text:
    CITY OF DETROIT v. DETROIT MANUFACTURERS’ RAILROAD.
    1. Railroads — Street Railroads — Distinction.
    Where the purpose for which a railroad was constructed and is operated is that of a steam railroad, to carry frieght to and from manufactories and business houses not otherwise accessible by the steam railroads, the facts that the company owning it was organized under the train railway act (chapter 167, S Comp. Laws), and that the track is laid along a highway, do not make its use that of a street railway, the company having been reorganized under the general railroad law, and its property having been leased to a steam railroad company.

      2. Same — Taxation—State or Local Assessment.
    The property of the Detroit Manufacturers’ Railroad, a corporation organized under the general railroadlaw, is assessable by the State board of assessors, under Act No. 173, Pub. Acts 1901, and not by the local taxing officers of the city of Detroit, though the road is laid along a street of the city, and was built by a company organized under the train railway act.
    Case made from Wayne; Donovan, J.
    Submitted October 5, 1906.
    (Docket No. 10.)
    Decided October 4, 1907.
    Assumpsit by the city of .Detroit against the Detroit Manufacturers’ Railroad for taxes. There was judgment for plaintiff, and defendant appeals.
    Reversed.

      N. E. Slaymaker (Henry Russel, of counsel), for appellant.
    P. J. M. Hally and Frank E. Dor emus (T. E. Tarsney, of counsel), for appellee.
   Hooker, J.

This is an action brought by the city of Detroit against the defendant, a corporation organized in March, 1902, under the provisions of the general railroad law of the State, 2 Comp. Laws, chap. 164, to recover for taxes assessed for the years 1903 and 1904. The action was defended upon two grounds, and error is alleged upon the refusal to enter a judgment for the defendant. The grounds referred to are:

1. That the tax was void, not having been assessed by the State board of assessors, under Act No. 173, Pub. Acts 1901, as amended by Act No. 45, Pub. Acts 1903.

2. That the tax for 1903 was void for the reason that it was assessed against- the Detroit Terminal Railway, and not against the defendant.

It was proved upon the trial that the city tax roll for 1903 shows that the Detroit Terminal Railway was assessed for that year on a personal property valuation of $100,000, the tax levied being $1,656.82, which with accrued interest amounted to $2,151.37 at the time of the trial. The roll for 1904 showed an assessment against the defendant on the same valuation, the tax levied being $1,532.71, amounting to $1,827.74 at the time of the trial, and that no part of said taxes or either of them had been paid.

It was also shown that the Detroit Transit Railway was incorporated September 21, 1872, under the train railway act, chap. 167, 2 Comp. Raws, and that on March 21,1873, the city council passed an ordinance granting to the Detroit Transit Railway, for a period of 30 years, the right to construct and operate a railway in certain streets of the city of Detroit, from such a point as it and the Detroit Sc Milwaukee Railroad Company might agree upon for a connection to the eastern limits of the city, subject to said corporation obtaining the right through private property on the line of the road. These rights were extended for 30 years by a new ordinance in 1901. The ordinance required the use of animal power at certain hours of the day, permitting the use of steam and other power to operate the trains between the hours of 6 p. m. and 6 a. m. The road was built and put in operation.

The Detroit Terminal Railway was also organized under the train railway law, on July 26, 1901, and on September 23d of that year purchased all of the railroad property, rights, and privileges of the Detroit Transit Railway.

On March 31, 1902, the defendant purchased from the Detroit Terminal Railway all of its property and rights, .and during 1903 and 1904 owned the same, and the road was, during those years, operated by the Michigan Central Railroad Company, a corporation existing under the general railway laws of the State, for switching cars and transporting freight for shippers along the line thereof, and to points beyond, in the United States and elsewhere. It appeared that by an agreement between the defendant and the Michigan Central Railroad Company the exclusive possession and control of the road was transferred to the latter company for 25 years from the time when the road should be reconstructed by said company. It has been in its possession since April, 1902, .has been operated by steam power, and since that date has been reconstructed.

It was admitted, subject to the objection of immateriality, that all of the property of the defendant was taxed by the State board of assessors in 1903 and 1904 on a valuation of $100,000, and that it paid taxes pursuant thereto in 1903 amounting to $1,691.15. At the time of the trial it had not paid the tax for 1904, but claims to have done so since.

Defendant has appealed from a judgment for the plaintiff. Counsel for the city say that the only question in the case is whether the personal property formerly owned by the Detroit Transit Railway, and now owned by the defendant, is street railway property or railroad property, within the meaning of Act No. 173, Pub. Acts 1901, and they concede that if it is railroad property, not merely used by and owned by a railroad, but in the full and general acceptance of that term railroad property, it is not subject to taxation in Detroit and is only taxable under the provisions of that act.

Section 4 of Act No. 173, Pub. Acts 1901, makes it the duty of the State board of assessors to make an annual assessment of the property of railroad companies. If the term railroad companies be assumed to refer only to companies organized under the general railroad law, the defendant is within the description. It is contended that this railroad must be considered a street railway for the reason that it is constructed in a highway, was first built by a company organized under the train railway law, accepted an ordinance from the city authorizing and restricting its construction and operation, and has the right to carry freight and passengers.

We are of the opinion that it is fairly inferable from this record that the purpose for which this railway was constructed, and has been and is now operated, is that of a steam railroad, to carry freight to and from manufactories and business houses not otherwise accessible by the steam railroads. The ordinance seems to have contemplated such use, and the road has been acquired by a railroad company and by it leased to another well known steam railroad company, which is apparently using it in connection with its own road. The fact that it is laid along a highway does not make its use that of a street railway, for steam roads are sometimes granted the use of streets, nor does the fact that it was organized under the train railway act. This was done by the city of Monroe, as appears in the case of City of Monroe v. Railway, 143 Mich. 315, and it has been done by other cities, both within and outside of this State.

Sections 4 and 5 of Act No. 173, Pub. Acts 1901, provide:

‘ ‘ Sec. 4. It shall be the duty of said board to make an annual assessment upon an assessment roll to be prepared by said board, of the property having a situs in this State as hereinafter defined, of railroad companies, union station and depot companies, express companies, doing business within this State, car loaning companies, and refrigerator and fast freight line companies, and all other corporations owning, leasing, running or operating any freight, stock, refrigerator, or any other cars, not being exclusively the property of any railroad company paying taxes upon its rolling stock under the provisions of this act, over or upon the line or lines of any railroad or railroads in this State.

“Sec. 5. The term property as used in this act shall be deemed to include all property, real or personal, belonging to the corporation subject to taxation under this act, including the right of way, roadbed, stations, cars, rolling stock, tracks, wagons, horses, office furniture, telegraph or telephone poles, wires, conduits, switchboards, and all other property used in carrying on the business of said corporations or owned by them respectively, and all other real and personal property and all franchises, said franchises not to be directly assessed, but to be taken into consideration in determining the value of the other property.”

Under this act the duty of the board is plain, and without doing violence to the language, if not the apparent intent of the legislature, we cannot say that any railroad company, organized under the provisions of the general railroad law, is exempt from taxation under it, whether it acquired its property from manufacturers who manufactured it, or from railway companies organized under some other statute, who purchased, manufactured, or constructed it, or whether it operates a track built in a street in a city, under authority granted by a council, or in a country district or highway. A city may withhold a franchise to build and operate a railroad in a street, and it is not impossible that it may make the payment of a local tax a condition, but this would not relieve such a company from its statutory liability to pay taxes. We should not be inclined to hold that calling a road a street railway, or building it in a street, would absolve the railroad company from its liability under Act No. 173, even though it operated a typical street railway. Doubtless if it purchased one, and was permitted to operate it, or if it was organized for the purpose, and constructed it, it would be required to perform the conditions of its franchise, though the result should be that it was doubly taxed. See City of Monroe v. Railway, supra. But this record shows no condition as to taxation in the original franchise. We are, therefore, of the opinion that the property in question was taxable under Act No. 173 of the Public Acts of 1901, and, being so taxable, it was not subject to local taxation by the plaintiff, for section 13 of said Act No. 173 (this section was amended by Act No. 45, Pub. Acts 1903), among other things, provides: “Said taxes shall be in lieu of all taxes for State and local purposes.”

We do not discuss the question of the lawfulness of a railroad company’s operation of a street railway, because it is unnecessary to decide it.

The judgment is reversed, and a new trial ordered.

McAlvay, C. J., and Carpenter, Ostrander, and Moore, JJ., concurred.


source: Caselaw Access Project

author: Hooker, J. Caepenteb, J. Moore, J.

license: Public Domain

text:
    STEVENS v. CITY OF PORT HURON.
    ■Municipal Corporations — Public Improvements — Special Assessments — Power to Levy — Street Sprinkling.
    In this case, involving the power of the city of Port Huron to levy a special assessment upon city lots to pay for sprinkling the street upon which they abut, the power is denied; Mr. Justice Hooker, with whom concur Chief Justice McAlvay and Justices Grant and Ostrander, denying the power on the ground that the sprinkling is of no substantial or permanent benefit to the property, and Mr. Justice Carpenter denying it on the ground that the charter of the city does not authorize a special assessment for sprinkling by the front foot rule without any hearing as to benefits. Moore, Blair, and Montgomery, JJ., dissenting.
    Cross-appeals from St. Clair; Tappan, J.
    Submitted January 18, 1907.
    (Docket No. 55.)
    Decided October 4, 1907.
    Bill by Herman W. Stevens, Fannie F. Mitchell, and Jennie J. Wilson against the city of Port Huron to set aside an assessment for a sprinkling tax. From a decree sustaining defendant’s demurrer as to complainant Stevens, and overruling the demurrer as to complainants Mitchell and Wilson, complainant Stevens and defendant appeal.
    Affirmed as to complainants Mitchell and Wilson and reversed as to complainant Stevens.

