text:
    HOLLAND FURNITURE CO. v. KNOOIHUIZEN.
    1. Corporations — Liabiutv of Manager for Assets — Accounting.
    The manager of a furniture company cannot be compelled to account for tbe proceeds of sales of samples of the company wbere no record is made on the books and such proceeds are used in paying notes of a third person on which the company was liable, and of which .there was also no record on the corporate books.
    2. Same.
    A settlement between the representatives of the estate of a deceased officer of a furniture company and such company whereby the company acknowledges payment in full and releases and discharges all claims of the company against the estate includes outstanding “kited” paper which was illegally issued by such deceased officer but which an audit of the books had disclosed, and the fact that the successor, of deceased renewed or kept alive such obligation is immaterial.
    3. Same.
    Where defendant, instead of charging an account to profit and loss, improperly credited the debtor and charged the amount to commissions and thus wiped out the account, he cannot be .charged with the account if it was fictitious and the company thus suffered no loss.
    4. Same.
    Defendant officer could be required to account for the sum paid out of corporate funds to a third person in satisfaction of a personal note.
    5. Same.
    Where defendant manager had no authority to subscribe for stock in another corporation in the name of the company, he could not recoup his loss by canceling a valuable lease held by the company, taking a new lease in his own name and then profiting by subleasing to his own and other companies, and he must account for the money thus received.
    6. Same.
    Defendant manager could be compelled to account to the company for the unearned portions of the salary of his deceased predecessor where, without authority, he credited the account of such deceased officer with the amount of salary unearned in the month that deceased died, as well as with the earned portion, and used the proceeds to pay debts of such deceased officer.
    7. Same.
    Where an officer of a corporation collects on small sales of merchandise without making any entry of the proceeds on the books, he is bound to account therefor if he is unable to show that he has paid out such proceeds in satisfaction of an increased salary to another officer.
    8. Same.
    A managing officer of a corporation may be required to account for excess interest paid to a relative on a loan made by her to the company where he pays interest on the full amount of the loan, disregarding previous payments on the principal.

      9. Same.
    Where a managing officer of a corporation cancels an indebtedness of a relative and employee of the company by crediting such employee with labor and such employee had been receiving full payment of his salary and an extra amount not appearing on the pay roll and there was nothing due him, such officer may be required to account for the amount of such indebtedness.
    10. Same.
    A managing officer of a corporation may be required to account to the corporation for the reasonable value of work performed on property of his relations by employees of the company at his order and without charge, especially where work could have been found for the men to do at the plant of the company.
    11. Same.
    Where defendant officer kept no record of the time of the employees while they were working on the premises of his relatives he cannot be heard to complain, in a suit by the company for an accounting, of the indefiniteness of the proof, when he is required to account for the' reasonable value of such work.
    12. Same.
    Where a defendant corporate officer used the labor of employees of the company to construct .a residence for himself and fitted his house with specially designed furniture made in the plant and no record was kept of the time of such employees he may be compelled to account for the reasonable value of such labor and of such furniture.
    13. Same.
    A managing officer of a furniture .corporation, having charge of the making of all contracts for the company, who receives valuable gifts from companies with which the company deals and uses such gifts in the construction of a home, commits a breach of trust and may be required to account for the value of such gifts.
    Appeal from Ottawa; Cross, J.
    Submitted April 12, 1917.
    (Docket No. 80.)
    Decided July 26, 1917.
    Bill by the Holland Furniture Company against Albert Knooihuizen for an accounting. From the decree rendered, both parties appeal.
    Modified and affirmed.

      Charles IT. McBride and Willies & Stone, for plaintiff.

      Diehema, Kollen & Ten Cate (Colin P. Campbell, of counsel), for defendant.
   Fellows, J.

Plaintiff, a Michigan corporation with capital stock of $50,000, was. organized in 1890 by one Jacob G. Van Putten and associates, to manufacture furniture at the city of Holland. Van Putten and his relatives controlled about two-thirds, of the stock, and he was its active manager until his. death January 9, 1909. Defendant was a brother-in-law of Van Putten, a physician by profession, and from 1900 until Van Putten’s death was. assistant to his brother-in-law. On Van Putten’s death he succeeded as. manager, and had charge of and conducted the business of plaintiff until October, 1914. He also held the offices of secretary and treasurer, and was authorized to borrow money, execute notes of the company, purchase material, and possessed such general powers as are usually incident to the positions held by him in the company. This bill was filed for an accounting covering the period of his management. Many items were allowed and several disallowed. From those allowed defendant appeals; from those disallowed plaintiff appeals. This necessitates a consideration of all the items involved in the transactions between defendant and the company covering nearly six years. A satisfactory disposition of the case requires a separate consideration of each of the transactions questioned.

The Shephard Deal. We are satisfied from this record that during the Van Putten administration, and covering a period of many years, note kiting was conducted by him on a large scale. Negotiable paper of plaintiff in considerable amounts was issued, without consideration, to different parties and disposed of to bona fide purchasers. Plaintiff, through Van Putten, indorsed other paper, likewise floated. This dishonest practice seems to have been conducted with nothing but a suspicion on the part of some of the board of directors of its existence, and without even suspicion on the part of others. The directors did not direct; they only met twice a year, and then only to declare dividends, and did not apparently, feel that they owed the duty to the company of familiarizing themselves with the affairs of the company, and directing its activities. Had they discharged their duty as directors it is highly improbable that loss would have fallen on the company through these illegal practices. As it was, Van Putten was permitted to entirely dominate and control the company as he saw fit. This kited paper was issued without check and without entry on the bills payable of the company, and while some of it was paid by the parties for whose benefit it was issued, much of it was not. Van Putten seems to have attempted to keep an account of it on a private book, but we are not certain from this record that he entered it all. So far as this fictitious paper is involved we are concerned only as to the so-called “Shephard deal” and the “C. L. King & Co. deal”; to the latter we shall presently refer. The other kited paper had been retired by the parties for whose accommodation if was issued.

One A. L. Shephard was a designer and later sales manager of plaintiff. We are satisfied that under the Van Putten administration of this company at one time there was outstanding of so-called Shephard paper, on which plaintiff was liable, $13,000, paper for which plaintiff received no consideration, but which was issued as above stated, for Shephard’s accommodation, and which found its way into the hands of bona fide purchasers. Shephard was interested in a zinc mine, and it is highly probable much of this money was sunk in this mine, but we are satisfied that it all took place during the Van Putten administration, and that the claim of plaintiff that defendant had to do with the diversion of the funds of plaintiff to the zinc-mining proposition of Shephard is entirely without foundation. Defendant did purchase $500 worth of stock in the mine, but traded it for sugar stock, and was out of the mining deal long before Van Putten’s death. We are also satisfied that at the time of Van Putten’s death Shephard was totally irresponsible, and that this accommodation paper, somewhat reduced in amount, was in the hands of the National Bank of Sturgis, of which a Mr. Anthony was cashier.

Soon after the installation of defendant as manager of the company he learned of the existence of the kited paper by notices from banks holding it. Instead of calling the board of directors together and laying before them the situation as he should have done, and placing those obligations of the company on the books of the company, he arranged to take care of them by renewals and payment out of the assets of the company, without the transactions being accurately recorded in the company’s books. Van Putten was his brother-in-law, had stood high in the city of Holland, had been postmaster, treasurer, and mayor of that city, and was respected by its citizens. Defendant chose the wrong course to protect his memory.

Furniture manufacturers hold two sales annually at Grand Rapids, one in January and one in July. They there exhibit their samples and take orders from furniture dealers. This sample furniture is usually sold after the sales are over to parties, making a business of dealing in sample furniture. For three successive sales defendant disposed of the samples exhibited, and turned in the notes received in payment to extinguish the liability of the company on the Shephard notes. The Shephard notes did not appear on the books of the company, and he made no entry of the sales of the sample furniture on the books of the company. His conduct deserves the severest condemnation, but we cannot say that he has not accounted for the proceeds of these sales. He has used the assets of the company to discharge the legal liability of the company.

Under the circumstances of this case and his manner of handling company assets, defendant must be held to the strictest accountability, but where he has used company assets to reduce company liabilities, he cannot be personally charged with such assets, because his bookkeeping, or want of bookkeeping, leaves him open to suspicion and a most rigid examination of every item of his accounting. Decrees cannot pass in. the face of the only testimony appearing in the record, nor upon plausible innuendoes based upon an ingenious assorting of bits of testimony gathered here and there from hundreds of pages of cross-examination. The trial court was satisfied, and found that the notes which were received from the sale of sample furniture went to pay the Shephard notes which the company was legally obligated to pay, and that defendant should not account for them. A careful reading of this record of 717 pages convinces us that he reached a correct conclusion on this item.

