author: Hooker, J. Blair, J.

text:
    ATTORNEY GENERAL, ex rel. HUDSON, v. COMMON COUNCIL OF CITY OF DETROIT.
    1. Constitutional Law — Municipal Corporations — Bonds — Purchase of Public Utilities.
    Under sections 23 and 24, Art. 8, Constitution of 1909, municipal corporations are permitted to issue bonds for the purchase or acquisition of public utilities in excess of the limitation upon general bonded indebtedness, the excess to be secured only by the property purchased, without creating a debt against the municipality.
    2. Same — Bonds—Limitation of Indebtedness.
    None of the provisions of the Constitution prohibit the use of both kinds of bonds, within the limitations prescribed.
    3. Same.
    Unless the bonds issued upon such public utility create an indebtedness on the part of the city, in excess of the prescribed limit, they violate no provision of the Constitution and therefore Act No. 279, Pub. Acts 1909, permitting the issuance of such nonliability bonds, without limit, is valid. If, however, they should become an indebtedness of the city, the extent of such indebtedness is limited by the act to four per centum of the assessed value of the property.
    4. Same — Statutes—Municipal Charters — Revision.
    Act No. 279, Pub. Acts 1909, is not unconstitutional for failing to give the electors of municipalities part in framing amendments to the charter; for the Constitution does not purport to point out the method by which amendments shall be framed, and, although it delegates the power to electors to amend their charter, indirect means of proposing the amendment were properly provided for by the act, which permits twenty per centum of the electors to initiate amendments.
    5. Municipal Corporations — Amendment of Charters — Detroit Charter — Revision.
    Since it was intended by Act No. 279, Pub. Acts 1909, that cities incorporating or revising their charters under its provisions should include therein the requirements of sections 3 and 5 of the act, a proceeding to amend the charter of the city of Detroit, without first revising the charter so as to contain such required provisions, is invalid.
    6. Same — Street Railways — Public Utilities — Charters op Cities.
    Amendments provided for in section 21 of the act to be submitted to the vote of the electors, are amendments to charters framed and adopted under the general law, not to charters which remain in force until revised or replaced.
    7. Mandamus — Restraining Action — Injunction.
    While mandamus does not ordinarily restrain action, a function of the writ of injunction, in view of the prior rulings of this court (Elliott v. City of Detroit, 121 Mich. 611 [84 N. W. 820]), mandamus will issue to prevent the holding of a special election to amend the charter of the city of Detroit, so as to authorize the acquisition and construction of street railway lines; but the. opinion in such case is overruled. Ostrander, C. J., and Blair and McAlvay, JJ., dissenting.
    Certiorari to Wayne; Mandell, Hosmer, and Rohnert, JJ., sitting in banc.

    Submitted October 12, 1910.
    (Calendar No. 24,152.)
    Decided February 1, 1911.
    Mandamus by Franz Kuhn, attorney general, on the relation of Joseph L. Hudson, George H. Barbour, Russell A. Alger, Jr., Charles A. Ducharme, Fred T. Moran and Henry B. Joy, against the common council of the city of Detroit, to restrain the submission of a proposed amendment to the municipal charter to a vote of the electors of the city. An order denying the writ is reviewed by relator by writ of certiorari.
    Reversed and writ granted.

      Angelí, Boynton, McMillan & Bodman and Walker & Spalding, for appellant.

      P. J. M. Hally, for appellee.
   Hooker, J.

I am of the opinion that, if the relators have a remedy at this stage of the proceedings, it should be by injunction bill, and not by mandamus:

(1) Because mandamus issues to command action, and not inaction.
(2) Because there is another adequate remedy for any one entitled to restrain the council.

In Merrill on Mandamus, § 43, mandamus and injunction are contrasted:

“ Mandamus and injunction should not be confounded. The latter is used to prevent action, to maintain affairs in statu quo. The former is compulsory, commanding something to be done. An injunction is preventive and protective merely, and not restorative. It interposes between the complainant and the injury he fears or seeks to avoid. If the injury be already done, the writ can have no operation, for it cannot be applied correctively so as to remove it. It is not used for the purpose of punishment, or to compel persons to do right, but simply to prevent them from doing wrong. It is sometimes used as an affirmative remedy, but only by the chancery court to carry into effect its own decrees, commanding the party not to allow things to continue in the condition in which they have been allowed to become. Mandamus, however, is compulsory and requires the doing of an act. It lies to command the doing of what ought to be done, and not to undo what has been done. It does not revise nor correct action. It cannot command to abstain from a tort or abuse of office. It never had the effect of the old writ of de molestando. It will be refused to prevent one claiming to be elected from exercising his office or to enjoin him from qualifying. When officers requested a mandamus to prevent others from molesting them in the exercise of the functions and powers of their offices, the court refused the writ, stating that, if the writ were issued for such cause, it would become merely a substitute for an injunction. Such substitution will not be allowed.”

In Crawford v. Carson, 35 Ark. 565, mandamus was asked to prevent the auditor from prosecuting a distress warrant. The court said:

“A writ of mandamus, in name and nature, and at common law, is something of a mandatory nature, compelling an act. Blackstone says (Book 3, p. 110) that it is a writ requiring the person, court, or officer to do some particular thing, therein specified, which pertains to their, office or duty. The writs to prevent the doing of an act by courts, or individuals, were those of prohibition and injunction. Mandamus was a writ of a moving nature, the proper writ to enforce obedience to an act of parliament, and hence only proper to compel quiescence where an act is itself mandatory of something negative, where it specially directs the not doing of a thing which might be natural or otherwise proper. It would be to suppose that the legislature, in abolishing forms of action, meant also to abolish all meaning of terms and distinctions of things, to suppose that it meant, in the case of ministerial and executive officers, to make the writ of mandamus perform a function hitherto unknown, and take the place of an injunction. * * *
“It was not ground of demurrer that the complainants on their part had mistaken their remedy in adopting the proceeding by mandamus. But it is the duty of the courts in clear cases, where the entertainment of a writ in the form presented would lead to a confusion of all boundaries between proceedings at law and in equity— and between ordinary actions and special proceedings — to refuse, of their own motion, to do so. * * * It would lead to an utter wreck of all system, and bring the administration of justice into contempt, to allow parties, by tacit consent, to ignore all order and determine their controversies by any form of proceedings, upon whichever side of the court they may elect. * * *
“ The court should have refused to proceed upon the writ of mandamus, unless the petition had been reformed and transferred to the equity side. The proceeding by mandamus is extraordinary, and should not be used except in cases where there is no other appropriate remedy.”

See, also, People, ex rel. Faile, v. Ferris, 76 N. Y. 326.

In Legg v. City of Annapolis, 42 Md. 226, the court said:

“Mandamus is a writ commanding the performance of some act or duty, therein specified, in the performance of which the applicant for the writ is interested, or by the nonperformance of which he is aggrieved or injured. Reg. v. Bishop of Chichester, 2 Ell. & Ell. 209. But as simply a preventive remedy it has never been used, so far as we have been able to discover. The nature of the writ, and the end for which it was framed, direct upon what occasion it should be used. It was introduced to prevent disorder from a failure of justice and defect of police. Its use is therefore confined to those occasions where the law has established no specific remedy, and where in justice and good government there ought to be one. 6 Bac. Abr., Tit. Mand. p. 418 * * * Chief Baron Comyns, in his Dig. Tit. Mand. (B), lays it down as settled that a mandamus does not lie to prevent a molestation against law. The same principle is stated by Tapping in his work, as the settled law. Tapp, on Mand. pp. 189, 190. Taking this to be an established principle upon the subject, there is no proper case stated in the petition of the appellees to justify the issuing of the writ. * * * To grant the writ in such case would be simply making it a substitute for an injunction.”

The court has asked counsel to furnish briefs, and both counsel appear to have been industrious in the effort to find Michigan cases upon the question. We have found an overwhelming support to the contrary rule as to injunctive remedies outside of this jurisdiction both in this country and in Europe. We have found but one case sustaining relator’s contention outside of Michigan, viz., Gayle v. Owen County Court, 83 Ky. 61, where mandamus was considered to be the proper remedy to prevent the judge and clerk of a county court from recording the vote upon a local-option law when the law was unconstitutional. Of this Merrill says in a note:

“ It is not seen why an injunction would not have been the proper remedy, and no authority is cited in support of the practice by that court.”

Doubtless counsel considered the question settled by Michigan cases, and that other authorities were unimportant, and we should agree with them if we can say that it is so settled by our decisions. We will review these cases so far as counsel have cited them.

In People, ex rel. Russell, v. Inspectors of State Prison, 4 Mich. 190, a mandamus was sought to prevent the letting of prison contracts. The court refused the writ. It said in an opinion by Copeland, J.:

“Still we think the relator has mistaken his remedy; that the relief he seeks cannot be maintained under a mandamus. A mandamus is not a preventive writ. Its office is to put inferior tribunals or public persons in motion. It commands the performance of ministerial acts, or, being addressed to subordinate judicial tribunals, requires them to exercise their functions, and render some judgment in cases before them. Ex parte Nash, 15 Ad. & Ellis, 15, 92; Chase v. Canal Co., 10 Pick. [Mass.] 244; Strong, Petitioner, 20 Pick. [ Mass. ] 484. In the latter case the court say:
“ ‘ In every well constituted government the highest judicial authority must necessarily have a supervisory power over all inferior or subordinate tribunals, magistrates, and all others exercising public authority. If they commit errors, it will correct them. If they refuse to perform their duty, it will compel them. In the former case, by writ of error; in the latter, by mandamus.’
"The office sought of .the writ in this case is to restrain the defendants from doing certain things they are alleged to have in contemplation.”

