text:
    HOROWITZ v. BLAY.
    1. Negligence — Excavating Soil — Duty to Owner — Support.
    The owner of a parcel of ground who desired to erect a building on his land with a basement of ordinary depth and character was entitled to excavate the entire width of the lot unless some duty to the adjoining owner or the tenant of the building was violated: the mere fact, that the excavation caused one of the walls of the building, to fall does not in itself establish liability.

    2. Same — Adjoining Landowners — Excavation.
    Where one of the witnesses for plaintiff testified that the wall should have been underpinned as a protection against the consequences of excavating the adjoining lot, and where plaintiff assumed that the duty of constructing the underpinning rested upon those who made the excavation, but there was no proof that the ground under the wall would have given way except for the weight of the building, the obligation was not on the excavators but rested with the proprietor of the building.

      3. Same — Evidence—Burden.
    Moreover, mere evidence that those excavating permitted water from the mains to accumulate did not show negligence without proofs tending to connect the fall of the building with the water, or that the ground was softened thereby so as to weaken the support.
    4. Same — Appeal and Error — Offer of Proof.
    Where counsel stated that he had witnesses in court whom he offered to produce to give testimony that the men in charge of excavating the ground were incompetent, inefficient, and negligent, his statement amounted to a conclusion only, and unless the court could determine that the testimony, if received, might or would have changed the result, it will not reverse the judgment, upon writ of error.
    Error to Wayne; Hosmer, J.
    Submitted April 5, 1916.
    (Docket No. 16.)
    Decided December 21, 1916.
    Rehearing denied April 19, 1917.
    Case by Minnie Horowitz against Euphemia Blay, Isaac L. Polozker, Desire B. De Coster, and Norval Wardrop for injuries to a stock of merchandise. Judgment for defendants on a directed verdict. Plaintiff brings error.
    Affirmed.

      Donnelly, Lyster, Brennan & Munro, for appellant.

      Louis C. Wagner, for appellee Polozker.

      Charles H. Hatch, for appellees De Coster and War-drop.
    This is an action brought to recover damages for injuries to a stock of shoes caused by the falling of the wall of the- building in which they were stored. This building was a two-story brick standing on the south side of Gratiot avenue, in the city of Detroit. Plaintiff was in possession as tenant of a Mrs. Blay, and occupied the first story as a shoe store and the second story as a residence for herself and her family. The building extended back from the street about 60 feet, and the easterly wall, which fell, came to the easterly line of Mrs. Blay’s lot. There was no basement to the building, and its foundation walls extended only about 3 feet below the surface of the ground. Dr. Polozker owned the lot adjoining Mrs. Blay’s on the east, and at the time of the accident his lot was being excavated for the purpose of erecting a building upon it. The excavation had been going on- for some time before the occurrence of the accident, which took place on the 29th day of April, 1912. That was on a Monday, and the first appearance of any cracking in the easterly wall of the building occupied by plaintiff was on the afternoon of the preceding Friday. During the forenoon of the next day, Saturday, Mr. De. Coster, Dr. Polozker’s contractor, caused the northerly end of the wall to be shored up for a distance of about 12 feet from the street line. At that time the ground had been removed from the entire front end of Dr. Polozker’s lot to a depth of 7 or 8 feet and for a distance of some 20 feet back from its northerly line. From that point the excavation gradually sloped to the surface of the ground. Upon, the shoring up of its northerly end the cracking of the wall ceased, and was not renewed until about 8 o’clock on Sunday evening. During that period all of the parties seemed to have considered the building fairly safe. A fall of rain began on Sunday afternoon, and continued for about 20 hours. On the morning of Monday, the 29th, the cracks in the front part of the wall were found to be considerably wider than they had been on Saturday, and other cracks had appeared further to the south above that part of the. foundation next to which some ground had been excavated on that day. During the afternoon of Monday a large body of bricks fell from the wall above the surface line of the ground and next to the excavation last mentioned. Shortly after that most of the wall that had not been shored up came down. In falling it inflicted considerable injury upon plaintiff’s stock of shoes on the first floor of the building, and she brings this action against Dr. Polozker, as owner of the lot which was being excavated, against Mr. Wardrop, his architect, and against Mr. De Coster, who had the contract for the erection of the building for Dr. Polozker, attributing the injury to their negligence in making the excavation. Mrs. Blay, the owner of the building occupied by plaintiff, was originally joined as defendant, but at the beginning of the trial the cause was discontinued as against her. At the close of plaintiff’s proofs it was the opinion of the trial court that she had failed to maintain the charge of negligence, but that, if negligence had been shown, it was the negligence of one Raymond, an independent contractor, to whom De Coster had sublet that portion of the work, and therefore not imputable to defendants. For these reasons a verdict was directed against the plaintiff, and she brings the case to this court by writ of error.

      On the question of liability for injury to buildings on adjoining land by negligent removal of lateral support of the soil, see note in 6 L. R. A. (N. S.) 243.

   Person, J.

(after stating the facts). Unless it has been shown that the injury to the building occupied by plaintiff is chargeable to some fault on the part of the excavators, it is, of course, unnecessary to determine whether Raymond, who had charge of the work, was an independent contractor or not.

It appears from the record that Dr. Polozker desired to erect a building upon his lot with a basement of the ordinary depth and character. It was a legitimate object. And in the accomplishment of his purpose he or his employees had the undoubted right to excavate .the entire width of his lot, without incurring liability for injury to the adjoining building, unless, in the prosecution of the work, some duty to the owner or occupant of the building was violated. The mere fact that the excavation caused the wall of the. building to fall does not establish such liability. Ward v. Andrews, 3 Mo. App. 275.

It is clearly shown by the testimony of plaintiff’s witness Decker that the wall which fell should have been underpinned as a protection against the consequences of the excavation. And it is claimed by plaintiff that the duty of constructing such underpinning rested upon those making the excavation. In this she is mistaken. There is no evidence that the ground under the wall would have given way except for the weight of the building resting upon it. It was a clay soil, and held its place on' all other sides of the excavation. By placing the wall of her building upon the line with a three-foot foundation under it the adjacent owner could not impose upon Dr. Polozker, or his employees, the burden of supporting it by an underpinning before making use of his own lot. Gildersleeve v. Hammond, 109 Mich. 431 (67 N. W. 519, 33 L. R. A. 46); Hemsworth v. Cushing, 115 Mich. 92 (72 N. W. 1108); Bissell v. Ford, 176 Mich. 64 (141 N. W. 860). Plaintiff, as occupant of'the building, saw the work of excavating proceed day by day without taking any steps to protect her goods from possible injury. And it is to be assumed that the owner of the fee also knew that the excavation was in progress; for, if she did not, and those responsible for the excavation were guilty of any negligence in failing to notify her, the burden of proving such negligence rested on the plaintiff just the same as the burden of proving any other negligence.

It was also shown that the excavators permitted water from the mains in the street to run into and accumulate in the excavation. If there had been evidence to connect such accumulation of water with the falling of the wall, it might have amounted to proof of negligence; for, although the excavators were not required to furnish the labor and sustain the expense of constructing supports for the wall, yet they were bound to conduct the work of excavation with such ordinary care and skill as to avoid unnecessary injury to the building. Bissell v. Ford, supra; Larson v. Railway Co., 110 Mo. 234 (19 S. W. 416, 16 L. R. A. 330, 33 Am. St. Rep. 439). But the evidence does not show the depth of the water next to the ground under the wall, nor that any of the ground in that vicinity was softened or gave way, before the wall fell. In fact, the part of the wall that first came down was to the south of the deeper part of the excavation.

These are the only specific acts of alleged negligence shown by the testimony. At the close of his proofs counsel for plaintiff did say:

“We have witnesses here in court, and we now offer to produce them and produce testimony to the effect that the men actually in charge of the excavation on the premises were incompetent, inefficient, and negligent, and were a large part of the time decidedly under the influence of alcohol.”

This offer was not sufficiently definite as to acts of negligence to make its rejection erroneous. It did not give the court any information as to the facts plaintiff could prove bearing upon negligence, but simply stated counsel’s opinion as to their legal effect. If the proofs had been received, it might have transpired that counsel was mistaken, and that they had no tendency to show negligence, or that the negligence shown had no relation to the injury. This court cannot justly reverse a case because of the exclusion of testimony unless it is able to see that the testimony, if it had been received, might have changed the result.

Plaintiff having failed to show any negligence on the part of those making the excavation that contributed to her injury, the other questions raised become immaterial, and the judgment will be affirmed.

