116 Mich. 628 | Mich. | 1898
{after stating the facts). 1. No claim is made that these bonds were not valid when issued. Counsel insist that the sole remedy possessed by the persons holding them was by mandamus to compel an assessment as they became due. If this were a defense, it should have been raised in that suit. The position, however, is untenable. Even if an amount sufficient to pay them had been included in prior assessments, and had failed of collection, or had been collected and misappropriated, this would not bar the right of the holders to sue upon their bonds. Ralls County Court v. U. S., 105 U. S. 733.
2. Is it a good defense that the result of this assessment will increase taxation beyond the rate allowed by the charter ? The charter of the respondent has been several times amended and revised. It has always contained a limit to the rate of taxation. The charter of 1895, at present in force, limits the amount that may be raised by general taxation “for the purpose of defraying the general expenses and liabilities of the corporation, and for all purposes for which the several general sums hereinbefore mentioned are constituted,” to 3 per cent, on the assessed valuation. Act No. 466, Local Acts 1895, chap. 10, § 4. The general sums before mentioned are the contingent fund, the sinking fund, to pay the bonded indebtedness of the city and interest thereon, the fire-department fund, water fund, highway fund, poor fund, and police fund.
The validity of these bonds is conceded. When they were issued, does not appear. It is fair to presume that they were issued when the city was prosperous, and had prospects of permanent prosperity. It depended largely
None of these cases, however, involve the enforcement of the payment of bonds valid when issued, and merged in judgments. The contention means this: That the municipality may avoid its legal obligations by the reduction of its valuation, and making its running expenses equal to the limit of taxation. This is practical repudiation. Whether the valuation of the property of this city at $33,-000 was reached by the same methods as were severely condemned by this court, speaking through Justice Cooley, in Wattles v. City of Lapeer, 40 Mich. 624, we do not know, since there is no explanation in the .record. Whether, however, this singular result would follow from a strict construction of the limitation clause in its charter, we need not determine. Possibly in contemplation of such results, a special statute was enacted, providing for the assessment of judgments rendered against municipalities. 3 How. Stat. § 8218. This statute provides that judgments rendered against municipalities shall be assessed by the assessing officers upon its taxable property, and the amount thei’eof added to the other municipal taxes. It was enforced in Shippy v. Mason, 90 Mich. 45. It clearly provides for the payment of judgments, exclusive of the limitations to taxation established by municipal charters.
It is, however, seriously urged that the above act is repealed, so far as the city of North Muskegon is concerned, by an amendment to its charter passed in 1897. It was there provided that, when the city shall be unable to meet the payment of any judgment or decree by reason of the limitation of its power of taxation, it shall be lawful for the council to issue bonds to pay the same, which shall not be disposed of at less than par value. Act No;
“It is possible, however, that the State itself may so far sympathize with a debtor municipality as to be disposed to aid it in its obstructive methods to prevent collection; and it may seek to do this by so limiting the municipal power to tax that it shall be impossible for it to pay its debts by faxes raised within the legal limit. Where such obstruction has been attempted, however, it has been judicially determined that the limitation of the power to tax under such circumstances was an impairment of the obligation of contracts, and therefore inoperative. The argument, shortly stated, is that the State, in conferring upon its municipalities the power to contract debts and to levy taxes for their satisfaction, impliedly contracts with thos'e who become creditors in reliance upon the power, that such power shall not, while their demands remain unpaid, he so limited, impaired, or hampered as to preclude the municipality providing for and satisfying such demands according to their terms. Any subsequent legislation, therefore, which could have such injurious effect upon the interests of creditors, and deprive them of the resource of taxation, which they had a constitutional right to rely on, will be treated as inoperative and void, and a levy of taxes may be compelled, as it might have been if no such legislation had been attempted.” Cooley, Tax’n (2d Ed.), 76.
It follows that the judgment of the court below was correct, and it is affirmed.
The decision in this case ruled the companion cases of Commercial & Savings Bank of St. Clair v. Place and Boston & New York Air Nine Railroad Co. v. Place, in which orders granting mandamus were also affirmed.