The C. L. King & Co. Deal. Under the Van Putten administration the practice of kiting paper was indulged in with C. L. King & Co. This was a Holland institution, and was managed by W: W. Hanchett. Plaintiff was obligated on over $19,000 of King & Co. paper when defendant became manager. Before Van Putten’s death King & Co. had sold its plant to the Eastern Basket & Veneer Company, taking stock in that company in payment. It, however, continued to transact some business at Holland. Soon after defendant became manager he received notice that one of the King & Co. notes was due. He found no record of if on the books of the company, and at once sought out Mr. Hanchett. From him he learned the extent of the liability of the company on the King & Co. paper. It was scattered in various banks, and defendant consulted the attorney for the company as to the most advisable course to pursue. King & Co. could not pay these notes, neither could plaintiff, with cash then on hand. It was hoped that King & Co. would eventually pull through and be able to pay its debts. There was but one thing to do as the parties then viewed it, and that was to renew the paper. It was paper issued by defendant’s predecessor, and was in the hands of bona fide holders. Defendant renewed it from time to time as it fell due, sometimes in the same bank, sometimes by placing loans in other banks for the purpose of taking it up. These renewals were not entered in the bills payable account of the company. King & Co. went into the hands of a receiver. The exact date does not'appear, but plaintiff’s original claim against it, filed in the district court for the western district of Michigan, bears date September 29, 1913. An audit of the books of plaintiff company was first had covering the period from January 1,1909, to December 31, 1913; another and later audit covered the period from January 1, 1914, to October 27, 1914, and still later a thorough audit of both the Van Put-ten and defendant’s administrations .was had. These audits revealed the situation, and showed that under neither administration did the books show the actual situation of the company; they showed many fictitious entries and accounts running through Van Putten’s administration, some of which were not rectified or closed out by defendant. In October, 1914, defendant sold his stock in the company to the present controlling interest, and resigned.

February 16, 1916, this bill was filed. This was before the audit covering defendant’s administration had been completed. At about the same time plaintiff also filed a petition in probate court to revive the commission on claims in the estate of Jacob Van Putten, and also filed a bill to recover stock claimed to have been fraudulently issued by Van Putten to himself. The representatives of the plaintiff, and of the Van Putten estate got together to see if an adjustment could not be made. After considerable discussion a settlement was arrived at. The Van Putten estate turned over 2,223 shares of stock of plaintiff company, worth $44,-460, and surrendered a dividend of $2,223, declared, but not then paid, and plaintiff executed a release, acknowledging “payment in full, and to release and discharge all claims of every nature which the said Holland Furniture Company now has against the said executors and the said estate of Jacob G. Van Putten, deceased.” It is now claimed by plaintiff that this settlement did not include the King & Co. paper, and that defendant ought now to account for the amount of such paper renewed by him. It is unnecessary for us to determine whether defendant has by his conduct rendered himself liable, either by what he actively did in renewing this paper, or by what he passively did by not proceeding at once against King & Co. on learning of the outstanding paper, as we are clearly satisfied that the King & Co. deal was settled and closed by this settlement with the Van Putten estate. The King & Co. paper was originally issued by Van Putten in his lifetime. He was liable to the company for the loss suffered by it through the issue of this fictitious paper; the audit covering the Van Putten administration was-in the hands of plaintiff at the time this settlement was made, and disclosed the King & Co. transaction. When plaintiff settled with the Van Putten executors and took the equivalent of $44,460, it closed and settled all liabilities of the Van Putten estate to it, and it cannot now call to account Van Putten’s successor for renewing or keeping alive a legal liability created against the company by Van Putten in his lifetime.

The W. C. Grobheiser Account. We have already stated that the audit of the books of the company disclosed many fictitious accounts. When defendant became manager he found a charge on the books against W. C. Grobheiser of $1,250. He satisfied himself that Mr. Grobheiser did not owe the company anything. There is no proof or shadow of evidence other than the account itself of any indebtedness from Grobheiser to the company. Instead of charging this to profit and loss, defendant, on two different occasions, credited Grobheiser and charged the amount to commissions, and thus wiped out the account. This was an improper manner of disposing of this account, but the company suffered no loss in wiping off this fictitious account, nor did defendant profit by it. He should not be charged with this account.

Fruit Growers’ State Bank Note. On March 17, 1909, defendant paid with company funds a note given by himself and Jacob G. Van Putten, amounting to $2,575. This note had not been found when this bill was filed, nor at the time of the settlement with the executors of the Van Putten estate. It was later found with some other canceled notes in an old safe. Defendant seeks to connect this note with the Shephard deal, but it was his personal obligation, and he paid it with company funds. He must account to the plain-' tiffs for this sum. .

Manufacturers’ Building Lease. The semi-annual furniture sales at Grand Rapids, and the fact that plaintiff there exhibited its samples, has been noted. The plaintiff held a lease for floor space in the Manufacturers’ Building for the purpose of making this exhibit of its wares. During the administration of defendant, Luce Redmond Company surrendered a lease of floor space adjoining that occupied by plaintiff, and a lease was first made with plaintiff for this space. Later defendant caused this lease to be canceled, and took one in his own name; the company, however, paid the full rent. A portion of the floor space was sublet by defendant, and he received $1,400 therefor. Defendant’s explanation of this transaction is that he subscribed in the company’s name for stock in a new hotel at Grand Rapids which was deemed necessary by the furniture trade to accommodate the dealers who visited these sales, that the directors of the plaintiff declined to ratify this transaction, and that he took this course to repay his loss occasioned by the purchase of this stock, which, he claims, was for plaintiff’s benefit. His explanation does not relieve him from accounting for this sum. He had no authority to subscribe in the name of plaintiff for stock in another corporation, and he could not recoup loss suffered by him through his unauthorized act by canceling a valuable lease held by the company of which he was manager, take a new lease in his own name, and then profit by subleasing to his own and other companies. He should be charged with this amount.

Jacob G. Van Patten Accounts. After the death of Van Putten defendant paid sundry of his bills due at his death, aggregating $158.36, with company funds. Van Putten’s account on the books of the company showed a debit balance of $79.58. To close this account and balance these items defendant credited Van Putten’s account with salary for February, $209, and expenses, $28.94, making $237.94. Although Van Put-ten died on January 9th, his salary for the full month was credited to defendant’s account, and he claims to have used it to pay Van Putten’s debts. The trial court charged defendant with the $237.94, but declined to charge him with the portion of the January salary covering the period after Van Putten’s death. We agree with the trial court that defendant should be charged with the $237.94, but we are also impressed that he should be charged with that portion of the January salary subsequent to Van Putten’s death. As between defendant and the Van Putten estate, he may have a claim, but as between him and the plaintiff he had no right to use the company’s funds to pay other than company’s obligations. When Van Putten died his salary ceased, and we are not concerned with the inquiry as to whether it would have been a gracious act for the company to have voted the unearned portion of the January salary to the Van Putten estate. It did not do so, and the defendant as its manager had no right to use its funds, for the payment of Van Putten’s debts.' This, item will be increased as indicated.

M. Tromp and E. H. Bradwell Accounts. Defendant sold to these parties merchandise belonging to plaintiff, collected pay, and the books give no evidence of the transactions. Defendant admits, that these accounts were collected by him, and insists that they went in as “petty cash,” and that from this petty cash he paid to his brother Charles to make up the amount of his agreed salary, which was more than appeared on the pay rolls or books of the company. The brother was a witness and confirmed the arrangement that he was to receive more salary than the books show, and testifies that he received this extra stipend at regular intervals. The dates of payment of the extra allowance do not correspond with the dates when these accounts were collected. One of the accounts amounted to $157.08, and could not very well be called petty cash. The defendant was bound to account for these items. The trial court was not satisfied that he had done so, and we are not persuaded that he reached a wrong conclúsion. These items will stand as allowed by the circuit judge.

Mrs. R. Knooihuizen, Loan. The mother of the defendant loaned money to the plaintiff. She received payments on her note from time to time as her needs required. She was, however, during defendant’s management of the company, as she apparently was during the Van Putten administration, paid interest on the full amount of her loan without taking into account any payments made thereon. By so doing she was paid by the defendant from plaintiff’s funds $158.06 in excess of the amount she was entitled to. Defendant should account for this amount.