Also:

“ "Whether the decision of the agent is final or not, and in no way subject to revision, it is not necessary to determine. It is only necessary now to say the relator cannot obtain the relief he seeks under the writ prayed for.”

This case hardly supports relator’s claim, and unqualifiedly commits this court to the contrary doctrine. We may mention, in passing, that when a similar question arose recently the admonition of this case was heeded and relief was sought by injunction bill, and the jurisdiction was sustained and relief granted as prayed. See Manthey v. Vincent, 145 Mich. 327, 335 (108 N. W. 667). This demonstrates that there is another remedy, and, under innumerable cases in our reports, this should of itself preclude relief, if such is an adequate remedy.

People v. Insurance Co., 19 Mich. 393. In this case a mandamus compelled an insurance company to submit its books to an examination by the insurance commissioner, a duty prescribed by law. It was compelled by mandamus to do so. Apparently there was nothing in the nature of injunctive relief sought, and no such question was raised. It was claimed that indictment or quo warranto was an adequate remedy. The court held not, upon the ground that such remedy was not adequate, as it clearly was not. This case is not in point on the question of injunctive relief, and in my opinion is distinguishable on the subject of other remedy.

In People v. State Treasurer, 24 Mich. 468, it was held that mandamus was the only safe remedy to compel a delivery of bonds of which the treasurer was the lawful custodian. The petition prayed action and not restraint.

In the case of Giddings v. Secretary of State, 93 Mich. 1 (52 N. W. 944, 16 L. R. A. 402), relator prayed both injunctive and active relief. The court compelled the respondent to give the notice required by law. That necessarily involved the omission to give another notice which the court restrained, and which would have been ineffective after the decision of the case had it been given. The court had jurisdiction to compel the giving of the notice required by law. We do not discover that the questions now under discussion were raised.

Elliott v. City of Detroit, 121 Mich. 611 (84 N. W. 820), came to this court on certiorari to the Wayne circuit. No opinion was filed. The reporter in his statement of facts said that the case was removed to this court by certiorari where the decision and opinion of the lower court were affirmed. It is impossible, at this time, to ascertain what authority there was for the statements of the reporter, as there is nothing, on file or of record, to show what the court said or did or that the cause was argued. An examination of the files, however, indicates that the question of the fitness of the remedy sought was raised in the circuit court. There is nothing to indicate that the question of injunctive relief was discussed or considered there or here. There is nothing to show what questions were discussed or waived here. If, therefore, this case is a precedent on these questions, it must be merely by force of the fact that the relief was granted. In my judgment this case should not be considered conclusive of the question, but should be treated as the misapplication of the rule through inadvertence; I cannot conceive that the court intended to overrule the case of People, ex rel. Russell, v. Inspectors, supra, or that it would deliberately overrule any case without referring to it, and so stating. It is a significant fact that this is the only case that counsel have found where a writ of mandamus has issued to compel inaction alone, and it is also significant that applications of that kind have not been frequent, if it is a proper practice.

The cases of Maclean v. Wayne Circuit Judge, 52 Mich. 257 (18 N. W. 396), and Tennant v. Crocker, 85 Mich. 328 (48 N. W. 577), required the vacation of orders and involved affirmative action. Renaud v. Court of Arbitration, 124 Mich. 648 (83 N. W. 620, 51 L. R. A. 458, 83 Am. St. Rep. 346), was similar and included an order on application for a writ of prohibition, which alone was sufficient to dispose of that case.

Several cases were cited where circuit judges have been compelled to vacate orders for preliminary injunctions. That is a common practice where they are issued contrary to law. If we follow the practice indulged in in Elliott v. City of Detroit, supra, it is obvious that we cannot refuse it in any mandamus case where there is another remedy by bill in chancery, if the refusal will be followed by greater expense or inconvenience. We have seen that there is a remedy in equity in this controversy, and that remedy is still available. We have refused to grant this writ in innumerable cases where an action at law or suit in chancery was available, and we have endeavored to be consistent in our adherence to this fundamental rule relating to the remedy by mandamus, as we should be to the companion principle that injunctive relief is contrary to the very nature of the writ. We should not allow the former rule to be overturned by the one inadvertent violation of that rule, shown to have occurred in the Elliott Case. The same identical thing happened in the case of Carpenter v. St. Clair Circuit Judge, 122 Mich. 323 (81 N. W. 95), and the case of Grand Rapids, etc., R. Co. v. Charlevoix Circuit Judge, 133 Mich. 122 (94 N. W. 1134), corrects the practice; the opinion saying:

“It seems that these cases were overlooked at the time of the decision of Carpenter v. St. Clair Circuit Judge.”

Other similar instances might be mentioned. It is equally true of the other point so clearly covered in People, ex rel. Russell, v. Inspectors, supra.

In my judgment this should result in a denial of this writ, and the relator should be left to the remedy afforded by chancery. However, in view of an exigency which appeals strongly to my Brethren, and in deference to their view thereof, I have considered the merits of this case.

I am of the opinion that this act, which I consider to be clearly constitutional, has pointed out a way that amendments may be submitted, and that, the council having adopted and voted to submit this amendment, it may be considered as proposed by it, whether we go to the extent of saying that the act points out a practical method of procedure, by petition merely, without any legislative deliberation or action by the council in framing an amendment according to the prayer of the petitioner. That question is set at rest, so far as the submission of the preliminary question of revision is concerned, by the case of Common Council of City of Jackson v. Harrington, 160 Mich. 550 (125 N. W. 383), and it may be that it should govern in cases of amendment, where no provision is made for a preliminary vote, though possibly a distinction might be made were the question a crucial one in this case. I concur, however, with Mr. Justice Blair’s conclusion that the charter of the city of Detroit must be revised under the provisions of Act No. 279, Pub. Acts 1909, before amendments can be made in accordance with its provisions. I agree with Mr. Justice Blair in regard to the subject of the bonds.

I concur in granting relief, in view of the unexplained action of the court in the Elliott Case, and the reliance naturally placed thereon by counsel. The case should be overruled as out of harmony with the authorities generally, including our own cases.

Bird, Moore, Brooke, and Stone, JJ., concurred with Hooker, J.

Blair, J.

This is an application for a review by certiorari of the order of the "Wayne circuit court dismissing a petition filed by the attorney general on the relation of taxpayers to restrain the common council of Detroit from submitting to a vote of the electors of that city a proposal to amend its charter. The petition sets out, briefly, the facts, and the answer of the council admits them. A hearing was had upon undisputed facts, and the court below considered the whole matter as involving only a question of law.

The facts, in brief, are these:. In March of the present year a petition signed by more than 20 per cent, of the electors of the city was filed with the city clerk, asking for the submission to a vote of the electors at a general or special election of a proposed amendment to the charter, which would give the city the right to own and operate the street railroads. The council, without acting on the matter, transmitted it to the governor, who approved and returned the same. Thereupon the council took into consideration, the matter of calling a special election. Pending such consideration, application for mandamus was filed and argued. After the decision of the lower court, the council called such election for the 15th day of August. Prior to that date this writ of certiorari issued. The application for mandamus was based on three principal grounds, viz. r

(I) Act No. 279 of the Public Acts of 1909, under which, if at all, the proceedings taken can be upheld, is unconstitutional.
(II) The proceedings taken have not been in accordance with said act.
(III) The proposed amendment, if adopted, would be unconstitutional and invalid

I. Counsel for petitioner contend that Act No. 279, Pub. Acts 1909, is unconstitutional for the following reasons:

(1) Bonds are allowed by the statute to be issued which the Constitution does not authorize.
(2) The street railroad mortgage bonds authorized by the statute are debts of the city, and the act fixes no limit to the amount of them, although the Constitution requires the fixing of some limit upon city debts.
(3) The electors are given by the statute no part in framing an amendment when the proceeding is by initiatory petition, although the Constitution confers on them the right to frame amendments.

It is argued that the Constitution of 1909 (article 8, § 24) only authorizes for the purpose of acquiring public utilities the issuance of bonds imposing no liability upon the city; that the act under consideration permits for the purpose of acquiring a street railroad the issuance of bonds which do impose liability.

“The Constitution clearly did not intend that cities should have power to issue for street railroad purposes both bonds which impose a general liability and bonds which do not impose such liability. If it be admitted, for the sake of argument, that power is given to issue one kind of bond or the other, power is not given to issue both kinds. It was not intended that a city should, and there is no grant of power to permit a city to, first issue bonds imposing a general liability with which to buy the tracks and equipment of a street railroad system, and, secondly, issue bonds, secured by mortgage, on what it' has acquired plus a franchise, on which latter it should not be liable. That, however, is what the act authorizes and what the amendment proposes to have done. By this method the taxpayer is first subjected to a heavy burden in order to acquire the property, and then has his property mortgaged in such a way that in practice, if the venture is unprofitable or ill managed, he must pay again to save his original investment.”

In considering this subject we are to keep in mind those general rules of construction referred to by Mr. Justice Cooley in the State Tax Law Cases, 54 Mich., at page 360 (20 N. W. 493).