Stone, C. J., and Kuhn, Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred.


source: Caselaw Access Project

author: Ostrander, J. Brooke, J.

license: Public Domain

text:
    ATTORNEY GENERAL v. CONNOLLY.
    1. Constitutional Law — Teachers’ Pension — Statutes — Class Legislation — Schools—Contracts.
    The provisions of Act No. 174, Pub. Acts 1915, 2 Comp. Laws 1915, §§ 5767-5780, providing for the establishment of a teachers’ pension fund, and providing for contributions from the compensation of those who are actively engaged in their employment to maintain it, are not class legislation, and are not in violation of the Constitution, because the classification of teachers as one employment is reasonable and justifiable; whether such contract will encourage or promote education is a matter for the legislature to determine; any legislation that affects the qualifications, period of service, or reward of teachers' acts upon this class.
    2. Same — Due Process oe Law — Statutes.
    While the statute affects contributions from teachers, the salaries to be paid constitute a net amount, and the act takes nothing from any one, hence, does not trespass upon the due process prohibition of the Constitutions.
    3. Same — Inequality—Taxation.
    The objection that it is a fund that belongs under the Constitution to the school districts and cannot be taken by the State for a pension fund is untenable as a ground of the invalidity; and whether or not the act effects inequality in contributions by different districts, it is not a reason for holding the law void, as the rule which requires uniformity in taxation does not apply to such districts.
    4. Same — Private Purpose.
    The general effect and purpose of the act is not to authorize the expenditure of public money for a private purpose, nor does it award extra compensation to a public agent as forbidden by section 3, Art. 16, of the Constitution. Ostrander, J., dissenting.
    5. Same- — Schools—Teachers’ Pension — General Act — Special Legislation.
    Act No. 174, Pub. Acts 1915, 2 Comp. Laws 1915, § 5767 et seq., creating pensions for teachers, does not violate the section of the Constitution prohibiting extra eompensation to public officials and servants, tbe statute extending similar inducements to teachers already employed and to those who enter public service subject to the pension provisions. Nor does section 14 violate the Constitution, Art. 5, § 30, in that the act does not apply to Detroit until the local retirement fund is discontinued: the general purpose and phraseology of the legislation brings it within the legislative authority. Ostrander, J., dissenting.
    Quo warranto proceedings by Grant Fellows, Attorney General, against William F. Connolly and others to determine the constitutionality of Act No. 174, Pub. Acts 1915. Respondents demurred to the information.
    Submitted April 14, 1916.
    (Docket No. 138.)
    Writ dismissed December 21, 1916.

      Grant Fellows, Attorney General, and L. W. Carr, Assistant Attorney General, for petitioner.

      William L. Carpenter and H. E. Spalding, for respondents.
   Ostrander, J.

(dissenting). Pursuant to provisions found in Act No. 174, Pub. Acts 1915 (2 Comp. Laws 1915, §§ 5767-5780), entitled “An act to provide for a retirement fund for teachers in certain cases,” which became effective in August, 1915, the governor appointed respondents members of the teachers' retirement fund board, they with the superintendent of public instruction composing the said board.

The act, by its terms, affects all teachers in the public schools of the State except those who, being under contract when the act takes effect, do not elect to come under its provisions. After the act becomes effective, every teacher contracting to teach in a public school is conclusively presumed, by the act of contracting to teach, to agree to pay and to authorize the deduction from salary necessary to pay “the assessments herein provided.” The “assessment” varies. A teacher who has taught 5 years or less in this State, or elsewhere in a public school, contributes one-half of 1 per cent, of the annual contractual salary, but not more than $5, an amount which the retirement fund board may increase to 1 per cent, of salary, but not more than $10 in any year. One who has taught more than 5 years, but less than 15 years, contributes 1 per cent, of contractual salary, not more than $10, and the said board may increase the contribution tó 2 per cent., but not more than $20 in a year. One who has taught 15 years or more contributes 2 per cent., but not more than $20 a year, subject to an increase by the said board to 3 per cent., but not more than $30 in a year. The contributions thus provided for, the income from donations, legacies, and bequests, and the income from the fund, constitute the Michigan State teachers’ retirement fund for public schoolteachers. The custodian of the fund is the State treasurer, and the board is given power to draw warrants upon him for payment of annuities and for purposes of investment of the fund.

No teacher is entitled to an annuity who has not contributed to the fund an amount equal to his annuity for 1 year, but a teacher, otherwise entitled to retire and to an annuity, may pay into the fund in cash an amount which, with previous contributions, equals an annuity for 1 year, or, if unable to do so, may have the required sum deducted from the annuity, withheld, subject to which restriction retirement and participation may occur by request of a teacher, or upon request of a board of education or other governing body of a school district, which request being approved, various annuities are to be paid, the amount depending, generally, upon the years of service as teacher. A teacher who has taught for a period or periods aggregating '30 years, of which at least 15 years, including the last 5 years of service preceding the application for retirement, shall have been spent in the public schools of the State, may retire after December 1, 1915, and receive an annuity equal to one-half of the annual contractual salary paid to him during the last 5 years, but not more than $500 nor less than $300. Teachers who have taught 25 years, 15 years and the last 5 years preceding retirement having been spent in the public schools of the State, may retire after December 1, 1915, and be entitled to an annuity “which bears the same ratio to the annuity provided for on retirement after thirty years of service as the total number of years of service of said persons bears to thirty years.” And one who has taught 15 years or more in the public schools of the State, being in the judgment of the board physically or mentally incapable of teaching and deemed deserving of an annuity, may • be retired and bé entitled to an annuity “of as many thirtieths of the full annuity herein provided after thirty years’ service as said teacher has taught years in the public schools of this State.” “The board shall pass upon all requests for retirement and shall determine whether such requests should be granted.”

If a teacher “ceases to teach in the public schools of this State” before receiving an annuity, he or she is entitled, upon application, “to the return of one-half of the amount, without interest, which shall have 'been paid into the fund by such teacher,” the sum so withdrawn, with interest, to be returned to the fund if teaching is resumed. So if one to whom an annuity is paid resumes teaching, the annuity ceases, to be paid upon a subsequent retirement. Unless it is held to come under the provision for repayment to one who ceases to teach and is not an annuitant, the contingency of death of a teacher is not provided for. The words “shall contribute” are used with respect to the action or duty of teachers. “Conclusively agree to pay or to authorize the deduction from salary of the assessments herein provided” is another form of words used. Boards of education, trustees, and other school officers are required to “cause to be deducted from each installment of salary of such teachers the pro rata amount due from such teachers. * *

The act is not applicable to any school district in which,- in accordance with any special or local act, public school-teachers are required or authorized to contribute, to a teachers’ retirement fund, or in which teachers are entitled to annuities or pensions. In such school districts, however, upon the request of two-thirds of contributing teachers, and by a majority vote of qualified electors of the district, the local arrangement may be discontinued and the act becomes operative in such district, the local retirement fund being merged in the State fund. The school district of the city of Detroit is the only one affected by the provisions of this section.

The term “teacher” is defined in the act, and includes all persons teachers in schools in the country and in cities and villages, superintendents and assistant superintendents, supervisors of instruction, principals and assistant principals and special teachers, county school commissioners, county normal teachers, the superintendent of public instruction and his deputies. It includes, as well, all persons employed in teaching or in educational work in the Industrial Home for Girls, Industrial Home for Boys, Michigan Employment Institution for the Blind, School for the Blind, School for the Deaf, State Public School, and State Normal Colleges and Normal Schools.

The attorney general, in an information filed in this court, inquires into the right of respondents to hold and enjoy offices as members of said board, contending that the act is invalid because:

“The measure is class legislation in the obnoxious sense, deprives certain persons thereby affected of their property without due process of law,, and likewise deprives them of the equal protection of the laws.
“The measure attempts to authorize the payment of extra compensation after the service has been performed, in contravention of section 3 of article 16 of the State Constitution.
“The act is unconstitutional because it seeks to authorize the expenditure of public money for a private purpose.
“Section 14 of the act is invalid, and renders the entire measure unconstitutional.”

Respondents moved to dismiss the information upon the ground that the objections made to the validity of the act are, and each of them is, insufficient in law. There was a rejoinder and prayer for judgment of ouster. For respondents, and for the validity of the act, it is contended that the law in its operation takes no property of the teacher, and takes no contribution at all except by the consent of the teacher; that there is no natural right to teach and the employment of a teacher is, in its nature, public and may be subject to conditions. Assuming, it is said, that the deduction is a real deduction from salary, and not an appropriation of public money measured by a percentage of salaries, there would then be no deprivation of property without due process of law.

The objection that the act provides for giving extra compensation for services performed is, it is said, inconsistent with the first objection made, since it assumes that the pension or extra compensation is provided out of public, and not private, funds, and that in any event it is unsound, because no one may have advantage of the law who is not in service when the law takes effect and thereafter, and but few could, by election, have advantage of the act before the contract of service, existing when the law becomes, or became, operative, expired; that the act does not provide for expenditures of public money for private purposes, since a public interest which the legislature may recognize is served and promoted.

Lastly, it is argued that if section 14 is invalid, it is not so vital a part of the act as to make it wholly invalid; but said section is not invalid.