Charles Knooihuizen Account. The books of the company showed that defendant’s brother Charles owed the company $215.11. The indebtedness is admitted. On the day defendant resigned as manager he caused this account to be closed by crediting his brother the amount of this account for labor. We have already stated that it is the claim of the defendant that he was paying his brother an extra amount beyond the salary appearing on the pay roll. We have already stated that Charles testified that he was receiving this extra compensation at stated times. If Charles is correct in his version of the arrangement and the manner of carrying it out, there was no such sum as this due at this time. It is quite apparent that this was a gratuity to Charles. Defendant could not thus make free with plaintiff’s funds, and must account for this sum.

Labor Performed for Defendant’s Relatives. By instructions from'defendant, employees of plaintiff did work iff painting the house of defendant’s mother, and also did work on the new house and garage of his brother Charles. The company paid the men for their time while thus employed. Defendant kept no account of the amount of time of any of these men while so employed, and’did not make any charge or collect anything from either Mrs. Knooihuizen or Charles. Plaintiff is unable to fix the amount of the time of the men so used, but did produce witnesses who gave evidence as to what the work was reasonably worth. Defendant objects to the allowance made, claiming that the men only worked at odd times when it did not interfere with their work in the plant, and that the evidence is too indefinite. We cannot agree with defendant in this contention. Had the men not been away from, the plant, the evidence discloses, and it must be quite evident, work would have been provided for them there; they would not have.been left idle, but would have been kept at work by their employer. As to the indefiniteness of the proof, it is sufficient to say that it was within the power and it was the duty of the defendant to keep an account of the time of the men when in the pay of plaintiff and working elsewhere by his directions, and he cannot be heard to complain when called to account if he is charged what such work was reasonably worth. But defendant insists that the evidence does not show all the work to have been done that is claimed by plaintiff was done, and does not authorize the allowance made. We agree that as to two of the items allowed for work in Charles Knooihuizen’s house defendant is correct; as to the balance of the items we are impressed the trial court reached the correct result. The trial court charged “for finishing dining room, $51.” We are unable to find from the evidence that plaintiff’s employees did this work. Counsel for plaintiff concede that it was not done, but insist that the sum of $51 should be charged for shellacking and sanding the stairway. We are unable to find support in the testimony for this claim, Charles Knooihuizen, while admitting that some work was done by plaintiff’s employees, testified that the work of finishing the woodwork was done by his brother-in-law. He was, so far as disclosed by this record, a fair witness. While there is some evidence of work of this character being done, we are satisfied that if any was done it was inconsequential in amount, and the items under this head will be reduced by this item of $51, and another item of $55, for “labor finishing living room and hall,” making a total of $106, and the other items allowed as found by the circuit judge.

Defendant’s New House and Furniture. During defendant’s administration he built a new house costing around $12,000. The «evidence is convincing that the workmanship on it was the best, and that the skilled employees of plaintiff were used, at the expense of the company, to make it an up-to-date residence. Furniture of special design was made- in the plaintiff’s plant by its employees, and -no account was made of their time, or any charge made. The rule laid down under the preceding head-of charging defendant the reasonable value of the work done must be here followed. He must also be charged with the reasonable value of the furniture made for him by the plaintiff. In the main we agree with the trial judge as to the amounts found by him. Four witnesses gave evidence as to the value of the furniture; some were below, while others were above, the figures found by the circuit judge. We are not persuaded that we should change his values on the furniture, except in one particular. He charged defendant with a white enamel bedroom suit, $75. We think this item should be reduced to $40, as the evidence satisfies us that was its value. We also reduce the allowance by the further sum of $160.69, the value of -the walnut and mahogany lumber which were used in making up this furniture, and which will be considered under the next head. 'It will not be necessary for us to discuss each item involved in this transaction; except as above noted, we agree with the figures found by the trial court.

Gifts to Defendant. During the time defendant was building his house he received valuable gifts from the companies with whom plaintiff was dealing, and from whom it, acting through defendant, purchased merchandise. These gifts were not such as usually pass between friends, but were valuable articles of commerce, mahogany and walnut lumber and veneer and varnish. The defendant was the manager, secretary, and treasurer of the plaintiff. He made its contracts with the companies making these gifts; was the officer authorized to purchase lumber and varnish. By accepting these secret gifts' from companies holding these relations with the plaintiff he committed a breach of the trust held by him, and must account to the company for the value of the property so received. Section 650, 3 Cook on Corporations (7th Ed.), p. 2023. This lumber was used by him for his personal benefit in building his house and making the special furniture for it. There is no dispute as to the amount of it or its value. The varnish was also used in his house; its value is not agreed upon.' The trial court did not allow these items. They should be allowed. We charge defendant with $580 for lumber and veneer, and $38.25 for varnish.

As modified herein, the decree of the court below will be affirmed. Plaintiff will recover interest at 5 per cent, on the various sums allowed.

Both parties appealed. We have slightly increased the amount of the decree entered in the court below, but not sufficient to justify allowing full costs. Each party will pay for printing briefs. No attorney fees in this court will be allowed; plaintiff will pay 45 per cent, of the other costs of appeal, and defendant will pay 55 per cent.

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


source: Caselaw Access Project

author: Stone, J.

license: Public Domain

text:
    JASNOWSKI v. CONNOLLY.
    1. Criminal Law — Indictment and Information — Grand Juries —Statutes.
    The only statutory methods whereby one may be prosecuted in the recorder’s court of the city of Detroit are upon an indictment returned by a grand jury sitting in the circuit court for the county of Wayne and duly certified and transmitted by the clerk of the circuit court to the recorder’s court, and upon an information signed by the prosecuting attorney of the county of Wayne, upon which shall he indorsed the names of the witnesses known to him, and which may he filed during the term in the recorder’s court.
    2. Courts — Recorder's Court of Detroit — Jurisdiction—Statutes.
    The recorder’s court of the city of Detroit is, in a sense, a court of limited jurisdiction, deriving its authority from the statute only.
    3. Same — Recorder’s Court of Detroit — Summoning Grand Jury.
    No authority rests in the recorder’s court of the city of Detroit under the city charter to order the summoning of a grand jury for such court
    4. Same — Recorder’s Court of Detroit — Detroit Charter — Constitutional Law.
    The provisions of the Detroit city charter, limiting the jurisdiction and practice of the recorder’s court and giving it no power to order the summoning of a grand jury, do not infringe any constitutional provision.
    5. Grand Jury — Statutes—Jurisdiction.
    Under 3 Comp. Laws, § 11876 (3 Comp. Laws 1915, § 15703), a grand jury must have the power and he at liberty to inquire for the whole county.
    Petition by Charles H. Jasnowski, prosecuting attorney of Wayne county, against William F. Connolly, judge of the recorder’s court of Detroit, for a writ of prohibition restraining the calling of a grand jury for said court.
    Submitted June 6, 1917.
    (Calendar No. 27,940.).
    Writ granted July 26, 1917.

      Charles H. Jasnowski, Prosecuting Attorney, and Paul W. Voorhies, Assistant Prosecuting Attorney, for plaintiff.

      James H. Pound, for defendant.
   Stone, J.

On the 2d day of March, 1917, a resident of the city of Detroit filed in the recorder’s court of that city a petition requesting said court to enter an order calling a grand jury to sit in and for said court. On the day following an order was made by respondent directing the board of jury commissioners of Wayne county to file with the clerk of said court on or before the 8th day • of March, 1917, a list of 50 suitable persons from whom a grand jury in and for said recorder’s court should be selected. On said 8th day of March, the jury commission filed with the clerk of said court said list, as ordered by the said recorder; the drawing of the names from said list being at that time postponed.

On the 14th day of March, 1917, the relator filed with said recorder a motion praying that an order might be made vacating the order of March 3, 1917. After arguments, and on April 17, 1917, the respondent filed his decision overruling the motion of relator to vacate said original order, but amending his original order to the effect that he ordered the said jury commission to prepare a list of 150 qualified jurymen. instead of the 50 originally called for, and directing the said jury commission to draw from said list the names of 23 persons to serve as grand jurors in and for said court, which said persons were to be summoned to be and appear before the said recorder’s court on May 10, 1917, which was the date named for the sitting of said grand jury. Later an order was made by the respondent extending the time for the calling of said grand jury, and setting the date whereon said grand jury should assemble for its first sitting as the 20th day of May, 1917.

In the meantime this petition for a writ of prohibition to prohibit the said respondent from taking any further action, or making any further order looking toward the calling of said grand jury in and for said recorder’s court was filed, and an order to show cause was granted. The proceeding 'was brought on the theory that there is no authority in law, either statutory or otherwise, for the calling of a grand jury by or for said recorder’s court, and that the only court in the county of Wayne having authority to call a grand jury is the circuit court in and for said county.

