City of Highland Park v. Clark

• Decision Date: 08 October 1945
• Docket Number: No. 117.,117.
• Citation: 20 N.W.2d 253,312 Mich. 407
• Parties: CITY OF HIGHLAND PARK v. CLARK, County Drain Com'r, et al
• Court: Michigan Supreme Court

312 Mich. 407

20 N.W.2d 253

CITY OF HIGHLAND PARK

v.CLARK, County Drain Com'r, et al

No. 117.

Supreme Court of Michigan.

Oct. 8, 1945.

Mandamus by the City of Highland Park against Earl L. Clark, Drain Commissioner of Oakland County, Board of Supervisors of Oakland County, and Charles A. Sparks, Treasurer of Oakland County, to compel defendant treasurer to pay a deficiency on certain storm sewer drain district bonds from county's general fund. From an order denying relief prayed, plaintiff appeals.

Order vacated and case remanded with directions.Appeal from Circuit Court, Oakland County; H. Russel Holland, judge.

Before the Entire Bench.

Voorhies, Long, Ryan & McNair, of Detroit, for relator and appellant.

Harry J. Merritt, Corp. Counsel, of Pontiac, for respondents and appellees.

Alex J. Groesbeck, Hugh Francis, and Bernard F. Powell, all of Detroit, for amici curiae.

STARR, Chief Justice.

Plaintiff, as the owner of certain bonds of the Southfield No. 6 storm sewer drain district, began the present mandamus action to compel the treasurer of Oakland county to pay the deficiency on said bonds from the county's general fund. Having obtained leave, it appeals from an order denying the relief sought. Questions are presented which require us to construe and determine the constitutionality of Act No. 316, chap. 10, § 15, Pub.Acts 1923, as amended by Act No. 331, Pub.Acts 1927, which provides in part:

‘In case the amount available in the drain fund shall be insufficient to pay the principal or interest of any such bonds heretofore or hereafter issued when they become due the same shall be advanced and paid by the county out of its general funds and reimbursement to said general fund shall be made out of the drain taxes thereafter collected, provided that such advancement by the county shall not cause the total debt of the county to exceed the constitutional limitation thereof.’

Substantially all of the material facts involved are stipulated. The drain district comprised 297 platted lots and an unplatted parcel of about 33 acres in Oakland county. On February 1, 1928, the district issued bonds in the amount of $45,000 to provide funds for the construction of a storm sewer drain. The issue consisted of 45 bonds in the amount of $1,000 each, maturing serially during a period of 10 years, the last maturity being May 1, 1938. They provided for interest at 5 1/2 per cent. payable semiannually on May 1st and November 1st of each year. The bonds contained the following provision, which substantially embodied the above-quoted portion of the statute:

‘The principal and interest of this bond are payable out of the installments of drain taxes assessed against the lands in said district and against the county of Oakland and the township of Southfield at large, in proportion to their respective taxation for such improvement as follows: lands in district 89 per cent., Oakland county 1 per cent., Southfield township 10 per cent. and are issued for the payment of the cost of construction of the Southfield No. 6 storm sewer drain in the township of Southfield in said Oakland county, * * * and in case the amount available in the drain fund for said drain shall be insufficient to pay the principal or interest of any of such bonds when they become due the same shall be advanced and paid by the county of Oakland out of its general funds and reimbursement to said general fund shall be made out of the drain taxes thereafter collected, provided that such advancement by the county shall not cause the total debt of the county to exceed the constitutional limitation thereof.’

In March, 1928, plaintiff purchased $19,000 in amount of said bonds and $16,000 were subsequently purchased by Oakland county. The remaining $10,000, which matured on and prior to May 1, 1931, were sold and were redeemed at maturity. All bonds owned by plaintiff and Oakland county have matured and remain unpaid. No interest has been paid since May 1, 1931. Subsequently, all the unplatted acreage and 179 of the 297 lots in said district were sold to the State of Michigan for delinquent taxes, leaving only 118 lots which would be subject to a deficiency assessment under our holding in Keefe v. Oakland County Drain Commissioner, 306 Mich. 503, 11 N.W.2d 220. It was agreed that the 118 lost represented 41.175 per cent. of the land on the original assessment roll of the district. The amount of principal and interest (computed to May 1, 1945) remaining due on the district's outstanding bonds is $61,950. Plaintiff and Oakland county are the only parties interested as creditors of the drain district. The financial status of the district and the probable deficiency in funds required to pay its outstanding bonds and interest are shown by the following stipulated facts:

‘Assuming that an additional deficiency assessment were levied in 1944, the following approximate figures show the amount of the same and the approximate maximum recoveries which could be expected therefrom:

+---------------------------------------+
                ¦“Principal of bonds         ¦$35,000.00¦
                +----------------------------+----------¦
                ¦“Interest to 5/1/45         ¦26,950.00 ¦
                +----------------------------+----------¦
                ¦                            ¦$61,950.00¦
                +----------------------------+----------¦
                ¦“Cash in (drainage district)¦          ¦
                +----------------------------+----------¦
                ¦fund                        ¦17,014.63 ¦
                +----------------------------+----------¦
                ¦“Additional deficiency      ¦          ¦
                +----------------------------+----------¦
                ¦assessment                  ¦$44,935.37¦
                +---------------------------------------+
                

‘Only 41.175 per cent. (of the deficiency assessment) could be collected because of the fact that levies cannot be made against lands which passed to the State, hence the maximum amount which could be expected from this levy would be $18,520.04. On the basis of the amount in the fund, plus estimates of the amounts which may be recovered from an additional levy and from future receipts from the State land office board, the maximum recoveries are as follows:

+-----------------------------------------+
                ¦“Amount in fund              ¦$17,014.63 ¦
                +-----------------------------+-----------¦
                ¦“Estimated maximum returns   ¦           ¦
                +-----------------------------+-----------¦
                ¦from additional assessment   ¦18,502.04  ¦
                +-----------------------------+-----------¦
                ¦“Estimated returns from State¦           ¦
                +-----------------------------+-----------¦
                ¦land office board            ¦1,764.75   ¦
                +-----------------------------+-----------¦
                ¦                             ¦$37,281.42”¦
                +-----------------------------------------+
                

It was agreed that approximately $5,838.60 of an additional assessment probably could not be collected, which would leave a balance of only $31,442.82 as the maximum amount available from the drainage district for payment on the bonds in question There was approximately $224,578 in the county's general fund, and if the deficiency on the drainage district's outstanding bonds, over and above its estimated available funds, were paid from the general fund, it would necessitate an increase in the county's general tax budget to replenish the fund.

On September 27, 1973, plaintiff tendered its unpaid bonds and interest coupons to the county treasurer and demanded payment, which was refused. On September 30th it filed petition in circuit court for a writ of mandamus to compel the treasurer to pay the amount due on said bonds and coupons from ‘either the fund of said drain, or the general fund of said county, or both.’ Defendants answered, admitting the issuance of the bonds held by plaintiff and default in the payment of principal and interest. In their answer they conceded plaintiff's right to a proportionate deficiency assessment as to the lands in the district which had not been acquired by the State. Keefe v. Oakland County Drain Commissioner, supra. However, they denied plaintiff's right to have the deficiency on its bonds paid out of the county's general fund, on the ground that the statute quoted above¹ required the county to pay only such amount as it could obtain in reimbursement from the drainage district. They also contended that if said statute was construed to require the county to pay the full deficiency from its general fund, it would be unconstitutional, as violating Const.1908, art. 5, § 21, and art. 10, §§ 6, 12, and 14.

The trial judge held that the statute required the county to pay from its general fund only the amount which it could obtain through reimbursement from the drainage district. On the basis of this construction he held it to be constitutional. He further held that if the statute were construed to require the county to pay the full deficiency on the drainage bonds from its general fund, it would be uncon stitutional. In his opinion he said in part:

‘The legislature, when Act No. 331, Pub.Acts 1927, was passed, did not contemplate the widespread tax delinquencies which did follow, and * * *

‘Did not intend that the county would be compelled to advance from 40 per cent. to 70 per cent. of the cost of drains, which ran into huge sums of money without the possibility of reimbursement, because if the legislature did so intend

‘a. The advancement statute (section 15) would result in a general tax on the county at large, which would make the act unconstitutional in its present form, being violative of Const.1908, art. 10, § 6, and art. 5, § 21.

‘b. It would have put the county in the position of being unconstitutionally engaged in works of internal improvement prohibited by Const.1908, art. 10, § 14.

‘c. It would have required the counties to unconstitutionally lend their credit to private or public enterprise, prohibited by Const.1908, art. 10, § 12.

‘This court cannot presume the legislature had any such intention and is forced to the conclusion that the legislature intended reimbursement to follow advancement.’

In his order directing the...