To the argument of the attorney general, to the effect that if the contribution be public money, it belongs to the school districts and cannot be taken by the State for a State pension fund, and that to do so would compel an unequal contribution by different districts, it is answered that the rule requiring uniformity of taxation does not apply, and, if it did, a large proportion of the money available to each school district comes from State taxation and the primary school fund. This fund must undoubtedly be used for school purposes, and there is no other constitutional restriction upon its employment. What the State might retain, it may require the districts to use for the same purposes.

In successive Constitutions of the State the legislature has been enjoined to establish and foster a system of primary schools. In the Constitution of 1909, art. 11, | 1, it is declared:

“Religion, morality and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.”

The educational policy of the State from the year 1817 down to 1874 is, in a measure, reviewed in Stuart v. School District, 30 Mich. 69. With the restrictions that a system shall be established whereby a school shall be kept without charge for tuition at least three months in each year in every school district in the State, and that instruction shall be conducted in the English language, there was in the Constitution of 1850 and the prior Constitution no restrictions upon the power of the legislature, to establish a primary school system. Perrizo v. Kesler, 93 Mich. 280 (53 N. W. 391); Pingree v. Board of Education, 99 Mich. 404 (58 N. W. 333). No other restrictions are found in the Constitution of 1909, save the one, article 10, § 1, that all subjects of taxation now contributing to the primary school interest fund under present laws shall continue to contribute to that fund, etc. Generally, the whole subject of education is for legislative consideration and control, and it is for the legislature to determine, within other constitutional restrictions of its power, in what manner and by what means schools and the means of education shall be encouraged. It is not contended, and cannot reasonably be claimed, that the legislature may not establish a system, both for primary and other public schools, which shall fix the pay, or the salary, of public schoolteachers, with regulations relating to the age, period of service, and retirement of teachers. If it may do this, it may likewise determine whether it is wise and in the general interest of education that in the system it establishes provision be made for retired teachers whose qualifications for teaching, periods of service and salaries it may control. Having made such a provision, it is for the courts to determine whether the legislature has traveled beyond any other constitutional limitation upon its powers.

In this proceeding, there is properly involved no question of the exercise of the taxing power of the State. Taxes may be levied, now as heretofore, to support public schools and encourage and foster education. No question of legislative interference with the private right to make contracts is involved, because the right of a school district to make contracts with teachers is not a private right. And while teachers are not public officers, they, like all other persons who engage in public service, are controlled by legislative limitations upon the powers of the municipal district with which they enter into contract relations.

The act cannot be called class legislation. Included in any system of education must be a provision for teachers and for paying them. Teachers render services which are essentially public services. Their avocation, if pursued, sets them apart,- in a class. They each become a working unit in the system of education devised by the legislature pursuant to constitutional direction. Any legislation which affects the qualifications, period of service, or reward of teachers acts upon this class. The legislation in question does no more. It is true that one possessing all of the necessary qualifications for teaching does not become one of the class except by contracting to teach. But he must make such a contract as the school district may make. Whether such contracts will encourage and promote education is a matter for the legislature to determine, and, perhaps, for experience to prove, or disprove.

Nor does the act, in its general scheme and purpose as an amendment of the school system, deprive any person of his property. I mean by this that, looking to the purpose of the legislation, it takes nothing from any person. While it speaks of contributions from teachers, still, all of its provisions being considered, it is apparent that the salary to be paid by each school district, to each teacher, is the net, and not the gross, amount of salary agreed upon.

The reasoning so far employed denies the contention that the act in its general purpose authorizes an expenditure of public money for private purposes. It admits, and it is a necessary corollary to the general proposition I have sustained, that the fund which the act seeks to create is a public fund, devoted, it is true, to purposes of education, but beyond the control of any individual, in which the teacher has no private interest and can have none until the happening of the event upon which private interest is made to depend. Except for this act, the proportion of primary school money which each district receives is devoted to the payment of teachers’ wages, or to what is made thereto equivalent (4 How. Stat. [2d Ed.], § 9897, 2 Comp. Laws 1915, § 5678), but a devolution not, however, binding upon the legislature.

While the legislation in respect to its general purpose, and in respect to the legislative power to accomplish the general purpose, may be unobjectionable, it may be that insuperable objections exist to carrying it into effect according to its terms. The argument, and I think the only argument which can be made to sustain the general power of the legislature in this direction, sustains the necessary corollary that the system of education to be established and controlled by the legislature must be one operating uniformly throughout the State, upon all affected persons and in all school districts. As matter of fact, this is the history of all prior general legislation upon the subject. The amendment considered here operates in a part of the State only, and not uniformly upon all persons affected by it. It is made operative in the city of Detroit by election. The school district of the city is excluded, not upon any attempted classification of districts according to the idea that the act ought to be applicable in some and not in others, but because there, is there a local retirement fund for teachers.

It is not, however, the case of mere exclusion of certain territory and the inhabitants therein from the operation of a general law. There are two laws upon the general subject, each affecting persons, teachers, as they may or may not be employed in a particular school district. As affecting the status of the teacher, years of service in Detroit count, under the law we are considering, as much as years of service elsewhere in the State. This is an advantage to the teacher who, having been employed in Detroit, seeks service elsewhere. On the other hand, a teacher, employed elsewhere, who obtains employment in Detroit, is, by accepting a position there, automatically excluded from participation in the fund which the act creates. The purpose to 'continue the local law is evident.

Although the fund sought to be created is devoted to public schools, and although the legislature has practically plenary powers in the matter of the system of public schools, there are some constitutional restrictions upon the legislative power to use the fund, in the system, to create a system which shall require, or permit, certain dispositions of money. Such a limitation is found in section 3, art. 16, of the Constitution, which denies the authority of the legislature or of any municipal authority to grant or to authorize to any public employee or contractor extra compensation after the service has been rendered or the contract entered into. This constitutional provision excludes, I think, as grounds for the appropriation of public moneys, all considerations of charity or gratitude, except that poor persons must be supported by the public.

“Extra compensation is "compensation- over and above that fixed by contract or by law when the services, were rendered.” Mahon v. Board of Education, 171 N. Y. 263, 266 (63 N. E. 1107, 1108, 89 Am. St. Rep. 810).

There is no reason for now affirming or denying the proposition that under our Constitution the State may reward distinguished public service, with a view to the promotion of loyalty and patriotism. Opinion of the Justices, 175 Mass. 599 (57 N. E. 675, 49 L. R. A. 564); Opinion of the Justices, 186 Mass. 603 (72 N. E. 95); Opinion of the Justices, 190 Mass. 611 (77 N. E. 820); Mead v. Inhabitants of Acton, 139 Mass. 341 (1 N. E. 413). The act does not purport to do any such thing as that. Nor, as framed, does it extend to all teachers affected by it an inducement to work for moderate pay and to continue in service. If it did, the pension or annuity might be, and I think should be, regarded as not extra compensation. But, in terms, the act grants what may be termed a pension to some teachers under contract to teach when it became effective, and it extends its benefits in a measure to certain public elective officers, with salaries, and to others employed wholly outside of the system of public schools.

For the reason that the act, in operation and by .its terms, will grant extra compensation to certain persons within the meaning of the constitutional provision, for the further reason that the repeal of the local act governing the Detroit school district, a part of the charter of the city, is left to the determination of a majority of school-teachers (no provision being made for determining the will of the majority nor for enforcing it), and to the electors of the school district, and for the further reason that it is impossible to say that with the objectionable portions of the law eliminated the legislature would have passed it, the act must be held to be invalid, and judgment of ouster entered.

No adjudicated case in which parallel facts were considered is cited. Some of the authorities, to many of which we were referred by counsel, which have been examined, are: 1 Dillon Mun. Corp. (5th Ed.) § 480 et seq.; Pennie v. Reis, 80 Cal. 266 (22 Pac. 176); Id., 132 U. S. 464 (10 Sup. Ct. 149); State, ex rel. Risch, v. Board of Trustees, 121 Wis. 44 (98 N. W. 954); Hughes v. Traeger, 264 Ill. 612 (106 N. E. 431); Pecoy v. City of Chicago, 265 Ill. 78 (106 N. E. 435); Ball v. Board of Trustees, 71 N. J. Law, 64 (58 Atl. 111); Allen v. Board of Education, 81 N. J. Law, 135 (79 Atl. 101); State, ex rel. Heaven, v. Ziegen hein, 144 Mo. 283 (45 S. W. 1099, 66 Am. St. Rep. 420); Commonwealth v. Walton, 182 Pa. 373 (38 Atl. 790, 61 Am. St. Rep. 712); Commonwealth v. Barker, 211 Pa. 610 (61 Atl. 253); State, ex rel. Ward, v. Hubbard, 22 Ohio Cir. Ct. R. 252, affirmed 65 Ohio St. 574 (64 N. E. 109, 58 L. R. A. 654); Friel v. McAdoo, 101 App. Div. 155 (91 N. Y. Supp. 454), affirmed 181 N. Y. 558 (74 N. E. 1117); Trustees of Exempt Firemen’s Fund v. Roome, 93 N. Y. 313 (45 Am. Rep. 217); People, ex rel. Waddy, v. Partridge, 172 N. Y. 305 (65 N. E. 164); State, ex rel. Haberlan, v. Love, 89 Neb. 149 (131 N. W. 196, 34 L. R. A. [N. S.] 607, with note, Am. & Eng. Ann. Cas. 1912C, 542); State, ex rel. Jennison, v. Rogers, 87 Minn. 130 (91 N. W. 430, 58 L. R. A. 663); Stevens v. Relief Ass’n, 124 Minn. 381 (145 N. W. 35, 50 L. R. A. [N. S.] 1018); People, ex rel. Manufacturing Co., v. Board of State Auditors, 9 Mich. 327; Smith v. Auditor General, 80 Mich. 205 (45 N. W. 136); Beach v. Bradstreet, 85 Conn. 344 (82 Atl. 1030, Am. & Eng. Ann. Cas. 1913B, 946.

