Ziegler v. Witherspoon

• Decision Date: 01 October 1951
• Docket Number: No. 59,59
• Citation: 49 N.W.2d 318,331 Mich. 337
• Parties: ZIEGLER, State Highway Commissioner v. WITHERSPOON, City Controller. * Motion
• Court: Michigan Supreme Court

Page 318

49 N.W.2d 318

331 Mich. 337

ZIEGLER, State Highway Commissioner v. WITHERSPOON, City Controller. ^*

Motion No. 59.

Supreme Court of Michigan.

Oct. 1, 1951.

Frank G. Millard, Atty. Gen., Edmund E. Shepherd, Solicitor Gen., Lansing, for Charles M. Ziegler, State Highway Commissioner.

Paul T. Dwyer, Acting Corp. Counsel, Detroit, for City of Detroit.

John C. Jacoby, Detroit, for Board of County Road Commissioners of the County of Wayne.

Miller, Canfield, Paddock & Stone, Detroit, for plaintiffs.

Wood, King & Dawson, New York City, New York, for plaintiffs.

Frederick McGraw, Detroit, for defendant.

Before the Entire Bench.

BUTZEL, Justice.

In 1945, the State Highway Commissioner, herein referred to as the commissioner, the Wayne County Board of Road Commissioners, herein referred to as the county, and the City of Detroit entered into a contract for the construction of two limited access highways, herein referred to as the projects, within the city of Detroit. One project, known as the John C. Lodge Expressway, was to begin a short distance from the Detroit Riber, near Woodward Avenue, and run in a more or less northerly and northwesterly direction into a divided 8-lane highway in the northwestern part of the city. The other project, known as the Edsel Ford Expressway was to run in an easterly and westerly direction through the center of the city, and at each end into wide expressways. As of December 31, 1950, some $42,000,000 had been expended for the highways. The three participating units had contributed a total of $5,000,000 annually and Federal aid comprised the balance. At the rate of progress under the 1945 contract, it was estimated that it would take an additional 15 years to complete the projects which were being built in sections as the money became available, and there was no provision for borrowing money to expedite the construction.

At the 1950 Extra Session of the legislature, Public Act No. 22, an amendment to P.A.1941, No. 205, C.L.1948, § 252.51 et seq., Stat.Ann.1949 Cum.Supp. § 9.1094(1) et seq., was enacted. The entire act as amended shall herein be referred as Act No. 22, supra. This act, which shall hereinafter be discussed in more detail, authorized the commissioner to enter into a contract with any county, city or village for the construction of limited access highways to be financed through the proceeds from the public sale of bonds. The act provides that the state, county and city or village should share the costs. It authorizes these units to make an irrevocable pledge of sufficient moneys to pay the bonds, but very carefully limits the nature of the pledge. The act provides that the pledges shall not be a general obligation of the state of Michigan or of the contracting counties or cities, but shall be payable solely from the allocations to the units from the state highway fund. ¹

On April 17, 1951, under the authority of Act No. 22, supra, the three plaintiffs herein, the commissioner, the county, and the city, entered into a contract, referred to in the pleadings as Exhibit 'A', for the completion of the projects and the financing thereof. Exhibit 'A' provides for the issuance of $80,000,000 in bonds payable in serial annual installments beginning October 1, 1955, with the final payment to be made October 1, 1976, and also semi-annual interest on all bonds issued and outstanding at the rate of 2 1/2 per cent beginning October 1, 1951.

We briefly refer to some of the pertinent clauses of Exhibit 'A', which is dated April 17, 1951, and has been duly signed by all parties thereto, with the exception of defendant. It provides for the issuance of $80,000,000 of bonds to defray the cost of completing the two projects which it describes in some detail. It states that it follows the provisions of Acts Nos. 205 and 22, supra. In the payment of interest and principal of the bonds, the State Highway Commissioner agrees to pay 50 per cent, or $2,500,000 a year, and the other two plaintiffs each agree to pay $1,250,000 a year, or 25 per cent a year, for interest and serial payments on the bonds. Each of the plaintiffs irrevocably pledges such annual sums from their share of state highway fund to meet the interest and serial payments on the bonds, and to make the payments to the state treasurer who was made the fiscal agent to pay such amount. It further provides that the State Highway Commissioner may make additional pledges or pledge within the limits permitted by Act No. 22, supra, which pledge or pledges shall be on a parity with that made under Exhibit 'A'. There is a further provision that the county's pledge is subject to a prior one made under the provisions of P.A.1943, No. 143, C.L.1948, § 141.251 et seq., Stat.Ann. 1949 Cum.Supp. § 9.130(1) et seq., which provides for the issuance of weight tax anticipation notes. ²