Without going into the history of the grand jury, which would be more interesting than profitable here, it is sufficient to say that in this country the manner of selecting and procuring the attendance of grand jurors is now wholly regulated by local statutes in the various States, Edwards on the Grand Jury, p. 47.

The relevant provisions of the general statute and the charter of the city of Detroit are as follows:

By Act No. 204, Pub. Acts of 1893, there was created a board of jury commissioners in the county of Wayne. This act has from time to time been amended in some of its provisions, but section 22 has remained unchanged. It provides as follows:

“Said board of jury commissioners shall, when ordered by the circuit court for the county of Wayne, make a list of suitable persons having the qualifications of petit jurors to serve as grand jurors. Such list shall contain one hundred and fifty names, and shall be made up from the county at large, without reference to any division into wards or townships; and when a grand jury shall be ordered to be drawn, the jury commissioners shall give the same notice and take the same proceedings as is provided in the case of drawing petit jurors, for drawing the names of twenty-three persons from said list of grand jurors to serve as grand jurors, and the same shall be summoned and serve in like manner and with like pay as petit jurors.”

The present power of the recorder’s court is governed by the provisions of the charter of the city of Detroit of 1904, which at paragraph 290 provides:

“The said recorder’s court shall have original and exclusive jurisdiction of all prosecutions and proceedings in behalf of the people of this State for crimes, misdemeanors and offenses arising under the laws of this State, and committed within the corporate limits of the city of Detroit, except in cases cognizable by the police court of the city of Detroit or by the justices of the peace of said city; and shall have power to issue all lawful writs and process and to do all lawful acts which may be necessary and proper to carry into complete effect the powers and jurisdiction given by this act, and especially to issue all writs and process and to do all acts which the circuit courts of this State within their respective jurisdictions may in like cases issue and do by the laws of this State: Provided, That this section shall not be construed to prevent the grand jury for the county of Wayne from inquiring into and presenting indictments as heretofore, for crimes and offenses committed within the limits of said city.”

Paragraph 291 of said charter is as follows:

“All indictments for all offenses committed within the limits of the city of Detroit which may be found and presented to the circuit court for the county of Wayne by the grand jury of said county shall be forthwith certified and transmitted by the clerk of the said circuit court to said recorder’s court, and thereupon said recorder’s court shall have as full and complete jurisdiction of said indictments as if the same had been originally presented to said recorder’s court, and shall have full power to take all further proceedings thereon.”

Paragraph 292 of the charter provides:

“Except as provided in the preceding section, prosecutions in the recorder’s court for crimes, misdemeanors and offenses arising under the laws of this ■ State, and within the jurisdiction of said court, shall be by-information, as provided for in chapter 261 of the Compiled Laws of 1871.”

Chapter 261 of the Compiled Laws of 1871, above referred to, is to be found at section 11933 and following of the Compiled Laws of 1897 (3 Comp. Laws 1915, § 15760 et seq.). Section 11934 provides:

“All informations shall be filed during term, in the court having jurisdiction of the offense specified-therein, by the prosecuting attorney of the proper county as informant; he shall subscribe his name thereto, and indorse thereon the names of the witnesses known to him at the time of the filing the same; and at such time before the trial of any case as the court may, by rule or otherwise, prescribe, he shall also indorse thereon the names of such other witnesses as shall be then known to him.”

It is therefore manifest that the only statutory methods whereby one may be prosecuted in the recorder’s court of the city of Detroit are the following:

(1) Upon an indictment returned by a grand jury sitting in the circuit court for the county of Wayne and duly certified and transmitted by the clerk of the circuit court to the recorder’s court.
(2) Upon an information signed by the prosecuting attorney of the county of Wayne, upon which shall be indorsed the names of witnesses known to him, and which shall be filed during term in the said recorder’s court.

While the recorder’s court of the city of Detroit, like the superior court of the city of Grand Rapids, is recognized in the Constitution as “such other courts of civil and criminal jurisdiction inferior to the Supreme Court as the legislature may establish,” yet it is in-a sense a court of limited jurisdiction, deriving its authority from the statute only.

In Swift v. Wayne Circuit Judges, 64 Mich. 484 (31 N. W. 434), in speaking of the recorder’s court, this court said:

“It was * * * to have exclusive jurisdiction for the trial, but not for the finding of indictments, of all indictable crimes committed in the city of Detroit. In the trial of these cases, and in reviewing them, the general laws of the State, as provided for the circuits, were made by the charter to apply, and, as already suggested, the removal to the Supreme Court was to be in the same way provided for like cases in the circuit courts.”

The provisions of the act creating the board of jury commissioners was.in Dickson v. Judge of Recorder’s Court, 136 Mich. 479 (99 N. W. 405), held to be mandatory.

In People v. Swift, 59 Mich. 529 (26 N. W. 694), it was held that the recorder’s court must take indictments sent to it from the circuit court of Wayne county as valid, if upon their face they appeared to be so, and it has no power to inquire into the constitution of the grand jury finding such indictments. In that case Chief Justice Campbell, speaking for the court, said:

“The indictment was found in another court of constitutional jurisdiction, broader than that of the recorder’s court, and not in any respect a court of inferior jurisdiction. The inquiry into the constitution of its grand jury involves a power of supervision which is not and cannot be given to the recorder's court, which must take the indictments sent to it from the circuit court as valid if upon their face they appear to be valid.”

In view of the fact that the recorder’s court is a creation of the statute, having authority given to it by the statute only, and in view of the further fact that under the statutes there is no authority given to said court to try a defendant upon an indictment returned by a grand jury called and sitting in said court, we think it must be said that there never has been vested in said court any authority to order the summoning of a grand jury for said court; the work of such so-called grand jury being a nullity if any indictments should be found by it. We find nothing in the Constitution prohibiting the legislature from thus limiting the jurisdiction and regulating the practice.

Under our system we think it is apparent that a grand jury must have the power and be at liberty to inquire for the whole county. This is accomplished by the present statutory provision. The oath' administered to the grand jury indicates this, as appears by a portion of section 11876, 3 Comp. Laws (3 Comp. Laws 1915, § 15703), as follows:

“You as grand jurors of this inquest for the body of this county of * * * do solemnly swear, that you will diligently inquire and due presentment make of all such matters and things as shall be given you in charge,” etc.

It is apparent from the order made by the respondent that the grand jury contemplated by him was—

“for the purpose of determining.as to whether sufficient evidence is available to warrant prosecutions of certain crimes, misdemeanors, and offenses suspected to have been committed within said city as set forth in said petition, and divers other crimes, misdemeanors, and offenses suspected to have been committed within said city and brought to the personal attention of the recorder,” etc.

It is evident that the body contemplated by this order was to have no power to inquire for the whole body of the county of Wayne. Such a grand jury would be an anomaly under our system. It is true' that in the case of People v. Reigel, 120 Mich. 78 (78 N. W. 1017), this court upheld the statute providing that the grand jury might be taken from certain townships of the county; yet when the body was convened it was to represent the whole county, and was a grand jury for the body of the county at large, clothed with the power to inquire at large for the whole county.

Counsel for respondent have referred to the cases of Attorney General v. Renihan, 184 Mich. 272 (151 N. W. 824); Murtha v. Lindsay, 187 Mich. 79 (153 N. W. 245), and Detroit Civil Service Commission v. Engel, 187 Mich. 83 (153 N. W. 358), as controlling of the question in this case. We have again examined these cases, and do not agree with counsel that they are controlling of the question here discussed.

In the late case of Dunham v. Tilma, 191 Mich. 688 (158 N. W. 216), it was distinctly held that the superior court of Grand Rapids, although given great powers by the act creating it, is not a circuit court, and the judge thereof is not a circuit judge within the meaning of the Constitution. In Michigan the power to draw, summon, and organize a grand jury is a matter of statutory regulation.

Being of the opinion that the recorder’s court has not the inherent power to order and convene a grand jury, and that under existing legislation no such power has been given to that court, but that such power is lodged solely in the circuit court of Wayne county, the writ of prohibition will issue as prayed for in the petition herein. The question involved being one of public interest, no costs will be awarded.