“And after the repeated declarations by this court that the legislature of Michigan possesses all legislative power, to the full extent that like power is possessed by the parliament, except as State and Federal Constitutions have limited it, we suppose we may consider ourselves safe in assuming that it possesses the power to authorize this proceeding unless something in the State or Federal Constitution forbids. It is that something, then, that should be pointed out to us.” State Tax Law Cases, 54 Mich. 389 (20 N. W. 513).

It should also be remembered constantly that “home rule ” is the fundamental purpose of the amendments, and that cities can only become financially ruined by accomplishing such ruin themselves.

Sections 23 and 24, Art. 8, of the Constitution of 1909, read as follows:

“Sec. 23. Subject to the provisions of this Constitution, any city or village may acquire, own and operate, either within or without its corporate limits, public utilities for supplying water, light, heat, power and transportation to the municipality and the inhabitants thereof; and may also sell and deliver water, heat, power and light without its corporate limits to an amount not to exceed twenty-five per cent, of that furnished by it within the corporate limits; and may operate transportation lines without the municipality within such limits as may be prescribed by law: Provided, that the right to own or operate transportation facilities shall not extend to any city or village of less than twenty-five thousand inhabitants.
“Sec. 24. When a city or village is authorized to acquire or operate any public utility, it may issue mortgage bonds therefor beyond the general limit of bonded indebtedness prescribed by law: Provided, that such mortgage bonds issued beyond the general limit of bonded indebtedness prescribed by law shall not impose any liability upon such city or village, but shall be secured only upon the property and revenues of such public utility, including a franchise stating the terms upon which, in case of foreclosure, the purchaser may operate the same, which franchise shall in no case extend for a longer period than twenty years from the date of the sale of such utility and franchise on foreclosure.”

There is certainly nothing in these sections expressly prohibiting the issuance of bonds of both kinds, nor is such prohibition necessarily implied. On the contrary, the sections referred to, upon any reasonable interpretation of the language used, clearly authorize such issuance. It is plain that under the provisions of section 23 any city of the required population may acquire the different utilities referred to, issue its bonds in payment therefor, and incur liability thereunder so long as such liability is not in excess of its debt-contracting power as restricted by the legislature. Section does not purport to be a restriction upon the power to acquire public utilities under section 23, but an enlargement of such power when necessary by permitting the city to exceed the general limitations of its charter as to bonded indebtedness. Any other construction would practically prohibit the smaller cities and villages acquiring water and lighting plants, which they might acquire under the Constitution of 1850 by the issue of general bonds, since it is not to be supposed that the money for construction could be obtained upon the security of the utility alone. If the city may lawfully pay for a public utility entirely by the issue of its general bonds, it logically follows that it may pay for it in part by such bonds and secure the balance by the special bonds authorized by section 2i.

Our conclusion seems to be so clearly compelled by the language of the Constitution itself as to require no argument in support of it. But if any support were needed it is furnished by the debates in the constitutional convention, which make it certain that the members intended to permit the use of both kinds of bonds. The chairman of the committee on cities and villages, having been asked “whether it would be possible under that clause ever to issue bonds for a public utility that would be a lien upon the entire property of the city or village,” replied: “ Up to the amount of the bonded indebtedness, yes, certainly it would,” etc. Proceedings and Debates, vol. 2, p. 83?. Delegate Adams, speaking to an amendment for the purpose of limiting the bonds to the nonliability kind, said in part:

“As the language reads here, I can see nothing to prevent the city bonding its faith, property, and credit up to the limit of its bonded rights and taking that amount and making a first payment upon the purchase price of a street railroad system, then bonding the street railway system for the balance of the purchase price.” Id. p. 838.

Delegate Pratt, speaking on the same subject, said:

“Mr. Chairman:' There was one other reason that influenced the committee in leaving the proposal in the shape in which it was reported out, and that was the point made, I think principally by the gentleman from Macomb (Mr. Acker), that there were a great many small cities and villages that could not, with only the mortgage bonds available for use, raise money for water and lighting plants, and we thought that those small communities ought to have the source of raising money by ordinary municipal bonds open to them for those purposes.” Id. p. 844.

In the course of the debate, Mr. Adams offered the following substitute:

“ Mr. Chairman: I desire to offer as a substitute for the amendment offered by the gentleman from South Haven, and also to cover the entire language of clause 13, the following:
“ ‘ When a city or village is authorized to acquire or operate a publio utility for supplying transportation, it may issue mortgage bonds therefor,’ etc.
"Then comes clause 14:
“ ‘Provided that such mortgage bonds shall not impose any liability upon suoh city or village.’
“And when we reach clause 14 I want to follow this up by moving to strike out the words ‘issued beyond the ordinary limit of its bonded indebtedness,’ in order to make the clause read correctly.” Id. p. 845.

Speaking on the substitute, Mr. Fairlie said:

“Mr. Chairman: I'wish to.indorse what has has been said by Mr. Simons and Mr. Pratt. This section, like the rest of the proposal, is the result of a great deal of discussion in the committee on cities and villages, and I believe in its present form it presents substantially the best arrangement that can be made. The amendment proposed by Mr. Adams restricts the use of mortgage bonds to purely transportation questions. Now, it is true that it is that problem which has raised the question of such mortgage bonds; but I believe it to be the opinion of most of the members of the committee on cities and villages that the use of such bonds should not be restricted. We believed that for water and lighting plants it was advisable to permit the city to issue bonds on the general credit of the city, and it was also advisable that the city should have the alternative of issuing mortgage bonds secured only by the plant itself. Mr. Adams’ motion makes that alternative impossible. The new substitute by Mr. Wicksall does not go so far, and for that reason is not so objectionable. But I still believe that the proposal in the form presented by the committee is in its best form, and I therefore hope that both the amendment and the substitute will be defeated.” Id. p. 845.

Mr. Adams, in support of his substitute, said:

‘ ‘ Mr. Chairman: If the language of the printed report before us only permitted cities to mortgage the property purchased in establishing a utility for transportation purposes, then I would have nothing more to say. But I cannot indorse the idea of permitting a city to pledge its faith, its general faith and credit, and all the property it possesses, for any part of the purchase price of a transportation line. I think that is against public policy and dead wrong. And for that reason I cannot stand for the language that appears in this report. If it can be changed in any way to conform to my amendment covering that point, so that in establishing transportation lines they should only mortgage property of those lines, that will be all right.”

The substitute and amendments and all subsequent substitutes and amendments to the same end were voted down by the convention. In explaining his vote in the negative upon the final passage of the sections, Mr. Adams assigned as his fourth ground:

“Because this grants the power to a city to bond its general faith and credit for the purchase of a public utility; and on top of that bonding the special property for the balance of the purchase price.” Id. p. 1156.

We therefore consider it to be established beyond cavil that the convention intended to permit the use of both kinds of bonds, and that they used apt and appropriate words to express that intention.

Under sections 20 and 23 the legislature is authorized to provide for an issue of bonds to the limit restricting the cities' borrowing power. Under section 24 the legislature is authorized to provide for an issue of mortgage bonds beyond the general limit of bonded indebtedness. This is precisely what it has done, and, to nullify its action directly supported by the constitutional provisions, we must import into the Constitution restrictions unwarranted by its language.

No limit is fixed by the act to the amount of the non-liability mortgage bonds. These bonds, where general bonds have been issued, are debts of the city, and the indebtedness of the city may be increased without limit, although section 20 expressly requires such limitation.

The important question raised by. this contention is whether the nonliability bonds in reality constitute an indebtedness on the part of the city, within the meaning of the Constitution, so as to require limitation under the provisions of section 20. The language of section 24 is at war with any such construction. That section expressly provides that the limit of general bonded indebtedness required by section 20 shall not apply to the bonds authorized, so long as the bonds themselves impose no liability upon the city and are in the form substantially prescribed. The Constitution contained no such provision when the case of Ironwood Waterworks Co. v. Gity of Ironwood, 99 Mich. 454 (58 N. W. 371), was decided. The Constitution clearly implies that there is to be but one “general limit of bonded indebtedness prescribed by law,” and that the bonds provided for in section 24 are not to be considered in determining whether such limit has been exceeded. Austin v. City of Seattle, 2 Wash. St. 667 (27 Pac. 557); Woodbridge v. City of Duluth, 57 Minn. 256 (59 N. W. 296). The legislature, in pursuance of the constitutional provision, has, in the statute under consideration, fixed the general limit of bonded indebtedness and has expressly provided:

“That no city shall have power to borrow money or issue bonds imposing any liability upon the city in the purchase, construction or maintenance of a public utility-for transportation purposes, which liability added to the' then existing general indebtedness of the city shall cause the net general indebtedness of the city to exceed four per centum of the assessed value of all the real and personal property of the city.”

In the same section is found a provision for the issuance of nonliability bonds in the exact language of section 24 of article 8. It would appear, therefore, that, even if the so-called nonliability bonds do become a debt of the city, then the amount thereof is clearly limited by the provision quoted. If they do not create any indebtedness on the part of the city, within the meaning of section 20, the constitutional provision has not been violated..

The electors are not given any part in framing an amendment.

In the recent case of Common Council of City of Jackson v. Harrington, 160 Mich. 550 (125 N. W. 383), we said of sections 20 and 21 of article 8:

“ It is to be noticed that the foregoing provisions of the Constitution are mandatory, and it is obvious that Acts Nos. 278 and 279, the first relating to villages, and the second to cities, were passed by the legislature of 1909 for the express purpose of carrying out the constitutional mandate. We are left in no doubt, therefore, as to the legislative intent. It intended to, and did, pass a general law, giving to the electors of cities power to frame, adopt, and amend charters.”

