Mun. Investors Ass'n v. City of Birmingham

• Citation: 299 N.W. 90,298 Mich. 314
• Decision Date: 30 June 1941
• Docket Number: Motion No. 321.
• Parties: MUNICIPAL INVESTORS ASS'N v. CITY OF BIRMINGHAM et al.
• Court: Supreme Court of Michigan

298 Mich. 314

299 N.W. 90

MUNICIPAL INVESTORS ASS'N

v.CITY OF BIRMINGHAM et al.

Motion No. 321.

Supreme Court of Michigan.

June 30, 1941.

Original proceedings by the Municipal Investors Association against the City of Birmingham and others for a writ of mandamus to compel defendants to make an additional assessment against certain property for the payment of bonds.

Writ denied.

Argued before the Entire Bench, except BUTZEL, J.

Berry & Stevens, of Detroit (Claude H. Stevens, of Detroit, of counsel), for plaintiff.

Miller, Canfield, Paddock & Stone, and Harry Allen, all of Detroit, for defendants.

Herbert J. Rushton, Atty. Gen., Edmund E. Shepherd, Sol. Gen., and Peter E. Bradt, Asst. Atty. Gen., for the State.

Voorhies, Long, Ryan & McNair, of Detroit, amici curiae.

CHANDLER, Justice.

Plaintiff is the holder of six $1,000 bonds numbered 12 to 17, inclusive, which were issued by the Village of Birmingham on October 1, 1928 as part of a series of 14 bonds of like denomination in anticipation of the collection of taxes to be assessed against Special Assessment District No. 146 composed of 106 lots to be improved by a street paving project. The Village of Birmingham re-incorporated as the City of Birmingham in 1933 and the city assumed all of the debts and liabilities of the village including these bonds which bore interest at the rate of 5 1/4% per annum, and matured on October 1st of the year indicated as follows: $4,000-1929; $3,000-1930; $4,000-1931; $3,000-1932 and $3,000-1933. In addition to the bonds which plaintiff holds, there are yet outstanding 3 of 4 bonds which were issued to refund the obligations maturing in 1931.

The special assessment district consisted of 18 lots in Birmingham Lincoln Lots Subdivision, and 88 lots in Birmingham Lincoln Lots Resubdivision. The sum of $14,388.77, later reduced to $12,436.25, was levied against the resubdivision property, but nothing was ever paid thereon. An assessment of $3,405.81, later reduced to $2,942.61, was made against the subdivision premises, but payment was made on only 9 and a fraction lots.

A payment of $100 was made upon plaintiff's bonds on June 19, 1939 and upon the refunded obligations on November 28, 1939 leaving a principal amount of $8,100 due and owing, which with accrued interest to January 1, 1941 constitutes an outstanding indebtedness in excess of $11,800. The amount on hand in the assessment fund is $25,67.

All the lots in both subdivisions upon which assessments were levied but not paid were offered for sale at the annual tax sale for the year 1938 and bid in by the State of Michigan. Title passes to the State upon failure of the owner to exercise their right of redemption.

Alleging that no more than $2,000 will be received upon the assessments already made and moneys allocable to the assessment district by reason of the cancellation of special levies under the provisions of Act No. 155 of the Public Acts of 1937, as amended, plaintiff instituted this action for a writ of mandamus to compel defendants to make an additional assessment; a demand for a re-assessment of the property in the district in an amount sufficient to pay the principal and interest of the outstanding bonds having been denied by the defendant City Commission.

Plaintiff argues that the officials of the City of Birmingham are required by charter to make an additional deficiency levy and that the sale of the property to the state under the general property tax laws and subsequent conveyance by the state under Act No. 155 of the Public Acts of 1937, as amended, does not preclude such levy, for such sale affects only existing liens and not additional deficiency liens which were non-existent at the time of sale. Defendants have assumed that it would have been the duty of the City Commission to have levied additional deficiency assessments had there been no tax sale, but vigorously resist this proceeding upon the theory that they have been relieved of such duty and no longer have the power to levy further assessments by reason of the cancellation of taxes and assessments when absolute title to most of the lots in the district vested in the state and did not revive when the lots were repurchased by the former owner in accordance with the terms of Public Act No. 155 of 1937, subsequently amended by Act Nos. 29, 244 and 329, Public Acts 1939 and the general property tax law as amended by Acts Nos. 114 and 325, Public Acts 1937.