Kuhn, C. J., and Bird, Moore, Steere, Brooke, and Fellows, JJ., concurred. Ostrander, J., did not sit.


author: Steere, J. Ostrander, J.

text:
    LOOMIS v. ROGERS.
    1. Constitutional Law — Statutes—Object Expressed in Title.
    The requirements of the Constitution, art. v, § 21, that no law shall embrace more than one object, which shall be expressed in its title, are met if an act centers to one main general object or purpose which the title comprehensively declares, though in general terms, and if the provisions in the body of the act not directly mentioned in the title are germane, auxiliary or incidental to that general purpose.
    2. Statutes — Highways and Streets — Constitutional Law.
    The Covert act, Act No. 59, Puh. Acts 1915 (1 Comp. Laws 1915, § 4671 et seq.), entitled, “An act to provide for the construction and improvement of highways, to borrow money therefor, and the assessment and collection of taxes for the construction thereof, and to limit the sums of money to be paid by counties for highway purposes,” was solely intended to provide a system for constructing and improving highways, borrowing money therefor, with a limitation, and the inevitable taxation to ultimately cover the cost, and the provisions in the body of the act relating to the mode of raising the money when borrowing, the determination of districts specially benefited and the manner of making assessments are germane to the expressed object, so as not to render the act subject to the objection that it violates the Constitution, art. v, § 21, providing that no law shall embrace more than one object, which shall be expressed in its title.
    3. Same.
    The Covert act, although giving the execution or the administration of the law to the State highway commissioner where counties retain the township road system, is not invalid as constituting an invasion of the township right of self-government, as the improvement of highways is a public as well as a local concern, under the Constitution, art. viii, § 26, and the State necessarily has the right to designate a proper agent to carry out the work.
    4. Same — Constitutional 'Law — Taxation — Highways and Streets.
    The constitutional question of lack of uniformity of taxation. by the Covert act in providing that the cost of the improvement of a highway in counties under the county highway system shall be apportioned between the special assessment district, the affected township, and the county, while in counties in which the township system is retained •the total amount is to be assessed against the special assessment district and the township or townships through which the road passes, is immaterial where it is not shown or claimed that any property owner within a highway improvement assessment district was assessed in excess of actual resultant benefits.
    5. Highways and Streets — Assessments for Benefits — Presumptions.
    It must be presumed, in absence of proof, in highway improvement assessment proceedings under the Covert act, that the benefits to be received by those who pay for them, both individuals and townships, equal the costs assessed against them.
    6. Same — Taxation—Uniformity—Constitutional Law.
    The constitutional requirement of just and uniform taxation is met when a highway improvement assessment is within the limit of benefits received, is just, and uniform throughout the created assessment district.
    7. Same.
    A special assessment for the improvement of a highway under the Covert act is not a “tax” within the constitutional provision as to uniformity of taxation.
    8. Statutes — Constitutional Law — Taxation.
    The legislature did not exceed its powers, in enacting the Covert act, by placing a just portion of the burden of a highway improvement on a specially benefited assessment district and levying assessments for special benefits conferred upon the property, although benefits are also conferred thereby upon the community or ■ State at large.

    ■9. Same — Partial Invalidity — Effect.
    The concluding clause of section 17 of the Covert act, relating to apportionment of the cost of a highway assessment improvement according to benefits and providing an arbitrary maximum and minimum percentage limit, while out of harmony with the rest of the act, is not an interdependent part of the rest of the statute essential to accomplish its moving purpose and chief object for which it was enacted forcing the inference that the law would not have been passed without it so as to render the rest of the act invalid because of its invalidity.
    Appeal from Ionia; Houghton, J., presiding.
    Submitted June 27, 1917.
    (Docket No. 145.)
    Decided July 26, 1917.
    Bill by Arthur P. Loomis against Frank F. Rogers, State highway commissioner, to restrain the construction of a highway. From a decree dismissing the bill, plaintiff appeals.
    Affirmed.

      Alfred R. Locke and George E. Nichols, for plaintiff.

      Alexander J. Groesbeck,, Attorney General, and Iceland W. Carr, Assistant Attorney General, for defendant.

      On rural highway as a local improvement the cost of which may be assessed against tributary property upon the basis of special benefits, see note in 40 L. R. A. (N. S.) 173.

   Steere, J.

In this proceeding plaintiff contests the constitutionality of the so-called Covert act, being Act No. 59, Pub. Acts 1915 (1 Comp. Laws 1915, § 4671 et seq.), entitled:

“An act to provide for the construction and improvement of highways, to borrow money therefor, and the assessment and collection of taxes for the construction thereof, and to limit the sums of money-to be paid by counties for highway purposes.”

The controversy also incidentally involves the validity of Act No. 125, Pub. Acts 1917, passed at the last session of the legislature (1917) and given immediate effect, amending the Covert act of 1915 in many particulars, apparently intended to remedy defects and omissions in, the details of procedure and operation, amongst other things elaborating the title; but the scheme of the law and principles involved as originally enacted are not altered, and it appears to be conceded that as to the controlling questions raised here they stand or fall together. The transactions to which this controversy relates were inaugurated under the original act of 1915, and the briefs of counsel adopt it as their theme. Section 1 of this act thus declares the legislative intent in enacting it:

“This act is intended to provide an additional method for constructing and improving public highways, and to be in force where a portion of the cost of constructing or improving highways is paid by special assessment upon lands benefited thereby.”

Seventy-four sections follow, elaborating a method for improving highways in sections or districts upon petition of adjacent landowners, involving assessments according to benefits closely analogous in procedure and phraseology to the Michigan drain law. Where the county road system has been adopted execution or administration of the law is committed to the county road commissioners, and in counties yet clinging to the township system to the State highway commissioner. In either case action is initiated by a proper application signed by the “owners of a majority of the frontage of lands fronting upon a highway or portion of a highway, not less than two miles in length,” which it is desired to have improved.

The facts presented in this case are not in dispute. The section of highway sought to be improved by this method is a thoroughfare in the county of Ionia, extending several miles in a westerly direction through certain townships of the county, from where the so-called South River road intersects State reward road No. 1080 to the east limits of the village of Saranac, in Boston township. It has been opened and in use as a highway for more than 25 years, under control of the authorities of the different townships in which it lies. The county of Ionia has never adopted the county road system, and on February 14, 1916, a petition for the improvement of this highway was filed under the Covert act with the State highway commissioner, signed by a majority of the owners of land fronting along the highway.

Proceeding upon this petition the State commissioner of highways made the requisite examination and preliminary order, caused survey and a plat to be made with specifications of the proposed improvements with an estimate of the cost, and determined such improvement was necessary for the public benefit; gave notice of holding hearings and heard objections, fixed the assessment district, times of payment, etc., advertised for bids to make the improvements specified, payments therefor to be from sale of bonds based upon a special assessment district and at large upon certain townships, let a contract for making such improvements, and gave notice of the sale of bonds to defray the cost of the same, but no bids were received for their purchase, owing to questions raised as to the constitutionality and legality of the proceedings, and because of such complications further proceedings were delayed until the 3d of May, 1917, when the commissioner again advertised to receive bids for the sale of bonds, and plaintiff, who is the owner of 50 acres of land within the proposed assessment district, filed, in the circuit court of Ionia county, on a date not disclosed by the record, the pleading which is the foundation of this action, sometimes called in the record a “petition” and sometimes a “bill of complaint,” detailing at length the various steps taken in the matter, alleging their invalidity on numerous stated constitutional grounds, praying “use of process of subpoena and the people’s writ of injunction,” that defendant be perpetually enjoined from offering for sale and selling said highway bonds, and the special assessment for construction of said road be set aside, canceled, and held for naught. An order to show cause was thereupon issued, and answer made to the same by defendant, followed by a hearing before the court and decree dismissing “said bill of complaint.”

No contention is made that defendant failed to comply with all requirements of the statute, nor is it claimed that the special assessment levied, or to be levied, on petitioner’s land exceeded the actual value of benefits which would result, or that the public benefit does not equal, or exceed, the proportion of cost of the improvements assessed against the various townships concerned, or that the aggregate cost of construction of the highway will exceed the benefits resulting therefrom. Defendant’s answer admits the facts alleged in the petition, and the sole question presented here is the constitutionality of said Act No. 59.

While other objections are raised which need not be discussed, though not overlooked, the various grounds upon which the constitutionality of this act is most seriously attacked, and to which the briefs of counsel are chiefly devoted, condense to the three concrete propositions that its title is insufficient, it violates constitutional requirements as to uniformity of. taxation and due process of law, and invades the guaranteed right of local self-government.

The claim of defective title is based on the familiar provision in section 21, art. 5, of our Constitution that no law shall embrace more than one object, which shall be expressed in its title. This provision has proved a tempting source of attack on the validity of statutes with which parties are dissatisfied, for few laws of any length are enacted where the objection cannot b,e plausibly urged as to details and auxiliary provisions incidental to the main purpose of the legislation appearing in the body of the act and not itemized in the title. The Covert act embraces 75 sections, authorizing, outlining, and.providing the means and legal machinery for an intended additional method of constructing and improving highways. An abridgment of all those sections is not essential to a sufficient title. While it contains various related provisions not directly indicated or enumerated in the title, under the construetion of this constitutional requirement, as many times reviewed by this court, if the act centers to one main general object or purpose which the title comprehensively declares, though in general terms, and if provisions in the body of the act not directly mentioned in the title are germane, auxiliary, or incidental to that general purpose, the constitutional requirement is met.