      William T. Mitchell (Stevens, Graham & Stevens, of counsel), for complainants.

      Joseph Walsh, for defendant.
   Hooker, J.

An ordinance of the city of Port Huron provided for the assessment of the cost of sprinkling streets upon the premises abutting the street in proportion to street frontage, irrespective of the use made of the premises, and whether they are vacant lots, or lands having buildings upon them. A bill was filed on behalf of Fannie F. Mitchell, Jennie J. Wilson, and Herman W. Stevens, owners of premises in severalty, to set aside an assessment for such purpose. A demurrer to the bill was overruled as to Mitchell and Wilson, the assessment being held void as to them because their vacant property was assessed at the same rate per front foot as were residence properties. It was sustained as to Stevens, because the bill failed to show which of his property was vacant, it alleging that of a large number of separate lots only two had dwellings upon them. Stevens and the city have appealed. Counsel appear to agree that the meritorious question is whether it is lawful to base an assessment for street sprinkling upon the foot front rule.

The important question in this case is whether a statute authorizing a municipal corporation to pass an ordinance requiring the cost of street sprinkling to be assessed upon the abutting land in proportion to frontage, is valid. The cases where this question has been considered are few and discordant. The differences seem to rest on a disagreement among the judges as to whether it can truly be said that the sprinkling of a street can have any substantial or permanent effect upon the value of the premises; some holding that it does to some extent protect the property from injury, and makes the locality a more comfortable and therefore desirable one to live in, thereby enhancing rental value, and that consequently enhancement by paving and from street sprinkling differ only in degree. Other judges say that this is a similarity more fanciful than real, that it rests on a refinement of logic rather than •a substantial and practical benefit, and that such a rule ■once established will furnish a precedent for the imposition of other burdens of like character, such as keeping streets and sidewalks free from ice, mud, water, snow, dust, etc., for the convenience of the traveling public, on no better ground than that a well kept street is more desirable for residence than one which is not. Of the cases called to our attention the earliest is State v. Reis, 38 Minn. 371.

The case turns upon the question indicated, a somewhat extended argument being made to show that, although the element o£ permanence is lacking, there is no difference in principle between sprinkling and paving, inasmuch as it cannot be claimed that the latter is eternal, or as stated in the opinion:

“But if permanence or durability is to be the test, how long must the beneficial results last in order to constitute an improvement ? It certainly will not be claimed that the work must be eternal in duration, or imperishable in character. We are unable to see any, difference in principle between the work of street sprinkling, the results of which, unless repeated, last but a day, and the construction of a block pavement or wooden sidewalk, which wears out or decays, and has to be rebuilt every few years. When a pavement or sidewalk has worn out, the future value of the property is not enhanced by it, any more than it is by street sprinkling when that ceases. Neither do we see that it makes any difference whether the substance applied to the surface of the street is wood, which has to be renewed every few years, or water, which has to be applied daily. Each benefits the adjacent property as long as it lasts, and no longer. It is not the agency used, or its comparative durability, but the result accomplished, which must determine whether a work is an improvement in the sense in which that word is here used.”

This case was followed by Reinken v. Fuehring, 130 Ind. 382 (15 L. R. A. 624). It related to street sweeping, the cost of which was made the subject of local assessment. In its last analysis this case appears, like the other, to rest upon the principle that the person assessed is benefited in the increased value of his property, either rental or permanent, over and above the benefits received by the public, in a sum equal to the amount he is required to pay. It is upon this theory alone that they (local assessments) can be sustained.

This case cites Village of Carthage v. Frederick, 122 N. Y. 275, decided in 1890, where an ordinance imposing a penalty for not cleaning snow and ice from a sidewalk was sustained. It appears to approve the suggestion that the imposition of such a burden on the landowner is defensible under the police power of the State, as “requiring a duty to be performed highly salutary and advantageous to the citizens of a populous and closely buñt city, and which is imposed upon them because they are so situated, that they can most promptly and conveniently perform it,” a rather astounding and startling reason for imposing a public burden on a citizen.

The New York case is not left to rest upon this suggestion, however, for it closes with the significant language:

“We are unable to yield to this reasoning, because it overlooks not only public safety and general convenience, but also the peculiar interest that every owner or occupant of real property has in a clean sidewalk in front of his own premises. Whatever adds to the usefulness of a sidewalk, adds both to the rental and permanent value of the adjacent lot.”

The Indiana case was followed by the case of Sears v. City of Boston, 173 Mass. 71 (43 L. R. A. 834). This was a sprinkling case, and the ordinance was sustained. That case freely admits that the power must rest upon the theory that the assessment is in the nature of a diminution of that which at first is a public burden, by subtracting from it the amount of the special enhancement of private property arising from the expenditure of public money in part for its benefit.

The court recognizes the gravity of the crucial question for it says:

“ It is a grave question whether nthe benefit that comes to abutting property from the watering of the street in front of it is such an improvement to the property that it can be made the subject of an assessment upon it. There must be a real substantial enhancement of value growing out of a public work to warrant an assessment of special taxes upon particular estates on account of it. The watering of streets produces only transitory effects, and makes no permanent change in the condition of the property.”

But it continues:

“It greatly promotes the health and comfort of the people generally, who use the streets from time to time, but its greatest benefit is to the abutting estates as places for residence or the transaction of business. Indeed, so much more important to the occupants than to the general public have been the benefits from watering streets that until lately the expense of the work in this Commonwealth has usually been borne by the abutters, who have procured the watering to be done by private contractors. If a special benefit, accruing from day to day, which very materially increases the rental value of real estate by reason of the proximity of the property to the place where the beneficial work is done, can be treated as an improvement within the reason of the rule which permits special assessments, then such assessments may be made to pay the expense of watering streets. ”

Yet it adds that it is,—

“With some hesitation, we hold that there is an improvement of private property, when this work is done by a city regularly from day to day, which may warrant an assessment upon the abutters. It was so held in State v. Reis, 38 Minn. 371, and in Reinken v. Fuehring, 130 Ind. 382 (15 L. R. A. 624), although the cases generally which uphold such assessments relate to improvements of a permanent character. Many improvements from which real estate receives an incidental advantage are held to justify only general taxation. Hammett v. Philadelphia, 65 Pa. 146; Washington Avenue, 69 Pa. 352; City of Erie v. Russell, 148 Pa. 384, 386; Dyar v. Village of Farmington, 70 Me. 515, 527; State v. Chamberlin, 37 N. J. Law, 388; Dietz v. City of Neenah, 91 Wis. 422, 427.”

The doubt is finally resolved in accordance with the result reached in Minnesota and Indiana, and the case has been fdlowed twice since in Massachusetts. See Trustees of Phillips Academy v. Inhabitants of Andover, 175 Mass. 118 (48 L. R. A. 550); Stark v. City of Boston, 180 Mass. 293.

Upon the other side of this question we find the case of City of Chicago v. Blair, 149 Ill. 310 (24 L. R. A. 412), where it was held that the sprinkling of streets is not a local improvement subject to local assessment. In the opinion we find the following:

“The only basis upon which either special assessment or special taxation can be sustained is, that from the proposed local improvement the property subjected to the tax or assessment will be enhanced in value to the extent of the burthen imposed. * . * * If, therefore, from an inspection of the ordinance authorizing the making of the improvement, it appears from the nature of the work proposed that the market value of abutting or adjacent property would not be increased thereby, as a matter of law it would not be a local improvement, within the meaning of the statute, and no declaration of the corporate authorities could make it so. * * * Any fair, reasonable doubt concerning the existence of the power is resolved by the courts against the corporation, and the power is denied. * * *

‘ ‘ It cannot, we think, in any just sense, be said that street sprinkling is an improvement, within the contemplation of article 9 of the cities and villages act. In the nature of things, the sprinkling is only useful while the work is continued. In a few hours the beneficial effects are gone, and the property is.worth no more than before the street was sprinkled.

“It is insisted, however, that all improvements — the building of sidewalks, the paving of streets, of however lasting material, — are evanescent, and in a few years at most, will necessarily require renewing, and that it makes no difference whether it be water put upon the street, or wood or granite, — that all alike are but temporary in character. In a sense this is true, but not in a practical sense. It is common experience that well paved streets and convenient and durable sidewalks, furnishing access to property, do, in fact, enhance its market value.

“ It is, however, insisted that the sprinkling of the streets during the summer months renders the occupation of adjacent property more enjoyable and comfortable, and that therefore the property is enhanced in value. Doubtless the same résult would follow by placing vases at convenient points on the streets to be filled every morning with fresh cut flowers, or by open air concerts, in which music should be selected with reference to the taste of the adjacent dwellers. So the employment of an efficient police force, whereby greater safety was felt, would add to the enjoyment and comfort of persons residing upon the street. The proper watering and clipping of the grass upon lawn and terrace, the removal of garbage from the premises, besides saving expense to the occupant, would add to the enjoyment, and possibly the healthfulness, of the locality. These all might be improvements, and increase, while they continued, the desirability of the property in their locality. But they are not improvement», either of the property or of the street, within the legislative contemplation when granting power to make local improvements by special assessments.