In the recent case of Baker v. State Land Office Board, 294 Mich. 587, 592, 293 N.W. 763, 765, Justice McAllister described the background giving rise to the enactment of the foregoing statutes:

‘Between the years 1920 and 1930 speculative activities in real estate in the State, unrestrained by normal caution and on a scale unparalleled, had resulted in platting of subdivisions with building lots sold at highly inflated prices. The same exaggeration seeped into farm lands and business properties in cities. During this period municipalities and their officials encouraged the speculative movement by approval, in undeveloped areas, of widespread improvements, including sewer extensions, sidewalks, and pavements. The entire movement was pervaded by an enthusiasm uncolored by moderation. But all of these plans and hopes collapsed under the pitiless and inexorable advance of economic depression, of which this court has on several occasions taken judicial notice. * * *

‘The result of this activity was that taxes, on excessively high assessments, became delinquent and accumulated in amount until they greatly exceeded the assessed valuation. For approximately six years subsequent to 1932, no tax sales were held; moratorium statutes were passed by the legislature, embodying waiver of interest and penalty charges, and providing for payment of taxes in installments covering a 10-year period; but such efforts to effect payment were in vain, and the unpaid taxes accumulated, until in some counties they exceeded five times the amount of the assessed valuation of the property. Planning commissions, which occupied themselves with a possible solution of the problem, were appointed by the governor, and concluded that the various plans to remedy the situation had failed to stop the abandonment of taxdelinquent land; and legislative committees made exhaustive studies, in an effort to devise means of overcoming the rapidly growing peril which was assuming catastrophic form. The result was the enactment of Act No. 155, Pub.Acts 1937, and the amendment of the general property tax law by Acts Nos. 114 and 325, Pub.Acts 1937.’

One cannot but conclude, considering the motivating force behind this legislation, that it was the answer of the legislature to the desperate problem of delinquent taxes based upon property valuation having no foundation in fact, and to clear away the debris left by an abnormally high tide of prosperity swept up by an irresistible current of speculation.

‘The primary and inducing purpose of the legislation was to secure a portion of the unpaid taxes, rather than nothing, and to restore lands to a taxpaying basis, instead of supinely allowing them to accumulate tax delinquencies with no hope of ever recovering them.’ Baker v. State Land Office Board, supra, 294 Mich. page 606, 293 N.W. page 770.

Pursuant to legislative intent the Michigan Supreme Court has held that a taxpayer may bring mandamus to compel a city to immediately place on its tax rolls all parcels of land sold under the ‘scavenger’ act even though the state land office board had not as yet executed deeds or contracts to the successful bidder; that such lands are subject to taxation when a bid is accepted and notice of slae given by the agent of the board to the county treasurer who in turn is obliged to notify the proper assessing officers. Wilson v. City of Pontiac, 294 Mich. 79, 292 N.W. 565.

It is remedial legislation and is to be construed as such. Oakland County Treasurer v. Auditor General, 292 Mich. 58, 290 N.W. 327.

‘In interpreting the act our duty is to ascertain the meaning of the statute, to give it full force and effect, coloring our construction by the purpose of its enactment. The statute is remedial and is entitled to a liberal construction. * * * It is said to be the duty of the court to draw inferences from the evident intent of the legislature, as gathered from a view of the law in its entirety; we must render effectual the specific things which are included in the broad and comprehensive terms and purposes of the law.’ Wilson v. City of Pontiac, 294 Mich. 79, page 86,292 N.W. 565, page 568.

Plaintiff says that the additional assessment sought in this case has not yet been levied against the premises and therefore was not a lien when the state acquired title pursuant to the terms of the general tax laws, and hence was not extinguished. A contrary holding, argues plaintiff, would result in the impairment of contractual obligations. In the Baker case, supra, it was claimed that there was nothing in the title, of the general property tax law, as amended by Act No. 114, Pub. Acts 1937 (Stat.Ann. 7.112), to indicate that it covered the cancellation of past as well as future taxes and special assessments, or that municipalities which have borrowed in anticipation of the collection of taxes or issued special assessment bonds shall have such taxes and assessments cancelled. A review of the briefs filed in the Baker case shows that counsel for plaintiff herein filed a brief amicus curiae in which many of the cases relied upon by plaintiff in the instant suit were cited. Notwithstanding the fact that the Court had those cases before it, the argument made was repudiated upon the ground that it was unnecessary to include in the title the nature of the interest secured by the purchaser upon the sale, as well as the specific tax incumbrances from which the property was freed in such proceedings and the court concluded that the statutes in question do not contravene the...