Section 21 provides that—

“Under such general laws, the electors of each city and village shall have power and authority to frame, adopt and amend its charter,” etc.

Under this provision, such cases as Elliott v. City of Detroit, 121 Mich. 611 (84 N. W. 820), cease to apply, since the people in their sovereign capacity, through the Constitution, have not only authorized but commanded that power to amend a charter be delegated to the electors of the city. The Constitution does not purport to point out the method by which this important power, now for the first time conferred upon the electors, shall be exercised, but leaves the details entirely to the legislature. There is nothing in the language of the provision to indicate that it was contemplated that the whole body of the electors in a city like Detroit should convene for the purpose of framing an amendment, as a strict construction of the language might require. Since it would be impracticable for all of the electors to meet and frame an amendment or to determine upon what subject they wished to have one framed, some indirect means must be adopted, and that adopted by the legislature as well satisfies the Constitution as to provide for the election of a. committee of electors to frame the amendment. For the framing of the amendment proposed by the committee would have no binding force, since the body of the electors in whom the power resides could not delegate its power to frame any more than it could delegate its power to adopt, if such power is an essential element of the constitutional power granted.

We are of the opinion that the method of presenting a proposed amendment provided for is within the power necessarily committed to the legislature to provide the method of executing the constitutional provision as fully as the power to prescribe the method of proposing a revision of a charter, which we held to be constitutional in Jackson Common Council v. Harrington, supra.

II. The proceedings are not in conformity with Act No. 279.

The contentions are:

(1) That revision must precede amendment under the act.
(2) That the act presupposes action by the council before submission to the governor of the petition.

1. The act contemplates and provides for: (a) The incorporation of new cities; (6) a general revision of the charters of existing cities; (c) the amendment of the charters of existing cities; (d) the continued existence of existing cities with all their “ present rights and powers until otherwise provided by law.”

Section 20 of article 8 of the Constitution requires “ a general law for the incorporation of cities,” etc. Section 21 provides that:

“ Under such general laws, the electors of each city and village shall have power and authority to frame, adopt and amend its charter, and, through its regularly constituted authority, to pass all laws and ordinances relating to its municipal concerns, subject to the Constitution and general laws of this State.”

We have held that the title of Act No. 279, Pub. Acts 1909, is broad enough to include the revision of existing charters. Common Council v. Harrington, supra. It is, of course, apparent that any city incorporating under Act No. 279 must include in its charter the compulsory provisions of section 3 of the act and the restrictive provisions of section 5. At every election on the question of incorporating a new city, the electors also are entitled to vote for nine electors to constitute a charter commission who “shall convene within ten days after election and frame a charter for said city.” Act No. 279, Pub. Acts 1909, § 15. In case of cities desiring a general revision of their existing charters under section 18 of the act, a charter commission is also provided for to frame the revised charter for submission to the electors, and we cannot doubt that it was the intention of the legislature to require that such revised charter should also contain the compulsory and restrictive provisions referred to.

Does a different rule obtain with reference to amendments provided for in section 21 et seq.? If we must answer this question in the affirmative, the result will be that a city by extensive amendments may effect a general revision of its charter containing none of the restrictive provisions of section 5 and prohibiting the doing of any of the things commanded by section 3. The language of section 21 of article 8 of the Constitution is not without significance in this connection. Authority “to frame, adopt and amend its charter ” naturally refers the authorized amendment to a charter framed and adopted “under such general laws.” This, we think, was the view of the legislature, as manifested by the terms of the act. At the very outset of the act it is provided:

“ Sec. 2. Each city now existing shall continue with all its present rights and powers until otherwise provided by law.”

“Until otherwise provided by law” can scarcely be said to refer to subsequent sections of the act itself, but must be held to refer to some future law. The provisions of section 21, therefore, that “an amendment to a charter may be proposed by the legislative body,” etc., refer, in our opinion, to the new charter or general revision equivalent thereto framed and adopted under the previous provisions of the act. This construction is in harmony with the letter and spirit of the Constitution to provide a municipal constitution for all cities, in conformity with the fundamental principles of which and the Constitution and general laws of the State each city may govern itself according to the judgment of its electorate. The contrary construction of piecemeal amendment would be out of harmony with the scheme of home rule proposed by the Constitution and the statute and would make the confusion intended to be remedied by “general laws "worse confounded.

We therefore hold that, since revision must precede amendment, the proceedings have not been taken in accordance with the act. In view of this conclusion, it becomes unnecessary to consider the other points.

No question was raised, either in the court below or in this court, as to the propriety of the remedy by mandamus; counsel and the circuit bench doubtless considering the question settled by the case of Elliott v. City of Detroit, 121 Mich. 611 (84 N. W. 820). At the request of this court, briefs have been filed by counsel for the respective parties, which briefs concur in the view that mandamus is the proper remedy. Undoubtedly, the general rule is that the function of mandamus is to compel action, and not to restrain action. Nevertheless, this court, in the Elliott Case, above referred to, affirmed the order of the circuit bench issuing a writ of mandamus commanding the city of Detroit to desist and refrain from proceeding further to publish certain notices, etc., relative to the holding of an election. It was contended “that the court has no jurisdiction in the matter by way of mandamus, that mandamus is not the proper remedy,” etc. The question was, therefore, squarely presented to this court, whether mandamus was the proper remedy to restrain action by the city, and whether the , circuit court had any jurisdiction by way of mandamus to restrain the contemplated action. The case is on all fours with the instant case as to the facts, the character of the legal questions involved, and the necessity of prompt action. Unless, therefore, we are to overrule the case, it determines this as to the question of remedy. I am in favor of confining the application of the Elliott Case to precisely similar cases where there exists a public exigency and constitutional questions are involved; but I am decidedly opposed to overruling it. In my opinion, it is a wholesome rule, as applied to a case like the present, which affects the constitutionality of the general statute for the incorporation of the cities of the State, under which many municipalities have taken, are taking, or are about taking, action.

The order denying the writ is overruled, and the writ granted.

Ostrander, C. J., and McAlvay, J., concurred with Blair, J.


source: Caselaw Access Project

author: Hooker, J.

license: Public Domain

text:
    McMANUS v. CITY OF PETOSKEY.
    1. Injunction — Municipal Corporations —Misuse on Funds — Jurisdiction of Equity.
    A taxpayer may, by bill in equity, restrain a threatened misuse of city funds in two classes of cases; where his interest in the fund or threatened damage to his property interests by its misuse amounts to §100; where he has land worth §100 which is threatened with sale, or liable to a lien for a tax, in consequence of the proposed misuse. 1 Comp. Laws, § 435.
    2. Same — Amount in Controversy.
    The fact that the municipality intends to use money on hand improperly, so that taxation must be increased by a corresponding amount, is sufficient to confer jurisdiction, if the amount in controversy is within the jurisdiction of chancery.
    3. Appeal and Error — Demurrer—Review.
    After the overruling of a demurrer to the sufficiency of a bill of complaint, and the filing of an answer to the bill, the pleading is not open to objection on appeal.
    4. Equity — Pleading—Cross-Bill—Relief.
    Defendant who has not filed a cross-bill or asked affirmative relief in its answer is, at most, entitled to the dismissal of the bill.
    5. Municipal Corporations — Private Enterprise — Contracts —Validity.
    Under provisions of a lease by a city to a manufacturing corporation providing for the payment to the company of a sum of money, deposited in escrow, on the completion of a building upon the city’s property, the lessee is only entitled to the fund upon performance, and the construction of a building not upon the property leased is not a sufficient compliance with the contract.
    6. Same — Misuse of Funds — Powers of Common Council.
    Injunction will issue to prevent the payment of money in furtherance of a private enterprise, under contract made by the council of a city.
    Appeal from Emmet; Shepherd, J.
    Submitted October 19, 1910.
    (Docket No. 89.)
    Decided February 1, 1911.

      Bill by William L. McManus, Berk Be Ruiter, Reuben G. Porter, and William J. Jarman against the city of Petoskey, John J. Reycraft, mayor of said city, other officers and aldermen, and the Petoskey Block and Manufacturing Company, to restrain the threatened misuse of municipal funds. From a decree for complainants, defendant company appeals.
    Affirmed.

      E. E. Gilbert, for complainants.

      W. 8. Mesiek, for defendant company.
   Hooker, J.

The complainants’ bill alleges that they are owners of real estate and taxpayers in the city of Petoskey, and reside in Emmet county, in which said city is located; that said city is owner of $5,000, in the hands of one Curtis, and has authorized, through its council, the payment of the same to a corporation, which, for convenience, we will call the Block Company; that such payment is to be for an unlawful purpose. An injunction was prayed. A demurrer was filed; three of the grounds stated being:

First. That said bill of complaint does not state such facts as entitle complainants to institute and maintain a cause of action in a court of equity, or to any relief therein.
Second. That the interests of complainants in the subject-matter are not sufficient to entitle them to maintain their said bill of complaint, as the said bill nowhere shows, by direct allegation nor by inference from the facts stated, that severally nor combined they are interested to the amount of one hundred dollars.
‘ ‘ Third. That the bill of complaint is not sufficient to confer jurisdiction upon the court, because it in no way shows that complainants are interested to the amount of one hundred dollars, and that none of them shows definitely that any wrong has been done him that equity should redress.”

The demurrer was overruled, and the defendants answered with the exception of Curtis, whose default was entered. A temporary injunction was allowed, and made perpetual on the hearing, and Curtis was commanded to pay $5,000 into the city treasury. The Block Company only has appealed.