‘ ‘ The tendency of municipal government to arrogate to itself power and to encroach upon the rights of the citizen has led to the establishment of the statutory rules of construction, limiting its powers to those expressly granted, or arising, by reasonable and necessary implication, from the grant. It cannot, we think, be assumed that the legislature intended, by the language employed, to confer power upon the municipality to require work of the class provided for in this ordinance to be done by special assessment, even though it be held to be public work which the municipality is authorized to perform.”

Pettit v. Duke, 10 Utah, 311, decided in 1894, held that a local assessment could not be imposed for street sprinkling. It is fair to say, however, that this case turned upon a construction of the charter, though the opinion rests the construction of the statute upon the distinction between paving and sprinkling, the former being considered a permanent improvement, while the latter is not. It is difficult to avoid the force of the statement regarding sprinkling, that—

“It is only useful while the work is continued, and in a few hours the beneficial effects are gone, and the property is worth no more than before the streets were sprinkled. It does not enhance the value of the abutting property, and therefore the city cannot demand special contribution by local assessment to bear the cost' of the public work.”

In Kansas City v. O’Connor, 82 Mo. App. 655, the court held:

“That portion of the contract providing for sprinkling the street was ultra vires. It was not within the power of the city to lay a special tax against the abutting property of the citizen for the purpose of paying for sprinkling. A special tax against abutting property is based and sustained on the idea that the work for which the tax is laid is an improvement of the property, and sprinkling to keep down the dust, while good for the comfort of the inhabitants, is too intangible to be denominated an improvement of the property.”

The question again arose in the case of New York Life-Ins. Co. v. Prest, 71 Fed. 815, where Phillips, J., said:

“The sole foundation for the exercise of this extraordinary power, so often pressed to the utmost verge of toleration by these municipal governments, rests on the fact or assumption that it operates in the nature of conferring a practical, permanent benefit upon the property itself, independent of any fancy, whim or caprice of the occupant. The term ‘local improvements,’ on which the power asserted by this city charter is buttressed, had, at the time of the legislative grant, a well-known and sharply-defined meaning in law. As applied to a street, it meant the improvement of a street, as such, within the design of its creation, ‘ by reason' of which the real property abutting or adjacent was especially benefited in its market value.’ Cooley on Taxation, pp. 109, 110; 2 Dillon on Municipal Corporations (4th Ed.), §§ 752, 753. Its exercise is inseparable from the idea and purpose of permanency, and must be of that character which, presumptively, works out an enhancement of the market value of the property assessed. Kankakee Stone & Lime Co. v. City of Kankakee, 128 Ill. 176. The supreme court of Missouri manifestly entertains the same view. In Neenan v. Smith, 50 Mo. 529, the court says:

“ ‘Local taxes for local improvements are merely assessments upon the property benefited by such improvements, and to pay for the benefits which they are supposed to confer. The lots are increased in value, or better adapted to the uses of town lots, by the improvement. Upon no other ground will such partial taxation for a moment stand.’

“This is reasserted by the court in City of St. Louis v. Allen, 53 Mo. 44, and the same view of the underlying principle runs like a thread of gold through the discussion in State v. Leffingwell, 54 Mo. 458. On page 477 the court sums up the whole doctrine:

‘ ‘ ‘ Private property cannot be taken for public use without a just compensation. Special benefits cannot form any part of such benefits, unless they attach to and become a part of the taxed property.’

“Without such test, Judge Wagner very aptly declares that ‘ the time will probably come when it will be deemed advisable to provide statuary and other costly adornments for the park.’ Black, P. J., in City of Clinton v. County of Henry, 115 Mo. 569, speaking on this subject, said:

“ ‘These cases hold that local assessments can be upheld, alone, on the ground of compensation in benefits to the particular property assessed.’

“This precise question has been considered and determined by the supreme court of Illinois in City of Chicago v. Blair, 149 Ill. 310 (24 L. R. A. 412). While it is to be conceded that, in some other jurisdictions, the contrary view has been expressed, the reason and authority of the Illinois court commands my entire approval. It holds that such an assessment as practiced by the city for street sprinkling was violative of fundamental law, because it is not predicable of an improvement — a betterment — of the adjacent property. * * *

“ It is true the court was there demonstrating that the ordinance in question was not reasonably within the terms of the statute authorizing special assessments. But the legislative branch of the government is as much restrained by the fundamental law of the State in granting power to an integral part of the State, like a city, as the latter is controlled by the legislative grant. Carried to its logical extreme, where is the application of such a power, once conceded, to lead ? Under such ordinances, streets are sprinkled in front of vacant lots on which are neither house nor any ‘living creature.’ It could hardly be said, with reason, that running a sprinkling cart now and then in front of such a lot adds to its market value. Nor is there, in such occasional ‘laying of the dust,’ any semblance of permanency. It is as evanescent as the early and the later dew, and, in my judgment, it is no more within the power of a municipality thus to create liens on the citizens’ property than to hire a ‘ rain-maker ’ to vex the skies for refreshing showers, and charge the lots adjacent to the raindrops with the cost thereof. As the sprinkling of the public highways of a city like the cleaning thereof, contributes much to the comfort and enjoyment of the public, its cost should be made a general, and not a special, burden.”

If the question before us is to depend upon the application of the doctrine l’ecognized in most of the cases, viz., that a local assessment can only rest upon a substantial enhancement of values, rather than upon the idea that the public may impose this burden upon the citizen because he is so situated that he can “most promptly and conveniently perform a duty highly salutary and advantageous to the public,” a doctrine which is alleged to rest upon the police power of the State, it seems to us that the view taken by the cases last discussed is the correct one. We think it unnecessary to discuss other questions.

The decree is affirmed, with costs, as to complainants Mitchell and Wilson, and reversed as to complainant Stevens, who will take the decree usual on the overruling of a demurrer, with costs of both courts.

McAlvay, C; J., and G-bant, and Ostbandeb, JJ., concurred with Hookeb, J.

Caepenteb, J.

The legislature empowered defendant’s common council—

“ To provide by ordinance for the * * * sprinkling of any of the streets of said city * * * by the city or by contract, and to levy and collect special assessments, to defray the costs and expenses of so-doing, and to provide by ordinance the necessary means for carrying out the provisions of this section and the making of the necessary assessment rolls. The amount so assessed shall be a personal charge against the owner or occupant of the premises adjacent to which such sprinkling * * * is done, and be and remain a lien upon the property until the same is paid.” Act No. 539, Local Acts 1903, chap. 7, § 54.

In accordance with this authority defendant’s common council passed an ordinance providing that the streets which it determined to have sprinkled should be sprinkled by contract, and that the total expense should be levied upon the lots and premises abutting the street so sprinkled “in proportion to the number of feet fronting, abutting or touching on such street.” In pursuance of this ordinance Military street in said city of Port Huron was sprinkled and the total amount of said cost assessed upon the abutting property owners. As would be inferred from this statement, no steps were taken to ascertain that the property assessed was benefited, and the owners were given no opportunity to be heard upon that question.

Complainants, whose property — some of which is vacant and some of which is occupied — abuts on said street and is assessed for said sprinkling, bring this suit in equity setting forth the above facts and also averring that their property was not benefited by said street sprinkling, and asking to be relieved therefrom. Defendant demurred to this bill. The cause was heard in the lower court and a decree therein rendered setting aside said assessment on the vacant property and sustaining it on the occupied property. Both parties appeal to this court.

Complainants contend that the proceedings for the levy of this assessment are void because the assessment was not apportioned according to benefits. They rely upon City of Detroit v. Judge of Recorder's Court, 112 Mich. 588, where it was said: “ The sole ground for imposing a part or all of the cost of a public improvement upon one part of a municipality is that the part burdened with the cost receives corresponding benefits which the general public does not receive,” and where we held invalid a street-opening law which provided that at least half of the amount required for opening the street should be raised by local assessments, saying:

“It contains no provision which requires the assessment upon the local district to be in proportion to the benefits received. The common council are not required to determine when they establish the district to what extent it is benefited. The jury are required to assess one-half upon the assessment district, regardless of whether it is benefited to that extent and are clothed with power to assess a larger amount only when they conclude that the benefit exceeds 50 per cent. The legislature has no power to fix an arbitrary percentage of a public improvement to be imposed upon a local assessment district, regardless of the benefits received. ”

Defendant’s counsel contend that the case at bar is not within the principle of the above case, but is within the principle which is applied in paving a street. In such cases it is held that it is competent for the legislature to provide that the entire cost of paving the street shall be borne by the property abutting upon the street in proportion to its «frontage. See Sheley v. City of Detroit, 45 Mich. 431; Cass Farm Co. v. City of Detroit, 124 Mich. 433, 181 U. S. 396; French v. Paving Co., 181 U. S. 324. There is this distinction, however, between those cases and the case at bar. In those cases the legislature itself directed the entire cost of the improvement to be levied upon the abutting property in proportion to frontage. In the case at bar it has not done that. It has simply given the common council of defendant authority to collect the same by special assessments. It cannot be said that this distinction is unimportant. It was recognized by the Supreme Court of the United States in French v. Paving Co., by quoting with approval from a former decision of the Supreme Court of the United States (Fallbrook Irrigation District v. Bradley, 164 U. S. 112), as follows:

“ It has been held in this court that the legislature has power to fix such a district (assessing district) for itself without any hearing as to benefits for the purpose of assessing upon the lands within the district the cost of a local, public improvement. * * * But when as in this case the determination of the question of what lands shall be included in the district is only to be decided after a decision as to what lands described in the petition will be benefited and the decision of that question is submitted to some tribunal (the board of supervisors in this case), the parties whose lands are thus included in the petition are entitled to a hearing upon the question of benefits and to have the lands excluded if the judgment of the board be against their being benefited. Unless the legislature decide the question of benefits itself, the landowner has the right to be heard upon that question before his •property can be taken.”

