Opinion
Calendar No. 44,676.
Decided October 12, 1950. Rehearing denied December 5, 1950.
Appeal from Oakland; Breakey (James R., Jr.), J., Presiding. Submitted April 4, 1950. (Calendar No. 44,676.) Decided October 12, 1950. Rehearing denied December 5, 1950.
Petition by City of Pleasant Ridge and another against Township of Royal Oak and others for mandamus to compel reassessment of levy of new assessments. Arthur E. Moore intervened as party plaintiff. Judgment for defendants. Plaintiffs appeal. Reversed and writ of mandamus granted.
Arthur E. Moore, for plaintiffs.
Glenn C. Gillespie and Franklin E. Morris, for defendant township.
W.C. Hudson, for defendant City of Royal Oak.
Orph C. Holmes, for defendant City of Ferndale.
Fletcher L. Renton, for defendant City of Hazel Park.
This is a petition for a writ of mandamus to compel the officials of the township of Royal Oak and of the cities of Royal Oak, Ferndale and Hazel Park, which now embrace a portion of the territory formerly a part of the township of Royal Oak and having within their respective areas properties assessed for special assessments, involved in this litigation, to levy additional assessments or reassessments in the specific special assessment districts in the total approximate amount of $203,234.42. Petitioner Arthur E. Moore was permitted to intervene for and on behalf of himself as a bondholder and on behalf of all other bondholders of the special assessment districts involved in this litigation. Certain of these obligations became due and matured on October 1, 1947.
From a decree dismissing the petition, plaintiffs appeal.
Discussions in the briefs in this case center largely around 2 questions, namely: Are the defendants or any of them authorized or required to make reassessment because of unpaid bonds?; secondly, are the plaintiffs and the township of Royal Oak guilty of laches for not proceeding sooner to institute proceedings to compel such reassessment?
Commencing in the year 1926 and ending September 1, 1928, the township of Royal Oak created 35 special assessment districts under the provisions of PA 1923, No 116, as amended by PA 1925, No 263, and PA 1927, No 58, which became effective April 21, 1927 (see, as later amended, CL 1948, § 41.411 et seq. [Stat Ann 1949 Rev § 5.2411 et seq.]), for the purpose of furnishing water, sewer and street improvements.
The number, purpose, amount of assessment, and date of bonds, in each district, and the total of all the rolls, are shown in the record on exhibit No 1.
The special assessment bonds were due and payable 5 years after date, and were all sold to the public and the proceeds used to pay the costs of the improvements.
Since the creation of the special assessment districts and the levying of the special assessment taxes in the special assessment districts, 16 various portions of township territory have been annexed to cities or incorporated as cities, a total of 8 cities being involved.
The following tabulation shows the population and assessed valuation of the defendant cities which acquired portions of the special assessment districts by incorporation or annexation:
Assessed Population Valuation Royal Oak ................. 25,087 $33,357,500 Ferndale .................. 22,253 26,199,975 Hazel Park ................ 16,665 9,556,210
The several annexations or incorporations of township territory by defendant cities of Royal Oak, Ferndale and Hazel Park included all of some and parts of other special assessment districts, and those districts, or, the portions thereof, which are now included within the corporate limits of such cities, are no longer under the jurisdiction or control of the township of Royal Oak.
For a short period of time collections of special assessment taxes were sufficient to meet payments of interest on the bonds, but, when the first effects of the subsequent general financial depression began to be felt, collections were not sufficient to meet interest payments.
In the year 1929 and subsequent years, many of the taxes in the area involved became delinquent and as a consequence many of the special assessments were unpaid. Tax moratorium statutes were enacted by the legislature cancelling interest and penalties under certain conditions and extending the period over which the taxes and special assessments could be paid. PA 1933, No 126, as amended (CL 1948, § 211.301 et seq. [Stat Ann 1950 Rev § 7.231 et seq.]).
After default of the special assessment districts in payment of their bonds one Charles F. Whitman, the owner of some of the bonds, filed a bill of complaint in the Oakland county circuit court in chancery to compel the township of Royal Oak to advance from its general fund sufficient money to pay the amounts due on the bonds. See Whitman v. Township of Royal Oak, 269 Mich. 146. The Whitman Case determined the liability of the township generally to pay the bonded indebtedness after default. Following the decision in the Whitman Case the township from time to time made payments from its general fund on the bonds and interest, but it at no time had sufficient money to pay all interest and principal then due. At the time of the adoption of the refunding plan hereinafter referred to, there was barely sufficient money in the township's general fund to pay outstanding township orders.