The facts necessary to an understanding of the case may be briefly stated as follows: The board of trade of Petoskey had title to the land involved in this case, and owned one of the buildings upon it. It may have owned other buildings, but that is perhaps unimportant. The property was occupied by the Climax Dish Company for manufacturing purposes. The Block Company purchased certain buildings — presumably not including the building owned by the board of trade — from the Climax Dish Company. The Block Company then took a lease of the premises owned by the board of trade for five years, with the right of a further term of five years, at an annual rental of $1, and agreed to keep the building — i. e., the main factory building — insured against fire for the benefit of the board of trade. It was leased and rented for use as a factory (date of lease January 12, 1905), and was so occupied from that time forward. On June 11, 1907, the board of trade deeded the premises to the city of Petoskey, excepting and reserving all buildings erected by the Climax Dish Company and the Block Company, the same being then the property of the Block Company, receiving therefor from the city the sum of $1,950, paid under the authority of Act No. 529, Local Acts 1907. Apparently the main building was not one reserved. Afterwards that building burned, and thereupon, acting under and by authority of the common council, the mayor and city clerk executed a lease and contract with the Block Company for the period of 50 years, upon an annual rental of $1, and the condition of continued occupancy for manufacturing purposes. It also provided that the city should deposit with Curtis in escrow the proceeds of the insurance policies held by the city upon the building destroyed by fire which had been insured for its benefit, the same to be paid over to said company:

“When the new main building is completed, the city to have such interest in said building as the sum so paid over to the said company bears to the entire cost thereof, and the city’s interest to decrease in such proportion as the sum paid out by said company for labor, exclusive of executive labor, during the preceding year shall bear to the sum of $100,000, and the entire interest of the city in said building to pass to said company if said company shall pay out the sum of $100,000 in wages, exclusive of executive labor, within five years from and after the date hereof, it being understood and agreed, however, that if said company shall not pay out the sum of $100,000 for labor, exclusive of executive labor, within five years from and after the date hereof, the interest which said company may have theretofore acquired in said building shall revert to the city.”

As a part of the consideration for this lease and agreement, the Block Company surrendered the then existing board of trade lease. Five thousand dollars insurance money came into the hands of Curtis for the city, and, as stated, this suit is brought to restrain payment to the Block Company, it having meantime rebuilt the building, not upon the premises belonging to the city, but on premises of its own adjacent thereto.

Jurisdiction. At the threshold of the case is the question of jurisdiction. Our statute, 1 Comp. Laws, § 435, provides:

Such courts shall dismiss every suit concerning property, excepting suits between copartners, and suits for the enforcement of mechanics’ liens, suits for the foreclosure of mechanics’ liens, and suits for the foreclosure of mortgages, where the matter in dispute shall not exceed one hundred dollars, with costs to the defendant.”

The complainant as a taxpayer has a right to ask chancery to restrain a threatened misuse of a city fund, in two classes of cases, viz.:

First. Where his interest in the fund or threatened damage to his property interests by its misuse amounts to $100.
Second. Where he has land worth $100 which is threatened with sale, or liable to a lien, for a tax, in consequence of the proposed misuse.

Otherwise the bill must be dismissed wherever it appears affirmatively in the case that the amount involved is less than $100, and that the case is not within the exceptions mentioned in the statute. The bill having been held sufficient on demurrer, and no appeal taken from that decision, it is not here open to criticism. The evidence shows that these complainants each own land in Petoskey subject to taxation, the value of which greatly exceeds $100. "Were this a case where the money to be paid would have to be raised by taxation, there would be no doubt of the jurisdiction, because of the possibility of its becoming a lien on such land to the extent of its proportion of the taxes, and of a sale to enforce collection. This is put beyond controversy by our decisions.

In the present case the money is on hand, and the only theory upon which it can be held that complainants might invoke the aid of chancery is that the money on hand, being available for city purposes, and used for other and unlawful objects, will inevitably necessitate the raising by tax an equal amount that would otherwise be avoided. This is a step further than the court has ever gone, but we are of the opinion that it is within the spirit of the decisions. The cases of City of Detroit v. Wayne Circuit Judge, 128 Mich. 438 (87 N. W. 376), and Kimmerle v. Village of Cassopolis, 160 Mich. 90 (125 N. W. 65), are no obstacle to this holding, both being rested upon an absence of proof, and both recognizing the existing rule. For convenience in future controversies, we append a list of cases that have dealt with this provision of the statute: Gamber v. Holben, 5 Mich. 331; White v. Forbes, Walk. Ch. (Mich.) 112; Fuller v. City of Grand Rapids, 40 Mich. 395; Putnam v. City of Grand Rapids, 58 Mich. 416 (25 N. W. 330); George v. Electric Light Co., 105 Mich. 5 (62 N. W. 985); Savidge v. Village of Spring Lake, 112 Mich. 93 (70 N. W. 425); Campbell v. Electric Co., 113 Mich. 335 (71 N. W. 644); Dodge v. Van Buren Circuit Judge, 118 Mich. 189 (76 N. W. 315); City of Detroit v. Wayne Circuit Judges, 128 Mich. 438 (87 N. W. 376); Kimmerle v. Village of Cassopolis, 160 Mich. 90 (125 N. W. 65); Black v. Common Council of Detroit, 119 Mich. 572 (78 N. W. 660).

The Merits. The Block Company is in no position to question the title of the city to the land or its ownership of the money in the hands of Curtis, when received by him. Its right to said fund must rest upon the validity and performance of its contract to rebuild upon the city property the building destroyed. It has neither filed a cross-bill nor asked affirmative relief in its answer, and is therefore at the most entitled to a dismissal of the bill. But the proof shows that it has not rebuilt the building upon the property of the city, which the contract required under any reasonable construction. Furthermore, the evidence shows that the agreement to pay this |5,000 to the Block Company was an attempt to use public moneys in furtherance of a private enterprise, which agreement the council could not lawfully make.

We are therefore constrained to affirm the decree of the circuit court, with costs.

Moore, McAlvay, Brooke, and Blair, JJ., concurred.


author:
Ostrander, C. J.
      Bird, J.

text:
    MICHIGAN HOME MISSIONARY SOCIETY v. CORNING.
    1. Trusts — Wills—Executors and Administrators.
    Trustees under a will which bequeaths the sum of 55,000 in trust for the benefit of a missionary society, are entitled to receive cash from the executors of the estate.
    2. S ame — W ills — Interpretation—In vestments.
    A will which transfers such sum in trust to be kept invested, and which directs the payment of the income to the beneficiary annually, contemplates a permanent investment.
    3. Same — Executors Aisp> Administrators — Investments — Fiduciary Relations.
    Where the trustees gave a receipt to themselves as executors under the will for an unsecured note of $5,000, taken in their capacity of executors in renewal of a note that their testatrix had accepted, without security, in her lifetime, and where the last renewal had not expired at the time the executors filed their final account and were discharged, they must be held to have contemplated receiving the note as trustees in satisfaction of the legacy and to stand as they would if they had deliberately chosen to accept from a solvent estate a personal note, instead of money.
    4. Same — Discretion—Construction op Will.
    By directing in her will that the trustees use their best skill and discretion in investing the trust fund, the testatrix did not enlarge their powers or discretion; strictly construed, the direction imposed a duty to exercise more than ordinary care.
    5. Same — Trustee’s Duty — Good Faith.
    A trustee must show the utmost good faith in his management of the trust.
    6. Same — Diligence—Negligence.
    And he must exercise the degree of care and diligence which a man of ordinary prudence would exercise in the management of his own affairs.
    7. Same — Investments—Security Required — Bills and Notes.
    It is not such prudence to invest the funds in unsecured notes of an individual or partnership.
    8. Same — Res Judicata — Probate Courts — Orders — Closing Estates — Executors and Administrators.
    By entering an order closing the estate of the testatrix and assigning to the trustees, with their consent, an unsecured note obtained by renewing a loan made by deceased, the probate court did not construe the will, or approve the investment of the executors.
    9. Executors and Administrators — Estates op Decedents.
    Proceedings to administer an estate are in rem.

    10. Same — Probate Court — Legacies—Power op Court.
    A probate court has no power to make an order requiring a legatee of money to accept anything but money in satisfaction of the legacy.

      11. Same — Statutes—Jurisdiction.
    Jurisdiction to allow the final account of executors and close an estate, is not derived from Act No. 253, Pub. Acts 1899.
    12. Same.
    And since the court had no authority to require the acceptance of a note instead of cash, the order approving the transfer of notes to the trustees must rest on their consent.
    13. Trusts — Acquiescence of Beneficiary in Acts of Trustee —Burden of Proof.
    The burden rests upon a trustee to prove acquiescence of the beneficiary in their acceptance of unsecured notes as an investment.
    14. Same.
    And evidence that accounts were filed with the probate court but not heard or allowed, and that interest on the investment was paid to an unauthorized person, does not show acquiescence, with knowledge of the beneficiary.
    Appeal from Saginaw; Gage, J.
    Submitted October 14, 1910.
    (Docket No. 70. )
    Decided February 1, 1911.
    Bill by the Michigan Home Missionary Society against Lucy W. Corning and Ida C. Oxtoby, executors of the estate of Gurdon Corning, deceased, and Alexander M. Lemke, for an accounting. From a decree for complainant, defendants appeal.
    Affirmed.

      Clark C. Wood (Durand & Holland, of counsel), for complainant.