In Wight v. Davidson, 181 U. S. 884 (this was a case similar to the Cass Farm Company Case and decided at the same time), the Supreme Court of. the United States, in speaking of Norwood v. Baker, a former decision reported in the 172 U. S. 269, said:

“There the question was as to the validity of a village ordinance, which imposed the entire cost and expenses of opening a street, irrespective of the question whether the property was benefited by the opening of the street. The legislature of the State had not defined or designated the abutting property as benefited by the improvement, nor had the village authorities made any inquiry into the question of benefits. There having been no legislative determination as to what lands were benefited, no inquiry, instituted by the village councils and no opportunity afforded to the abutting owner to be heard on that subject, this court held that the exaction from the owner of private property of the cost of a public improvement in substantial excess of the special benefits accruing to him is to the extent of such excess a taking under the guise of taxation of private property for public use without compensation.”

The foregoing quotations are placed in this opinion, not because I regard them as correct statements of the law — ■ for I candidly confess to a conviction that the law upon this subject is not yet settled — but for the purpose of showing the difficulty of bringing this case under the principle of the street-paving cases.

If we concede that the legislature might itself determine that the total expense of sprinkling a street should be assessed upon the abutting property owners in proportion to their frontage (and I make such concession only for the purpose of this opinion) and if we concede that the legislature may delegate this power to a municipality — and this concession is opposed to the principle declared in the foregoing quotations — the question arises whether in this case the power was delegated. If it was, it would, as already shown, permit a municipality to decide that a landowner is benefited by an improvement without giving him any opportunity whatever of being heard upon the question of benefits. A municipality certainly does not possess that power unless the legislature granted it. See Detroit Citizens’ St.-Ry. Co. v. City of Detroit, 110 Mich. 384 (35 L. R. A. 859). The legislature did not expressly grant it. Was it granted by implication ? It was not, unless it is to be implied from the grant of authority “ to levy and collect special assessments, to defray the costs and expenses of ” sprinkling the street. It is clear that defendant’s common council might fully and effectively exercise this authority by proceeding in the usual manner, viz., by apportioning the assessments according to benefits after hearing the parties interested. To make said grant of authority effective it is not, therefore, necessary to infer a grant to the municipality of the unusual and extraordinary power of determining that a landowner is benefited by a public improvement without giving him any opportunity of being heard. Whether such power passed by implication is to be determined by the general rules applicable to the construction of municipal charters. Justice Cooley, in. his work on Constitutional Limitations (7th Ed.), p. 271, says:

“ The general disposition of the courts in this country has been to confine municipalities within the limits that a strict construction of the grants of powers in their charters will assign to them; thus applying substantially tho same rule that is applied to charters of private incorporation. The reasonable presumption is that the State has granted in clear and unmistakable terms all that it has designed to grant at all.”

Judge Dillon, in his work on Municipal Corporations (4th Ed), § 91, note 2, says-:

“If upon the whole there be fair, reasonable, substantial' doubt whether the legislature intended to confer the authority in question, particularly if it relates to a matter ex-tramunicipal or unusual in its nature, and the exercise of which will be attended with taxes, tolls, assessments, or burdens upon the inhabitants, or oppress them, or abridge natural or common rights, or divest them of their property, the doubt should be resolved in favor of the citizen, and against the municipality.”

Under these rules the power under consideration was not granted. It was certainly not granted in clear and unmistakable terms. It is an unusual power for a municipality to possess. This is the first time in the history of this court that a municipality has asserted such a power. Its “ exercise will be attended with assessments upon the inhabitants” of the city. And inasmuch as it denies them a hearing upon the-question of benefits it “ oppresses them and abridges their natural rights. ” It follows that the proceedings for the levy of the assessment under consideration were fatally defective.

Defendant insists that complainants are not entitled to relief under the rule laid down in Byram v. City of Detroit, 50 Mich. 56, and other similar cases, where we held that one who stands by and permits public improvements to be made which benefit his property, cannot seek the aid of equity. The doctrine of these cases is not applicable, for it must be assumed, as stated in their bill, that complainants received no benefit from the alleged public improvement.

Complainants are, in my judgment, entitled to full relief.

Moore, J.

(dissenting). I do not reach the same result in this case as does Justice Hooker. His statement of facts is sufficiently full for an understanding of the important question in the case, which I agree with him is whether a statute authorizing a municipal corporation to pass an ordinance, requiring the cost of street sprinkling to be assessed upon the abutting land, in proportion to frontage, is valid. I also agree with him that the authorities are very much-divided. He presents in his opinion very fairly the two lines of authorities, but from some of them which give an affirmative answer to the question, I desire to quote more freely than he has done.

Preceding the quotation which he has made from State v. Reis, 38 Minn. 371, is the following:

“While the public who travel it are also benefited by having the street sprinkled, yet it requires no argument to show that those who reside or do business on it receive an exceptional and special benefit from abating the nuisance of dust, which is a source not only of discomfort to them, but also of actual pecuniary injury to their household goods or merchandise. Sprinkling a street renders the property fronting on it more desirable, and hence more valuable, for occupancy, — a benefit not shared in by other property.”

Following the quotation made by him is the following:

“ The only essential elements of a ‘local improvement ’ are those which the term itself implies, viz., that'it shall benefit the property on which the cost is assessed in a manner local in its nature, and not enjoyed by property generally in the city. If it does this — rendering the property more attractive and comfortable, and hence inore valuable for use — then it is an improvement. That the regular and systematic sprinkling of a street has this effect upon the property fronting on it is a matter of common knowledge. This construction is fully warranted by the definitions of the word ‘improvement’ given by lexicographers. It has been defined as ‘that by which the value of anything is increased, its excellence enhanced, or the like;’ or ‘an amelioration of the condition of property affected by the expenditure of labor or money, for the purpose of rendering it useful for other purposes than those for which it was originally used, or more useful for the same purposes. ’ ”

In the case of Village of Carthage v. Frederick, 122 N. Y. 275, the justice speaking for the court uses the following language:

“ Chief Justice Shaw, in deciding a case, involving the collection of a penalty imposed for the violation of a municipal ordinance requiring the owners or occupants of houses bordering on streets to remove the snow from their respective sidewalks within a specified time, used this significant language:

“ ‘It is not speaking strictly to characterize this city ordinance as a law levying a tax, the direct or principal object of which is the raising of revenue. It imposes a duty upon a large class of persons, the performance of which requires some labor and expense, and, therefore, indirectly operates as a law creating a burden. But we think it is rather to be regarded as a police regulation, requiring a duty to be performed highly salutary and advantageous to the citizens of a populous and closely built city and which is imposed upon them because they are so situated as that they can most promptly and conveniently perform it, and it is laid not upon a few but upon a numerous class, all those who are so situated and equally upon all who are within the description composing the class. * * * Although the sidewalk is part of the public street and the public have an easement in it, yet the adjacent occupant often is the owner of the fee, and generally has some peculiar interest in it and benefit from it, distinct from that which he enjoys in common with the rest of the community. He has this interest and benefit often in accommodating his cellar door and steps, a passage for fuel and the passage to and from his own house to the street. * * * For his own accommodation he would have an interest in cleaning the snow from his own door. The owners and occupiers of house-lots and other real estate, therefore, have an interest in the performance of this duty, peculiar and somewhat distinct from that of the rest of the community. Besides, from their situation, they have the power and ability to perform this duty with the promptness which the benefit of the community requires and the dirty is divided, distributed and apportioned upon so large a number that it can be done promptly and effectually and without imposing a very severe burden upon any one.’ In re Petition of Goddard, 16 Pick. (Mass.) 504, 509, 516.

“In a recent case this court, referring to the police power, said:

‘ ‘ ‘ That power is very broad and comprehensive, and is exercised to promote the health, comfort, safety, and welfare of society. * * * tinder it the conduct of an individual and the use of property may be regulated so as to interfere, to some extent, with the freedom of the one and the enjoyment of the other.’ In re Jacobs, 98 N. Y. 98, 108.

“And in another case the court declared that ‘ all property is held subject to the general police power of the State, to so regulate and control its use in a proper casb, as to secure the general safety and the public welfare.’ People v. Gillson, 109 N. Y. 389, 398.

“ In both of the eases last referred to, the police power was distinctly recognized, but it was held that a statute, to be sustained as an exercise of that power, must have some relation to the public health, comfort or safety, and that the rights of property could not be invaded under the guise of a police regulation for the protection of health, when it was manifest that such was not the object of the regulation.

