Port Huron v. McCall

• Decision Date: 12 October 1881
• Citation: 46 Mich. 565,10 N.W. 23
• Court: Michigan Supreme Court
• Parties: PORT HURON v. MCCALL.

10 N.W. 23

46 Mich. 565

PORT HURON v. MCCALL.

Supreme Court of Michigan

October 12, 1881

Under the provision in the charter of Port Huron which empowers the common council to "issue new bonds for the refunding of bonds and evidences of indebtedness already issued," the common council may issue new bonds to raise money for the satisfaction of judgments.

Municipal powers are to be construed strictly; but the reason for strictness has little application when they are of a nature to concern no one but the people of the municipality; as for example, when they relate merely to a change in the form of municlpal indebtedness. The question in such a case is, what was probably the legislative intent in granting a power?

If a city has obtained money on a particular construction of a power, and then adopts a different construction to avoid payment, it is proper to give some weight to the first construction, if the question is one of doubt.

Error to St. Clair.

Charles. K. Dodge and A.E. Chadwick, for plaintiff in error.

Albert McCall, for defendant in error.

COOLEY, J.

To an understanding of this case a brief summary of the facts is essential. Under certain legislative acts purporting to empower the city of Port Huron to grant municipal aid to the Port Huron & Lake Michigan Railroad, the city subscribed a large sum to the stock of the company engaged in building that road, and issued bonds for the amount of the subscription. These bonds were negotiable, and soon passed from the railroad company into the hands of purchasers. Subsequently to these issues, in the case of People v Township Board of Salem, 20 Mich. 452, this court decided that it was incompetent under the constitution of the state to pass acts empowering municipalities to grant aid to railroads. Notwithstanding that decision the municipalities which had issued bonds in conformity with the invalid legislation, generally recognized their obligation to provide payment, and proceeded to do so without dissent on the part of their people. In some cases suits were brought in the federal courts and recovery had. In some other cases suits were brought in the state courts and judgments allowed to pass by default or on confession. In Port Huron the controlling sentiment seems to have favored the payment without question, of the bonds the city had issued, and some of them were put into judgment in state and federal courts without contest. In January, 1875, the city attorney was instructed by a vote of the common council to confess judgment in all suits brought upon the bonds.

I think we are agreed that the question of the original validity of the bonds which have been put in judgment is now wholly unimportant. The good faith of the city authorities in suffering the judgments to be taken is not impugned, and they stand unquestioned. We are, therefore, excused from any discussion of some of the points made.

The charter of the city was revised in the year 1869. One section of the revision is as follows:

"No loan or other evidence of debt not expressly authorized by this act, or by any act hereby continued in force, shall be made or issued by the common council or any officer of the corporation: provided, however, that the common council may issue new bonds for the refunding of bonds and evidences of debt already issued, and the proper officer of the corporation may draw and issue orders on the treasury for the necessary and current expenses of the city." Laws 1869, vol. 3, p. 1554.

Under the assumed authority of this provision of the charter, the common council in October, 1874, voted to sell 8 per cent bonds, at a price not below par, for the payment of judgments on railroad aid bonds, and proposals for the bonds were invited by public notices. In the following month the interest offered was increased to 10 per cent., and proposals were then received and bonds issued from time to time to the amount in all of $80,000 and upwards. The money received for these bonds was paid into the city treasury, and was used to satisfy judgments rendered upon the railroad aid bonds. The charter of the city was again revised in 1877, and the following are the provisions which bear upon the issue of bonds:

"The common council shall, with the approval of the board of estimates, also have power to provide money for the water fund, the sewer fund, the school building fund, the public building fund, and the bridge fund, by borrowing upon the faith and credit of said city, and upon the best terms that can be made, such sums of money as shall be deemed necessary and expedient, and to issue the bonds of the city therefor, but said bonds shall not be negotiated at less than their par value, or bear interest to exceed 7 per centum. ***

"Bonds issued under the preceding section shall be respectively denominated water bonds of the city of Port Huron, school building bonds of the city of Port Huron, public building bonds of the city of Port Huron, and bridge bonds of the city of Port Huron, and shall be regularly dated and numbered in order of their issue, and shall be for sums not less than $100 each, and shall be payable not less than 10 or more than 30 years from date; shall be issued under the seal of the corporation, signed by the mayor and clerk, and countersigned by the controller. The controller shall keep an accurate record of said bonds, and of the class of indebtedness to which they belong, the number, date and amount of each bond, its rate of interest, when and where the same is payable; and the person to whom it is issued. The proceeds of said bonds shall be paid into the city treasury, and be credited to the funds for which the bonds were issued, and be applied exclusively to the purpose for which said bonds are constituted by this act.

"No loan, bond or other evidence of debt not expressly authorized by this act or any act hereby continued in force, shall be made or issued by the common council or any board or officer of the corporation: provided, however, that the common council, subject to the

...