Following the decision in the Whitman Case, negotiations were entered into between the township and representatives of the bondholders to obtain an extension of time to pay the indebtedness and to secure a more favorable rate of interest. An agreement was ultimately arrived at under which the time for payment of the principal was extended and the rate of interest reduced. Upon consummation of the plan all prior special assessment bonds were surrendered to the township by the former bondholders in direct exchange for the refunding bonds. None of the refunding bonds were sold to any new purchasers.
No tax sales were held in Oakland county between the years 1932 and 1938. At the so-called "scavenger sale" of property for delinquent taxes under PA 1937, No 155, as amended (CL 1948, § 211.351 et seq. [Stat Ann § 7.951 et seq.]), much property in the township and assessment districts was sold for delinquent taxes by the State. Upon such sale all remaining delinquent taxes (including special assessment) against the lands so sold were cancelled.
Other facts connected with the history of the 35 special assessment districts are recited in 5 cases in this Court, hereinafter cited.
For the purpose of this decision, lands, the title to which was forfeited to the State because of unpaid taxes, are herein referred to as scavengered and lands that are under discussion in this case, the title to which was not so forfeited to the State, are called unscavengered.
The scavengered lands are, because of the scavenger sale proceedings, exempt from any special assessment or reassessment for unpaid balances to be reassessed against the several assessment districts that are spoken of in this proceeding. Municipal Investors Association v. City of Birmingham, 298 Mich. 314; Keefe v. Oakland County Drain Commissioner, 306 Mich. 503, 510-512.
The township of Royal Oak has a secondary liability as guarantor for payment of all the bonds. Hazel Park Nonpartisan Taxpayers Association v. Township of Royal Oak, 317 Mich. 607, 625.
The township has the authority and duty to levy reassessment against the remaining (unscavengered) lands in such special assessment districts situate within the present territorial limits of the township, in a manner not inconsistent, however, with our recent holding in Wood v. Village of Rockwood, ante, 507.
The township has now no authority to levy or direct the levying of reassessments on any lands not now within the territorial limits of the township.
The township and plaintiff cities have an interest in seeing to it that all the "seceded" territory contributes its just proportionate share toward the payment of the debt.
The plaintiff cities of Pleasant Ridge and Huntington Woods contain within their territorial limits no lands embraced in any of the 35 original assessment districts. Each of said 2 plaintiff cities is liable at large for the payment out of its general fund to the township for its proportion of the remaining unpaid debt after remedies of reassessment have been exhausted.
Plaintiff cities Pleasant Ridge and Huntington Woods must make their proportionate contribution without recourse to any special assessment district for the reason that there are no lands of the original special assessment district located within their territorial limits. The defendant cities of Royal Oak, Ferndale and Hazel Park having within their territorial limits lands embraced within some of the original 35 assessment districts, have a right and duty to make proportionate reassessment on the remaining (unscavengered) lands within their territorial limits and within such original assessment district or districts also in a manner consistent with our holding in Wood v. Village of Rockwood, ante, 507.
The defendants have omitted to take steps that it was their imperative duty to take and are subject to an order of mandamus to require them to proceed.
Defendant township cites CL 1948, § 41.413 (Stat Ann 1949 Rev § 5.2413), hereinafter quoted, and claims that the last sentence thereof speaking of reassessment did not impose any statutory duty upon the township or cities to make a reassessment. However, in Hazel Park Nonpartisan Taxpayers Association v. Township of Royal Oak, 317 Mich. 607, at page 630, referring to CL 1948, § 68.12 et seq. (Stat Ann § 5.1360 et seq.), where the words are, "The council may, within the limitations prescribed for such assessments, make an additional pro rata assessment to supply the deficiency," we held the provision to be mandatory although the word used is "may." The word "may" was substituted for the word "shall" in the above statute by PA 1934 (1st EX Sess), No 24, subsequent to the creation of the special assessment districts and subsequent to the special assessment bond issues. In Wood v. Village of Rockwood, 311 Mich. 381, we say at page 389, "While permissive in form, the requirement to reassess has been construed by this Court to be mandatory." The township board is to be considered as required under the circumstances of the instant case to make the reassessments.
