Real Estate Exch. Corp. v. Harte

• Decision Date: 06 April 1943
• Docket Number: No. 73.,73.
• Citation: 8 N.W.2d 652,304 Mich. 596
• Parties: REAL ESTATE EXCH. CORPORATION et al. v. HARTE, Muskegon County Drain Commissioner, et al.
• Court: Michigan Supreme Court

304 Mich. 596

8 N.W.2d 652

REAL ESTATE EXCH. CORPORATION et al.

v.HARTE, Muskegon County Drain Commissioner, et al.

No. 73.

Supreme Court of Michigan.

April 6, 1943.

Suit by the Real Estate Exchange Corporation and another against John Harte, Muskegon County Drain Commissioner and others, and Gustav Aue, Norton Township Supervisor, to enjoin defendant from taxing plaintiffs' land in connection with construction of an alleged drain and for other relief. From a decree for plaintiffs, John Harte and others appeal.

Decree vacated and dismissal of bill of complaint ordered.

BUSHNELL, J., BOYLES, C. J., and BUTZEL, J., dissenting.

Appeal from Circuit Court, Muskegon County, in Chancery; William B. Brown, Judge.

Before the Entire Bench.

Warner, Norcross & Judd and Conrad E. Thornquist, all of Grand Rapids, and Arthur W. Penny, of Muskegon, for appellees.

Morton L. Wolfe, Pros. Atty., and Alexis J. Rogoski, both of Muskegon, for John Harte and others.

Edward C. Farmer, of Muskegon, for City of Muskegon and another.

Charles A. Larnard, of Muskegon, for Joseph F. Cihak, Jr.

SHARPE, Justice.

This case arises because defendants, taxing authorities, pursuant to a mandatory order of the United States District Court for the Western District of Michigan have proceeded to assess and tax certain property owned by the plaintiffs and located within the so-called Ruddiman Valley No. 3 Drain District contra to a prior injunction of the circuit court of Muskegon county.

It appears that in 1929, proceedings were had under the general drain laws then in effect, Act No. 316, Pub.Acts 1923, as amended by Act No. 365, Pub.Acts 1925, and Act No. 331, Pub.Acts 1927, for the establishment of an alleged drainage district to be known as Ruddiman Valley Drain District No. 3, and the construction of an alleged drain. The drainage district embraced certain lands within Norton and Muskegon townships and the city of Muskegon. An assessment of benefits was made against the property within the district and the drain district issued bonds in anticipation of the collection drain taxes levied for the payment of the cost of constructing the Ruddiman Valley No. 3 Drain. Construction of the alleged drain proceeded.

In 1932 the township of Norton and others brought suit in the circuit court of Muskegon county, in chancery, against the drain commissioner, the county treasurer, and the county of Muskegon to set aside and declare void all proceedings and actions taken relative to the ‘survey, location, establishment and construction of the so-called Ruddiman Number Three Drain, and all apportionments and assessments made thereon’; and to perpetually enjoin and restrain the county treasurer from collecting any of the assessments. The court held that the construction was not a drain but was in fact and law a sewer and entered a decree granting plaintiffs relief. The case was appealed by plaintiffs on their right to recover assessments paid before the validity of the proceedings was determined and is reported in Norton Tp. v. Cockerill, 265 Mich. 405, 251 N.W. 543.

Later the Bankers Trust Company of Muskegon and others, owners of land within the district and predecessors in title of plaintiffs herein, filed a bill of complaint in the circuit court of Muskegon county asking relief similar to that asked by Norton township in the above mentioned case.

After hearing, the court found: ‘That the Ruddiman Valley No. 3 Drain as designated and constructed was in fact a tile sewer, and not a drain within the meaning of the general drain laws as same existed at the time of the laying out of said drainage district and the construction of said drain.’

And entered the following decree:

‘1. That all proceedings so as aforesaid had relative to the survey, location, establishment, and construction of the so-called Ruddiman Valley No. 3 Drain be and they are hereby declared to be null and void and of no effect as against the Plaintiffs to this suit, or any of them.

‘2. That all assessments and installments of assessments against the lands of the Plaintiffs to this suit for the construction of said Ruddiman Valley No. 3 Drain be and they are hereby cancelled, set aside, and held for naught and the apparent lien of all such assessments against said lands is vacated, set aside, and held for naught.