Brooke, J.

My Brother Ostrander in his opinion-holds that the act under consideration is:

First. Not class legislation.

Second. That it deprives no person of property without due process of law.

Third. That it does not authorize the expenditure of public money for a private purpose.

Fourth. That it is unconstitutional because, as framed, it authorizes the taking of extra compensation within the meaning of section 3, art. 16, of the Constitution.

Fifth. That it is unconstitutional because of provisions of section 14, which excepts the city of Detroit from its operation.

With reference to the fourth point my Brother says:

“Nor as framed, does it extend to all teachers an inducement, certainly not an equal inducement, to work for moderate pay and continue long in service, in which case the pension or annuity might be, and I think should be, regarded as not extra compensation.” .

Under this head the argument is made that the act violates the Constitution because it does not extend an inducement (or an equal inducement), to those teachers in service under contract when the act became effective, nor to certain persons who are made beneficiaries of the act, though not employed in the public school system. This, I take it, means that no inducement is extended to public school teachers under contract when the act took effect, nor to those engaged in .educational work in State institutions outside of the public schools, nor to elective educational officers like county school commissioners. I am unable to agree with this conclusion. The educational system is not limited to public schools. It is as much the province of the legislature to promote the efficiency of other departments of the educational system as to promote that of the public schools. The Constitution (section 1, art. 11) provides that:

“Schools and the means of education shall forever be encouraged.”

Section 2 provides for the election of a superintendent of public instruction, whose “duties and compensation shall be prescribed by law,” and in section 10 it is provided that the legislature shall maintain certain enumerated institutions “and other educational institutions as may be established by law.” Whether these other departments of the educational system shall be included in the benefits of a retirement fund is, in my opinion, a matter of legislative discretion. The act under consideration holds out its benefits to all those in educational service when it took effect, whether that service be rendered under contract, through appointment, or by virtue of election; but those benefits are available only upon conditions involving efficiency and continued service. Contracts will not be renewed, reappointments and re-elections will not be secured, unless the service of these employees has, in the past, been found to be satisfactory. There is then an inducement held out to these, as well as to those entering service after the passage of the act, so to perform their duties as to secure continued employment, and this inducement, in view of the classification of the employees, according to length of service contained in the act, in my opinion, cannot properly be said to be unequal. It is to be noted that in Mahon v. Board of Education, 171 N. Y. 263 (63 N. E. 1107, 89 Am. St. Rep. 810), whose definition of extra compensation is quoted in support of the argument under consideration, it is conceded that it would not be extra compensation to include in the benefits of the teachers’ pension system those already in employment when the act took effect.

It seems to me to be immaterial whether the inducement be greater or less, for that obviously depends upon the circumstances of the individual. The test would appear to be: Will those to whom the benefits of the act are extended be induced thereby to render better and longer service? Public interest is sub-served, not only by inducing persons who are not in the public service to enter, but as well in inducing competent persons already in public employment to continue in it and to.render better service, so that they may secure such continuance. Teaching should be made a vocation instead of a stepping stone to another profession, and anything which tends to make the present educational force so regard it is a distinct public benefit.

My Brother Ostrander holds the act invalid because of the provisions of section 14. Under the terms of section 14, the act is not to apply to the city of Detroit (where for a number of years a local retirement fund has existed under the provisions of a special statute), until that fund shall be discontinued through local action. The argument is made that this provision destroys the general character of the act, and constitutes a violation of section 30, article 5, of the Constitution, which prohibits the legislature from passing any local or special act where a general act can be made applicable. This position rests upon the assumption that a general law must apply to every portion of the State, and must operate uniformly in each portion, unless different regulations are applied to different, districts upon some proper principle of classification. Assuming that this argument is sound, it does not follow that a general law must, to be valid, repeal all local .acts which provide regulations for their respective localities different from those of the general act covering the same legislative object. That a proper classification does not destroy the general character of legislation has been determined in this State. Hayes v. Auditor General, 184 Mich. 39 (150 N. W. 331); Burton v. Koch, 184 Mich. 250 (151 N. W. 48), and cases cited. A valid classification in a general law must be based upon some real difference or distinction. What could be more reasonable, in an act creating a retirement or pension fund for each of the school districts of the State, than to except therefrom by way of classification such school districts as already have such a law? The general object and purpose of the act is to establish a fund for the payment .of annuities or pensions to school-teachers, and if in any school district of the State such a fund has already been established, there was no occasion to make the act applicable to such districts in order to accomplish the object of the act, for the result is that all the school districts in the State after its enactment have retirement or pension funds. I am •therefore of opinion that the first portion of section 14 is a valid exercise of the legislative power. That portion of this section following the words, “provided however,” is in form a proviso to the preceding proviso or exception, but in reality it is substantive legislation, in that it undertakes to provide a method by which a local teachers’ retirement fund may be turned over to the State and be placed in its treasury to be administered by the State retirement fund board, created by the act. Whether it was within the constitutional power of the legislature to provide this method of initiating an election need not now be determined. The occasion may never arise where action is sought under the power of initiation provided. IÍ in the future action is attempted, its validity, in a proper proceeding, may be determined.

The demurrer should be sustained, and the application dismissed.

Stone, C. J., and Kuhn, Moore, Steere, and Person, JJ., concurred with Brooke, J. Bird, J., did not sit.


author: Person, J.

text:
    MICHIGAN STATE TELEPHONE CO. v. MICHIGAN RAILROAD COMMISSION.
    1. Telegraphs & Telephones — Railroad Commission — Ordering Connection — Validity of Order.
    Under the authority granted to the railroad commission by virtue of the terms of Act No. 206, Pub. Acts 1913, 2 Comp. Laws 1915, § 6689 et seq., the power of the commission to require a physical connection extends only to two or more persons, copartnerships, or corporations operating telephone lines which can be made to form a continuous line of communication. It gives the power to order a physical connection whenever and wherever those lines by such connection can be made to form a continuous line of communication whether between the different towns or between subscribers in the same town.
    2. Same — Due Process oe Law — Eminent Domain — Constitutional Law.
    The enforced physical connection between the lines of two companies would be an exercise of the right of regulation, and would not amount to such a taking as could only be justified by the power of eminent domain.
    3. Same — Discrimination—Statute.
    The relations of a, telephone company in this State are not simply with its own subscribers, but with the public generally, and it is forbidden by law to make any dis- . crimination between persons. 2 Comp. Laws 1915, § 6688.
    4. Same — Railroad Commission — Reasonableness.
    Since the regulation of public utilities by the State is thus, and necessarily, an interference to some extent with private property, it can be justified only by the demands of public convenience and necessity, and the regulation must be reasonable having in view the public interest to be subserved and the extent of the burden .imposed.
    5. Same — Necessity—Public Convenience.
    The statute does not require that the public necessity be peculiar to the particular case, for the existence of a public necessity in each particular case is not diminished by the existence of the same public necessity in all cases; and, under said Act No. 216, Pub. Acts 1913, 2 Comp. Laws 1915, §§ 6689-6714, the question whether public Convenience and necessity require physical connection of competing telephone lines in a particular case is a question of fact in every instance, the result of competition varying; in different localities. If there is a public need of the connection the statute is satisfied.
    6. Same — Decree—Charges—Evidence.

      Held, on an appeal from a decree for the defendant railroad commission, in a suit to test the validity of an order requiring the complainant and Citizens’ Telephone Company to connect their systems for toll line service in Traverse City, that the needs of the locality justified an order of the commission to the effect aforesaid and that its fixing of charges was not an abuse of discretion. The burden was on complainant to show that the connection would inflict undue loss upon it and one that could not be avoided by adjustment of the rates, tolls and charges.
    Appeal from Wayne; Van Zile, J.
    Submitted June 23, 1916.
    (Docket No. 145.)
    Decided December 21, 1916.
    Bill by the Michigan State Telephone Company against the Michigan Railroad Commission to vacate' an order requiring certain physical connections with the Citizens’ Telephone Company. From a decree for defendant, complainant appeals.
    Affirmed.

