Detroit Edison Co. v. East China Township Sch. Dist. No. 3, 17004.

• Decision Date: 02 June 1967
• Docket Number: No. 17004.,17004.
• Parties: The DETROIT EDISON COMPANY, Ralph Wertz and Herbert Knack, Plaintiffs-Appellants, v. EAST CHINA TOWNSHIP SCHOOL DISTRICT NO. 3, Donald MacDonald, Leland Sass, Mary Phillips, Milton J. Gearing, Edwin H. Lindow, Malcolm G. Simons and William Hopson, Individually and as Members of the Board of Education of said School District, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

378 F.2d 225 (1967)

The DETROIT EDISON COMPANY, Ralph Wertz and Herbert Knack, Plaintiffs-Appellants, v. EAST CHINA TOWNSHIP SCHOOL DISTRICT NO. 3, Donald MacDonald, Leland Sass, Mary Phillips, Milton J. Gearing, Edwin H. Lindow, Malcolm G. Simons and William Hopson, Individually and as Members of the Board of Education of said School District, Defendants-Appellees.

No. 17004.

United States Court of Appeals Sixth Circuit.

June 2, 1967.

Prentiss M. Brown, St. Ignace, Mich., and Richard Ford, Detroit, Mich., for appellants, Fischer, Sprague, Franklin & Ford, Harvey A. Fischer, Richard Ford, Detroit, Mich., on the brief.

Kenneth J. Stommel, Port Huron, Mich., for appellees, Miller, Canfield, Paddock & Stone, John H. Nunneley, Stratton S. Brown, Gilbert E. Gove, Detroit, Mich., Walsh, O'Sullivan, Stommel & Sharp, Norman D. Beauchamp, Port Huron, Mich., on the brief.

Before PHILLIPS and PECK, Circuit Judges, and CECIL, Senior Circuit Judge.

JOHN W. PECK, Circuit Judge.

Plaintiffs-appellants sought a declaration pursuant to 28 U.S.C. § 2201 that the annexation of two larger school districts to the school district in which they owned property violated the Fourteenth Amendment of the federal constitution, and that the assumption of the bonded indebtedness of the two annexed school districts by the combined district violated both the federal constitution and state law.

At all times relevant hereto, plaintiffs owned property within East China Township School District No. 3 (hereinafter "East China"), in St. Clair County, Michigan. Prior to 1960, East China embraced an area of 12 square miles, had 900 electors, a relatively small outstanding bonded indebtedness and a total property assessment for taxation purposes of approximately $82 million, the overwhelming proportion of which could be attributed to the power plant of Detroit Edison Company. Adjacent to East China was Marine City Community School District No. 7 (hereinafter "Marine City"), which embraced an area of 51 square miles, had 3800 electors, a relatively high outstanding bonded indebtedness and a total property assessment for taxation purposes of approximately $19.5 million. Also adjacent to East China was the School District of the City of St. Clair (hereinafter "St. Clair") which embraced an area of 27 square miles, had 4538 electors, a relatively high outstanding bonded indebtedness and a total property assessment of approximately $18.7 million.

In 1961, East China annexed both Marine City and St. Clair, the combined district thereafter being operated as a single, integrated unit. The annexations were made pursuant to the Michigan School Code (C.L.S.1961 § 340.1 et seq. (Michigan Statutes Annotated § 15.3001 et seq.)) which in pertinent part provided for school district annexations upon the approval of the State Superintendent of Public Instruction, the affirmative vote of the school electors in the annexed district and the affirmative vote of the board of education of the annexing district. The Michigan Supreme Court, in Detroit Edison Co. v. East China Tp. School District, 366 Mich. 638, 115 N.W. 2d 298 (1962), upheld the validity of the annexations in question as against plaintiff Detroit Edison's contention that the joinder of the districts should have been accomplished pursuant to the statutory consolidation provisions which would have required an affirmative vote by the electors in both the annexing and annexed districts. The issues presented in the instant case were not raised in the state proceeding.

Subsequent to the annexations, the electors of the combined district voted to assume the high school bonded indebtedness of the former Marine City and St. Clair districts. The complaint alleges that the electors of original East China rejected the debt assumption proposal although it was approved by a majority of the voters of the combined district. Thus, with respect to the $2.8 million bonded liability, over 60 per cent was allegedly shifted to East China, a large portion of which fell on plaintiff-appellant Detroit Edison Co.

The plaintiffs in this case consist both of individual property owners of the original East China district (who had the statutory right to vote directly on the debt assumption proposals) and Detroit Edison, a New York corporation which obviously and admittedly did not have any voting right.