‘3. That the defendant Ernest R. Cockerill, as Drain Commissioner of Muskegon County, and the defendant William H. Wilson, as Treasurer of said County, and their and each of their successors in office, and the defendant County of Muskegon, be and they are hereby perpetually enjoined and restrained from collecting or in any manner attempting to collect from the Plaintiffs or by any proceedings against said land any of the assessments so as aforesaid levied incident to the construction of said Ruddiman Valley No. 3 Drain. * * *’

No appeal was taken from this decree.

In December, 1938 the bondholders brought an action in the United States District Court for the Western District of Michigan against the Ruddiman Valley No. 3 Drain District and the County of Muskegon upon the bonds. They alleged that the drain commissioner ‘(after proceedings lawfully taken pursuant to Act #316 of the Public Acts of Michigan, 1923, as amended by Act #365 of the Public Acts of Michigan, 1925, and by Act #331 of the Public Acts of Michigan 1927), issued in behalf of defendant Ruddiman Valley #3 Drain District * * * $75,000.00 * * * par value of bonds * * *, said bonds being issued in anticipation of the collection of drain taxes levied for the payment of the cost of constructing the Ruddiman Valley #3 Drain * * *.’

Defendant county answered and denied that the bonds were issued after proceedings ‘lawfully taken’ and denied that the drain district was established pursuant to the laws of Michigan. It averred that the illegality of the establishment of the drain district was adjudicated by the circuit court of the county of Muskegon in the Norton township case, mentioned above. Defendant county also set forth a summary of the drain proceedings in support of its averment that the commissioner was without jurisdiction or authority to make his order of determination of the drain district and had no jurisdiction to assess the land for the benefit of a sewer.

In March, 1939 plaintiffs, bondholders, were given a judgment of approximately $75,000 against the Ruddiman Valley No. 3 Drain District. It also provided that the liability of the county of Muskegon was secondary to that of the drain district. No appeal was taken from this judgment. The county of Muskegon paid the judgment and on October 16, 1939, took an assignment of the same from the bondholders.

In September, 1939, the United States District Court issued an order in the nature of a writ of mandamus compelling the taxing authorities to levy, spread, collect and enforce taxes originally assessed by the drain commissioner against land in the Ruddiman Valley No. 3 Drain District sufficient to pay the amount of the judgment. The drain commissioner proceeded to obey the mandate of the Federal court. He prepared and certified an assessment rule for the drain district in which he apportioned and levied taxes, according to the apportionment of the costs of the drain as fixed in the original proceedings for the drain, against the several parcels of land embraced in the drain district; and the taxing authorities have spread said taxes.

Plaintiffs as owners of land in the alleged drain district filed the bill of complaint now before us against the taxing authorities claiming that all matters set forth in the above mentioned decrees of the circuit court of Muskegon county are adjudicated; that the taxes about to be assessed are unlawful and deprive plaintiffs of vested rights without due process of law in violation of the State and Federal Constitutions; and asked the following relief:

‘That the defendants, their agents, servants, successors in office, attorneys and employees be forever restrained and enjoined * * * from levying, assessing, spreading, demanding or taking any steps to collect from the plaintiffs herein, or by any proceeding against the lands above described, any taxes incident to the construction of the so-called Ruddiman Valley No. 3 Drain.

‘3. That a decree be entered in the above entitled matter, decreeing:

‘(a) That the attempted levy, assessment, spread and collection of taxes against the property of the plaintiffs above described in connection with the construction of the alleged Ruddiman Valley Drain No. 3 is a deprivation of plaintiffs' vested rights in property without due process of law, and a violation of plaintiffs' constitutional rights.

‘(b) That all proceedings had by any of the defendants hereto in connection with the levy, assessment and spread of taxes in connection with the so-called Ruddiman Valley Drain District No. 3 on the above described lands belonging to the plaintiffs be declared null and void and of no effect.

‘(c) That the above described lands are free and forever clear of any liability for taxes heretofore, now, or hereafter levied, assessed and spread on account of the construction of the so-called Ruddiman Valley Drain District No. 3.’

After hearing, the trial court entered a decree that the establishment, creation and completion of the drain district and all proceedings taken therein are set aside and decreed null and void; and that all proceedings connected with the levy, assessment, spread and collection of taxes for construction of the drain are null and void and discharged the lien upon the property. It also held that the writ of mandamus issued by the United States District Court is ‘null, void and inoperative.’

All defendants, except the Norton township supervisor, appeal and contend among other things that the State court decrees relied upon by plaintiffs as a basis for relief have been superseded by the judgment and writ of mandamus issued by the District Court of the United States; and that the...