      Stevenson, Carpenter, Butzel & Backus (Thomas G. Long, of counsel), for complainant.

      Grant Fellotos, Attorney General, and David H. Crowley, Assistant Attorney General (Edwin H. Lyon and William A. Buhlke, of counsel), for defendant.
   Person, J.

On the 11th day of June, 1914, the Michigan railroad commission made an order:

“That the Michigan State Telephone Company and the Citizens’ Telephone Company, two Michigan corporations, make such a physical connection or connections between their toll lines or systems, in the city of' Traverse City as is required for the furnishing of toll line service to the subscribers of each company at the stations installed in their residences and places of business over the toll lines of the other company.”

The order was granted upon the petition of certain residents of Traverse City, who are said to represent in their application a large number of their fellow townsmen. Complainant, as one of the companies affected by the order, brings this suit, under the provisions of the statute, asking that it be vacated and set aside.

It appears from the record that both the Michigan State Telephone Company and the Citizens’ Telephone Company have exchanges in Traverse City. The Citizens’ Company has by far the larger number of local subscribers, 1,740 as against 479 of the Michigan Company, but the latter has the more extensive toll system, and handles a larger number of outgoing and incoming messages. The lines of the latter company not only afford better long-distance facilities, but reach every, or nearly every, city and village in the vicinity of Traverse City, while those of the Citizens’ Company fail to reach a number of important neighboring towns. Testimony was given explaining the telephonic connection of Traverse City with the exchanges in about 50 other places in that part of the State. For the purpose of more clearly understanding the situation these places may be roughly divided into three groups.

In the first of these groups, comprising more than half of the places considered, the Michigan Company operates the only exchange now in existence. Formerly there were two exchanges in each of these towns, the one owned and operated by the Michigan Company, and the other by what was known as thev Swaverly Company. At that time the Citizens’ Company in Traverse City and other so-called independent companies in other places were connected with the exchanges of the Swaverly Company so that the subscribers of the one could talk with the subscribers of the other. About March, 1912, the Michigan Company purchased from the Swaverly Company all of its property and business and united the exchanges of the latter company with its-own. But as a condition of the merger it was required by the railroad commission that the Citizens’ Company should be allowed to continue the same connection with the exchanges thus consolidated that had before existed with the Swaverly exchanges. As a result of this requirement the toll lines of the Citizens’ Company have continued to be, and are, connected with the switchboards of the consolidated exchanges in all of these Swaverly towns, as we will call them, so that the subscribers of either company in Traverse City are able to talk with the subscribers of the Michigan Company in the 30 or more Swaverly towns as if they were all reached by the same telephone system. In addition to these so-called Swaverly towns, there are a large number of places in the southeastern part of the State, including the city of Detroit, with which the holders of Citizens’ telephones have the same kind of connection, and from the same cause. With the towns in this group the present order of the commission will afford no new or additional facilities of communication to the residents of Traverse City.

In the second of the groups into which we have divided the towns around Traverse City, full competition still exists between the two telephone companies. There are in this group about nine cities and villages, and between these towns and Traverse City the Michigan Company and the Citizens’ Company has each its own toll line, and in them each maintains its own exchange. As between Traverse City and these towns the subscribers of one company cannot talk from their own telephones with the subscribers of the other, and will not be able to do so unless the physical connection is made between the lines of the two companies as required by the order of the railroad commission.

The third group is also composed of some nine or ten towns, and includes places of considerable import^ anee. In these towns the Michigan Company has the only exchanges and its toll lines are the only ones connecting them with Traverse City. With the residents of these towns the subscribers of the Citizens’ Company in Traverse City have no telephonic communication except by becoming subscribers of the Michigan Company, or by going to the public stations of that company.

Traverse City, according to the census of 1910, has a population of more than 12,000. It has wholesale and jobbing concerns patronized by merchants of surrounding communities. And it is the site of the Traverse City State Hospital for the Insane, which receives patients from the thirty-seven counties of the northern portion of the lower peninsula. The business men of the city must necessarily have telephonic communication, not only with residents of the city, who mostly use the Citizens’ telephone, but also with towns of the third group, which can be reached only over the lines of the Michigan Company. This forces a duplication of instruments, and there are 188 subscribers in the city who feel obliged to, and do, keep both telephones. And in asking for the order in question it was the object of petitioners to obviate the expense of two telephones, where one could be made to answer the purpose of both, and to bring about the same facilities of communication among telephone subscribers in the city, and between them and the towns of the second and third group, that they now have with the numerous towns of the first, or Swaverly, group, and with the towns and cities in the southeastern part of the State.

Upon the hearing of the case in the circuit court the order of the commission was upheld and a decree entered dismissing complainant’s bill. From this decree complainant, the Michigan State Telephone Company, appeals to this court.

The power of the railroad commission to regulate the business of telephone companies is to be found in Act No. 206 of the Public Acts of 1913 (2 Comp. Laws 1915, §§ 6689-6714), and authority to require the physical connection of telephone lines is contained in section 6 of the act, which reads as follows:

“Whenever the commission, after a hearing had on its own motion or upon complaint of any party in interest, shall find that a physical connection can reasonably be made between the lines of two or more persons, copartnerships or corporations operating telephone lines, whose lines by such connection can be made to form a continuous line of communication, and that public convenience and necessity will be subserved thereby, or shall upon like motion or complaint find that two or more persons, copartnerships or corporations so operating telephone lines have failed to establish joint rates, tolls or charges for service by or over their said lines, the commission may by its order require that such physical connection be made, and may prescribe through lines and joint rates, tolls and charges to be made and to be used and observed in the future. If such persons, copartnerships or corporations so operating telephone lines and telephone facilities do not agree upon the division between them of the cost of installing of such physical connection or connections, or the division of any joint rate, tolls or charges established by the commission over such through line, the commission shall have authority after hearing to establish such division.”

Upon considering this section of the act, it will be observed in the first place, that the railroad commission is given no authority by the statute to require a physical connection between the lines of two or more persons, copartnerships, or corporations operating telephone lines, unless the lines, by such connection, “can be made to form a continuous line of communication.” Complainant insists that this means a “continuous line of communication” between places not already connected by any telephone line, and that it does not apply to such a situation as that at Traverse City, which is now connected with practically all other places by the lines of the Michigan Company. If the lines of the Michigan Company, counsel say, in illustrating their position,- ran only from Charlevoix to Traverse City, and the lines of the Citizens’ Company ran only from Traverse City to Cadillac, then the lines might be required to connect so as to form a continuous line of communication between Charlevoix and Cadillac. And counsel argue that the statute should be so construed as to authorize the requirement of physical connection between telephone lines only in situations substantially covered by the illustration. In other Words, it is counsel’s position that in the hypothetical case connection of the lines might be required, under the statute, so that subscribers of the Citizens’ Company in Cadillac could talk with subscribers of the Michigan Company in Charlevoix, but that it could not be required so that subscribers of the Citizens’ Company in Traverse City should have the same privilege. In this we think counsel for complainant attempt to read into the statute a limitation not expressed by its language. There is nothing said about existing lines of communication, or the absence of such lines. Nor is the continuous line spoken of restricted to communication between differ-ent towns, and cities. We think the statute must be held to give the commission authority, if other necessary conditions exist, to order a physical connection of telephone lines whenever and wherever those lines “by such connection can be made to form a continuous line of communication,” whether the communication is between different towns or between subscribers to different telephones in the same town.

Complainant also claims that an enforced physical connection between its lines and those of the Citizens’ Company would not be an exercise of the right of regulation, but would amount to such a taking of its property as could be justified only under the power of eminent domain and upon the payment of compensation. As the basis of this contention, it is argued that the Citizens’ Company would be given the use and control of complainant’s lines every time one of its subscribers talked over them by means of the connection. In support of this position our attention is directed to Pacific Telephone & Telegraph Co. v. Eshleman, 166 Cal. 640 (137 Pac. 1119, 50 L. R. A. [N. S.] 652, Am. & Eng. Ann. Cas. 1915C, 822). With all due respect for that court, however, we find ourselves unable to agree with its conclusion as to the effect of a connection between competing lines. The business of a telephone company is to transmit oral messages from one point to another, and for that purpose every patron, whether he is a subscriber or not, has the use of its lines for the time being. That is the public use to which they are dedicated. Without the physical connection each subscriber to a Citizens’ telephone is entitled to the same use of complainant’s lines that he would have with the physical connection; the difference being that with the lines connected he can talk from his own telephone, while without the connection he would be obliged to go to a public station of complainant company. The relations of a telephone company in this State are not simply with its own subscribers, but with the public generally, and it is forbidden by law to make any discrimination between persons. 3 How. Stat. (2d Ed.), § 7221, 2 Comp. Laws 1915, § 6688. Complainant would have the same control over its own lines if the Citizens’ subscriber should talk from his house or office that it would have if he should talk from one of complainant’s public stations; and complainant, not the Citizens’ Company, would receive compensation for the use of the lines. It would amount simply, so far as this phase of the matter is concerned, to a difference in the way messages were got to and from the Citizens’ subscribers, and would be, not a taking of property by eminent domain, but a regulation in the interest of the public. This conclusion, we think, is in accordance with the weight of authority. Pacific Telephone & Telegraph Co. v. Wright-Dickinson Hotel Co., 214 Fed. 666; Pioneer Telephone & Telegraph Co. v. State, 38 Okl. 554 (134 Pac. 398); Wis consin Telephone Co. v. Railroad Commission, 162 Wis. 383 (156 N. W. 614, L. R. A. 1916E, 748).