“The following authorities, some expressly and others in principle, justify the passage of the ordinance in question as a proper exercise of police power, lawfully delegated to a municipal corporation by the legislature: People v. Mattimore, 45 Hun (N. Y.), 448; Mayor, etc., of New York v. Williams, 15 N. Y. 502, 505; Phelps v. Racey, 60 N. Y. 10; Cronin v. People, 82 N. Y. 318; Moore v. Gadsden, 93 N. Y. 12, 17; Dixon v. Railroad Co., 100 N. Y. 176, 179; People v. Arensberg, 105 N. Y. 123; Vanderbilt v. Adams, 7 Cow. (N. Y.) 349; Coates v. Mayor, etc., of New York, 7 Cow. (N. Y.) 585, 606; Stokes v. New York, 14 Wend. (N. Y.) 88; Sharpless v. Mayor, etc., of Philadelphia, 21 Pa. 147; Beer Co. v. Massachusetts, 97 U. S. 25, 33.

“If this power of local legislation can be conferred upon the largest city in the State, it can also be conferred upon the smallest village that the legislature sees fit to incorporate. In this latitude the accumulation of snow upon sidewalks in large quantities is a matter of course. Its presence retards travel, interrupts business, and interferes with the safety and convenience of all classes. It is a frequent cause of accidents and thus affects the property of every person who is liable to assessment to pay the damages caused by a failure to remove it. But how is it possible for the authorities of a large city, with many hundred miles of streets, „to remove the snow in time to prevent injury to those who have the right to travel upon the sidewalks unless they can require the owners and occupants of adjacent property to remove it ? Every man can conveniently and promptly attend to that which is in front of his-own door, and it is both reasonable and necessary that he should be compelled to do so. We think that the ordinance under consideration is valid; that it conflicts with no provision of the constitution, and that it is the duty of the courts to enforce it.”

In the case of Sears v. City of Boston, 173 Mass. 71 (43 L. R. A. 834), the following language is used in the opinion:

‘ ‘ This is a petition for a writ of certiorari to quash alleged illegal assessments laid to meet the cost of watering streets in the city of Boston under Stat. 1897, chap. 419. The first and most important question in the case is whether this statute is constitutional. The right of the legislature to raise money by taxation is founded upon article 4, chap. 1, § 1, of the constitution of the Commonwealth. Under this article there is authority ‘ to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities,’etc. This authority we need not consider in the present case. Secondly, there is authority ‘ to impose and levy proportional and reasonable assessments, rates, and taxes upon all the inhabitants of and persons resident and . estates lying within the said Commonwealth.’ The watering of streets in thickly settled portions of cities is such a public benefit that it legitimately may be provided for at the public expense. So far as it promotes the comfort, convenience, and prosperity of the people generally, as distinguished from landowners, it should be provided for by general taxation, which involves the assessment of proportional and reasonable taxes upon all persons and property within the city. The statute purports to authorize every city, not only to ‘ appropriate money for watering the public ways, or portions thereof, within its limits at the expense, in whole or in part, of the city,’ but also to ‘determine that certain other public ways or portions thereof shall be watered at the expense, in whole or in part, of the abutters thereon. Stat. 1897, chap. 419, § 1. This last provision calls for another kind of taxation, which is local and special. Such taxation, under the constitution, can only exist when there is a special or peculiar benefit to certain real estate, different from that which is received by the inhabitants generally. The owners of the land upon which such an assessment is made must pay the same share of the general taxes in proportion to the value of their property that other persons pay. As the constitution requires that taxes shall be proportional and reasonable, this additional special tax can be justified only when there is a special benefit to property from the expenditure on account of which the assessment is made. Wright v. City of Boston, 9 Cush. (Mass.) 233, 234; Dorgan v. City of Boston, 12 Allen (Mass.), 223, 237; Mount Auburn Cemetery v. Cambridge, 150 Mass. 12, 14 (4 L. R. A. 836); Norwood v. Railroad Co., 161 Mass. 259, 264; City of Boston v. Railroad Co., 170 Mass. 95; Norwood v. Baker, 172 U. S. 269; Stuart v. Palmer, 74 N. Y. 183, 189; Sharp v. Speir, 4 Hill (N. Y.), 76, 82; Hammett v. Philadelphia, 65 Pa. 146, 157; Tidewater Co. v. Coster, 18 N. J. Eq. 518, 527; City of Norfolk v. Chamberlain, 89 Va. 196, 213; Nichols v. City of Bridgeport, 23 Conn. 189; Thomas v. Cain, 35 Mich. 155, 162; Taylor v. Palmer, 31 Cal. 240, 254; Sheehan v. Good Samaritan Hospital, 50 Mo. 155. In the last analysis the assessment is not laid as a part of the burden of public expenditure put upon the land; for the burdens which are strictly public are to be shared proportionally by all the people, according to the value of their taxable property. It is rather in the nature of a diminution of that which at first is a public burden, by subtracting from it the amount of the special enhancement of value of private property from the expenditure of public money in part for its benefit. It is taxation in the sense that it is a distribution of that which is originally a public burden, growing out of an expenditure primarily for a public purpose.

“ It is a grave question whether the benefit that comes to abutting property from the watering of the street in front of it is such an improvement to the property that it can be made the subject of an assessment upon it. There must be a real substantial enhancement of value growing out of a public work to warrant an assessment of special taxes upon particular estates on account of it. The watering of streets produces only transitory effects, and makes no permanent change in the condition of the property. It greatly promotes the health and comfort of the people generally, who use the streets from time to time, but its greatest benefit is to the abutting estates as places for residence or the transaction of business. Indeed, so much more important to the occupants than to the general public have been the benefits from watering streets that until lately the expense of the work in this Commonwealth has usually been borne by the abutters, who have procured the watering to be done by private contractors. If a special benefit, accruing from day to day, which very materially increases the rental value of real estate by reason of the proximity of the property to the place where the beneficial work is done, can be treated as an improvement within the reason of the rule which permits special assessments, then such assessments may be made to pay the expense of watering streets. With some hesitation, we hold that there is an improvement of private property, when this work is done by a city regularly from day to day, which may warrant an assessment upon the abutters. It was so held in State v. Reis, 38 Minn. 371, and in Reinken v. Fuehring, 130 Ind. 382 (15 L. R. A. 624), although the cases generally which uphold such assessments relate to improvements of a permanent character. Many improvements from which real estate receives an incidental advantage are held to justify only general taxation. Hammett v. Philadelphia, 65 Pa. 146; Washington Avenue, 69 Pa. 352; City of Erie v. Russell, 148 Pa. 384, 386; Dyar v. Village of Farmington, 70 Me. 515, 527; State v. Chamberlin, 37 N. J. Law, 388; Dietz v. City of Neenah, 91 Wis. 422, 427.”

I do not make reference to the cases which hold such a statute is not valid, for the reason that they are very fully referred to in the opinion of Justice Hooker.

It must be conceded that, in principle the case at bar cannot be distinguished from those where the lot owner is required to keep his sidewalk free from mud, snow, and slush. It is a matter of common knowledge that the several charters granted to cities and villages in this State confer upon the common councils of said municipalities the right to pass ordinances of the character just mentioned. It is also a matter of common knowledge that the legislature has conferred upon municipalities the right to pass ordinances like the one now under consideration, and that ordinances of like character have been in effect in many cities and villages in this State for many years.

We think it also a matter of common knowledge that people who can afford it will not willingly reside in a residential district where the streets are not sprinkled during our hot and dusty summers; nor would one willingly engage in retail trade upon such a street. If the property owner desired to rent his property so situated he would receive a larger rent than he would if it was understoo d the streets in that district were to remain unsprinkled. This would be equally true did he desire to sell.

We think it very clear a real estate dealer would find that a lot in a residential district or in a retail business center would sell more readily and for a better price, if he could assure a prospective buyer that the street upon which it abutted would be kept sprinkled during the hot and dusty summer, than if he was.obliged to say to him it would not be sprinkled. It would also be found that the increased value of the lot would not be disproportioned to the amount levied upon the property to pay for the sprinkling. The tax is levied not for sprinkling one day simply, but for the season. The tax • levied is small. It amounts to only about ten cents a foot front for the entire season. The sprinkling of the street appreciably increases the comfort of the occupants of the property, and as before stated increases its rental value as well as its sale value. 2 Cooley on Taxation (3d Ed.), p. 1,178 et seq.

As the question is a new one in this State, and as ordinances of like character are almost universal in our cities and villages, and in many of them have been acted upon for years, and as there is abundant authority from very respectable courts holding like ordinances valid, and as the opinions so holding seem to be logical, I think we should follow them rather than. the other line of cases. The parties having delayed until the service was fully rendered are concluded from attacking the proceedings on technical grounds under Byram v. City of Detroit, 50 Mich. 56.

The decree should be affirmed as to complainant Stevens, with costs, and should be reversed as to complainants Mitchell and Wilson, with costs.