Counsel for the township say that the right of the township to assert any claim against the assessment districts is barred by statute and by the township's laches, but in the Hazel Park Case, supra, we say, 630, 631:
"A failure to reassess does not terminate the liability of the cross-defendant cities to share proportionately in making up the deficiencies."
Counsel for defendant township stress their contention that CL 1948, § 41.413 (Stat Ann 1949 Rev § 5.2413) does not command the township to levy a reassessment and does not prescribe the steps to be taken by township officers in the performance of that duty, and further argue that it cannot be said that the act contemplated a reassessment by a seceded city because according to both the title and body of the act, the act is limited in its application to a township or township board. See, however, Wood v. Village of Rockwood, 311 Mich. 381 ( infra).
Some of the defendants complain that a requirement by the court that the proceeding be at once instituted to make reassessments would amount to so great a hardship to the taxpayers involved that the excessive burden would defeat the purpose of the assessment by reason of nonpayments. No evidence is pointed out that any such situation is likely to occur.
Defendant township asserts that because CL 1948, § 41.413 (Stat Ann 1949 Rev § 5.2413) prescribes a duty that the township shall pay the defaulted bonds and then the municipalities shall proceed to make reassessments, that this amounts to a bar to a procedure for the municipalities first to be compelled to make the reassessments and precludes the mandate of the court now to make the reassessments.
The inability of the township to make full advancement on its secondary liability is no bar to proceedings to obtain all possible payments by reassessment against lands properly subject thereto. Nor is the necessity for making reassessments any excuse for the plaintiffs and defendants not proceeding to make such payments now from their respective general funds as with reasonable certainty the township and municipalities which are parties to this case are required to pay because of their secondary liability for such deficiencies as remain after remedies of reassessment have been exhausted.
The proceedings for improvements to platted lands are by CL 1948, § 41.413 (Stat Ann 1949 Rev § 5.2413) expressly made conformable to procedure in the village improvements statute.
The unpaid bonds represent a debt that is still not outlawed and is primarily chargeable against the lands lying within the original limits of the several assessment districts, excepting as to scavengered lands, and excepting as otherwise held in Wood v. Village of Rockwood, ante, 507.
In the dispute as to reassessment we note a case recently decided by us and referred to in the briefs of the parties, City of Berkley v. Township of Royal Oak, 320 Mich. 597, in which we denied mandamus brought to require reassessment. However, the proceedings in that case were governed by a statute as to road repairs and fire protection districts in a township and had nothing to do with platted areas nor villages.
The instant case has to do with platted lands. Improvements and procedure in respect to improvements and taxation therefor in platted lands in townships and villages are provided for in PA 1883, No 38, as amended and added to (CL 1948, § 123.1 et seq. [Stat Ann 1949 Rev § 5.2221 et seq.]) and also governing some of the phases of the same subjects is PA 1923, No 116, as amended (CL 1948, § 41.411 et seq. [Stat Ann 1949 Rev § 5.2411 et seq.]). Of particular interest is CL 1948, § 41.413 (Stat Ann 1949 Rev § 5.2413), which section (hereinbefore referred to) in part reads as follows:
"All proceedings relating to the making, levying and collection of special assessments herein authorized and issuing bonds in anticipation of the collection thereof, shall conform, as near as may be, to the proceedings for levying special assessments and issuing special assessment bonds by villages, for like improvements, as set forth in Act No 3 of the Public Acts of Michigan for 1895, as amended, being chapter 72 of the Compiled Laws of Michigan for 1915, as amended. If any such special assessment fund is insufficient to pay such bonds and interest thereon when due and said bonds shall have been issued subsequent to the twenty-first day of April, 1927, the township board may advance the amount necessary to pay such bonds, and shall be reimbursed from such assessments when collected, or by reassessment of the deficiency if necessary."
After the lapse of 22 years and more with much of the original assessments still unpaid, it must be said reassessment is necessary.
From an examination of the statutes that deal with the authority of townships to make improvements as to platted lands and the decisions which we have heretofore made, we conclude that the unpaid balance of bonds issued for the improvements in the 35 assessment districts herein mentioned is a debt for which the lands in the several assessment districts are primarily liable (excluding scavengered lands and except as relates to those situations in which application of our holding in Wood v. Village of Rockwood, ante, 507, leads to a contrary result) with the township at large secondarily liable therefor and thereon, for the deficiency, which secondary liability of the township of Royal Oak is shared with the township proportionately by the several seceding municipalities. See Hazel Park Non-partisan Taxpayers Association v. Township of Royal Oak, supra.