In one sense there may be, and often is, a taking of property through the legitimate exercise of the power of regulation, and as necessarily incident thereto. In such case the company whose business is subjected to the regulation is not deprived of the title to or possession of its property, but it may be required to ■forego profits which it might otherwise receive; to apply its property, within the dedicated use, to some purpose contrary to its wishes; to expend its money as it would not otherwise expend it; to perform service it would not perform except for the regulation; and to submit to losses which it would prefer to avoid. In Wisconsin, etc., R. Co. v. Jacobson, 179 U. S. 287 (21 Sup. Ct. 115), the railroad company was required to expend its money for a railroad connection, and to submit to certain losses in revenue. In Chicago, etc., R. Co. v. Iowa, 233 U. S. 334 (34 Sup. Ct. 592), the company was required to accept and transport loaded cars received from other railroads, although it was willing and desired to use its own cars for the purpose. In Mayor, etc., of Worcester v. Railroad Co., 109 Mass. 103, the company was subjected to heavy expenses in establishing a union depot. And see Oregon R. R. & N. Co. v. Fairchild, 224 U. S. 510 (32 Sup. Ct. 535); Pittsburg, etc., R. Co. v. Railroad Commission, 171 Ind. 189 (86 N. E. 328); Grand Trunk R. Co. v. Railroad Commission, 231 U. S. 457 (34 Sup. Ct. 152), and many other cases. These relate mainly, if not wholly, to the connection of railroad tracks, but the principles announced are applicable to the control of any public utility by the State.

Inasmuch as the regulation of public utilities by the State is thus, and necessarily, an interference to some extent with private property, it can' be justified only by the demands of public convenience and necessity; and the regulation must be reasonable, having in view the public interest to be subserved and the extent of the burdeh imposed. Oregon R. R. & N. Co. v. Fairchild, supra; Great Northern R. Co. v. Minnesota, 238 U. S. 340 (35 Sup. Ct. 753).

The commission has found that the physical connection of telephone lines as directed by the order in question is a public convenience and necessity, and we think it had sufficient grounds for that conclusion. The telephone has become a vital element in the business and social life of the people, and enters so largely into the conduct of all of their affairs that the elimination of unnecessary expense and the saving of time in its use have become matters of importance. Men can no longer afford to loiter around public pay stations for the purpose of ■ sending or receiving messages, and the duplication of instruments in the house and office has grown into a waste of large proportions. These evils come largely from the existence of competing companies in the same community, and so far as reasonable regulation can improve the situation such regulation is assuredly required by public convenience and necessity. Communities should not be held up until one or the other of adverse companies; has been eliminated through the long battle of competition, if the delay can be justly and lawfully avoided. This was evidently the view of the legislature when telephone companies were brought under the control of the railroad commission, and that body was given the powers of regulation conferred by the statute referred to. It is suggested, however, by counsel for complainant, that the evils mentioned as furnishing grounds for regulation in the interest of the public are evils common to all competition between telephone companies, and could not have been within the. contemplation of the legislature when it required in each case, before action by the commission, a special finding that public convenience and necessity would be subserved thereby. In answer it may be remarked that the existence of a public necessity in each particular case would not be diminished by the existence of the same public necessity in all cases. And the results of competition must vary as between different localities, so that the question remains in every instance whether public convenience and necessity requires action on the part of the State in that particular case. It is also suggested by complainant that the connection of lines at Traverse City is not necessary because the residents of that city can rid themselves of the troubles of which they complain by surrendering their Citizens’ telephones and substituting those of the complainant company. This is the solution that competition always holds out to the public. But experience has shown that it is not a very practical solution, and it ignores the necessities of the outside public which requires facility of communication with Traverse City as much as Traverse City requires facility of communication with the outside public. And this public necessity spoken of in the statute is not an absolute necessity. We agree with the supreme court of Wisconsin that:

“If there was a strong or urgent need of the connection here sought, then there was a necessity for it.” Wisconsin Telephone Co. v. Railroad Commission, supra.

And there was evidence justifying the commission in finding the existence of such need.

That a physical connection may be required, in many instances at least, between the lines of competing companies without injury to either, is clearly shown by the record in this case. The toll lines of the Citizens’ Company and those of the Michigan Company both run into the same exchanges in the 30 cities and villages of the Swaverly territory, as well as into the exchanges of the more numerous places in the southeastern part of the State. While this arrangement may not constitute a technical connection'of the lines, it yet has the effect as to toll service of a physical connection. Neither party complains of injury from this mutual service, while the results are unquestionably beneficial to the public. And complainant may well be required by the commission to extend the same facilities generally to the residents of Traverse City unless it has been able to show some insuperable objection to doing so.

The objection complainant does raise as to the reasonableness of the order in question relates entirely to its effect upon its local exchange in Traverse City. That exchange, it says, will be destroyed if the order goes into effect. It bases this conclusion upon the fact that the business houses of the city find it necessary, without the connection, to use its telephone in communicating with the towns in the third group, as we have classified them, to which complainant has the only toll line. These telephones will be no longer required, it says, if, by means of the connection, these towns can be reached from the telephones of the Citizens’ Company. And it further claims that with the removal of its telephones in the city the value of its toll service with the Swaverly towns must be much impaired.

Undoubtedly complainant might suffer some loss if these results should in fact follow the enforcement of the order; yet just what the loss might amount to we are unable to determine with any accuracy from the record. But we do not think that complainant has shown with sufficient certainty that the apprehended results would in fact follow the enforcement of the order. And it is insisted by the railroad commission that they would not. The commission has full power under the statute to prescribe the joint rates, tolls, and charges to be made for the use of the connection and to determine the division of such rates, tolls, and charges if the parties interested fail to agree upon the division. In fixing these rates, tolls, and charges the commission seems to have a very large discretion, and while unquestionably they must be reasonable when all the circumstances affecting the situation are taken into consideration, yet they are not necessarily limited to the actual cost of operation or even to an ordinary profit thereon. In fixing the rates, tolls, and charges, the commission may undoubtedly take into consideration all of the equities growing out of the regulation and make use of the rates in adjusting those equities. This the commission says it intends to do, and it has retained jurisdiction of the matter for the purpose of'fixing and adjusting the rates, tolls, and charges if the parties themselves fail to agree upon them. And the commission insists that a proper adjustment of rates, tolls, and charges will prevent the injurious results anticipated by complainant. It is the purpose of the commission, it says, not to make use of the rates, tolls, and charges by way of compensation, but to prevent the occurrence of loss. In other words, a proper adjustment of the rates, tolls, and charges will, in the judgment of the commission, remove all inducement on the part of complainant’s subscribers in Traverse City to discard the telephones they now hold from complainant, and thereby to injure its local exchange.

Will the adjustment of the rates, tolls, and charges, when properly made, remove the danger of destruction of its local exchange which complainant fears? The whole thing, both as to the danger of loss and as to the remedial provisions intended by the commission, is somewhat a matter of speculation. It is for complainant to show affirmatively that the physical connection ordered by the commission will inflict upon it an undue loss and one that cannot be prevented by the contemplated adjustment of rates, tolls, and charges. The interest of the public in a proper regulation of public service corporations is continually becoming more vital and important, and any action of the State through its organized boards and commissions in the exercise of that power should not be set aside by the courts, except in instances of the clearest necessity. This is the view taken by the legislature. Section 18 (2 Comp. Laws 1915, § 6706) of the act explicitly declares that:

“In all actions under this section the burden of proof shall be upon the complainant to show by clear and satisfactory evidence that the order of the commission complained of is unlawful or unreasonable, as the case may be.”

What rates would be required to prevent the surrender of complainant’s telephones by such residents and business houses of the city as now employ them is not shown by the record. Nor is it shown that an adjustment of rates, tolls, and charges by the commission under its powers as we have construed them could not be so made as to obviate the injurious results which complainant apprehends from an enforcement of the order. And from the very nature of the order it is within the power of the commission to rescind it if it is found to operate unduly to complainant’s injury.

For these reasons, the decree appealed from will be affirmed, with costs to the defendant.

