Freeland v. City of Sturgis

• Decision Date: 07 October 1929
• Docket Number: No. 115.,115.
• Citation: 248 Mich. 190,226 N.W. 897
• Parties: FREELAND et al. v. CITY OF STURGIS et al.
• Court: Michigan Supreme Court

248 Mich. 190

226 N.W. 897

FREELAND et al.

v.CITY OF STURGIS et al.

No. 115.

Supreme Court of Michigan.

Oct. 7, 1929.

Appeal from Circuit Court, St. Joseph County, in Chancery.

Suit by Curtis A. Freeland and others against the City of Sturgis and others. From an order dismissing their bill of complaint, plaintiffs appeal. Reversed and remanded.

Argued before the Entire Bench.

Hagerman & Miller, of Sturgis, for appellants.

Jacobs & Dresser, of Sturgis, and Harry C. Howard, of Kalamazoo, for appellees.

McDONALD, J.

This is an appeal by the plaintiffs from an order dismissing their bill of complaint filed to restrain the misapplication of the revenues received by the city of Sturgis from its municipally owned hydroelectric plant. The bill alleges that the city is operating under a special charter authorized by the Home Rule Act (Pub. Acts 1909, No. 279); that for 19 years it has owned and operated a hydroelectric plant furnishing light and power to its citizens; that, to acquire the plant, it issued bonds to the amount of $175,000, of which $93,000 are still outstanding; that its net receipts from the business are about $60,000 a year; that from such receipts it now has on hand a fund of $96,000, which by resolution of the commission has been appropriated for the ordinary expenses of the city in lieu of money which should have been provided by an annual tax assessment; that the application of this fund to the general city expense is contrary to the provisions of Act 168, Public Acts of 1917; that the refusal of the city to raise money by taxation for its general expenses and the appropriation for that purpose of the hydroelectric fund constitutes ‘an unfair, unlawful discrimination in the method of raising and applying public funds so that the expense of running the city is not equitably distributed by taxation’; that the plaintiffs will be compelled to pay an unjust proportion of the general expenses of the city because they are large users of light and power; that those who have large holdings of real estate pay nothing to the general fund; that the failure of the city to preserve intact the $96,000 surplus to meet the outstanding obligations of the hydroelectric plant and other expenses due to depreciation and necessary replacements has created a situation imminently harmful to the plaintiffs as taxpayers and large users of electrical energy.

The defendants filed a motion to dismiss the bill principally on the ground that it does not state a cause of action. With this contention the trial court agreed and entered an order of dismissal without leave to amend.

The court was wrong. It was unlawful for the commission to appropriate the hydroelectric fund for payment of the general expenses of the city. The city charter nowhere authorizes such appropriation, and the state statute (Act 168, Public Acts 1917) expressly forbids it. But the defendants insist that this statute is not applicable because it relates to cities of the fourth class only, and that the city of Sturgis is not in that class, but is a home rule city operating under a special charter. The charter itself leaves the statute applicable. It provides:

‘All the provisions of the laws of the State of Michigan regarding Cities of the Fourth Class except as herein otherwise provided by this Charter shall apply to and control the legislative body of the City of Sturgis. It being the intention of this Charter that the general laws relating to Cities of the Fourth Class shall govern except as expressly specified otherwise by...