      Davitt & Davitt, for defendant Lemke.

      Eugene Wilber, for defendants Corning and Oxtoby.
    The last will and testament of Louise C. Bartlett, who died October 26, 1903, was duly probated November 30, 1903. In her said will, the testatrix nominated and appointed Gurdon Corning and Alexander M. Lemke executors, and also appointed them trustees to receive the trusts, devises, and bequests made in the will, and to carry out the trusts and provisions thereof. These gentlemen assumed the duties of executors and, later, those of trustees. Their final account as executors was allowed. Gurdon Corning is dead, and Lucy W. Corning and Ida C. Oxtoby are the executors of his estate.
    The second provision of the will of Mrs. Bartlett is as follows :
    “ I give, devise and bequeath to my executors, who are also made trustees under this will, the sum of five thousand dollars in trust, to be kept invested by them according to their best judgment and discretion, and the income and proceeds of such investment, I direct shall be paid by them annually to the Home Missionary Society of the State of Michigan, being the society of that name and description which is connected with the First Congregational Church Society of Saginaw, Michigan.”
    There were other bequests in the nature of charitable bequests. In her lifetime, on or about April 26, 1901, Mrs. Bartlett loaned to Ross Bros., a partnership engaged in mercantile and lumbering business in and around Beaverton, in Michigan, $10,000, receiving their promissory note for that amount, due nine months after date. This note was renewed January 29, 1902, November 3, 1902, May 6, 1903, and on September 6, 1903, two notes were given in renewal, each for $5,000, due, respectively, four and six months after date. The inventory of the estate was filed April 25, 1904, and in it appeared two notes for $5,000 each, executed by Ross Bros., made payable, as previous notes in the series had been, to defendant Lemke’s order, dated, respectively, September 6, 1903, and January 4, 1904, each bearing interest at the rate of 6 per cent, per annum. These notes were renewed by the executors when they became due. In the final account of the executors, they represented to the probate court as follows:
    “They also represent that the trust bequests provided for in the second, third, ninth and tenth paragraphs of the will have been provided for by the transfer by your petitioners, as executors, to the trustees named in said will of the notes described in the receipt given by said trustees, which is attached hereto and made a part of this report.”

      The receipt referred to read as follows:
    “ (1) Received from the estate of Louise C. Bartlett, by Gurdon Corning and Alexander M. Lemke, executors of said estate, one promissory note for $5,000.00 made and executed by Ross Brothers, of Beaverton, Gladwin County, Mich., September 9, 1904, payable to the order of A. M. Lemke, six months after date, with interest, which note is hereby accepted in satisfaction of the legacy bequeathed by the will of the said Louise C. Bartlett to us in trust to be invested, and the income thereof annually paid to the Home Missionary Society mentioned in the second clause of said will.
    ‘ ‘ (2) Received from said estate by said executors, note for $5,000.00 made and executed by said Ross Brothers, July 14, 1904, payable to the order of A. M. Lemke, six months after date, with interest, which note is accepted by us in satisfaction of the legacy bequeathed to us in trust by said will, to be invested by us and the income thereof paid to the Foreign Missionary Society mentioned in the third clause of said will.
    “ (2) Received from said estate by said executors, the note of A. F. Bartlett & Co., for $10,000.00, dated Sep: tember 9, 1904, payable two years after date, with interest at 5 per cent, per annum, payable annually, which note is accepted by us in full satisfaction of the bequest made to us in trust, the income of which is to be applied to keeping the family vault of said testatrix in repair, and otherwise to be expended in Brady Hill Cemetery, of Saginaw, Mich., as mentioned in the 10th clause of said will.
    “ (4) Received from said estate by said executors, note for $5,000.00 made and executed by Alexander M. Lemke, on the 9th day of September, A. D. 1904, payable two years after date, with interest at 5 per cent, per annum, payable annually, which note is accepted by us in full payment and satisfaction of the bequest made to us in said will in trust, to establish and maintain a kindergarten school in Saginaw, Mich., as mentioned in the 9th clause of said will.
    “Dated January 27, 1905.
    “Alexander M. Lemke, “Gurdon Corning,
    “Trustees under Will of Louise C. Bartlett.”
    This is referred to in the order of the probate court, allowing their final account, as follows:

      “ Third. The provisions made for the other trust bequests, as set out in the receipt of the trustees attached to said petition, is hereby approved and confirmed. And said trustees shall, out of the first income collected on the notes mentioned in said receipt, pay to Gurdon Corning the money advanced by him as inheritance tax thereon and attorney’s fees as above mentioned.”
    In the same order the estate was assigned, some of it to defendant Lemke, some of it to the trustees, the residue to Gurdon Corning, who was the residuary legatee named in the will, and the trustees were ordered to file bonds, each in the penal sum of $15,000, with sureties to be approved by the court. The trustees did not collect the Ross Bros, notes, but continued to renew them from time to time, collecting the interest. The trustees, or Mr. Corning for them, filed three accounts in probate court. None of them was allowed, no notice of hearing was ever published, and no hearing ever had. Neither of the notes were secured, nor was any security thereafter taken by the trustees. Ross Bros, failed in business in November, 1907, and were adjudicated bankrupts; their condition, according to the report of the trustee in bankruptcy, was, and for a considerable period had been, hopelessly insolvent, the liabilities being more than $200,000, and the discovered assets about $60,000. They had for some years been large borrowers of money, their bills payable amounting, between the date of Mrs. Bartlett’s death and the time they failed in business, to sums varying from |100,-000 to $150,000. Their own estimate of their assets, made from time to time during this period, showed a surplus of assets over liabilities of from $100,000 to $150,000.
    The Michigan Home Missionary Society filed the bill in this cause. It is alleged therein that there are now no funds remaining in the estate of Mrs. Bartlett available to supply the trust fund created in favor of the complainant by her will, and it is prayed that the trustees account for said trust fund whether it is in existence in their hands or whether it has been lost by them. The defendants filed separate answers, which were replied to, the cause came on for hearing in open court, and a decree was entered requiring the defendant Lemke and the executors of the estate of Gurdon Corning to pay over to James B. Peter and the Detroit Trust Company, who have been respectively appointed to succeed Corning and Lemke as trustees* the trust fund referred to in the said third clause of the will, being $5,000, with interest at 5 per cent, from July 16, 1907. From this decree, defendants have appealed.
    The propositions, the affirmative of which complainant maintains, are:
    (1) The trustees had not the right to accept the notes in payment of the legacies. This involves (a) the right of trustees to invest trust funds in such manner, (&) the effect of the provision of the will reading “to be kept invested by them according to their best judgment and discretion,” (c) the force and effect of the order of the probate court.
    (2) The personal interest of the trustees was served by accepting and continuing the notes in force.
    (3) The complainant did not acquiesce in the said action of the trustees, and is not concluded by the filing of accounts in probate court.
   Ostrander, C. J.

(after stating the facts). The trustees and the beneficiary were entitled to receive from decedent’s estate $5,000 in cash. The investment of this fund, contemplated by the will, was a permanent investment, the earnings to be paid annually to the complainant. The note in question was what is known as short-time paper. It fell due during the period required for administering the estate. It had run the- time the testatrix agreed that it might run. That it was on hand when the executors proposed to close the estate must be attributed to the fact that the trustees, who were also executors, contemplated taking over and receipting for this note, or a renewal of it, in payment of the legacy. They contemplated doing, and they did, an act as trustees which would discharge them as executors. The case for them stands no better than it would if they had deliberately chosen to accept from a solvent estate a personal note instead of money. Mattocks v. Moulton, 84 Me. 545 (24 Atl. 1004). Indeed, the case for them may not stand so well as this, because their interest as beneficiaries under the will, their interest as executors, and any other interest in the matter which is disclosed, may be considered in determining whether they did not deliberately assume the peril which attended their choice, and the continuing peril of failure to collect the note. The direction of the testatrix to use “their best skill and discretion” did not enlarge the powers or discretion of the trustees. Kimball v. Reding, 31 N. H. 352 (64 Am. Dec. 333); Caspari v. Cutcheon, 110 Mich. 86 (67 N. W. 1093). Strictly, it was a direction to exercise more than ordinary care and prudence.

It is general doctrine, accepted everywhere, that a trustee must show the utmost good faith. He must exercise in the execution of the trust the degree of care and diligence which a man of ordinary prudence would exercise in the management of his own affairs. In respect to the investment of trust funds, in the absence of express directions from the settlor and of statute directions, courts have not infrequently been called upon to determine whether particular investments evidenced the exercise by the trustee of ordinary prudence. However conflicting in some respects the decisions may appear to be, in one respect they are reasonably uniform. It is a generally accepted rule that it is not prudent to invest trust funds in unsecured notes of an individual or of a partnership. We have found no decision which announces a contrary rule where the trust contemplated an investment of a permanent nature. This rule condemns the defendant trustees, and, if applied, obliges them to account to the cestui que trust for the fund.

It is said by the trustees that the investment was approved by the settlor, and it ought not to be considered imprudent to do what she had done. It would be equally cogent argument for the complainant to say that it was not prudent to accept this note, because, as the trustees knew, banks would not accept it without indorsement or other security. This is not the case of changing or refusing to change the character of specific funds given in trust. Nor is it reasonable to say that the settlor had * invested ’’her money.