Stone, C. J., and Kuhn, Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred.


text:
    McMANIGLE v. DETROIT UNITED RAILWAY.
    Street Railways — Negligence—Contributory Negligence — Directed Verdict — Signals.
    Where plaintiff started to cross a wye of defendant’s tracks to reach a car which he purposed to board, and was obliged to pass in the rear of a standing car that was about to back up to turn about on the intersection, and no warning or signal was sounded to indicate the intention to back, as required by an ordinance of the municipality, known to the plaintiff, and there was no conductor on the rear platform, as also required by ordinance, the trial court erred in directing a verdict for defendant on the ground that plaintiff did not look after he left the curb, in taking five or six steps and passing behind the standing car. He was entitled to assume that the servants of defendant would conform to the provisions of the ordinance and the standing car would not back up without a conductor at the rear to sound a warning or take necessary precautions.
    Error to Wayne; Van Zile, J.
    Submitted June 22, 1916.
    (Docket No. 29.)
    Decided December 21, 1916.
    Case by Archibald J. McManigle against the Detroit United Railway for personal injuries. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Reversed.

      Charles T. Wilkins, for appellant.

      Corliss, Leete & Moody (Frederick T. Harward, of counsel), for appellee.
   Person, J.

On the 12th day of June, 1913, plaintiff was hit by a street car on Dix avenue, in the city of Detroit, and severely injured. At the trial a verdict was directed for defendant upon the ground that plaintiff was guilty of contributory negligence.

Dix avenue runs in an easterly and westerly direction, and upon it defendant has a double track for its cars. The northerly track is used for west-bound cars, and the southerly track for cars going east. Livernois avenue intersects Dix avenue from the north, but does not extend beyond it towards the south. Livernois avenue also has a double street car track, and cars coming down it towards the south turn by means of the westerly leg of a “Y” upon the northerly track on Dix avenue, back up towards the east, and then turn north on the easterly leg of the “Y” to the east track on Livernois avenue. On the day in question, a Sherman street car had come down Livernois avenue from the north, run out on the west leg of the “Y,” and backed to the east on the north Dix avenue track to a point near the east leg of the “Y,” where it stood with the front end towards the west and the rear end towards the east. About the same time a Springwells car was run in from the west on the southerly Dix avenue track and stopped with the end of the car a little farther east than the rear end of the Sherman street car. The Springwells car reversed its trolley and prepared to start west. It was what is sometimes called a “doubl'e-ender” with platforms for the entrance of passengers at each end. The steps to the platform at the east end were on the north side of the car and at the west end on the south side.

In determining whether a plaintiff’s proofs show a prima facie cause of action, it is always necessary that they be construed as strongly in his favor as is reasonably possible. Putnam v. Railway, 164 Mich. 342 (129 N. W. 860). So construed, the particular facts of the injury were as follows: Plaintiff, with a friend named Hayes, was standing on the north sidewalk of Dix avenue, nearly north of the west end of the Springwells car; and, wishing to go in the direction that car would take, they started across the street to enter it by the easterly platform. There is an ordinance of the city of Detroit requiring a conductor, as well as a motorman, upon every car, and another ordinance making it the duty of the conductor to be upon the rear platform and give warning to pedestrians and vehicles whenever the car is about to be backed. In going to the Springwells car from where they stood, it was necessary for plaintiff and Hayes to pass in the rear of the Sherman street car, but just how many feet from that car it is not definitely shown. Both were aware of the ordinance mentioned, and just as they were leaving the sidewalk both noticed that there was no conductor on the rear platform of the Sherman street car. They believed it would not start until he was there, and thought they could pass to the Springwells car in safety. From the northerly curb on Dix avenue to the north rail of the northerly track on that avenue, it is 15.4 feet. Both say that the Sherman street car was standing still when they started- and without any indication that it was about to be moved. Hayes was ahead and got across the northerly track on Dix avenue in safety; but plaintiff, who was just behind him, was struck by the Sherman street car, which had begun to back, without the conductor being on the rear platform, or any warning from him. It is conceded that plaintiff did not take another look at the Sherman street car after he left the sidewalk, and it was for this that the trial court held him guilty of contributory negligence.

We cannot agree with the trial court in that conclusion. If the car had been moving when plaintiff looked at it as he was leaving the sidewalk, the situation would have been different; or, if there had been any indication that it was about to be backed, he should have been upon his guard. But he is not to be charged with the duty of assuming that the car might be backed in violation of the ordinance. Defendant calls attention to plaintiff’s admitted knowledge of the- fact that the car would have to be backed farther before it could turn onto the east leg of the “Y”; but, even knowing ,this, plaintiff had the right to assume that it would not be backed until the conductor was on the rear platform to give notice and warning. Plaintiff and Hayes were walking rapidly, and it was only five or six steps from the curb to the northerly track. People were getting on the .Springwells car and it was about to start. Under these circumstances, we do not think it can be said that plaintiff was guilty of contributory negligence as matter of law. We think, rather, that the case is governed by the principles' laid down in Putnam v. Railway, supra, and the cases there cited.

. The judgment is reversed, with costs, and a new trial ordered.

Stone, C. J., and Kuhn, Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred.


text:
    CITY OF BAY CITY v. LUMBERMEN’S STATE BANK.
    1. Municipal Corporations — Bonds—Sales—Principal and Agent —Price.
    By paying for an entire issue of municipal bonds of tbe city of Bay City at a price agreed upon, without any report of further dealings therewith by the bank, which in turn disposed of nearly all the bonds to its customers, the bank became a purchaser, not an agent, of the city, which had or claimed no interest in the proceeds of subsequent sales made to customers of the bank, and especially where the parties themselves treated the transaction as a sale and so described it in the written contract executed between them.
    2. Same — Commission—Contracts—Illegality.
    Under Act No. 720, Local Acts 1907, wbicb authorizes the-expenditure of the funds from the foregoing bond issue exclusively for the purposes of a park, the payment of $4,000 to defendant bank as a commission for the sale of the bond issue, out of the proceeds, was unlawful and in excess of the authority granted by statute, amounting in effect to a rebate or discount.
    3. Same — Estoppel.
    Plaintiff city was rightly held by the trial court to be entitled to recover back the commission, so called, as the doctrine of estoppel which defendant attempted to interpose would not be held applicable to an unauthorized payment in violation of statute.
    Error to Bay; Sharpe, J., presiding.
    Submitted June 13, 1916.
    (Docket No. 51.)
    Decided December 21, 1916.
    Assumpsit by the city of Bay City against the Lumbermen’s State Bank for money had and received. Judgment for plaintiff on a directed verdict. Defendant brings error.
    Affirmed.

      Joslyn & Houghton,, for appellant.

      Cowmans & Gaffney, for appellee.
   Person, J.

This action was brought to recover the sum of $4,000 theretofore paid by plaintiff to defendant in connection with the sale of certain bonds, known as the Wenonah Park bonds.

By an act of the legislature, approved March 14, 1907, the city of Bay City was authorized to acquire a site for and to lay out, establish, make, alter, and regulate a public park and grounds; and for that purpose to borrow not to exceed $200,000 and issue its bonds therefor. Section 3 of the act provided:

“If authorized by the vote of the electors, .said loan shall be secured by the bonds of the city payable at such times, not less than ten years after the date of their issue, and shall bear such rate of interest, not exceeding four per cent, per annum, as said common council shall determine. The said bonds shall be indorsed ‘Bay City Bonds’ and numbered consecutively, and no sale thereof shall be negotiated at less than face value or par. The proceeds derived from the sale of said bonds shall be paid to the city treasurer and by him placed to the'credit of a fund to be known Us a public park fund. No appropriation or payment out of said fund shall be ordered by the common council, or made, except for the purpose of acquiring a site for and laying out, establishing, making and maintaining a public park and grounds.” Act No. 409, Local Acts 1907.

At the same session of the legislature, and by an ict approved June 27, 1907, provisions were made for ;he appointment of a board of park commissioners to cake charge of the public parks and grounds of the city, and exercise supervision over them. The eomnon council was required by this act to sell the bonds authorized by the preceding act and deposit the proceeds with the treasurer of the city, to the credit of 3, fund to be known as the “Wenonah Park fund.” And t was further provided that:

“No money shall be drawn therefrom except upon ;he order or warrant of said commission, duly authenticated by its secretary and signed by its chairman md countersigned by the comptroller of said city. The proceeds of the sale of said bonds shall be used exclusively for paying the cost and expense of purchasing and condemning or otherwise acquiring the property herein described for said Wenonah Park, and to pay the cost and expense of laying out the grounds so acquired and improving and making same into a suitable public park, it being the intent and purpose of this act that all of the funds obtained from the sale of said bonds shall be expended exclusively Ifor said Wenonah Park.” Act No. 720, Local Acts 1.907, § 11.

Section 16 of the same act reads as follows:

“Said board of park commissioners shall have powei and authority to contract for the sale of and to sell at the best price obtainable, in their judgment, any buildings, building material or salvage, upon '.the site of said Wenonah Park; also to contract for the removal of such buildings, building material and salvagi therefrom on the best terms which, in their judgment may Jbe obtained. The proceeds of the sale of suet buildings, building material or salvage shall be paic into the treasury of Bay City and there deposited tc the credit and as part of said Wenonah Park fund to be used, expended and paid out for the purpose anc in the manner in this act provided.”