The contract provides for the method of collection in case of default by the parties or any of them. It further states that all federal funds received on account of the project shall be used for the redemption of bonds in a prescribed manner. It is distinctly stated that the bonds are not a general obligation of the state but are payable only from the income received from motor vehicle taxes. The right is reserved to issue additional bonds of equal standing by the state if the moneys realized from the bond issue prove insufficient to complete the projects and sets forth the procedure by which this may be done. This requires also a supplemental contract by the three parties. Approval of the bonds by the Michigan Finance Commission as provided for by P.A.1933, Act No. 94, is also required. Bids for the purchase of the bonds must be approved by the State Administrative Board, the common council of the city of Detroit, and the Board of Supervisors and the Board of County Road Commissioners of Wayne County.

The contract further provides that the proceeds from the sale of the bonds shall be deposited with the state Treasurer who is designated as fiscal agent for the parties for the payment of principal and interest of bonds and redemption if payments are anticipated before maturity dates. Many other important provisions in Exhibit 'A,' we do not set forth as they are not involved in the discussion of the questions raised.

The purpose of decreasing the building time is evident. The need for the highways is not questioned. At present the Wayne county highway system is inadequate, the movement of vehicular traffic, raw materials and manufactured goods including armament for the government being retarded. Moreover, the construction involves the condemnation of city property, the building of a large portion of the highways below the level of surrounding property, the erection of bridges, the replacement of public utilities and their conduits, and other large costs. The estimates show that if the projects can be completed within five years the additional cost will be $134,000,000, but if 15 years are needed, plaintiffs contend in their brief that the cost will be much higher. It is also estimated that a contribution of $80,000,000 by the parties to Exhibit 'A' will be sufficient to complete the project for additional moneys will be forthcoming from Federal aid, from condemned property which will not be immediately destroyed, and other sources.

Defendant is the controller of the city of Detroit. His signature is necessary in order to bind the city to Exhibit 'A'. He has refused to sign and the instant suit for mandamus is brought to direct him to affix his signature to all necessary documents. Defendant has raised several important questions in regard to the validity of the contract and the proposed bond issue and urges that a decision of the questions raised by him is proper before the bonds should be offered for sale. It is conceded that this is a test suit. In a way it resembles a suit for a declaration of rights.

Act No. 22, supra limits the annual expenditure by the commissioner from his share of the State highway fund to $3,500,000 for limited access highways, and Exhibit 'A' calls for the annual payment of $2,500,000, or five-sevenths of the maximum amount. Defendant claims that the contract thus casts a burden on the taxing power of the state by leaving a balance of only $1,000,000, or two-sevenths of the entire amount that can be used for limited access highways in other portions of the state should they become necessary. While at first glance it might seem unfair to expend such a large proportion of the maximum amount on the two projects, a more realistic approach appears from the stipulation of counsel as to the following facts. The preliminary count of the U. S. Bureau of Census for 1950 shows the population of Michigan to be 6,308,794, of which number over one-third reside in Wayne county and of the latter over three-quarters in the city of Detroit. The population in the metropolitan district of Detroit is 2,973,019, or slightly less than one-half of the entire population of the State. The records of the state show the receipts from fuel and weight taxes from the entire state amounted to $86,998,723 for 1950, of which $33,010,149 was collected from Wayne county, the latter amount including $25,310,000 from the city of Detroit. The amount collected annually by the state for gasoline and weight taxes has been rapidly growing each year for the past five years, it being $58,780,361 in 1946, and $86,998,723 in 1950. There have been large increases in the amounts paid each year by the county of Wayne and the city of Detroit, the amounts received from the metropolitan district of Detroit increasing each year in a larger proportion. The number of vehicles registered in 1950 from the county of Wayne is more than one-third of the total registrations for the state of Michigan. These figures are from records of years prior to 1951. They clearly indicate that with the number of vehicles registered from Wayne county, which includes Detroit, the...