It is said in the brief for the Corning executors:

“We repeat again, the trustees did not invest the money in this note. The note was assigned to them by a decree of the probate court. True, it was at the suggestion of the executors (not the trustees), but the probate court was not bound by their suggestion. The testimony of Judge Crane shows that the order was made upon his own judgment, after considering the pecuniary standing of the makers of the note, and the fact that Mrs. Bartlett made, the investment herself and renewed the note, without indorsement, from time to time until her death. The executors had a right to ask for instructions, and it was the duty of the probate court, upon application, to give them directions. If the probate court made a mistake in so doing, and complainant was dissatisfied, it should have appealed.”

In the brief for defendant Lemke, counsel asserting that the probate court had statutory jurisdiction in that behalf, the following argument is made:

“ Assuredly the fact that there were trust legacies to be assigned did not lessen the conceded jurisdiction of that court to assign the residue, nor the force of the decree entered. If it should be thought that the probate • court ought to have so construed this will as to require tbe executors to pay this legacy to the trustees in cash, still, that question is barred by the decree, and not open to review in this collateral suit. Those courts have the fullest jurisdiction over the construction of wills under such circumstances.”

And again:

“It is manifest that he [the probate judge] intended that the notes should be held as these investments, and that he knew they were not assets belonging to the beneficiaries. There is nothing in the decree or record anywhere in conflict with this, nor is there the slightest pretext for calling these notes assets after they came to the trustees. They were no doubt assets of Mrs. Bartlett’s estate until they were assigned to the trustees, and then they at once became investments, for such was that court’s decree. For another clear and conclusive reason these notes were not assets: They never belonged to the beneficiaries at all, until they were assigned to the trustees by the probate court’s decree, and then that decree fixed their status as being not debts to be collected, but as legacy investments to be held for them. Without intending to make any admission, we might admit that it is the duty of the fiduciary to promptly collect ordinary assets in the form of notes and the like. But we deny that that rule, if right, applies here.”

There was no occasion to construe the will, and the probate court was not asked to and did not construe it. The trustees were not appointed by the court, but by the will. Gibney v. Allen, 156 Mich. 301 (120 N. W. 811); Wooden v. Kerr, 91 Mich. 188 (51 N. W. 937). Nor did they ask the court for instructions.

Counsel for appellants construe the order of the court as either a direction to invest or an approval of an investment already made. It is not necessary to give it a construction favorable to either theory. In terms it approves and confirms the provision agreed upon by the executors and the trustees for paying certain legacies, not in money, but in notes. It refers to the receipts, and if they are again examined it will appear that certain notes belonging to the estate have been “accepted in satisfaction ” of legacies bequeathed by the will to be invested. The record does not support the assumption that the probate court understood that the notes so accepted were to remain uncollected and represent, for an indefinite period, the trust fund. But whatever the real intention of the trustees and the court may have been, the result must be the same. The proceedings to administer an estate are essentially proceedings in rem. There is no residue of an estate to assign until general legacies, as well as debts and expenses, have been paid. The court could properly make no order requiring a legatee of money to accept anything but money in satisfaction of the legacy. Such an order would be a nullity. It is unnecessary to consider the extent of the powers of probate courts under Act No. 253, Pub. Acts 1899. Jurisdiction to allow the final account of executors and to close an estate is not derived from this statute, and no one would be bound by the notice of such a proceeding to assume, or to suspect, that the court would incorporate in an order closing an estate and discharging executors a provision affecting rights which, upon the theory of appellants, did not attach until the estate was closed. The will gave the legacy to the executors and trustees. The legacy could not be satisfied except by payment of money unless the trustees consented. That portion of the order approving the disposition of these notes rests, therefore, upon the consent of the trustees.

We notice, in passing, that the receipt of the trustees to which the order of the probate court as well as the petition of the executors refers, describes a note for $10,000, made by the A. F. Bartlett Company, due two years after date, and a note of Alexander M. Lemke for $5,000, due two years after date, as two of the notes accepted in satisfaction of legacies. Neither note appears in the inventory of the estate of Mrs. Bartlett, and the note of Lemke does not appear in the inventory of the trust estate which the trustees filed in compliance with the statute.. Instead, this inventory describes a note of the A. F. Bartlett Company for the same amount. The receipt states, also, that the Ross Bros, notes which have been accepted are each payable to the order of A. M. Lemke. Without explanation, one would suppose that these notes were, or were to be, indorsed by the payee. The inventory of the trust estate does not so designate the notes. Complainant is not concerned with these facts except as they indicate, or do not, that it was supposed that the probate court ap-proved the taking of any of the notes, as an investment, and except as it may bear upon the question of complainant’s acquiescence, with knowledge of the real facts, in the conduct of the trustees.

It may be added, in conclusion, that we are not prepared to hold that there is authority, statute or other, for substituting, in the first instance, the discretion and prudence of a court for that of a trustee charged by the terms of a will with the proper investment of funds.

Being of opinion that the case must be determined without reference to the good or bad faith of the trustees, we do not consider the question.

As has been stated, the trustees filed an inventory of the property comprising the trust estate. It does not indicate to which of several trusts created by the will either of the notes described attaches or belongs. At the time it was filed, none of the notes accepted in satisfaction of the legacies had become due. Thereafter, several accounts were filed, showing receipts of interest and sufficiently informing any one interested that complainant derived whatever money had been paid to it from Ross Bros. None of the accounts was allowed. The burden rested upon defendants to prove acquiescence, with knowledge, on the part of the beneficiary in the course pursued by them. The testimony fails to show knowledge. Such testimony as was given tends to prove that the trustees paid the interest collected, not to the complainant or to any of its officers, but to the treasurer of a local society.

Mr. Corning states, in a letter appearing in the record, written after the failure of Ross Bros., that he has been advised that it should not so have been paid.

The court below reached the right conclusion, and the decree is affirmed, with costs to complainant.

Brooke, Blair, and Stone, JJ., concurred with Ostrander, C. J.

Bird, J.

I concur in the conclusion reached in this case by Mr. Justice Ostrander, but I am of the opinion that the delinquency which should charge the trustees personally with the payment of the trust fund is their undue renewals and extension of the note, and their failure to collect it at the proper time.


author: Ostrander, C. J.

text:
    BACKUS v. HOYT.
    1. Taxation — Redemption—Tax Title — Tendee—Equitable Relief.
    In. a suit to redeem land from a tax purchase, after a tender by the complainant of the amount required by law, the purchaser is equitably entitled to reimbursement for sums paid to redeem from a subsequent tax in order to protect his interest.
    2. Same — Joint Purchase — Bona Fides.
    Defendants that were jointly interested in the purchase of tax titles on various lands are not purchasers in good faith of lands so bought of the State by one of them, who conveyed by quitclaim deed to the others.
    Appeal from Alcona; Connine, J.
    Submitted October 25, 1910.
    (Docket No. 106.)
    Decided February 1, 1911.
    Bill by Newton D. Backus, administrator of the estate of Sarah E. Backus, deceased, against Albert U. Hoyt, Henry K. Gustin, and Charles Conklin, to redeem certain lands from a tax purchase. From a decree for complainant requiring the payment of a specified sum, both parties appeal.
    Affirmed.

      Albert McGlatchey, for complainant.

      Henry K. Gustin, for defendants.
   Ostrander, C. J.

Taxes assessed against certain lands in Alcona county in the year 3 901 were unpaid, and the lands were sold and bid to the State in May, 1904. Defendant Hoyt purchased from the State, and, the lands not having been redeemed, received the tax deeds. The lands were assessed for taxes in 1902, 1903, and 1904, the tax remaining unpaid. Defendant Hoyt, on December 14, 1905, filed proof of personal service of notice to redeem upon Sarah E. Backus, which notice was signed, “Albert TJ. Hoyt. Place of business, Bay City, Michigan.” Complainant is administrator with the will annexed of the estate of Sarah E. Backus, deceased, who was the person upon whom the notice to redeem was served. Within six months after service of said notice, the said owner, by her agent, Henry N. Backus, tendered to said Hoyt personally, at Bay City, $92.82, and the fees of the sheriff for serving said notice, which tender was refused. The sum tendered was the amount demanded by the notice. The money tendered was not deposited or placed subject to the order of Hoyt. After the refusal of the tender, and in the year 1909, defendant Hoyt conveyed the land by quitclaim to defendants Gustin and Conklin, who claim to be owners of the land. Hoyt redeemed the lands from the taxes of 1902 on April 30, 1906, paying $61.84, and the defendants, or some of them, have since paid or . caused to be paid the taxes for the years 1903, $62.70, for the year 1904, $44.94, and defendant Gustin redeemed them from taxes for the year 1905 by paying $45.78. To a bill filed by the administrator to compel release of Hoyt’s tax title and a reconveyance, there was an answer, a cross-bill, which was answered, and replication. The cause came on for hearing February 10,1910. The facts which have been stated are not now contested.

The court found that a legal tender was made to defendant Hoyt, that the other defendants are neither of them good-faith purchasers from Hoyt. In the decree it is provided that complainant may redeem by paying to defendants or depositing with the register $168.21, less the taxable costs of the suit. This includes the taxes assessed for the year 1902. From this decree all parties have appealed.

