Spoon-Shacket Co. v. Oakland County, SPOON-SHACKET

• Decision Date: 05 June 1959
• Docket Number: No. 42,SPOON-SHACKET,No. 4,L,4,42
• Citation: 356 Mich. 151,97 N.W.2d 25
• Parties: COMPANY, Inc., a Michigan Corporation, and Ira J. Spoon, Plaintiffs and Appellants, v. COUNTY OF OAKLAND, City of Madison Heights and Districtamphere Pub-School of the cities of Madison Heights and Troy, Municipal Corporations, Defendants and Appellees.
• Court: Michigan Supreme Court

Page 25

97 N.W.2d 25

356 Mich. 151

SPOON-SHACKET COMPANY, Inc., a Michigan Corporation, and Ira

J. Spoon, Plaintiffs and Appellants, v. COUNTY OF OAKLAND, City of Madison Heights and District No.

4, Lamphere Pub-School of the cities of Madison

Heights and Troy, Municipal

Corporations, Defendants and Appellees.

No. 42.

Supreme Court of Michigan.

June 5, 1959.

Anbender & Anbender, Lionel E. Spoon, Detroit, for plaintiff.

James G. Hartrick, Harry J. Merritt, Pontiac, and H. Eugene Field, Royal Oak, for defendant.

Before the Entire Bench.

BLACK, Justice.

That the profession may properly be informed with respect to the unusual nature of this case and the self-reversible result I would reach, the opinion of the presiding chancellor is quoted in continuing part as follows:

'The plaintiff, Sppon-Shacket Company, Inc., a Michigan Corporation, is the owner of Lots 65 through 83, inclusive, and Out-Lot A of Spoon-Shacket Subdivision, City of Madison Heights, Oakland County, Michigan. Except for Out-Lot A, those lots were assessed by the Township of Royal Oak for tax purposes in the year 1955 at valuations ranging from $150.00 to $400.00.

'In 1955 a number of homes were built in the subdivision, and in preparing the tax rolls the new homes were assessed by the new city of Madison Heights at a more or less uniform valuation of $5500.00 each. Through inadvertence or mistake the assessing officer did not discover that Lots 65-83, inclusive, had remained vacant and they too, were assessed at $5500.00 each for tax purposes.

'The error in assessment was discovered by the City in 1956 and the assessment for the year 1957 on these lots reverted back to an amount approximately twice the 1955 valuations, but less than one-tenth of the valuations for 1956.

'Although plaintiff must be charged with constructive knowledge of the existence and amount of the 1956 assessment, it did not receive a tax statement from the new city in that year and hence did not have actual knowledge of the excessive assessment until April, 1957, when it attempted to pay the tax on one of the lots. It then offered to pay the tax to the County Treasurer under protest but that offer was refused. Obviously and it is conceded, the plaintiff neither appeared before the Board of Review nor made prior inquiry at the City offices in regard to the assessment. As a result of the assessing officer's mistake for 1956, plaintiff's tax liability for that year was more than ten times greater than in the following year of 1957.

'Within less than two months after its actual knowledge of the assessments, plaintiff brought this action in chancery for a declaration of rights alleging an existing controversy between the parties, asking that for the purpose of determining the parties' rights the tax for 1956 be considered as paid under protest, and praying for a decree determining the assessments to be excessive, invalid and illegal, and for other related relief.

'It should be here noted that the plaintiff seeks the same decree in relation to Out-Lot A as asked in respect to the other vacant lots. The assessed valuation of that lot was $7,500.00 in 1955; $15,000.00 in 1956, and $19,000.00 in 1957. The progressive increase in valuation during the three periods was consistent with other assessments in the area, and the Court is convinced, and so finds, that the assessing officer committed no error of omission or commission in connection with the assessment of this well located property. Plaintiff itself is, at best, half-hearted in its concern over the assessment on Out-Lot A, and this Court finds no cause for complaint as to that assessment.

'In contrast it is apparent from the record that the assessing officer did make a significant mistake in the assessment of plaintiff's remaining property for the levy of 1956 taxes, a mistake of such significance as to constitute in the opinion of this Court, a constructive fraud. The assessing officer is now deceased and it is suggested by the testimony that he did not view the property at the time he fixed the assessment. On the other hand it is conceivable that he may have visited the property but was confused as to lot numbers. Whatever the fact, there can be no doubt that a mistake was made which resulted in the plaintiff being charged some ten times the tax levied on comparable property in the area. The defendants will benefit measurably from that mistake. Obviously this Chancery Court should not permit the fruition of this injustice if it has the right to intercede.