A title is but a descriptive caption, directing attention to the subject-matter which follows. It is obvious that one reading the title would readily understand that the general object of. the law was a measure for constructing and improving highways by some method not already fully provided, for which purpose money might be borrowed and taxes assessed and collected within certain limits, and that to ascertain the particulars of the method by which the object is to be accomplished, resort must naturally be had to the body of the act.

In the early case of Connecticut Mutual Life Ins. Co. v. State Treasurer, 31 Mich. 6, the brief title under consideration was “An act to establish an insurance bureau.” This was held a sufficient compliance with the Constitution to sustain a comprehensive law creating the office of insurance commissioner, defining his powers and duties, containing numerous provisions relating to taxation of insurance companies, the reciprocal rights and duties of the State and those carrying on insurance, etc., it being said that by this title “the legislature must be understood as saying that it [the act] was made up of such provisions and details as were deemed suitable for the object.”

As before stated, the Covert act is in many respects analogous to and evidently modeled after the State drain law in many of its provisions. The title of that law (Act No. 254, Pub. Acts 1897 [1 Comp. Laws 1915, § 4870 et seq.]) is as follows:

“An act to provide for the construction and maintenance of drains, and the assessment and collection of taxes therefor, and to repeal all other laws relative thereto.”

Subsequent amendments have not enlarged this title. A preceding general drain law (Act No. 227, Pub. Acts 1885) with an identical title was attacked as unconstitutional in Hall v. Slaybaugh, 69 Mich. 484 (37 N. W. 545). The court there held that the object of the act was sufficiently covered by the title, saying:

“It is. difficult to conjecture anything pertaining to a drain in any way that would not come properly under this title if made the subject of legislation.”

That law was as broad and comprehensive in its provisions regarding drains as is the Covert act upon the subject of highways.

Act No. 149, Pub. Acts 1893, of which the present county road law is in its main features a re-enactment, amongst its many provisions authorized raising money for improvement and construction of highways by taxation and the issuance of bonds. It was entitled:

“An act to provide for a county and township system of roads and to prescribe the powers and duties of the officers having the charge thereof.”

It was attacked in Shearer v. Buy County Supervisors, 128 Mich. 552 (87 N. W. 789), as unconstitutional on.the ground that it violated the prohibition against embracing more than one object in its title, etc. This court there held that the indicated general purpose of the act was to provide for a system of highways, and it was not open to the objection raised. As to the sufficiency of a general title to cover a provision in the body of the act creating special assessment districts to pay the cost of particular improvements, see City of Detroit v. Railway Co., 63 Mich. 712 (30 N. W. 321).

Plainly the general and sole purpose of this act as indicated by its title is to provide a system for constructing. and improving highways, borrowing money therefor, with a limitation, and the inevitable taxation to ultimately cover the cost. The mode of raising the money when borrowing, the determination of districts specially benefited, and the manner of making assessments are congruous matters, germane to the expressed object of the act. Under the authorities cited and abundance of others to which they lead, this act cannot be held invalid on the ground that its object is insufficiently expressed in the title.

The objection that this act violates constitutional provisions protecting local self-government is directed against the authority it confers and duties it imposes upon the State highway commissioner in those counties where the county road system has not been adopted. The local governments involved, whose rights are claimed to be invaded, are the county and certain of the townships composing it. That portion of article 8 of our present Constitution, entitled “Local Government,” when dealing directly with those local governmental units under the subtitles “Counties” and “Townships,” vests them with no exclusive prerogatives, and imposes upon them no duties as to highways, nor does it make any reference to the subject beyond authorizing counties to raise not exceeding $1,000 in any one year for bridge purposes and providing for the election of one commissioner of highways and an overseer for each district in a township “whose powers and duties shall be prescribed by law.” It does especially provide that the legislature may confer upon both counties and townships “such powers of a local, legislative and administrative character, not inconsistent with the provisions of this Constitution, as it may deem proper.”

The Constitution, of 1850 also provided for the township highway officers above mentioned, and it was held in Hubbard v. Township Board of Springwells, 25 Mich. 153, that, while the legislature might modify their powers it could not abolish their constitutional offices or deprive them of all their functions, citing People v. Hurlbut, 24 Mich. 44 (9 Am. Rep. 103). In the Hurlbut Case it was said, in substance, that appointments for purely municipal purposes could only be made by municipal authority, and appointments made by the legislature of members of the board of public works, for the city of Detroit, as permanent officers for a full or specified part of a provided term, imposed upon the municipality a control of its purely local affairs by officials selected from without in contravention of implied constitutional restrictions upon such legislation. It may be said that these strongly reasoned decisions, which are not to be questioned as applied to the cases in which they were written and the Constitution then in force, sound the keynote of numerous other cases which may be found in the history of legislation and litigation relating to highways prior to the adoption of our present Constitution. The Constitution of 1850 lent further support to the found inference restraining State interference with local management and control of highways, by the provision in section 9, art. 14, that:

“The State shall not be a party to, or interested in, any work of internal improvement, nor engaged in carrying on any such work, except in the expenditure of grants to the State of land or other property.”

With these restraints on broader legislation, control of the construction and maintenance of public thoroughfares was relegated chiefly to the several townships through which they ran, or in which they were located, each under township laws acting independently by asserted right of local self-government, on the theory that highways were strictly a matter of local concern. That the township highway system standing alone, though an important factor, was wholly inadequate and illy adapted to such general development of highways throughout the State as conditions demanded ultimately made itself imperatively manifest, and to open the way for more direct State participation section 9, art. 14, of the old Constitution was amended by proper plebiscite, authorizing the State to be a party to or interested in the improvement of “the public wagon roads,” or highways. A State highway department under a State commissioner had been created and provided for by the legislature of 1903, but, manifestly recognizing its constitutional infirmities, this law was recast, elaborated, and reenacted after the constitutional amendment was adopted. Act No. 146, Pub. Acts 1905. When the new Constitution of 1908 was framed and adopted, not only was the amendment of 1905 retained, authorizing the State to engage in the work of internal improvements by improving, or aiding in improving, highways (section 14, art. 10),'but, manifestly mindful of the implied intent and meaning of the old Constitution as it had been interpreted in restriction of highway legislation, it was provided by section 26, art. 8, that:

. “The_ legislature may by general law provide for the laying out, construction, improvement and maintenance of highways, bridges and culverts by counties, districts and townships; and may authorize counties or districts to take charge and control of any highways within their limits for such purposes. The legislature may also by general law prescribe the powers and duties of boards of supervisors in relation to highways, bridges and culverts; may provide for county and district road commissioners to be appointed or elected, with such powers and duties as may be prescribed by law; and may change and abolish the powers and duties of township commissioners and overseers of highways.”

Conceding, as has been said, and is contended here, that the principle of local self-government is basic and thoroughly imbedded in the jurisprudence of this State, that principle and the authority of the courts to so declare necessarily find their source in the Constitution of the State and laws not in violation of it. When those constitutional limitations found in the old Constitution are removed from the new and legislation which the old Constitution was construed as impliedly forbidding is expressly authorized by the new, the basic principle of local self-government vanishes as to it. While yet recognizing local interest in and a reasonable local control over highways, the present Constitution makes plain that their, improvement for public travel is not to be regarded as solely and exclusively a matter of local concern, but of general public interest and State-wide importance. So viewing it, those who framed and adopted the new Constitution in the light of the old as interpreted in former decisions gave the legislature authority to commit the State to a system of highway improvements.either directly or by aiding minor governmental entities authorized by law. to make them, and, if deemed expedient to that end, change or entirely abolish the local powers and duties of township highway officers, which the former Constitution was construed as prohibiting.

