Ottawa Lumber, Co. v. Mayor of Harbor Springs

July 26, 1922, one Haynes, employed by the United States department of agriculture, was *Page 84 killed in Harbor Springs. Suit was instituted against the village (now city) which resulted in a judgment of $25,133.95. The assessing officer levied a general tax to pay the judgment. Plaintiff owned property in the village and paid $312 toward the liquidation of this judgment, which the village paid in full. Subsequently the village presented a claim to the United States court of claims. Upon a finding of joint liability, congress authorized payment of one-half the amount of the judgment, plus interest, to the village, and the secretary of the treasury paid $23,170.19 to the village, which is now in its possession, to satisfy one-half of the judgment. Plaintiff presented a claim to the city council for the amount of taxes paid by it toward the satisfaction of the judgment satisfied by the payment received from the United States government. This claim was audited and allowed by the council August 2, 1937, and a voucher and warrant drawn and presented to the mayor for signature which he refused to sign. Plaintiff instituted mandamus to compel the mayor to countersign the warrant. The trial court directed the issuance of the writ, and the case is brought here by defendant by appeal in the nature of certiorari. The law favors honesty in public and private affairs. This court has said that the obligation to do justice rests upon all persons, natural and artificial, and if a city obtain and hold money equitably belonging to others, the law, independent of any statute, will compel restitution or compensation.Blanchard v. City of Detroit, 253 Mich. 491. A general right exists, independent of statute, to a refund of taxes which, though legal at the time paid, by subsequent events are shown to have become inequitable. A city has the right to manage its own legal affairs in its own way so long as it does so within the limits *Page 85 of the Constitution and statutes providing for its creation.Bowler v. Nagel, 228 Mich. 434 (37 A.L.R. 1154). The charter of the city of Harbor Springs authorizes it to do any act to advance the interests of the city and the good government and prosperity of its inhabitants, subject only to the constitutional and statutory restrictions imposed thereon. A general right exists to refund any sums paid as corporate taxes if found to have been wrongfully exacted or believed tobe for any reason inequitable. 2 Cooley on Taxation (3d Ed.), p. 1396. Where an excessive amount of taxes has been received for a specific purpose which cannot lawfully be used for that purpose, the city should equitably refund such excess amounts, which it holds as trustee for the taxpayers, to them. 44 C. J. p. 1342. In legal contemplation, the city receives the money for the use and benefit of claimants and should pay it to them accordingly. Ward v. Board of County Commissioners of LoveCounty, 253 U.S. 17 (40 Sup. Ct. 419). Where an excess amount has been collected for taxes under a mutual mistake of fact, such excess is always recoverable back.Betz v. City of New York, 119 App. Div. 91 (103 N.Y. Supp. 886). The money here in controversy was raised and paid upon an honest belief upon the part both of the village and of the taxpayer that it was necessary to be so raised and paid. Subsequent events indicated both parties were mistaken and that a lesser amount would have been sufficient to discharge the specific obligation upon the village, for the money received from the United States government paid and discharged one-half of the obligation for this specific judgment. Why should not the taxpayers to *Page 86 whom such money equitably belongs have repayment of such excess amounts as they have paid? "The people in their collective capacity as a municipality ought to observe the same rules of honesty and fair dealing that they would demand of each other under like circumstances in their individual dealings." Roberts v. Boise City,23 Idaho, 716 (132 P. 306, 45 L.R.A. [N. S.] 593). The money raised "is a special fund created for a special purpose outside of the ordinary revenues of the town; * * * a trust fund, and must be applied to the purpose for which it was raised." Town of Aurora v. Railroad, 19 Ill. App. 360. "It is the policy of our laws to raise taxes no faster than they are likely to be needed." Michigan Land Iron Co. v.Township of L'Anse, 63 Mich. 700. Money received by a municipality for a specific purpose should be inviolably applied to the purpose for which it was paid. "It seems eminently just that this money, collected by the city in excess of its needs as determined by the constituted authorities, should be returned to those upon whom the unnecessary burden was imposed, and no merely technical objection should stand in the way of this consummation."Madary v. City of Fresno, 20 Cal.App. 91 (128 P. 340). Every city has the implied power to be honest, to deal fairly with its inhabitants, and if it received money which in equity and good conscience it ought not to retain, the law regards it as holding it for the use and benefit of the persons to whom it, in equity, belongs and raises an implied promise to pay it over to the owner. George's Creek Coal Iron Co. v. AlleganyCounty Commissioners, 59 Md. 255. *Page 87 The tax here in question was regular when levied and no protest was necessary to accompany the payment of the tax because such protest under the circumstances would have been useless. 61 C. J. p. 993. Believing it to be equitably entitled to a refund of the amount of general taxes levied and assessed against its property and paid for the specific purpose of discharging the judgment against the village, plaintiff presented a claim to the common council. The common council recognized that honesty and fair dealing required a refund of the taxes levied, one-half the amount of the judgment having been paid to it by the government of the United States. The audit and allowance of plaintiff's claim was, under the circumstances, conclusive. 44 C. J. pp. 1448, 1449. It thereupon audited and allowed the claim and directed an order or warrant to be issued for the payment thereof. It had a lawful right to audit this claim, and the effect of the audit was to determine and fix definitely the amount to which plaintiff was entitled. The duty of the mayor to countersign the order or warrant was purely ministerial. 38 C. J. p. 767. Having the duty to do so, acting within the scope of his authority the mayor of the city should countersign the warrant, and if he refuses may be compelled by mandamus to do so. 38 C. J. p. 784. The judgment of the trial court is affirmed, but without costs, a public question being involved. WIEST, BUSHNELL, and SHARPE, JJ., concurred with POTTER, J.