Mich. Gas & Elec. Co. v. City of Dowagiac

• Decision Date: 28 December 1936
• Docket Number: No. 71.,71.
• Citation: 278 Mich. 522,270 N.W. 772
• Court: Michigan Supreme Court
• Parties: MICHIGAN GAS & ELECTRIC CO. v. CITY OF DOWAGIAC et al.

278 Mich. 522

270 N.W. 772

MICHIGAN GAS & ELECTRIC CO.

v.CITY OF DOWAGIAC et al.

No. 71.

Supreme Court of Michigan.

Dec. 28, 1936.

Suit by the Michigan Gas & Electric Company against the City of Dowagiac and others. From an adverse decree, defendants appeal.

Decree reversed, and bill dismissed.Appeal from Circuit Court, Cass County, in Chancery; Earl C. Pugsley, judge.

Argued before the Entire Bench except POTTER, and TOY, JJ.

Lewis W. James, City Atty., of Dowagiac (Harold Goodman, of Detroit, of counsel), for appellants.

Carl D. Mosier, of Dowagiac (David Anderson, Sr., of Paw Paw, of counsel), for appellee.

WIEST, Justice.

The City of Dowagiac is of the fourth class. The common council of the city by resolution accepted an offer of the United States, made through the Federal Emergency Administration of Public Works, of aid in financing the construction of a Diesel Electric Generating Plant and Distribution System at an estimated cost of $202,000. The plan involved issuance of bonds of the city, secured by a mortgage upon the generating plant and distribution system and revenues therefrom accompanied by a franchise which, in case of foreclosure of the mortgage, would enable the purchaser to operate thereunder for a period of twenty years.

Plaintiff, a taxpayer in the city, filed the bill herein to enjoin the carrying out of the plan. The case was heard upon bill and answer, and the first question is whether the city can issue the bonds, secured by the mortgage, and grant a franchise, without submission to and affirmative action by three-fifths of the voters casting thier ballots and having the qualifications of electors who have property assessed for taxes or the lawful husbands or wives of such persons.

The common council by resolution first provided for submission of the proposals to the property qualified electors, and by subsequent resolution provided for submission to the general electors of the city, and provided that the proposal to acquire the plant and distribution system and the proposal to include a franchise in the mortgage appear on ballots marked ‘Taxpayers Ballot’ and ‘Non-Taxpayers Ballot,’ and requiring that each person who offered to vote as a taxpayer or as the lawful husband or wife of such a taxpayer be requested to execute an oath before an election inspector, showing the status of such person as to being a taxpayer or not.

At a special election both propositions received an affirmative vote of more than three-fifths of the general electors but less than three-fifths of the property qualified electors voting thereon. The common council declared both propositions duly approved. The court decreed three-fifths of the property qualified electors voting thereon was necessary to approval and restrained the city from proceeding otherwise.

Article 8 of the Constitution relates to local government and section 23 thereof provides that: ‘Subject to the provisions of this constitution, any city or village may acquire, own and operate, either within or without its corporate limits, public utilities for supplying water, light, heat, power and transportation to the municipality and the inhabitants thereof.’

Section 24 provides: ‘When a city or village is authorized to acquire or operate any public utility, it may issue mortgage bonds therefor beyond the general limit of bonded indebtedness prescribed by law: Provided, That such mortgage bonds issued beyond the general limit of bonded indebtedness prescribed by law shall not impose any liability upon such city or village, but shall be secured only upon the property and revenues of such public utility, including a franchise stating the terms upon which, in case of foreclosure, the purchaser may operate the same, which franchise shall in no case extend for a longer period than twenty years from the date of the sale of such utility and franchise on foreclosure.’

Section 25 provides: ‘Nor shall any city or village acquire any public utility or grant any public utility franchise which is not subject to revocation at the will of the city or village, unless such proposition shall have first received the affirmative vote of three-fifths of the electors of such city or village voting thereon at a regular or special municipal election; and upon such proposition women taxpayers having the qualifications of male electors shall be entitled to vote.’

Article 3 relates to the elective franchise, and section 4 thereof (as amended in 1932) provides: ‘Whenever any question is submitted to a vote of the electors which involves the direct expenditure of public money or the issue of bonds, only such persons having...