Blair, and Montgomery, JJ., concurred with Moore, J.


author: Ostrander, J. Hooker, J.

text:
    BEATON v. TOWNSHIP OF INLAND.
    Equity — Jurisdiction — Cancellation of Instruments — Accounting — Township Treasurer — Receipts.
    Equity has jurisdiction of a bill by a township treasurer against his predecessor in office for an accounting of the money and funds turned over to complainant and to cancel a receipt for such funds if found to be, through fraud or mistake, for too great a sum. Ostrander, J., MoAlvay, C. J., and Grant, J., dissenting.
    Appeal from Benzie; Chittenden, J.
    Submitted January 23, 1907.
    (Docket No. 100.)
    Decided October 4, 1907.
    Bill by Henry E. Beaton against the township of Inland and Edward Smock for a determination of the amount received as township treasurer by complainant from defendant Smock, for a cancellation of a receipt, and for a determination of the amount belonging to the township in the hands of defendant Smock. From a decree sustaining a demurrer as to defendant township, and overruling the demurrer of defendant Smock, he appeals.
    Affirmed.
    Complainant is treasurer of the township of Inland. His predecessor in office was defendant Smock. It is alleged in the bill of complaint that the clerk of the township and defendant Smock told complainant that he should receive from Smock the sum of $3,530.31, township funds; that there was turned over to him by Smock in cash and in checks $2,156.28, and in orders, receipts, and account for returned taxes $1,374.03, which said Smock represented to be a portion of the larger amount and for which he should have credit. Complainant gave to said Smock a receipt for the sum of $3,530.31, “for money and evidence of money that' he so received from the said Edward Smock.” After assuming the duties of the office of treasurer, complainant discovered “ what he then and now believes to be an error,” arising out of the fact that Smock had already received credit, as treasurer, for items going to make up the sum of $1,374.03. He reported this discovery to the township board, which entered upon an investigation, with the result that it was found complainant should have received from Smock “$3,034.16 or thereabouts,” being $877.88 more than he did receive and less than he receipted for. The township board declines to take any action in the matter beyond informing complainant that it concerned himself and Smock only and it would look to complainant and his bondsmen for any money belonging to the township. It is inferentially averred in the bill that the township and the outgoing treasurer had a settlement, as the law requires, 1 Comp. Laws, §§ 2356, 2346. Whether the statement required by 1 Comp. Laws, § 2350, to be made was so made and published does not appear. The relief asked for is, a determination of the sum actually received by complainant from said Smock, the cancellation of the receipt given to Smock, determination of the sum in the hands of Smock belonging to the township. The demurrer of the township to this bill was sustained; that of defendant Smock was overruled. He has appealed from the order overruling his demurrer.

      D. 6r. TP. Warner, for complainant.

      Smurthwaite & Alway, for appellant.
   Ostrander, J.

(after stating the facts). The court below was of opinion that complainant was accountable to the township for no more money than he received, for which reason a court of law was the proper forum in which to settle such differences, if any, as shall arise between them; that having given defendant Smock a receipt for more money than he received, complainant was entitled to a return of the receipt or the balance of funds necessary to make the receipt accord with the facts, and that a court of equity would cancel the receipt if, upon an accounting had in that court, it appeared that by mistake or by fraud it was for too large a sum.

No case is made for an accounting. The township and defendant Smock had a settlement as the law requires and neither party to it questions it. I do not understand that after making his settlement (accounting) with the township board an outgoing treasurer relieves himself and his sureties to the extent that he succeeds in inducing his successor to believe that vouchers for which he has already received credit are uncanceled. In a suit of the township against complainant, he would be obliged to account for the money he received from his predecessor. The receipt he gave his predecessor would be, unexplained, evidence of the amount he did receive. It is mere evidence and can be contradicted or explained by parol testimony. Johnson v. Insurance Co., 39 Mich. 33; Vyne v. Glenn, 41 Mich. 112; Powell v. Powell, 52 Mich. 432; Hart v. Gould, 62 Mich.. 262. The grounds of equitable jurisdiction asserted are fraud in obtaining the receipt; inability to obtain, otherwise, immediate relief from the apparent liability evidenced by the receipt; possible inability, arising from death or lapse of time, .to establish the invalidity of the receipt, when, if ever, it shall be offered to bind complainant, his estate, or his sureties. Complainant was elected to office, in April, 1905. His bill of complaint was verified December 14th of that year, and the decree of the court below is dated September 14, 1906. Whether any action in the premises has been taken by the township, we are not informed. I think the mere fact that a receipt is given at the conclusion of an alleged fraudulent transaction relating to personal property is not enough to establish the jurisdiction of a court of equity to investigate the transaction for the purpose of canceling or refusing to cancel the receipt. I have found no precedent for such action. It is urged that in this cas'e there is the additional fact that complainant may not himself attack the transaction in a suit at law but must await attack. . I think this fact is insufficient to support equity jurisdiction in this case. Complainant notified the township of the claim he makes. The township has discredited the receipt so far as the amount therein stated is concerned. It seems to me, therefore, that the receipt was explained to the township authorities before the bill was filed, apparent effect denied by complainant, and the fact that it did not truthfully evidence the actual turning over of funds by Smock was admitted by the township authorities. As the case stands, no decree binding upon the township can be entered, complainant is entitled to no money decree against defendant Smock, and the relief granted must be in any event the mere cancellation of the receipt. Without denying or discussing the jurisdiction of equity to cancel, in certain cases, a writing which might be used as evidence, where such writing has been procured by fraud (see 6 Cyc. pp. 294, 295, and notes), I am of opinion that such a case is not presented by the bill.

The decree is reversed, and a decree will be entered here sustaining the demurrer of defendant Smock, with costs of both courts. The record will be remanded and complainant will be given 30 days in which to file an amended bill if he desires to do so.

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

Hooker, J.

In my opinion this case should be affirmed, being ruled by the following cases: John Hancock Mut. Life-Ins. Co. v. Dick, 114 Mich. 337 (43 L. R. A. 566); Fidelity Mut. Life-Ins. Co. v. Blain, 144 Mich. 218; Fred Macey Co. v. Macey, 143 Mich. 138, and cases cited.

Carpenter, Blair, Montgomery, and Moore, JJ., concurred with Hooker, J.


author: Hooker, J.

text:
    GORE v. CANADA LIFE ASSURANCE CO.
    1. Principal and Agent — Life-Insurance Company — Unauthorized Contract by Agent — Holding Out — Estoppel.
    Where neither the manager of the Michigan branch of a life-insurance company nor the local superintendent of agents had authority to bind the company by a contract of employment of a solicitor, the company is not bound by such a contract made by them unless it has so held them out as having such authority as to induce the solicitor to rely upon it, and to estop the company from denying it.
    2. Same — Holding Out — Evidence—Sufficiency.
    Possession by the manager of the Michigan branch of a life-insurance company of a single copy of a blank contract of agency, which the officers of the company testify they did not know he had and was not intended for use in Michigan, is not such a holding out of the manager as having authority to enter into such a contract on the company’s behalf as to estop it from denying such authority.
    3. Same — Ratification.
    Where a life-insurance company placed its business in Michigan in the hands of an agent upon the basis of a commission, and their contract contemplated the maintenance of headquarters here, and the soliciting of business by such agent through agents appointed by him, the company to assume no obligation to such soliciting agents, the fact that the company required bonds from the soliciting agents was not an admission that it had other contract relations with them involving a promise to pay for their services rendered to the general agent.
    4. Same.
    That under its contract with its Michigan agent the company placed a representative in the Michigan headquarters, who officiated as bookkeeper and custodian of the funds received which, under the contract, belonged to the company; and that in the books there kept and in the books kept at the home office a soliciting agent’s name appears as credited with commissions due him and charged with payments, do not show a ratification of contract relations between the company and the soliciting agent, where the bookkeeping may be regarded as a necessary means of safeguarding the company’s interests and maintaining the efficiency and economical administration of the branch in the interest of the agent and his solicitors as well as of the company.
    5. Same
    That a life-insurance company included plaintiff’s name in the list of agents filed with the insurance commissioner pursuant to section 7246, 2 Comp.-Laws, does not show a ratification of an unauthorized contract by the company’s agent obligating the company to pay plaintiff’s commissions on business secured for the agent by him.
    Error to Wayne; Hosmer, J.
    Submitted January 24, 1907.
    (Docket No. 46.)
    Decided October 4, 1907.
    Assumpsit by Henry H. Gore against the Canada Life Assurance Company for agent’s commissions. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      Maybury, Lucking, Emmons & Helfman, for appellant.

      Russel, Campbell & Bulkley, for appellee.
   Hooker, J.

This cause was before us on a former occasion and is reported in 119 IVTich. 136, where the main facts are set forth at length. We then said that there were two theories upon which the plaintiff might recover in his action. First, that Glass actually had authority to make a contract that the defendant should pay for his services. Second, that the Company’s conduct was such a holding out as to justify his belief that Glass had such authority, thereby constituting an estoppel to deny it. Plaintiff has again appealed from a verdict and judgment by direction of the court.

This record, like the other, conclusively shows that the Canada Life Assurance Company put its business in Michigan, i. e., the obtaining of applications for insurance and loans, which is the only business it does, in the hands of Cox, upon the basis of a commission.. Their contract contemplated the maintenance of headquarters in Detroit and the soliciting of business by Cox through agents appointed by him; but it is beyond question that the company was to assume no obligation to such agents.

Cox appointed one or more persons to have charge of the business, one of whom, Bucknell, was known as manager of the Michigan branch, and another, Glass, went by the name of superintendent of agents. These men were paid salaries or commissions, possibly both, by Cox, and solicitors who worked upon commission, also paid by Cox, were appointed by one or both of them.

