Seltzer v. Sterling Tp.

• Decision Date: 10 October 1963
• Docket Number: No. 52,52
• Citation: 371 Mich. 214,123 N.W.2d 722
• Parties: Ralph L. SELTZER and Larry Shalit, individually and copartners doing business as Largo Homes, Plaintiffs and Appellants, v. STERLING TOWNSHIP, a municipal corporation of Macomb County, Michigan, Defendant and Appellee.
• Court: Michigan Supreme Court

Page 722

123 N.W.2d 722

371 Mich. 214

Ralph L. SELTZER and Larry Shalit, individually and copartners doing business as Largo HomesPlaintiffs and Appellants, v.STERLING TOWNSHIP, a municipal corporation of Macomb County Michigan, Defendant and Appellee.

No. 52.

Supreme Court of Michigan.

Oct. 10, 1963.

Paul Sislin, Detroit, for plaintiffs and appellants.

Miller, Canfield, Paddock & Stone, Detroit, Nunneley & Nunneley, Mount Clemens, for defendant and appellee.

Before the Entire Bench, except SOURIS, J.

KAVANAGH, Justice.

This law action was brought in the Macomb county circuit court to recover from defendant township the sum of $150 per lot, totaling $8,400, paid by plaintiffs as a privilege fee for 'capital improvements.'Payments were made under protest and the township was aware of the protest.The payments were in addition to water tap-in fees of $125 per lot paid under the Sterling township water ordinance.The tap-in fees are not involved in this action.In addition to the privilege fee and the tap-in fee, plaintiffs paid the water rate established by the ordinance based upon the amount of water used the same as other users of water.

The cause was tried in the circuit court on a stipulation of facts, which included the following: Plaintiffs, doing business as Largo Homes, were in the business of constructing houses.They built 56 homes on miscellaneous lots in Sterling township.The lots had been platted earlier by the subdivider and varied in size.The frontage of each lot was approximately 60 feet.In the course of obtaining building permits, Largo Homes was required to pay a privilege fee on each lot under an ordinance of the township admitted in evidence as ordinance number 34.This ordinance was in addition to the usual and regular water ordinance.The only water system available in the subdivisions involved is that owned by the township.The zoning ordinance of the township required the use of the township water supply because the lots were less than 80 feet wide.Ordinance number 34 was adopted by Sterling township, a noncharter township, solely by resolution of the township board.It was duly published but no annual meeting was held to authorize its adoption; no vote by the general or affected electorate was held to approve the ordinance; it was not adopted pursuant to a petition by the electorate; no bond issue was ever authorized pursuant thereto, nor any special or general assessments levied in accord therewith.The 'capital charge' had no relationship to the size of the lot being serviced, the size of the home thereon, the quantity of water required, the size of the main tapped-in, or the valuation of the property serviced.All proceeds realized were used for the acquisition of capital equipment for the water system.

The matter was submitted to the trial court on the briefs and argument of counsel.The trial court rendered an opinion finding the township had the authority to levy the privilege fee and, pursuant to that opinion, a judgment of no cause of action was entered in favor of defendant.

Plaintiffs are here on appeal raising these questions:

(1) May a noncharter township finance, wholly or in part, the expense of building or acquiring a water main and lateral system through flat-rate charges collected at inception from all lot owners building within the area served by the system, where the charges bear no relation to water consumed, cost of tapping-in, area of the property served, value of the property or value of the construction thereon, and said flatrate charges are in addition to consumption and tap-in charges?

(2) The powers of a noncharter township being limited both in general and as to taxation, may such township levy a flat-rate charge to finance building or acquiring a water main system?

(3) Did the Revenue Bond Act of 1933, or any other statute, authorize levying the flat-rate charge here in issue and did defendant comply with the provisions of the Revenue Bond Act?

(4) Was the charge reasonable?

(5) May the flat-rate charge here in issue be sustained as a tax or license fee?

(6) Is an ordinance levying the flat-rate charge here in issue discriminatory and confiscatory and contrary to the Federal and State constitutional requirements?

We shall discuss the third question first.The Revenue Bond Act of 1933, as amended,* authorizes public corporations to purchase, acquire, construct, improve, enlarge, extend or repair public improvements, within or without their corporate limits, and to own, operate and maintain the same; to condemn property for such public improvements; to provide for the imposition and collection of charges, fees, rentals or rates for the service, facilities and commodities furnished by such public improvements.

Section 4 of the act provides, 'The powers in this act granted may be exercised notwithstanding no bonds are issued hereunder.'

Section 3 of the act provides in subdivision (d) that the term 'governing body' shall be construed to mean in the case of a township, a township board.Subdivision (e) of that section specifies that the term 'rates' shall be construed to mean the charges, fees, rental and rates which may be fixed and imposed for the services, facilities and commodities furnished by any public improvement.Subdivision (f) provides the term 'revenues' shall be construed to mean all the income derived from the rates charged for the services, facilities and commodities furnished by any public improvement.

In the case of Morley Bros. v. Carrollton Township, 305 Mich. 285, pp. 288, 289, 9 N.W.2d 543, p. 545, this Court said:

'The title of the act is so worded as to first give to the municipalities including townships authority to acquire or construct certain improvements (including water supply systems) and then, as an aid to carrying out such projects, the power to issue self-liquidating bonds.We can find nothing in the act which provides that only the money raised by such bond issue may be used to pay for such construction.It would not even be necessary for the township to float such a bond issue if the township had funds on hand or other sources of income available with which to pay for the construction of the project.

'With authority being given to acquire or construct a public project as defined in the act, it must necessarily follow that authority to pay for the project is at the same time granted.'

This Court held in Morley that the township must pay for the materials since the expenditure of funds by a township for acquiring or constructing a water system is 'expressly authorized 'by the provisions of law."

It was clearly the intention of the legislature to give townships the power and...