Complainant asks that the amount required to be paid be diminished by the sum of $61.84, the amount of the taxes for 1902, plus $12.35, the interest thereon; in all, $74.29. He admits that he paid into court, before appealing, the sum called for in the decree. Defendants contend that because the tender which was made did not include money for the year 1902 which Hoyt had paid before the tender was made, and which he had been obliged to pay to protect his purchase for the tax of 1901, the sum tendered was too small. If, as we think must be conceded, the sum tendered to Hoyt was the sum required by the statute to be paid, either to him or to the register in chancery, to secure a reconveyance of the lands, the imposition of any greater burden in a suit brought to compel Hoyt to do what he ought to have done when the tender was made must be demanded, or excused, by equitable considerations. We think such considerations grow out of the fact that the payment of the 1902 tax inured to the benefit of the landowner, and was made by defendant Hoyt before the tender and before the time when the right of complainant’s decedent to secure a reconveyance had expired, to protect the title which he already held. But equity requires no further sum to be paid by complainant. One who reads the record will conclude that these defendants were jointly interested in the purchase of tax titles on these and other lands, that the reconveyance did not in fact affect the interest of any of them as against the' others, and that the knowledge possessed by one of them was possessed by all of them.

The decree is affirmed, without costs to either party, except that the cost of printing the record will be evenly divided between complainant and defendants.

Bird, Hooker, Moore, and Stone, JJ., concurred.


author: McAlvay, J.

text:
    NEWBERRY v. CITY OF DETROIT.
    1. Taxation — Special Assessments — Paving—Parks—Municipal Corporations.
    Only properties owned by municipalities for governmental purposes are exempt from special assessments for public improvements.

    S. Same — Detroit Charter — Exemption oe Park from Special. Assessment.
    A special assessment for paving a public street fronting on a. park, under the charter of the city of Detroit, is invalid unless it is based on and includes the frontage of the park.
    Error to Wayne; Mnrfin, J.
    Submitted November 16, 1910.
    (Docket No. 61.)
    Decided February 1, 1911.
    Assumpsit by Helen H. Newberry against the city of Detroit for the amount of taxes paid under protest. A judgment for plaintiff on a verdict directed by the court is reviewed by defendant on writ of error.
    Judgment reduced and affirmed.

      Walter Barlow (P. J. M. Hally, of counsel), for appellant.

      Miller, Smith, Paddock & Perry, for appellee.

       As to liability to local assessments for benefits of property exempt from general taxation, see note in 18 L. R. A. (N. S.) 451.

   McAlvay, J.

This litigation arose on account of a claimed illegal paving assessment made by defendant against certain lots owned by the plaintiff, and abutting upon Edison avenue in the city of Detroit, to pay the cost of paving such avenue. Yoigt Park occupies the entire block on Edison avenue, between Second and Third avenues. From the stipulated facts in the case it appears:

“That on or about September 3, 1907, * * * the common council of the city of Detroit passed a resolution to pave Edison avenue, in said city, from Second avenue to Hamilton boulevard, and that the lots and parcels of real estate fronting the portion to be improved were declared to be and constituted the local assessment district. * * * That in and by said roll the whole cost of such paving was assessed against the lots fronting on said Edison avenue between Second avenue and Hamilton boulevard (except for the cost of paving the intersections of cross-streets) and no part of such costs were assessed against Voigt Park.”

The stipulation shows that this was a public park, belonging to the park system of the city, fronting upon and extending along Edison avenue about 820 feet, and that the lots of plaintiff which abutted upon Edison avenue, as described in the declaration, were assessed in the sum of $8,446.96. Plaintiff on February 9, 1909, petitioned the common council to refer the assessment'roll back to the board of assessors for revision and correction, because the whole cost of the paving was assessed against the lots, • and no part against Voigt Park with a frontage of 820 feet, claiming that the park should be assessed, and that her assessment was out of proportion to the benefit conferred, and that the assessment roll was contrary to law. This petition was denied. Later, when the assessments had become payable and a lien upon these lots, plaintiff, under protest in writing, paid the sum so assessed in full, February 27, 1909. On March 2, 1909, she presented to the common council in due form her claim for the repayment to her of the sum of $8,446.96, the amount paid. This claim was denied. This suit in assumpsit was brought by her to recover that amount. At the close of the case both parties asked for an instructed verdict. The motion of plaintiff was granted, and a judgment was entered against the city in her favor for the full amount of the sum paid. The defendant upon a writ of error brings the case here for review, asking a reversal upon errors assigned.

The principal reason upon which defendant relied for a directed verdict in its behalf was—

“Because Voigt Park was not assessable for paving Edison avenue, and that the property of the private parties fronting on said avenue so paved was properly assessed for the (entire) cost of said pavement. ”

This, is the material question to be considered.

This assessment was made under authority of the charter of the city of Detroit, which reads:

“ For the purpose of such assessment, the lots and parcels of real estate situated on said street, and fronting the portion thereof ordered to be improved, shall constitute one local assessment district* * * the cost and expense of the paving to be assessed according to frontage. Detroit Charter 1904, §§ 266, 267, pp. 182-184.

Defendant, admitting that the authorities apparently are not in harmony upon the material question presented, urges that, in those States where special assessments against real estate owned by municipalities are declared valid, there was constitutional or statutory provision authorizing such assessments, but that in this State there is no such authority, and that this court has so held in the case of City of Big Rapids v. Supervisors, 99 Mich. 351 (58 N. W. 358). It must be conceded, if that case decides all that is claimed for it, defendant’s contention is correct. This court said in the opinion:

“ The general tax law of the State exempts from taxation all public property belonging to the United States, to this State, or to any county, city, village, township, or school district within this State save lands purchased at tax sales and still held by the State. The Constitution of this State contains no provision upon the subject, and in this respect differs from the Constitutions of some of the States. * * * Aside from express exemptions there are also exemptions implied by law. Implied exemptions exist where property is owned and held by the State, its political subdivisons, and its municipalities for governmental purposes” — citing Cooley on Taxation (2d Ed.), p. 172.

This authority, which is relied upon in the foregoing extract from the opinion, in the same paragraph says: “But a municipal corporation may hold property, not for governmental purposes, but for the mere convenience of its people,” which the text-writer states has been held “not presumptively excluded from taxation when it is restricted to special assessments.” From this we must conclude that the intention of the court was to be in harmony with the authorities cited, and that only properties owned by municipalities for governmental purposes were included in its holding as exempt.

Construing the language of the charter relative to assessments for paving, we do not find any exemption of public grounds. In cases which hold the extreme doctrine that no property of the State is exempt from special assessments, and also those which hold that certain properties belonging to the public are exempted by statute from taxation, the decisions are harmonious in holding that the exemptions apply “only to the taxes mentioned in the general tax law.” This rule was recognized by this court in City of Big Rapids v. Supervisors, supra. We cite some of the leading authorities which favor the rule: Cooley on Taxation, §§ 458, 572, 573; City of San Diego v. Irrigation District, 108 Cal. 189 (41 Pac. 291, 35 L. R. A. 34, note); County of Adams v. City of Quincy, 130 Ill. 566 (22 N. E. 624, 6 L. R. A. 155); In re City of Mt. Vernon, 147 Ill. 359 (35 N. E. 533, 23 L. R. A. 807); Hassan v. City of Rochester, 67 N. Y. 528; Essex County v. City of Salem, 153 Mass. 141 (26 N. E. 431); New Orleans v. Warner, 175 U. S. 120 (20 Sup. Ct. 44). The great weight of authorities upholds this doctrine. In view of this rule, which was recognized, and the language of the opinion, we conclude that this court in City of Big Rapids v. Supervisors, supra, decided that in this State the exemption of municipal property from special assessments extended only to such property as is held for governmental purposes. The Voigt Park property was not so held by defendant.

The requirement of the law under which this assessment was made is that it must be according to the frontage upon Edison avenue. Detroit Charter 1904, pp. 182-184. Yoigt Park occupies about one-fourth of this entire frontage. It was not assessed. The entire cost was assessed against the remaining three-fourths, and not according to the frontage of each abutting lot. The law governing these assessments cannot be followed if any frontage is omitted. This park frontage abutting upon the avenue should have been assessed for this paving. It was not exempt from such assessment. To so hold in this case would not extend the rule to include the ornamental strips of land in the center of the boulevards or other highways in the city. They can in no sense be considered as abutting lots, and included within the provision of the charter — '

“ For the purpose of such assessment the lots and parcels of real estate situated on said street and fronting the portion thereof ordered to be improved shall constitute one local assessment district.”

In the trial court plaintiff recovered for the entire amount paid by her upon this special assessment, with interest. The record shows that a duplicate assessment roll was made up and produced in evidence by defendant, showing what the amount of the assessment against plaintiff would have been had Yoigt Park been assessed, and the difference between that amount and the amount actually assessed, to be $2,186.28. Defendant’s contention was that this amount, with interest at 5 per cent, from February 27, 1909, the date of payment, was the amount for which plaintiff would be entitled to recover if the court held that Yoigt Park should have been assessed. The correctness of this computation was not questioned by plaintiff. In that court the case was decided upon the ground that the assessment was not made according to frontage, and was wholly invalid. In this court, however, counsel for plaintiff in his oral argument stated that, if it is held that the park property should have been assessed, plaintiff only asked to recover the excess paid by her, with interest. This agreement between the parties makes further discussion relative to the question unnecessary. As already decided, the park property was not exempt from this assessment, and therefore should have been included in the assessment roll. Plaintiff had not waived any rights, and had done nothing to estop her from recovering in this case.

For the reasons stated, the judgment is, accordingly, reduced, and, the questions involved being questions of law, a judgment will be entered in this court in favor of plaintiff and against defendant for the sum of $2,136.28, with interest at 5 per cent, from February 27, 1909, to date, with costs to defendant.

Bird, Brooke, Blair, and Stone, JJ., concurred.