Keefe v. Drain Com'r of Oakland Cnty.

• Decision Date: 11 October 1943
• Docket Number: No. 63.,63.
• Citation: 306 Mich. 503,11 N.W.2d 220
• Parties: KEEFE et al. v. DRAIN COM'R OF OAKLAND COUNTY et al.
• Court: Michigan Supreme Court

306 Mich. 503

11 N.W.2d 220

KEEFE et al.

v.DRAIN COM'R OF OAKLAND COUNTY et al.

No. 63.

Supreme Court of Michigan.

Oct. 11, 1943.

Declaratory judgment action by Kenneth M. Keefe and another against Earl L. Clark, Drain Commissioner of Oakland County, and Board of Supervisors of Oakland County, to have determined whether defendant Drain Commissioner and Board of Supervisors were obligated by statute to levy an additional assessment to cover the deficiency in a drain tax. From an adverse judgment, the petitioners appeal.

Declaratory judgment modified and affirmed, and the cause remanded for entry of judgment in conformity with opinion.

Appeal from Circuit Court, Oakland County; George B. hartrick, judge.

Before the Entire Bench.

Voorhies, Long, Ryan & McNair and Dykema, Jones & Wheat, all of Detroit, for appellants.

Harry I. Merritt, Corp. Counsel, of Pontiac, for appellees.

William C. Hudson, of Royal Oak, for intervening appellee City of Royal Oak.

BUSHNELL, Justice.

Petitioners Keefe and Bradford have appealed from a declaratory judgment which determined that respondents, Drain Commissioner and Board of Supervisors of Oakland county, are not obligated, by § 18, chapter X of Act No. 316, Pub. Acts 1923, as amended by Act No. 331, Pub. Acts 1927, (Comp.Laws 1929, § 4940) and Act No. 129, Pub. Acts 1939, Comp.Laws Supp. 1940, § 4940 (Stat.Ann. 1942 Cum.Supp. § 11.104), to levy an additional assessment to cover the deficiency in a drain tax. Petitioners are the owners of bonds, which are a part of an original issue in 1927, of $300,000, to finance the construction of the East Clawson storm sewer drain.

This improvement was held to be a legal drain and the assessment, therefore, valid in Village of Clawson v. Van Wagoner, 268 Mich. 148, 255 N.W. 743. The original assessment roll was payable in annual installments from 1928 to 1937, inclusive, and was levied as follows: 77.5 per cent. against lands in the drainage district; 3.5 per cent. against the county at large; 2.5 per cent. against Township of Troy; 6.5 per cent. against the Township of Royal Oak; and 10 per cent. against the Village of Clawson. All of the bonds had matured by May 1, 1938, and as of December 31, 1941, $33,440 was due for interest and $223,000 for principal.

The assessment installments were levied for four years from 1927 to 1931, and then discontinued. In 1937, in contemplation of a refunding arrangement, a supplemental roll was prepared spreading the remaining six installments of principal over a period extending from 1937 to 1961, and the accumulated interest over a ten year period. The failure to levy after 1931 was due to a large tax delinquency. During 1939 and 1940 about 47 per cent. of the lands in the district were bid in by the State at tax sales. How much of these lands have since been returned to private ownership is not disclosed by the record. Before negotiations between the bondholders and the drain commissioner were consummated, the case of Municipal Investors Association v. City of Birmingham, 298 Mich. 314, 299 N.W. 90, was decided on June 30, 1941. Respondents contended that this decision was authority for the proposition that lands in the drainage district which passed through a ‘scavenger sale’ became exempt from any deficiency assessment for unpaid drain taxes. The parties held the refunding plan in abeyance pending decision of the Supreme Court of the United States in the Birmingham appeal, which decision was rendered on April 27, 1942, and reported in 316 U.S. 153, 62 S.Ct. 975, 86 L.Ed. 1341. This case was commenced June 25, 1942.

Petitioners in the instant case argue that the action of the Supreme Court of the United States in the Birmingham case was inconclusive of their rights, and that it became necessary for them to resort to declaratory judgment proceedings in the state courts. The circuit judge held that our decision in the Birmingham case was conclusive of the issues involved, and that lands sold by the State Land Office Board, under the provisions of Act No. 155, Pub. Acts 1937, Mason's Cum.Supp. 1940, § 3723-1 et seq. (Stat.Ann. § 7.951 et seq.), were not subject to a deficiency assessment, and since a large portion of the lands in the district were lost to the possibility of reassessment, a deficiency assessment upon the remaining lands which had not been sold for delinquent taxes was ‘contrary to all the established principles of uniformity and equality in assessment as guaranteed by the Constitution,’ in that such an assessment ‘would be tax having no relationship to benefit.’

Appellants now argue that lands which have been sold to the State for delinquent taxes are not exempt from the deficiency assessment after their resale by the State, and that, if the act in question provides for such an exemption, it is in violation of section 9 of article X of the Constitution of 1908, which reads: ‘The power of taxation shall never be surrendered or suspended by any grant or contract to which the state or any municipal corporation shall be a party.’ They also contend that, if the act is construed to exempt such lands from deficiency assessments, it does so in violation of the impairment of obligation clauses of that State and Federal Constitutions. They further contend that, even if such lands are exempt, the remaining lands and the municipalities against which the original assessment was spread at large are still subject to an additional tax for the purpose of retiring the unpaid drain bonds.

The section of the General Drain Law, upon which petitioners rely, reads in part: ‘If there is not sufficient money in the fund in a particular drain at the time of the maturity of the bonds last to mature to pay all outstanding bonds with interest, whether such insufficiency is due to the anticipation of installments as provided in the preceding section, or to failure to sell any lands for delinquent taxes, or to any other cause, it shall be the duty of the commissioner to at once levy an additional assessment as hereinbefore provided in such an amount, as will make up the deficiency.’ 1 Comp. Laws 1929, § 4940, as amended by Act No. 129, Pub.Acts 1939, Comp.Laws Supp.1940, § 4940 (Stat.Ann. 1942, Cum.Supp. § 11.104).

The general drain law must be read and construed together with the general property tax law of the State for the reason that: ‘All drain taxes assessed under the provisions of this act shall be subject to the same interest and charges, and shall be collected in the same manner as state and other general taxes are collected, and collecting officers are hereby vested with the same power and authority in the collection of such taxes as are or may be conferred by law for collecting general taxes. * * *’ General Drain Law, chap. 10, § 5, 1 Comp.Laws 1929, § 4927 (Stat.Ann. § 11.91).

The General Property Tax Law, § 67, 1 Comp.Laws 1929, § 3459, as last amended by Act No. 234, Pub.Acts 1941, Comp.Laws Supp. 1942, § 3459 (Stat.Ann. 1942 Cum.Supp. § 7.112), provides that the final decree for the sale of lands assessed shall contain, among other provisions, the following: ‘It is further ordered, adjudged and decreed that title to each parcel of land ordered in this decree to be offered for sale, and which parcel of land is bid in at such sale to the state, shall become absolute in the state of Michigan on the expiration of the period of redemption from such sale, and all taxes, special assessments, which are charged against or are liens upon such parcel, and other liens...