The complaint alleges that the statute which permitted the annexation and debt assumption proceedings is violative of the due process and equal protection clauses of the Fourteenth Amendment of the federal constitution because the individual plaintiffs were denied the right to vote on the annexation proposal and their voting power was debased and diluted since they were compelled to vote in common with other adversely interested electors on the debt assumption issue. Thus, say plaintiffs, they have been discriminated against and have had their voting franchise abridged as compared with that of electors in adjacent districts. The complaint also alleges that the statute as applied to all East China property owners, including the corporate plaintiff, violates the above mentioned provisions of the Fourteenth Amendment since their property has been subjected to liens for the payment of the debts of others. Plaintiffs further contend that the tax burden imposed as a result of the debt assumption is so disproportionate to the benefits received as to amount to confiscation. Finally, plaintiffs contend that the debt assumption is invalid because the proceedings did not conform to state law. The specific relief requested was a declaration that the combined district had not assumed the bonded indebtedness of Marine City and St. Clair, that plaintiffs' property within the former East China district cannot be reached for the payment of such indebtedness, and that there has been no lawful annexation.

Upon defendants' motion for summary judgment, based on the grounds that the court had no jurisdiction of the subject matter and that plaintiffs failed to state a claim upon which relief could be granted, the District Court dismissed the complaint, stating that "The acts of which plaintiffs complain do not abridge any substantive rights secured to them by the federal constitution. The individual plaintiffs' suits do not meet the jurisdictional amount requirement in 28 U.S.C. § 1331(a) and are not within the scope of 28 U.S.C. § 1343(3); and even if the plaintiffs have a valid constitutional claim, this suit comes within the abstention doctrine."

This action allegedly arising under the Constitution, jurisdiction was based in part upon 28 U.S.C. § 1331, federal question jurisdiction. The District Court held that neither of the individual plaintiffs averred the requisite $10,000 jurisdictional amount, since the actual tax or assessment rather than the value of the property affected by the tax (as claimed by plaintiffs) was determinative of this issue. On appeal, dismissal of the complaint on this ground is not challenged.

Jurisdiction was also predicated upon section 1343(3)¹ of Title 28, U.S.C., as the suit was based upon the Civil Rights Acts, 42 U.S.C.A. § 1971 et seq.² The District Court held that this suit involving "essentially property claims" was not within the scope of section 1343(3) since the major purpose of Civil Rights jurisdiction is to redress the deprivation of constitutional rights which are incapable of pecuniary valuation. While the limitation suggested is derived from Justice Stone's concurring opinion in Hague v. C. I. O., 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423 (1939), it is unnecessary for a final disposition of this case that the District Court's ruling on this issue be affirmed, it being merely observed that many courts, including this one, have taken what has been termed a "latitudinarian view." Joe Louis Milk Co. v. Hershey, 243 F.Supp. 351, 354 (N.D.Ill.1965). See Glicker v. Michigan Liquor Control Comm., 160 F.2d 96 (6th Cir. 1947); Lewis v. City of Grand Rapids, 356 F.2d 276 (6 Cir. 1966), cert. denied, 385 U.S. 838, 87 S.Ct. 84, 17 L. Ed.2d 71 (1966); Burt v. City of New York, 156 F.2d 791 (2d Cir. 1946); Cobb v. City of Malden, 202 F.2d 701 (1st Cir. 1953); McGuire v. Sadler, 337 F. 2d 902 (5th Cir. 1964).

The District Court, relying principally on Hunter v. City of Pittsburgh, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151 (1907) for the proposition that "any alteration of municipal boundaries is a matter within the complete discretion of the state and not confined by any rights secured by the federal constitution," held that the annexation procedure followed was a legislative matter not justiciable under the due process or equal protection clauses of the Fourteenth Amendment.

In Hunter, the City of Allegheny was consolidated with the City of Pittsburgh pursuant to an act of the State General Assembly. Consolidation was permitted by the act upon an affirmative vote of a majority of the voters within both municipal corporations. Although a majority of Allegheny voters opposed the consolidation and voted against it, the proposal passed, whereupon suit was commenced in the state courts. On appeal, the Supreme Court summarized the assignment of error pertinent here as follows (p. 177, 28 S.Ct. p. 46):

"Briefly stated, the assertion in the fourth assignment of error is that the Act of Assembly deprives the plaintiffs in error of their property without due process of law, by subjecting it to the burden of the additional taxation which would result from the consolidation. The manner in which the right of due process has been violated * * * is that the method of voting on the consolidation prescribed in the act has permitted the voters of the larger city to overpower the voters of the smaller city, and compel the union without their consent and against their protest."

The following established principles were dispositive of this contention (p. 178-179, 28 S.Ct. p. 46):

"Municipal corporations are political subdivision

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