It is conceded that the contemplated improvements are to be made upon an old established highway of permanent character and part of a State trunk line road. Although the immediate locality through which the road runs would be .especially interested and benefited, it would be a violent legal fiction against the actual facts to hold that its improvement for travel is exclusively a matter of local concern in which the State at large and general public have no interest. Clearly the legislature is authorized by the Constitution to provide by general law for such improvements as are contemplated here, and that it is not required to commit the project to the township highway authorities is made manifest in the same paragraph of the Constitution, providing that their powers and duties may be abolished by the legislature. In the counties which have not adopted the county road system there are no other highway officials with authority over county roads. The State highway commissioner is chosen at large by the electors of the State, representing as a highway officer all parts of the State, holden, in matters pertaining to his official duty, to represent the interests of each township and person in the State, as is the county road commissioner, elected at large in a county adopting that system, to represent in the line of his duties his county as a whole and each township and person in it. With the right of the State to engage in the improvement of public wagon roads there necessarily goes the right to provide some proper agent or official to administer the law and carry on the work of improvement authorized. Contingent designation of the State highway commissioner where county highway commissioners are not available is no 'more an invasion of the asserted township right of local self-government than is the designation of county commissioners. In either case the township has a voice in their election to the offices they hold, and each in his official capacity represents the township as a part of the county or State.

Upon the subject of highway taxes, assessments, and performance of authorized work the following deductions from the weight of authority stated as general rules in 13 R. C. L. subpage 159, are illuminating:

“The legislature may itself levy a tax for highway purposes, or it may delegate that power to municipal or quasi municipal corporations within its borders. * * * But when the State at large or the general public has an interest in the construction or maintenance of such works, the legislature may assume the active direction of affairs by such agents as it may see fit to appoint, and may apportion whatever expenses may be incurred among such municipalities as may be found to be especially benefited, without first stopping to ask their consent. It may therefore, make provision for particular highways, and may provide for their construction or alteration by agencies of its own at the expense of those upon whom it sees fit to cast the burden. And it is generally held that, as against legislation of this character, no plea can be set up of a right of local self-government, implied in the nature of our institutions. So the legislature may compel a municipality, without its consent, to assume the expense of acquiring and maintaining public highways within its corporate limits. * * * The legislature may provide for the creation of road or taxing districts comprising lands in the neighborhood of a rural highway, and for levying taxes on property situated in such districts to pay the whole or a part of the cost of constructing or repairing the highway."

The proportion of State aid to be paid because of such improvements, which is based on the mileage, is to be paid to counties under the county road system and to townships pro rata to their assessment where the county road law has not been adopted. The plan for directly paying the cost of a proposed improvement under this law is based on the assessment of benefits, and it is provided in counties under the county system the cost of the improvement shall be apportioned between the special assessment district, the affected townships, and the county, while in counties which have not adopted the county road system the total amount shall be assessed against the special assessment district and the township or townships through which the road passes. It is contended that this violates the constitutional requirement of uniformity in taxation because it places a greater burden upon townships in the latter case than in the former, and, while recognizing that the county is benefited, the law relieves it from assessment. So far as this case is concerned the objection is disposed of by the fact that it is not shown or claimed that petitioner or any other property owner within the assessment district was assessed in excess of actual resultant benefits, and therefore it is immaterial to him how the public portions of the burden are borne as between the county and township. In Voigt v. City of Detroit, 123 Mich. 547 (82 N. W. 253), it is said:

“There is no, claim in the bill that complainant’s property is not benefited by the proposed improvement in excess of the amount assessed, nor is there any claim that he was not allowed to be heard in relation to the amount assessed against his property. * * * We do not think it can be said that complainant’s property is taken without due process of law.”

Presumptively benefits to be received by those who pay them, both individuals and townships, equal the costs assessed against them, and until the contrary appears neither is in a position to complain. As a proposition of general application the constitutional requirement of just and uniform taxation is met when the assessment is within the limit of benefits received, is just, and uniform throughout the created assessment district. "So far as direct benefits by reason of close proximity to the proposed improvement are concerned, the improvement is in a sense local, although also, in a wider sense, a public improvement of general concern, and the special assessment for benefits arising by reason of proximity is not in the true meaning of the word as used in the constitutional limitation a “tax,” which has reference to general revenues for the purpose of maintaining and carrying on the government where the benefits are alike enjoyed by all without reference to the special benefits. The element of special benefits is a distinguishing feature between taxes and assessments for benefits. It is well settled in this State that a general exemption of realty from taxation does not extend to such assessments based on special benefits resulting from proximity — sometimes called taxes for special improvements. That proposition is summed up in 2 Elliott on Roads and Streets (3d Ed.), § 663, as follows:

“A distinction is made between local assessments and taxes, levied for general revenue purposes. The question has been before the courts time and time again, and the almost unruffled current of judicial opinion is, that an assessment for a local improvement is not a tax within the meaning of the constitutional provision requiring uniformity of taxation. Local assessments are not ordinary taxes levied for the purpose of sustaining the government, but they are charges laid upon individual property because the property upon which the burden imposed receives a special benefit which is different from the general one which the owner enjoys in common with others as a citizen of the commonwealth. They may be a species of tax, and the power to levy them is generally referred to the taxing power, but, as already indicated, they are not taxes within the meaning of that term as generally used in constitutional restrictions and exemptions,”

—and reasserted in City of Detroit v. Weil, 180 Mich. 593 (147 N. W. 550).

This law was not intended to, and does not, impose the entire cost of the improvement upon adjoining lands or townships. Its purpose, as declared in the first section, is to provide an additional method to be in force, “where a portion of the cost of constructing or improving highways is paid by special assessment upon lands benefited thereby.” The amount of such assessment is limited to the special benefits resulting from the improvement as determined after all in interest are given opportunity to be heard. State aid under existing appropriate laws is recognized and contemplated. The State can only act upon local initiative, pursuant to a petition by a majority of those owning adjoining lands, who presumably are most seriously affected and vitally interested. The legality of assessments for special benefits resulting from improvements of streets in villages and cities was. long ago settled beyond contention, but there has been in the past a decreasing divergence of authority upon application of the rule to country roads. While there may be a difference in degree and demand, in the principle underlying assessment for special benefits resulting from public improvement of an adjacent highway, we fail to discover wherein the difference lies between streets and public roads. In Murray v. Smith, 117 Minn. 490 (186 N. W. 5, 40 L. R. A. [N. S.] 173, Am. & Eng. Ann. Cas. 1913D, 548), where that subject is carefully considered and the conclusion reached that such an assessment, authorized in proceedings, analogous to its drainage law, is permissible under the constitution of that State, the court says:

“The weight of authority today seems to be to the effect that a highway may be a local improvement, and that an assessment of lands specially benefited may be sustained. 1 Page & Jones, Taxation by Assessment, § 322; Bauman v. Ross, 167 U. S. 548 (17 Sup. Ct. 966); Law v. Turnpike Co., 30 Ind. 77; Monroe County Com’rs v. Harrell, 147 Ind. 500 (46 N. E. 124); Spaulding v. Mott, 167 Ind. 58 (76 N. E. 620); Jones v. Town of Tonawanda, 158 N. Y. 438 (53 N. E. 280); Seanor v. Whatcom County Com’rs, 13 Wash. 48 (42 Pac. 522).”

We find nothing in our present Constitution which forbids the legislature placing a just portion of the burden of a highway improvement on a specially benefited assessment district and levying assessments for special benefits conferred upon the property, although benefits are also conferred thereby upon the community or State at large. Much greater legislative powers than exercised here are recognized by the United States Supreme Court in the absence of constitutional prohibition. In Williams v. Eggleston, 170 U. S. 804 (18 Sup. Ct. 617), affirming Bulkeley v. Williams, 68 Conn. 131 (35 Atl. 24, 421, 48 L. R. A. 465), which contains an exhaustive discussion of many of .the questions involved here, the court said, speaking through Justice Brewer:

“Neither can it be doubted that, if the State Constitution does not prohibit, the legislature, speaking generally, may create a new taxing district, determine what territory shall belong to such district and what property shall be considered as benefited by the proposed improvement. And in so doing it is not compelled to give notice to the parties resident within the territory or permit a hearing before itself, one of its committees, or any other tribunal, as to the question whether the property so included within the taxing district is in fact benefited.”

The concluding clause of section 17 of Act No. 59, relating to apportionment according to benefits, provides an arbitrary maximum and minimum percentage limit which it is urged is inconsistent with the adopted rule of assessment for benefits and nullifies it. In the present case no claim is made that the assessments are not made according to benefits, and the clause complained of is not involved unless, as urged on constitutional grounds, it invalidates the whole act. This clause is an interjection manifestly out of harmony with the general theory of the act, and not so inseparably connected with its purpose and substantial provisions as to furnish the moving consideration for enacting the law.

“An unconstitutional provision or section in the statute will not affect the other provisions of the law unless they are essentially and inseparably connected in substance.” Mathias v. Cramer, 73 Mich. 5 (40 N. W. 926); Klatt v. Wayne Probate Judge, 159 Mich. 203 (123 N. W. 542).