'The situation herein presented parallels the problem discussed in the recent case of Consumers Power Company v. County of Muskegon, 346 Mich. [at] page 243 . The plaintiff in this cause would have the Court rely upon the well reasoned dissent of Justice Smith in that case. In his dissent the Justice, citing the common law and decisions from other states, rebels against the existence of a double standard of morality as between individuals and municipalities. It is his conclusion that under established precedents in this state the Chancery Courts will not permit an individual to benefit to the detriment of another through a mutual mistake, but that, at least in the field of taxation, a municipality may do so if the error is not timely discovered. His summation is worth repeating.

"This is the Supreme Court of Michigan speaking, the possessor of all the historic powers of law and equity, the keeper of the conscience of our sovereign people, a constitutional court of plenary powers, not a legislative court of enfeebled and circumscribed jurisdiction. What we are faced with is a simple case of constructive fraud. If, in such a case this Court must stand by with eyes downcast, protesting our impotence as we explain to this victim that we cannot 'exercise legislative prerogatives,' then the arm of justice has indeed withered and its conscience shriveled. Our constitutional duties may not be thus easily abandoned. Retreat before fraud, actual or constructive, carries us down a path forbidden to our feet. Under the clearest principles of good conscience and fair dealing this plaintiff should have restitution as prayed.'

'This Court believes that Justice Smith's reasoning is sound, but, be that as it may, the doctrine of stare decisis must prevail in the trial courts of this state. The majority of Justices in the cited case ruled against the conclusion of the dissenting Justice, and unless and until the majority of that Court comes to a different conclusion, this Court finds itself constrained to follow the prevailing rule.'

Having signed Mr. Justice Smith's dissenting opinion of Consumers Power Company v. County of Muskegon, 346 Mich. 243, 251, 78 N.W.2d 223, I would apply--as would the chancellor had he been able--the reasoning of that opinion to this essentially duplicating case. The controlling declaration, written by Mr. Justice Smith in Consumers, is that equity can and should intervene whenever it is made to appear that one party, public or private seeks unjustly to enrich himself at the expense of another on account of his own mistake and the other's want of immediate vigilance--litigatory or otherwise. That declaration, so written, has become our most constantly gnawed bone of contention as it recurrently passes from place to place around our solemn conference table. Starting with the notorious 'thirty-six cent tax case' (Farr v. Nordman, 346 Mich. 266, 78 N.W.2d 156, 188) ¹--in which 5 then members of this Court proclaimed that they had 'diligently sought, as did the lower court, to find a way to grant them (the appealing plaintiffs) the relief prayed for', and yet declared themselves hamstrung by the rigors of the law--, and proceeding on through the recent case of Romatz v. Romatz, 355 Mich. 81, 94 N.W.2d 432--where a new majority seated here vigorously cast aside 'the false premise that equity must find her jurisdiction * * * in legislative enactments granting direct and specific authority'--, this disputatious debate has continued since submission of the case at bar and, doubtless, will endure until the light of greater experience and deeper study--of equity's creative purposes--fully penetrates the slowly disappearing thought-shadows of our claustral quarters.

In essence it is the so-called Blackstonian theory, that equity must subordinate herself to law, that divides us. Mr. Justice Kelly, relying on Blackstone by quotation from Judge Story's work on equity jurisprudence (Vol. 1 [4th ed.], § 15, p. 16), happily makes this clear. ² Blackstone's steadfast view (taken from Mr. Justice Kelly's quotation) was this: 'By equity we mean nothing but the sound interpretation of the law.' But Story certainly did not support Blackstone, as we shall presently see. Neither did Pomeroy, as we shall likewise perceive. The fact is that Blackstone's 'Commentaries on the Laws of England' were written and published (1765-68), and Blackstone died (1780), before the valued lessons of mature experience in equity's limitless field were fully learned, and it was a full century later that Parliament adopted its equity-guarding amendment of the English judicature act of 1873. ³ The amendment came about this way:

'While the supreme court of judicature act was pending before the British Parliament, there appeared in the Saturday Review a series of articles written by one of the ablest lawyers and most profound thinkers of the English bar, which pointed out a grave danger threatening the jurisprudence of England in the plan, as then proposed for combining legal and equitable rights and remedies in the same action, and administering them by the same tribunal. The writer showed, as the inevitable result of the system, that equitable principles and doctrines would gradually be suppressed and disappear in the administration of justice; that they would gradually be displaced and supplanted by the more inflexible and arbitrary rules of the law; until in time equity...