Tower Realty v. City of East Detroit

• Decision Date: 18 April 1952
• Docket Number: No. 11408.,11408.
• Citation: 196 F.2d 710
• Parties: TOWER REALTY, Inc. v. CITY OF EAST DETROIT.
• Court: U.S. Court of Appeals — Sixth Circuit

196 F.2d 710 (1952)

TOWER REALTY, Inc. v. CITY OF EAST DETROIT.

No. 11408.

United States Court of Appeals Sixth Circuit.

April 18, 1952.

Wm. Henry Gallagher, Detroit, Mich. (Wm. Henry Gallagher, Detroit, Mich George A. Francis, East Detroit, Mich., on the brief), for appellant.

Carl B. Weymouth, East Detroit, Mich., on the brief, for appellee.

Before ALLEN, McALLISTER, and MILLER, Circuit Judges.

McALLISTER, Circuit Judge.

The controversy involved in this case has had a long and varied career. It has been, on three occasions, before the state circuit courts of Michigan; twice before the Michigan Supreme Court; twice before the district court; and this is its second appearance in this court. Before us, for our consideration of the issues, we have four separate records and twelve briefs that depict the progress of the case through its various adjudications.

With respect to the issues now before us, appellant filed a petition in the district court for a declaratory judgment, asking the court to declare void certain provisions of an ordinance of the City of East Detroit, Michigan, and to declare and determine that appellant, upon compliance with the valid provisions of such ordinance, was entitled to the issuance by the City of a license to operate an amusement park on certain real estate on the corner of Eight Mile Road and Gratiot Avenue. The district court held that appellant, under Rule 17 of the Federal Rules of Civil Procedure, 28 U.S.C.A., was not the real party in interest in the action, and entered an order denying the petition and dismissing the complaint, from which order, Tower Realty, Inc. appeals.

The background of the case is as follows: The real estate in question is owned by Flora Kerner. She leased the property for purposes of an amusement park to the Eastwood Park Amusement Company, a corporation owned by Max Kerner and Henry Wagner — each being a holder of 50% of the stock. Max Kerner was the husband of Flora Kerner, the owner of the real estate.

In 1947, Max Kerner and Henry Wagner pleaded guilty to a charge of permitting gambling in the park and paid fines for such law violation. Thereafter, early in 1948, a yearly license to operate the park was issued to the Eastwood Park Amusement Company. These yearly licenses had been issued to the company for each year during the twenty years prior to 1948. However, in May, 1948, the city officials raided the park and seized a number of chance games; and the mayor thereafter proceeded to revoke the company's license to operate the park, pursuant to an ordinance which provided:

"Section 18. The Council may refuse to issue licenses to the parties, and for the purposes aforesaid, and the Mayor may revoke any license all ready issued, for good satisfactory reasons which shall be reported to the City Council by the Mayor at its first session following such refusal or revocation, that any party aggrieved by the action of the Mayor in revoking a license may appeal to the City Council, and upon due consideration by said City Council, the action of the Mayor may be reversed, and the license or its revocation annulled upon a three-fourth vote of all of the Council elected."

Upon this revocation of the license, the Eastwood Park Amusement Company brought injunctive proceedings in the state circuit court to restrain the enforcement of such revocation, on the ground that Section 18 of the ordinance above quoted was unconstitutional in that it provided no standard of fitness, and, instead, conferred arbitrary power upon the mayor to revoke any license. It was further contended that since such provision was void, and was the only one prescribing procedure for revocation of licenses, the ordinance was left without any basis for such revocation by any official or body. On the hearing, the circuit court dismissed the bill and the company thereafter appealed to the Supreme Court.

In its decision, the Supreme Court held that Section 18 of the ordinance was unconstitutional. The court, however, held that under Sections 16, 19, and 21 of the ordinance,¹ revocation would be justified. However, it was declared that the company was entitled to a notice of revocation, setting forth the specific claimed violations of Section 16, as well as notice that the City was proceeding to revoke the license in accordance with Section 21; and that if, after such notice, the company were given a hearing, it would satisfy the due process to which it was entitled. The court, therefore, modified the decree of dismissal of the circuit court, in accordance with the foregoing determination. Eastwood Park Amusement Co. v. Mayor, 325 Mich. 60, 38 N.W.2d 77.