The clause is not an interdependent part of the rest of the statute essential to accomplish its moving purpose and the chief object for which it was enacted forcing the inference that the law would not have been passed without it. With it eliminated the statute is a complete, unobjectionable, and workable law.

We find no occasion to disturb the conclusions reached by the learned circuit judge who first considered the case, and his decree dismissing the complaint will stand affirmed, but without costs.

Kuhn, C. J., and Stone, Bird, Brooke, and. Fellows, JJ., concurred with Steere, J.

Ostrander, J.

I reserve opinion upon the point last decided, concurring, however, in affirming the decree.

Moore, J., concurred with Ostrander, J.


author: Steere, J.

text:
    PEOPLE v. WHITE.
    1. Commerce — Powers or Congress — Federal Decisions.
    The power given congress by tbe United States Constitution to regulate commerce among tbe several States is exclusive, and tbe decisions of tbe United States Supreme Court upon that question are controlling.
    2. Same — Municipal Corporations — Licenses—Peddlers — Interstate Commerce. ■
    A municipal license tax upon a peddler engaged in interstate commerce is a discriminating tax upon tbe goods themselves, and constitutes an illegal interference with such commerce.

      3. Same — Interstate Commerce.
    A salesman for foreign employer is engaged in interstate commerce where he sells goods on commission hy soliciting -orders from house to house for future delivery and fills such orders hy delivering goods shipped him hy the employer from another State.
    Exceptions before judgment from Oakland; Smith,, J.
    Submitted June 15, 1917.
    (Docket No. 133.)
    Decided July 26, 1917.
    William N. White was convicted of peddling without a license.
    Reversed.

      Earle M. French and George W. Eyster, for appellant.

      Peter B. Bromley, City Attorney, for the people.
   Steere, J.

While plying his trade as a peripatetic vendor of aluminum cooking utensils, from house to house in the city of Pontiac, Mich., defendant was apprehended and subsequently prosecuted for peddling within the city limits without a license in violation of a municipal ordinance which established a schedule of licenses imposed upon certain kinds of business. By it a license fee of $5 per day was required for peddling goods, wares, and merchandise upon the streets “or soliciting from house to house either for immediate or future delivery.” Violation of the ordinance was made punishable by fine or imprisonment. It is undisputed that on the date charged defendant was offering his wares from house to house in the city of Pontiac, displaying samples and soliciting orders for future delivery without having obtained a license in compliance with the ordinance. Trial in justice's court and re-‘ trial on appeal in the circuit court resulted in convictions, and the caserías been removed to this court for review on exceptions before sentence.

Defendant claimed in the lower courts and urges here that he was acting as a salesman of goods manufactured without the State, under written contract with the Aluminum Cooking Utensil Company, a foreign corporation of New Kensington, Pa., soliciting orders for its goods, for future delivery, which were to be subsequently filled by shipments from Pennsylvania, and, as the goods he was selling were in another State, to be delivered by interstate transportation, he was immune from the ordinance under the Federal interstate commerce law, as construed by the Federal courts, against which contravening local laws become .silent.

The contract under which he operated is a somewhat lengthy agreement for selling goods on commission, evidently prepared with care, stated by the Aluminum Company’s sales manager to be the regular form of .salesman’s contract made with each man representing it, which, amongst its numerous provisions, required defendant, who is designated its “salesman,” to deposit with the company $5 for a sample outfit, and diligently proceed to solicit orders for its aluminum utensils in territory assigned to him, “to keep faithfully and accurately a complete record of all receipts and expenditures in a book to be supplied by the company, and known as a ‘salesman’s account and expense book,’ ” to make two reports each week of the amount of each day’s orders and “be personally responsible for the payment for all goods included in requisitions sent to the company for goods to fill orders solicited for the company by him,” giving satisfactory security therefor, his commission to be on different specified goods from 33% to 40 per cent, of the company’s current retail prices, the net amount to be remitted promptly after deducting such commissions; failure to make sales at list prices averaging a specified amount per week is made ground for forfeiting his contract.

The material evidence produced by defendant, briefly stated, showed that he had been, engaged for several years in vending the Aluminum Company’s wares through different parts of this State on commission; .that neither he nor the company carried any stock of goods in the State, but he canvassed from house to house, displaying his samples, soliciting orders for future delivery, writing down in a book he carried for that purpose each order he secured, in detail, with the name, address, telephone number, etc., of the party giving it, which he later-copied on an order blank furnished by the company, sending each order, with the name and address of the purchaser, signed by him as salesman, to the home office of the company at New Kensington, Pa., where it was filled and the goods shipped to him for delivery; that he made no sales of the samples he carried, and delivered no goods, except those for which orders had been previously taken and sent to the home office, and by it shipped to him, and no goods were shipped to him, except to fill such orders; that the goods were sometimes sent by parcel post, sometimes by express, and sometimes by freight, as he ordered them; that he usually made periodical deliveries, and when an accumulation of orders was sent in, calling for a quantity shipped by freight, they would be filled to him in one package, the ordered articles nested together, and he would sort them out for delivery according to the orders previously taken; that rejected goods, or those left on hand for any reason when he came to make deliveries, were shipped right back to the company, unless he could use them to fill orders given prior to the time they were shipped, but the genéral practice was- to return all goods rejected by customers; that under instructions from the company he never sent in an order for any goods without sending the date of the order, with the name and address of the purchaser.

The controlling question in this case is whether the business defendant was pursuing at the time he is charged with violating the Pontiac ordinance constituted under the Federal law interstate or domestic commerce. That the power given congress by the United States Constitution to regulate commerce among the several States is exclusive, and the decisions of the United States Supreme Court upon that subject are controlling, cannot be questioned. Therefore decisions of this court, or other State courts, not in harmony with the' Federal interpretation of this law, are not to be followed. In Lyng v. Michigan, 135 U. S. 161 (10 Sup. Ct. 725), the court thus broadly states the rule:

_ “We have repeatedly held that no State has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress. Leloup v. Port of Mobile, 127 U. S. 640, 648 (8 Sup. Ct. 1380), and cases cited.”

Along these lines it is held that any tax upon the seller of goods, the sale of which requires their transportation from one State to another for delivery, is a discriminating tax upon the goods themselves, the imposition of which by a State or municipality is an illegal interference. with interstate commerce. This rule has. been applied to sewing machine and book agents, vendors of patent medicines, knives, brooms, pictures and picture frames, stoves, and other articles of traffic sold by canvassing from house to house with samples, where orders are taken for future delivery only, and the articles so sold are shipped from’ other States to fill such orders, on the theory that the goods so ordered and shipped are directly appropriated to keeping contracts, fulfillment of which necessitates their transportation for delivery by interstate commerce. In the case of Crenshaw v. Arkansas, 227 U. S. 389 (33 Sup. Ct. 294), where the commodity canvassed for was a range sold by sample, the subject will be found fully discussed, with a review .of several leading cases. In point upon the questions raised by this record the following is well condensed from cited decisions by Judge Dillon in his work on Municipal Corporations (Vol. 4, 5th Ed.), § 1356:

“Various decisions are to be found by courts of different States which purport to sustain a tax imposed upon canvassers or drummers selling goods to be afterwards brought within the State, where the goods, have been shipped in bulk to the agent or drummer or to a distributing agent, and have been by him delivered to the purchaser, instead of being shipped directly to the purchaser from without the State; but any supposed ground of distinction, based upon the fact that the goods, are shipped to the salesman or distributing agent in bulk and by him assorted and delivered to the purchasers, has been rejected by the Supreme Court of the United States, which has declared that the grounds, of distinction are not sufficient to remove the transactions from the domain of interstate commerce. Where the question of the power of the State to levy a privilege or occupation tax arises in a controversy with a drummer or canvasser, representing a non-resident, the fact that no discrimination is made between domestic and foreign drummers, and that all are taxed alike, is not material. Interstate commerce, as a business or occupation, cannot be taxed at all, even though the same amount of tax should be laid on domestic commerce, or that which is carried on solely within the State.”

The abundant cases there cited cover this case in all its aspects. Neither are we able to distinguish it in principle from Stewart v. Michigan, 232 U. S. 665 (34 Sup. Ct. 476), which in its controlling features was held, upon the Federal question involved, to have been disposed of in conflict with the rule announced in Crenshaw v. Arkansas, supra, and cases there reviewed, and the decision of this court sustaining Stewart’s conviction was reversed. It follows, from the foregoing, that the conviction appealed from must be set aside, and the record remanded for whatever further proceedings may be required in harmony with this opinion.

Reversed.

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