At the April election, following the passage of thest acts, the issuance of the bonds was duly authorizec by a vote of the electors; and after an unsuccessful attempt to effect their sale by advertisement, the common council received the following proposition' iron the defendant bank:

“Bay City, Michigan, July 5, 1907.
“To the Honorable Gustaves Hine,
“Bay City, Michigan.
“Dear Sir: Concerning the park bonds of Bay City to be issued, I am authorized to make the following proposition: For the issue of $200,000 we will tak< these bonds at par with accrued interest from date oí bonds up to and including June 30, 1907, less a com; mission or discount of $4,000.
“H. H. Norrington,
“Vice President Lumbermen’s State Bank.”

In July of the same year, the ways and means com-J mittee of the common council made a report to thall body, which was adopted by unanimous vote. This! report read as follows: 1

“Gentlemen: We have had under consideration thei matter of the sale of park bonds, and have received! a proposition from the Lumbermen’s State Bank tc| take said bonds and pay the city par and accrued in fcerest therefor, said bonds to be delivered to said bank August 1st, or as soon thereafter as possible, on condition that the park commission will pay to the said bank the sum of $4,000 for negotiating the sale of said bonds at par and accrued interest from the receipt of rents from the buildings now located on the property intended for park purposes after the same has been acquired by the park commission. We therefore recommend that such proposition be accepted, and that the mayor and comptroller procure the said bonds at once, properly lithographed and designated Wenonah Park bonds, in form to the satisfaction of the bank’s attorney.”

On October 7, 1907, the bank made the following reply to this action of the common council:

“Bay City, Michigan, October 7, 1907.
“To the Honorable Mayor and Common Council,
“Bay City, Michigan.
“Gentlemen: Our proposition to purchase the $200,-000 park bonds having been accepted by your honorable body with certain modifications with reference to details fully set forth in a report of your ways and means committee, adopted and approved by your honorable body July 15, 1907, we herewith accept such conditions and the provisions set forth in said report.
“Yours, etc.,
“Lumbermen’s State Bank,
“By H. H. Norrington, Vice President.”

After the action of the common council above recited, and prior to its acceptance by the bank, the board of park commissioners had, under date of September 9th, passed the following resolution: '

“Resolved, that the authorization by the common council of Bay City to this board to pay the Lumbermen’s State bank the sum of $4,000 on the sale of the park bonds to said bank be and is hereby approved, and that this commission will promptly comply with said provision, and will pay same at the earliest opportunity after the sale is consummated and said conds are delivered to said bank, the said $4,000 to be paid from the rents and salvage from said Wenonah Park property.”

The defendant bank offered to show upon the trial that the proposition from the bank referred to in the report of the ways and means committee was an oral proposition, and not the one contained in the letter from the bank of July 5th. The evidence was excluded and its rejection is assigned as error; but, even if received, it would not have been material. It is not shown that it ever came to the knowledge of the common council, and, whatever it was, the contract itself is contained in the report of the committee as adopted by the council, and its acceptance by the bank.

Before any of the bonds were delivered to the bank the following agreement, bearing date May 1, 1908, was signed by its president and the mayor of the city:

“Whereas, the two hundred thousand dollar bonds, commonly known as the Park bonds, have heretofore been sold to the Lumbermen’s State Bank, and, whereas, said Lumbermen’s State Bank has heretofore beer designated as a depository of the proceeds derived from the sale of said bonds, they to indemnify the city in the sum of two hundred thousand dollars ($200,000), it is hereby agreed and understood tha1 said Lumbermen’s State Bank is to immediately take such bonds and credit the city to the benefit of the park fund in the sum of two hundred thousand dollars, and to furnish the city with an indemnity bond in the sum of fifty thousand ($50,000) dollars to be signed by some satisfactory surety company.
“Also that said bank shall give to the city a bond in the sum of one hundred and fifty thousand ($150,-000) dollars, to which shall be attached one hundred and fifty thousand dollars of the aforesaid park bonds as collateral security; both of said bonds to indemnify and save the city harmless from any loss on the deposit of said two hundred thousand ($200,000) dollars in said Lumbermen’s State Bank.
“That on the delivery of said indemnity bonds to the city treasurer he will deliver to said Lumbermen’s i State Bank the aforesaid park bonds in the sum of two hundred thousand dollars and will receive from said bank a receipt for said two hundred thousand dollars together with the amount of interest now accrued on said bonds.
“It is further agreed and understood that upon application from the bank the city treasurer will deliver to it such portions of the one hundred fifty thousand ($150,000) dollars of bonds held as collateral to' any amount of same not exceeding the amount guaranteed by the said fifty thousand ($50,000) dollars indemnity bond, or to such other amounts as a satisfactory indemnity bond shall be furnished by the said bank to the city treasurer.
“This memorandum of agreement made and entered into by and between the parties interested for and ;on behalf of the city and said bank, this first day of May, A. D. 1908.”

, The bank assumed control of the bonds and credited the Wenonah Park fund, on May 18, 1908, with their face value — $200,000—and with the accrued interest thereon; and from that time the park commissioners drew against the fund as their necessities required. ’ The park commissioners also deposited with the bank to the credit of the same fund the moneys received by them for rents from the park property, and from the sale of buildings thereon.

At some period, the exact date of which does not seem to be given, a further agreement was entered into between the bank and the city, the agreement being signed by the president of the bank and the mayor. This agreement begins with the following recital:

“Whereas, the city of Bay City has heretofore sold to and the Lumbermen’s State Bank has heretofore purchased Bay City bonds in the amount of two hundred thousand dollars, which bonds were issued for the purpose of acquiring and constructing a public park; that on said sale of said bonds the said Lumbermen’s State Bank gave to the city an indemnity bond in the sum of one hundred and fifty thousand dollars ,and a certificate of deposit issued by the People’s State Bank of Detroit in the sum of fifty thousand.dollars, which said certificate and bond were given by said bank to said Bay City to indemnify said city against any loss by reason of said Lumbermen’s State Bank then and there becoming and being the city depository, for said two hundred thousand dollars — the proceeds received from the sale of said bonds”

—and then provides for a transfer and conveyance of, $50,000 of the bonds from the bank to the city, to be held in trust as security for the city deposits then in the bank.

On May 13,1910, the commission of $4,000 provided for by the report of the ways and means committee as, adopted by the common council was paid to the bank out of the Wenonah Park fund. It was to recover back this payment that the present action was brought. The moneys credited to the fund for the bonds and the other things mentioned had practically all been drawn out by the park commission except enough to make the payment. The bank had on hand, at the time, about $30,000, par value, of the bonds. The balance it had sold, from time to time, in small quantities. So far as the record shows the bonds so remaining are yet in the hands of the bank.

It is the theory of counsel for plaintiff that the transaction between the city and the bank constituted an absolute sale and purchase of the bonds at par, and that the payment of $4,000, as a so-called commission, amounted in effect simply to a rebate or discount in violation of the statute. The trial court took this view of the matter and directed a verdict for plaintiff. The bank contends that it never purchased the bonds, but sold them for the city, and that the commission was compensation for its work which the city was authorized to pay.

To our minds the transaction was a sale and purchase of the bonds. The parties not only characterized it as such in express terms, but it possessed every fundamental attribute of a sale and purchase. It was for a certain fixed price paid by the bank. The city thereafter had no interest in the selling value of the bonds. Had they appreciated in value the bank and not the city would have received the benefit. Had they depreciated the loss would not have fallen upon the city. It does not appear that the bank ever made any report of its sales to the city or that there was an accounting for the proceeds of the bonds it sold. In all of the papers executed after the bank had accepted the proposition contained in the report of the ways and means committee, the transaction was expressly recognized as a sale and purchase.

It is unnecessary to determine whether or not, under the limitations of the act, the city would have had power to pay a commission to an agent or broker for selling the bonds. If, as we have found to be true, the bank purchased the bonds outright, it was not an agent of, nor did it sell the bonds for, the city. It did not render the city any services for which it was entitled to a commission. The money paid to the bank amounted in substance and effect to a discount in violation of law, which required the bonds to be sold, at par. Village of Ft. Edward v. Fish, 156 N. Y. 363 (50 N. E. 973); Appeal of Whelen, 108 Pa. 162 (1 Atl. 88). Further than this, the control of the “Wenonah Park fund” by the park commission was purely statutory, and it had no authority to make any payment therefrom to a purchaser, as such, of the bonds.' Neither does the doctrine of estoppel apply, as contended for by the bank, inasmuch as the payment not only was unauthorized, but in violation of the express provisions of the statute.

The judgment is affirmed.

Stone, C. J., and Kuhn, Osteandee, Bied, Mqoee, Steeee, and Beooke, JJ., concurred.