It is admitted that the plaintiff went to work at the business of soliciting applications for insurance in the Canada Life Company under an arrangement made with Glass. He states, that Glass arranged with him to work for the Canada Life, and that he afterwards had talk with Bucknell, who was the manager, asking for a written contract, which Bucknell said he could have if he wanted it, and gave him a blank to fill up, at the same time telling him that the oral contract would be as good, as it was “just the same.” This blank was apparently designed for a contract between the defendant company and agents who should contract directly with it. It contáined blanks for the signatures of the president, secretary, and the agent, and nothing suggesting the intervention of a manager or other person conducting the Michigan branch appeared in it. It is contended that this statement of Bucknell showed an understanding of the parties to the conversation, viz., Bucknell and plaintiff, that the contract was made by the company.

We held upon the former hearing that neither Bucknell nor Glass had authority to so bind-the company, and this as conclusively appears from the record. The defendant cannot be bound even if it was the understanding between Bucknell and the plaintiff that the defendant should be bound unless the record shows such’ a holding out of authority of the manager or Glass, as to induce plaintiff to believe and rely upon it, and to estop the defendant from denying it.

The only fact in the nature of a holding out that plaintiff could then have relied on was the alleged possession of this blank, and the record contains nothing but the bare fact of the possession of this one copy to indicate that the company furnished to the Detroit office any such blank. The officers deny all knowledge of it, say that those blanks were for use in Canada, and not in Michigan, while Bucknell denies the entire story of the plaintiff regarding it. We think there is not such proof that the company clothed Bucknell with apparent authority as to constitute an estoppel.

In this connection We should allude to certain other testimony relied on to show that the company ratified such contract by treating plaintiff as its agent. This testimony consists largely of entries in books of the company, applications bearing plaintiff’s signature as agent, a list of district agents, kept at the home office, filed with the commissioner of insurance of this State, and published in its advertising matter, the fact that under the contract with Cox the company had a representative at the Detroit branch, who officiated as bookkeeper, and as custodian of the funds received, which, under the contract with Cox, belonged to the company, in which books the plaintiff’s name appears, as credited with commissions due him, and charged with payments, some of which were made by checks signed by the bookkeeper, and the further fact that in some cases bonds had been furnished by solicitors to the company though not by plaintiff. These facts are not inconsistent with the plainly established fact that the company never authorized the contract relied upon.

The course of business in the Detroit office is not in doubt. Under its contract with Cox all moneys received on policies was the money of the company. It reserved the right to approve or disapprove the selection of solicitors. Requiring of bonds from solicitors who received moneys was not an admission that it had other contract relations with them involving a promise to pay for their services rendered to Cox.

When money was paid in it went into the hands of defendant’s representative, who was authorized to disburse it as directed by the manager, within the lines of the Cox contract. It is not unnatural to suppose that the entire bookkeeping of the establishment was done by the company’s agent, as a necessary means of safeguarding its interests, and maintaining the efficiency and economical administration of the business of the branch, in the interest of Cox and his agents as well as of the company, and it furnishes no evidence of a ratification of contract relations with plaintiff, and is in no sense an admission of such. The same may be said of other entries in company books, both at Detroit and in the home office.

A reference to 2 Comp. Laws, § 7246, Insurance Laws of Michigan 1905, p. 82, will show that all persons who in any manner aid in transacting the business of an insurance company are denominated agents, and are required to have certificates of authority issued by the department of insurance of the State, and that lists of such must be filed with the commissioner by the company.

Again, the record shows that the course of business of this company was to have its applications taken by solicitors, and turned in to the branch office, sent by its manager to the home office, where they were passed upon and rejected or accepted, and policies were returned through the branch office to the solicitor, who delivered them. If rejected, it is presumable that the money, if paid, was to be refunded. All of these things require bookkeeping at each step, and as already said it is not inconsistent with the absence of contract relations between the solicitor and the company. These applications were the culmination of negotiations between the prospective patrons and the solicitor, and the blanks contemplated statements of fact, by the solicitor or agent, as well as by the applicants, and assurances which could only be given by the solicitor were required of him.

We are of the opinion that the learned circuit judge was correct in saying that the additional evidence offered upon the last trial was not materially different in1 character from that offered at the earlier hearing, and that it would not have justified his submission of the cause to the jury. If the plaintiff has been wronged by the conduct of the managers of the Michigan branch in appropriating a portion of the commissions to which he is entitled, his remedy is not against the company.

The judgment is affirmed.

Blair, Montgomery, Ostrander, and Moore, JJ., concurred.


author: Carpenter, J.

text:
    STEINER v. SUPREME COURT INDEPENDENT ORDER OF FORESTERS.
    Insurance — Mutual Benefit Insurance — Action on Policy — Exhausting Remedies Within Order.
    Where the laws of a mutual benefit insurance society provide that a member is bound by the decision of the chief officer unless he appeals therefrom to the executive council within 20 days from the date of the decision, and a member is not notified of the rejection of his claim by the chief officer until after more than 20 days have elapsed, notwithstanding the laws also provide that parties interested shall be notified at once whenever a decision is made, the member is not entitled to an appeal, and it cannot be said that he has not exhausted his remedy within the order before bringing suit upon his claim.
    Error to Saginaw; Gage (William G.), J.
    Submitted February 13, 1907.
    (Docket No. 135.)
    Decided October 4, 1907.
    Assumpsit by John J. Steiner against the Supreme Court of the Independent Order of Foresters on a policy of insurance. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Reversed.

      George O. By an (B. L. Grane, of counsel), for appellant.
    Dickinson, Stevenson, Cullen, Warren ■ & Butzel (Choate & Webster, of counsel), for appellee.
   Carpenter, J.

Plaintiff was a member of and insured by the defendant order. Under the claim that he is totally and permanently disabled he brought this suit to recover on his contract of insurance.' The trial court directed a verdict in favor of defendant upon the ground that plaintiff did not exhaust his remedies in defendant’s order before bringing suit, and the correctness of this decision is the only question presented by this record. Was this decision right ? Did the trial court err in directing a verdict on the ground that plaintiff did not exhaust his remedies in the order before bringing suit ?

We state such facts as are necessary to a proper determination of this question. In January, 1900, plaintiff filed with defendant order a petition to be placed on the probationary list for total and permanent disability. (Until he was on this list six months he was not, under the laws of the order, entitled to the insurance sued for.) This petition, as required by the laws of the order, was submitted to the supreme chief ranger and he, on May 1, 1900, rendered a decision denying the same. Under the laws of the order plaintiff had a right to appeal from this decision to the executive council “within 20 days from the date of the decision,” and the laws also provided that “the parties interested shall be notified at once whenever a decision is made.” It was further provided that “any aggrieved party failing to take an appeal from any action or decision in the manner or within the time laid down in the constitution and laws of the order shall be bound by such action or decision and shall have no further recourse whatever, whether in-law or equity in respect to the subject-matter of such action or decision, ” and also that ‘ no member of the order shall be entitled to bring any civil action or other legal proceeding against the supreme court until he shall have exhausted all the remedies provided in the constitution and laws of the order by appeals and otherwise. ” According to the testimony of the plaintiff (which we must assume to be true), no notice of the decision of the supreme chief ranger was given until February, 1903 — and this notice did not reach plaintiff until the following May or June — and he, therefore, made no attempt to appeal, as provided by the rules of the order. Under these' circumstances is it correct to say that plaintiff did not exhaust the remedies in defendant’s order before bringing suit? The provisions requiring an appeal to be taken “within 30 days from the date of the decision” and making said decision final, unless said appeal is taken, are to be read in connection with the provision that “the parties interested shall be notified at once whenever a decision is made.” This is conceded by defendant’s counsel, but' they contend that the laws of the order, properly construed, gave plaintiff 20 days to appeal after he received notice of this decision, and because he did not appeal within said 20 days he did not exhaust his remedy in the order, as required by its laws. This contention would be more meritorious if it were shown that the defendant order had itself placed that construction upon its laws. In that case it may be that plaintiff and this court would be bound by such construction. But it does not appear that defendant has so construed these laws. Under these circumstances, we must construe them, and we cannot construe them in accordance with defendant’s contention. Those laws say “all appeals must be taken within 20 days from the date of the decision,” and not “ within 20 days from the date the aggrieved party receives notice of the decision.” Those laws also say that “any aggrieved party failing to take an appeal from any decision within the time laid down in the constitution and laws of the order shall be bound by such decision.” In our judgment said defendant did not intend to give and, therefore, did not give, a right of appeal after the lapse of “20 days from the date of the decision.” The construction which we place upon defendant’s laws is this: A party aggrieved by a decision of the supreme chief ranger must appeal — and he is bound by the decision, if he does not appeal — within 20 days from the date of the decision, provided he is duly notified of the same. The contingency of an aggrieved party not being duly notified appears not to have been thought of and is not provided for. That party has, therefore, no right of appeal or any other remedy furnished by the laws' of the order. Under this reasoning plaintiff had exhausted all the remedies of the order before bringing suit.

The trial court erred in directing a verdict for defendant. The case should have been submitted to the jury.

Judgment reversed, and a new trial ordered.

