show cause and it was stipulated between the parties that the answer of the drain commissioner and the board of supervisors should stand as the return to that order.

The proceedings to establish this drainage district were instituted on June 3, 1927, under Act No. 316, Pub.Acts 1923, 1 Comp.Laws 1929, § 4838 et seq., Stat.Ann. § 11.1 et seq., which only authorize the construction of drains. This act has been since amended, Act No. 318, Pub.Acts 1929, and others and now includes provisions for the building of sewers and sewage facilities in connection with drains. The proceedings progressed in the usual manner and bonds in the par amount of $191,000 were issued. The entire issue was purchased by a brokerage house in City of Detroit and payment therefor was made to the county treasurer. The bonds were resold to various investors and these relators now hold 150 bonds of the outstanding issue.

The construction was of an underground type, of vitrified, double strength sewer crock, with catch basins for surface waters and Ys for sanitary sewer connections to each residential lot, capable of caring for sanitary sewage and surface waters of the whole area of the district. The underground conduits range from 12 to 54 inches in diameter.

The bonds have been in default since May 1, 1931, due to the suspension of the levy of installments of the assessment for this project during the years 1932 to 1936, inclusive. All bonds are now past due and interest has been in default since May 1, 1940. On December 12, 1940, relators entered into written agreement with the drain commissioner, board of auditors, and treasurer of the county, whereby 30 per cent of the accrued interest was cancelled and refunding bonds were to be issued. Relators surrendered their interest coupons, consented to an indorsement on their bonds of a receipt for all interest of May 1, 1940, and were paid 70 per cent of the accrued interest. Respondent drain commissioner then sought authority for the issuance of refunding bonds and, on February 13, 1941, the Michigan Public Debt Commission signed an order authorizing such an issue. Relators were later informed by respondents that they would neither issue such refunding bonds nor levy and further taxes for the payment of existing bonds. The answer of respondents avers in substance that the refunding agreement, having been executed without the authority or approval of the board of supervisors, is void and of no force and effect, and that, because of the holding of this court in Village of Oak Park v. Van Wagoner, 271 Mich. 450, 260 N.W. 743, decided May 17, 1935, the bonds held by relators are void.

In the 12 briefs that have been filed in this cause by the parties and various amici curiae, to whom leave was granted, it is conceded that decision in this case affects not only the possibility of payment of the defaulted bonds of this issue, but many millions of other outstanding drain bonds.

The issues presented may be summarized as follows:

1. Is the decision in Village of Oak Park v. Van Wagoner, 271 Mich. 450, 260 N.W. 743, either res adjudicata or stare decisis?

2. Are respondents estopped by the recitals in the bonds?

3. May the validity of the drainage proceedings be attacked in a collateral suit?

4. Is Royal Oak No. 7 Storm Sewer Drain a sewer or a drain?

5. Is mandamus the appropriate remedy?

Litigation regarding the validity of drainage projects has been determined by this court in various cases, among which are the following: Clinton v. Spencer, 250 Mich. 135, 229 N.W. 609;Warren Township v. Engelbrecht, 251 Mich. 608, 232 N.W. 346;Kinner v. Spencer, 257 Mich. 142, 241 N.W. 240;Township of Lake v. Millar, 257 Mich. 135, 241 N.W. 237;Hankinson v. Deake, 265 Mich. 1, 251 N.W. 418;Village of Clawson v. Van Wagoner, 268 Mich. 148, 255 N.W. 743;Village of Oak Park v. Van Wagoner, 271 Mich. 450, 260 N.W. 743;Kennedy v. Dingman, 272 Mich. 24, 261 N.W. 123;Meyering Land Co. v. Spencer, 273 Mich. 703, 263 N.W. 777; Detroit Fire & Marine Ins. Co. v. Oakland County, 284 Mich. 130, 278 N.W. 791;Detroit Trust Co. v. Dingman, 291 Mich. 170, 289 N.W. 118.

In none of the above cases were bondholders actual parties, although respondents argue that bondholders were represented by the drain commissioner. Holders of bonds issued on projects covered by some of the foregoing cases have litigated their claims in the Federal courts. The most recent Federal decision is Bloomfield Village Drain District v. Keefe, 6 Cir., 119 F.2d 157. Other Federal cases are an unreported one before Judge Raymond in the Western District of Michigan and Royal Oak Drain District v. Keefe, 6 Cir., 87 F.2d 786.

No useful purpose would be served in reviewing the cited cases, each of which has been re-examined as to its applicability to the issues presented. Careful consideration requires the conclusion that decision in the instant case is governed by the reasoning in Village of Oak Park v. Van Wagoner, 271 Mich. 450, 260 N.W. 743, 746. Although five members of the court concurred specially in the opinion in that case, nevertheless the court was unanimous in holding that the Royal Oak No. 7 Project was a sewer and not a drain; that the defendant drain commissioner was wholly without jurisdiction in the premises, and that therefore the entire proceedings were void and subject to collateral attack. In arriving at this conclusion, the court unanimously concurred in the statement that, ‘The acts of the drain commissioner were without warrant in law, and any tax levied and collected as a result thereof would constitute the taking of property without due process of law.’ We held unanimously that all assessments levied against the village should be cancelled and set aside and permanently restrained the drain commissioner from collecting, or attempting to collect, the same or any portion thereof.

The project was designated ‘Royal Oak No. 7 Storm Sewer Drain,’ and the bonds bore the heading, ‘Royal Oak No. 7 Storm Sewer Drain District Bond.’ It was recited in the bonds ‘that all acts, conditions and things required to be done, precedent to and in the...