We do not have before us for decision in this case the determination of the precise amount of the total bonded indebtedness which, however, seems not to be disputed. We further do not have before us for determination the precise amount to be borne by each of the several seceding municipalities and while some question is made about the possibility of defendant municipalities proceeding to meet their obligation without further instruction as to the amount and without a certified roll, we do not deem either of those matters to be an insuperable obstacle in the way of the defendant municipalities proceeding with the reassessments. The amounts, if controverted, are justiciable. We must assume that the original rolls are available for examination and copying.
Question is made about the authority of the defendant municipalities to reassess for the purposes of the 35 districts. It follows from what we have heretofore said that it is the duty of Royal Oak township to proceed to make reassessment against such portions of the original assessment districts as still lie within the territorial limits of the township of Royal Oak that are liable under Wood v. Village of Rockwood, ante, 507. As to the other defendants, we have examined their charter provisions as set forth in the record and find them sufficient to authorize the several city councils to proceed with the reassessment.
Section 13.12 of chapter 6 of the charter of the city of Hazel Park contains the words,
"Should the assessments in any special assessment roll prove insufficient for any reason, including the noncollection thereof, to pay for the improvement for which they were made or to pay the principal and interest on the bonds issued in anticipation of the collection of such assessments, then the council shall make additional pro rata assessments to supply the deficiency." (Italics supplied.)
This language is surely as broad as the language of the village charter of Rockwood in the Wood Case, heretofore cited, 311 Mich. 381.
Section 17 of chapter 12 of the charter of the city of Ferndale contains an even broader power of reassessment and the same may be said for section 17 of chapter 12 of the charter of the city of Royal Oak.
On the subject of laches, it is worth while noting the 5 decisions hereinbefore referred to, namely, Whitman v. Township of Royal Oak, 269 Mich. 146; Township of Royal Oak v. City of Pleasant Ridge, 295 Mich. 284; Township of Royal Oak v. City of Pleasant Ridge, 307 Mich. 714; Township of Royal Oak v. City of Huntington Woods, 313 Mich. 137; Hazel Park Nonpartisan Taxpayers Association v. Township of Royal Oak, 317 Mich. 607. All those 5 cases in this Court by appeal referred to the special assessments debt evidenced by the bonds involved in this case. An examination of all these decisions will disclose that the validity, liability and procedure concerning the debt evidenced by the bonds in question in this case constituted a maze of uncertainty and doubt and it would be a misapplication of the principle of laches to say that the right or duty of any of the municipalities involved in this litigation has been lost by inaction or delay. The rights of the parties were in great doubt, complexity and uncertainty. The statute of limitations had not run against the matters complained of in plaintiffs' petition when the petition was filed. The statute of limitations had not run to bar the proceeding herein instituted nor is laches to be attributed to the plaintiffs.
See CL 1948, § 609.13 (Stat Ann 1949 Cum Supp § 27.605). — REPORTER.
It is to be assumed that as the original assessments were all payable in 5-year instalments, that if the assessing authorities shall be confronted with a barrier of statutory or constitutional limitation presently limiting the amount of taxes that can be assessed against lands subject to reassessment, that the reassessment may be spread over a period of years not exceeding 5 years so as to overcome the barrier, if any, of the limitation.
See Const 1908, art 10, § 21, as amended in 1948. — REPORTER.
It is also the duty of each of defendant municipalities to proceed to pay from its general funds its proportionate share of the bonded indebtedness at least to within a reasonable estimate of ultimate liability as speedily as it may fairly so do in view of its resources in the nature of annual tax receipts and the strict necessities of each municipality in carrying on its government and that without waiting for the collection of the special assessments herein directed.
For a determination of the proportionate amounts which each city (with the township) shall have the burden of paying, and preparation of the reassessment, access can be had to the original assessment rolls, without waiting for the township to furnish a copy thereof.
The writ prayed for will issue if found necessary.
No costs, a public question being involved.
BOYLES, C.J., and NORTH, DETHMERS, BUTZEL, CARR, BUSHNELL, and SHARPE, JJ., concurred.