McAlvay, C. J., and Grant, Blair, and Montgom- • ery, JJ., concurred.


author: McAlvay, C. J.

text:
    HODGES v. VALLEY CITY DESK CO.
    Compromise and Settlement — Estoppel —Equitable Estoppel —Settlement of Claim— Effect.
    Plaintiff, claiming that salary was due him as president of defendant and superintendent of its factory, drew checks on defendant’s bank account on which he obtained the money but which defendant, through its proper officer, instructed the bank not to charge to its account. Subsequently he sold his stock in the company to defendant for a stipulated sum on which he agreed to accept the amount of the checks as part payment. After full payment for his stock had been made he made a claim for the salary represented by the checks. Held, that he was estopped to claim that the matter of his salary was not settled at the time of the sale of his stock.
    Error to Kent; Perkins, j.
    Submitted February 15, 1907.
    (Docket No. 145.)
    Decided October 4, 1907.
    Assumpsit by John A. Hodges against the Valley City Desk Company for services rendered. There was judgment for plaintiff, and defendant brings error.
    Reversed, and judgment entered for defendant.

      L. E. Carroll, for appellant.

      Hugh E. Wilson (Bichard L. Newhham, of counsel), for appellee.
   McAlvay, C. J.

Plaintiff recovered a judgment against defendant company for 20 weeks’ salary as superintendent of its factory. The case was tried before the court without a jury and the judge upon request in writing filed his findings of fact and conclusions of law, upon which judgment was entered for $998.33. The findings of fact and law made by the court are as follows:

“ 1. The defendant company was incorporated in 1888, and the plaintiff was at that time elected president of the company, and was such officer continuously from that time until April 1st, 1901.

2. In April, 1891, at a meeting of the directors of the company, George Corbin, one of the directors, moved that the plaintiff be appointed general superintendent of the factory, with power to hire and discharge all employes, and the motion was unanimously carried. That immediately after .such appointment the plaintiff entered upon and performed the duties of superintendent, and continued to perform such duties until April 1st, 1901.

“3. The plaintiff’s appointment as superintendent by the board of directors was never revoked prior to April 1st, 1901, but continued in force until that date.

“4. That several years prior to April 1st, 1901, the salary of the plaintiff was agreed upon between him and the company and fixed at the sum of forty dollars (140.00) per week, and he received a salary of forty dollars ($40.-00) per week from the time of that agreement up to and including the week ending November 10th, 1900. That the salary of the plaintiff was the same salary received by Alonzo N. Hodges, who was the secretary and treasurer of the company during all the time that the plaintiff was president and general superintendent.

“5. That on November 17th, 1900, and on November 24th, 1900, the bookkeeper, one Buell, put up in envelopes the salary of the plaintiff for the weeks ending November 17th and 24th, in the customary manner, but that the same was not paid over to the plaintiff, and that some time between November 24th and December 1st, 1900, Alonzo N. Hodges informed said Buell that he was to discontinue the payment of salary to the plaintiff.

“6. That the plaintiff after November 10th, 1900, continued in the employ of said company as general superintendent until April 1st, 1901, a period of twenty (20) weeks.

“7. That from November 10th, 1900, to April 1st, 1901, a period of twenty (20) weeks, the plaintiff received no salary from the defendant.

“8. I find as a matter of law that the plaintiff is entitled to recover from the defendant the sum of forty dollars (140.00) per week for twenty (20) weeks, together with five (5) per cent, interest thereon, from April 1st, 1901, to date, which I find to be the sum of nine hundred ninety-eight and 33-100 dollars ($998.33).

“Dated March 19th, 1906.

“Willis B. Perkins,

“Circuit Judge.”

Amendments to these findings were offered and denied and exceptions taken. Several errors are assigned, only two of which are urged in defendant’s brief:

1. That plaintiff was estopped by his conduct from maintaining his suit.

2. That the court erred in finding that plaintiff after his appointment as superintendent continued to perform those duties until April 1, 1901.

The plaintiff and others had conducted this business as a copartnership up to the time of its incorporation in 1888. He was then elected president and in May, 1890, was elected superintendent. He claims that he held both of these positions until he sold his stock in April, 1901. Some time after the incorporation plaintiff and his nephew and the nephew’s wife acquired all the stock of defendant company. They were all actively engaged in the business and entered into an agreement in writing that as long as they held the stock plaintiff should continue to be elected as president and director each year, and plaintiff was to receive the same salary as the nephew, Lon. N. Hodges, who was secretary and treasurer, such salary to be not less than $1,500 per year, and he was to give his time to the services of the company. The salaries were finally increased to $40 per week to each, and were never after-wards changed.

The basis of the claimed estoppel rests upon the acts and conduct of plaintiff at the time he sold out his stock on or about April 1, 1901. Some dispute had arisen because Lon. N. Hodges on November 10,1900, ordered the salary of plaintiff stopped, and plaintiff, being refused further salary, finally, on March 14th and 16th, drew two checks, amounting to $450, signed by him as president, and drew the money to apply on his salary. Lon. N. Hodges, who had always drawn the checks, claiming that the payment of these checks was unauthorized, informed the bank not to charge them on defendant’s account. Arrangements were made whereby others took an interest in the corporation, and plaintiff, having been deposed as president, contracted to sell his stock to the company for.#5,000. At the time of the transfer the matter of these checks was discussed. The amount of the checks was finally included in the transaction. The testimony conclusively shows that defendant understood, and plaintiff intended it should understand, that the purchase of his stock for $5,000 by defendant settled any claim on his part for back salary. It is undisputed that defendant insisted throughout that plaintiff was not entitled to any salary after November 10, 1900, and refused to pay him. It is undisputed that plaintiff claimed that he was entitled to salary up to the time of his removal as president. It is undisputed that plaintiff sought to pay himself a portion of his back salary in March, 1901, by means of two checks signed by him as president, upon which he collected $450, which he applied upon his alleged salary account. It is undisputed that defendant refused to recognize the checks and notified the bank not to charge them to defendant’s account. It is undisputed that plaintiff, although at the time he sold his stock claiming he was entitled to salary, surrendered his claim to retain the amount of back salary represented by the checks and accepted the obligation of defendant upon the checks as part of the consideration for the purchase of his stock.

Plaintiff testified:

“At the time I sold my stock I made the claim that they owed me on salary. * * * These checks were connected with the purchase of the stock by them from me. I suppose they were part of the payment for the stock; that is the way the company construed it I suppose; I did not construe it in that way; there was a controversy over the checks at the time and Mr. Van Hoff who paid me the money on the checks, and was quite liable to lose his position at the bank; there was a great deal of feeling in the matter, and the checks were objected to, and. under these considerations and through the influence of Mr. Graham, who was then vice-president of our company, I allowed them to take that amount out of the purchase price for the stock. * * * I received for the stock $1,000.00 in cash, eight notes for $400 each and one note for $350.00, making a total of $4,550. The consideration stated in this agreement as $5,000 is not correct. The consideration was $4,550. * * * I never gave any receipt, acknowledgment or waiver to the company of my claim for unpaid salary. The reason that I drew these checks was because I was advised by my attorney to get what money I had coming, if I could get it, in any way or manner; that I was entitled to it. The purchase price of my stock at $5,000 which was bought by the company was made up of these checks of $450, $3,000 in cash, eight notes for $400 each and one note for $350. * * * My attorney told me that I was perfectly entitled to the money for my salary and would be entitled to get it in any way I could; that is, the money I had coming or claimed I had coming. I had asked for my salary at the office, and they had refused to pay it. * * * I thought I had perfect authority to draw it, I had never drawn or signed any checks before for the company. I won’t say that these were the only checks that I ever signed for the company. I know I signed a great many notes. I did not consider that I had no authority to sign checks as president of the company. I supposed I had, I was so advised.

“ Q. Don’t you know that according to the by-laws and according to the custom and practice, and the order of the bank, that Lon. N. Hodges was the only one who drew any checks.

“A. No, sir. I have signed a great many notes and contracts for the company, or rather indorsed the notes. * * * I drew those checks for the purpose of getting my salary, to get the money, I needed it; I had been to the company and demanded my pay, it was on the instructions of my attorney that I did. I don’t know when I first made a claim to the company for my salary. * * *

etQ. If you knew that you had something coming to you, why didn’t you insist upon retaining that $450.00 at that time instead of allowing it to go in payment for your stock ?

“A. Through the influence of Mr. Graham and Mr. Van Hoff, and my attorney rather thought it would be all right to do that and try and collect it later.”

Plaintiff received $450 of defendant’s money on the checks, $1,000 in cash and notes aggregating $3,550, making $5,000 which he actually received for his stock. The $450 represented salary and nothing else. Plaintiff agreed to accept the money which he had collected on his alleged salary account — and which he was entitled to keep, if he was entitled to salary — as a part payment for his stock, with an undisclosed intention to try to collect salary afterwards. The surrender of part of his salary, in accordance with defendant’s contention that he was not entitled to salary, is inconsistent with his present claim, was acted upon by defendant, and he should be held to be estopped from now asserting the claim. Plaintiff received payment of the last note in January, 1902,. and in May, 1902, he sent defendant a bill for his salary. For the reasons above indicated the court was in error in not finding that plaintiff was by his conduct estopped from recovering in this suit.

The judgment is reversed and a judgment will be entered in favor of defendant and against plaintiff, with costs of both courts.

Carpenter, Grant, Blair, and Montgomery, JJ., concurred.