Prior to this decision of the Supreme Court, the Eastwood Company had again applied for a license for the year 1949, and because the matter was still pending in the court, the city council failed to act upon the application. Before the Supreme Court decided the case then pending, the company filed a complaint in the nature of mandamus in the state circuit court. Thereafter, the decision of the Michigan Supreme Court was announced, and the company subsequently amended its pleadings so as to attack the constitutionality of Sections 16 and 19 of the ordinance. In its complaint, it prayed that an injunction issue restraining the city officials from interfering with its operation of the park; that the ordinance, in so far as it related to the company, be declared unconstitutional; and that, in the alternative, a mandatory injunction issue requiring the grant of a license to the company, in accord with its application therefor. The circuit court dismissed the complaint; and the company again appealed to the Supreme Court.

On the second appeal, the Supreme Court of Michigan again decided the case against the Eastwood Company. It held that the operation of gambling devices in the amusement park, which constituted grounds for revocation by the city of the license to operate during the years when such devices were permitted, constituted sufficient grounds for refusal of a license for the succeeding year; that the ordinance which provided that no license be issued unless the place complied with all laws and ordinances provided a standard as a basis for determining whether or not a license should be issued by the city officials, and hence, was not unconstitutional for lack of a standard for the issuance of a license; and that the ordinance, which contained sufficient valid provisions to leave it complete and operative, must, to that extent, be permitted to stand. The court further held that the ordinance in question contained the following severable provisions that were complete and operable in themselves and were, therefore, valid and enforceable: (1) the requirement of a license as a prerequisite to the operation of an amusement park; (2) the provision forbidding licensees to permit gambling or other evils upon the licensed premises; (3) the provisions for revocation of a license and penalties for violation of the ordinance; and (4) the provisions for refusal of a license on the ground of violation of state laws and ordinances. In deciding the case, the court said that in view of the foregoing provisions, it was unnecessary to pass upon claims of the unconstitutionality of other provisions of the ordinance. With respect to the contention that the criminal violation of the laws by former owners and officers of the company could not be urged against the issuance of a license for a succeeding year since the company had, in the meantime, come under new ownership and management, the court declined to consider such claims on the ground that they had not been raised in the lower court or embodied in appellant's statement of reasons and grounds for appeal, as required by Rule 67 of the Michigan Court Rules. The court, accordingly, affirmed the decree dismissing the complaint. Eastwood Park Amusement Co. v. City of East Detroit, 328 Mich. 272, 43 N.W.2d 851.

After the first appeal of the Eastwood Company had been decided in the Supreme Court, and during the pendency of Eastwood's second appeal, Tower Realty, Inc., appellant herein, on February 3, 1950, filed an application with the city for a license to operate the amusement park. At that time, Tower had no interest or lease of the park. It was not until February 28, 1950, that Eastwood executed a lease of its interest in the amusement park to Tower. The application by Tower for a license was denied by the city on March 13, 1950.

On March 13, 1950, Tower filed its complaint in the instant case in the United States District Court.

On April 28, 1950, Eastwood again filed an application with the city for a license to operate the amusement park, which it had theretofore, on February 28, 1950, leased to Tower. This latter application of Eastwood was not acted upon by the city.

Thereafter, the Supreme Court decided against the Eastwood Company on its second appeal.

To summarize the above proceedings, then, during the period while there was pending the first appeal of the Eastwood Company from denial of a license to operate the park, Tower filed an application for a license to operate the same park, although at that time it had no lease of or interest in the park. Thereafter, although Eastwood's second appeal was still pending in the Michigan Supreme Court, Eastwood executed a lease of its interest in the park to Tower. Subsequently, Tower filed its complaint in the instant case in the district court. It asserted jurisdiction in the court on grounds of diversity of citizenship, as well as the due process clause of the Federal Constitution, and asked the court to declare the pertinent sections of the ordinance void, and, further, to declare that Tower was entitled to the issuance of a license. Thereafter, pending Tower's suit in the district court, Eastwood again applied to the City for a license to operate the park, although it had previously leased its interest in the park to Tower, and Tower...