American Axle & Manufacturing, Inc v. City of Hamtramck

Per Curiam.

A civil judgment was entered against defendant city of Hamtramck, and it assessed the unpaid amount of the judgment on the tax rolls under § 6093 of the Revised Judicature Act.1 Plaintiff American Axle & Manufacturing, Inc., paid the tax and petitioned the Michigan Tax Tribunal for a refund. The Tax Tribunal found for American Axle on the ground that adding the judgment to the tax rolls violated the Headlee Amendment, Const 1963, art 9, §§ 6, 25-34. The Court of Appeals affirmed.2

We conclude that § 6093, which authorizes levying the judgment on the tax rolls, constituted preexisting authority for that taxation, and thus is exempt from the Headlee Amendment’s election requirement. We also conclude that the judgment levy does not violate the home rule cities act, MCL 117.1 et seq.; MSA 5.2071 et seq., or the Hamtramck charter. Accordingly, *355we reverse the judgment of the Court of Appeals and the order of the Michigan Tax Tribunal.

i

In 1984, defendant city of Hamtramck sold property to Freezer Services of Michigan as part of a redevelopment plan. The city warranted that there were no toxic or hazardous substances on the property. However, such substances were discovered, and Freezer Services sued. The case was settled, and a consent judgment against the city was entered in the amount of approximately $3 million. After some intervening litigation, the city included a judgment levy of 30 mills in its 1994 tax bills under § 6093.

Plaintiff American Axle paid its tax bill, but then filed a petition with the Michigan Tax Tribunal seeking a refund on the ground that the levy violated the Headlee Amendment because it was not approved by the voters.

The Tax Tribunal granted summary disposition for American Axle, finding that levying the additional millage without a vote of the electors constituted a violation of art 9, § 6.

The city appealed, but the Court of Appeals affirmed, finding violations both of Headlee and of the home rule cities act3 and the Hamtramck City Charter.

n

The Headlee Amendment, adopted by referendum effective December 23, 1978, amended Const 1963, art *3569, § 6, and added §§ 25-34. Art 9, § 6, limits total property taxes to 15 mills without a vote of the electors, but allows the electors to approve an additional 35 mills. That section includes two exceptions to that limitation. Additional millage may be levied to repay certain bonds approved by electors, and taxes may be imposed “for any other purpose the tax limitations of which are provided by charter or by general law.” Art 9, § 6, was amended to incorporate the sections added by Headlee:

The foregoing limitations shall not apply to taxes imposed for the payment of principal and interest on bonds approved by the electors or other evidences of indebtedness approved by the electors or for the payment of assessments or contract obligations in anticipation of which bonds are issued approved by the electors, which taxes may be imposed without limitation as to rate or amount; or, subject to the provisions of Section 25 through 34 of this article, to taxes imposed for any other purpose by any city, village, charter county, charter township, charter authority or other authority, the tax limitations of which are provided by charter or by general law. [Emphasis added. ][4]

One of the sections added by Headlee, art 9, § 31, adds the requirement of voter approval of new taxes. However, it exempts taxes authorized by law at the time the section was ratified:

Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon.

*357We have not previously had occasion to deal with this subject. However, we agree with the decisions of several panels of the Court of Appeals that the Headlee exemption of taxes authorized by law when the section was ratified permits the levying of previously authorized taxes even where they were not being levied at the time Headlee was ratified and even though the circumstances making the tax or rate applicable did not exist before that date. For example, in Bailey v Muskegon Co Bd of Comm’rs, 122 Mich App 808; 333 NW2d 144 (1983), the Court of Appeals held that the county was authorized to levy an accommodations tax, even though the tax was first levied after Headlee was ratified. The Court explained:

The Muskegon County tax is unconstitutional, inasmuch as it did not receive voter approval, unless it can be determined that it was “authorized by law” prior to December [23], 1978, the date on which the Headlee Amendment was ratified. Defendants contend, the trial judge found, and we agree, that the term “authorized by law” does not require that a tax actually be levied on the date that the Headlee Amendment became effective. Rather, it requires only that a local government be empowered to levy the tax on the date that the Headlee Amendment was ratified, even if the local government had not exercised its authority. [122 Mich App 821 (emphasis in original).]

In several cases, changes in circumstances after the ratification of Headlee have been found to make levy of taxes constitutional where, without those changed circumstances, the increases would have been forbidden. In Smith v Scio Twp, 173 Mich App 381, 384; 433 NW2d 855 (1988), at the time Headlee was ratified the township was a general law township with its taxing authority limited to 1.16 mills. In 1986, the voters *358approved incorporation as a charter township. The charter township act, MCL 42.1 et seq.-, MSA 5.46(1) et seq., authorizes levies of up to 5 mills. The Court of Appeals held that the plain language of art 9, § 31, allowed the township board to increase taxes to 5 mills, even though there was no separate approval of that tax increase. The Court said:

The plain language of Headlee prohibits a local government from levying a tax in excess of that permitted by law or charter and it prohibits increasing the authorized tax rate without approval of the electors. But nowhere does Headlee require a direct vote of the electors in order to permit a local unit of government to increase taxes if the local unit of government has the authority by law or charter to levy the increase. [173 Mich App 381.]

Similarly, in Saginaw Co v Buena Vista School Dist, 196 Mich App 363, 364-365; 493 NW2d 437 (1992), in 1974 county voters had approved a resolution limiting school districts to a tax levy of 9.05 mills. However, the resolution also provided the districts located entirely within one city or charter township could levy 10.05 mills. At the time the Headlee Amendment was ratified the school district was located in two townships, and therefore was limited to 9.05 mills. In 1990, the district boundaries were redrawn so that the district was located within one township. Relying on Bailey, the Court of Appeals allowed the district to levy the higher rate:

The Headlee Amendment requires voter approval only if a unit of local government wants to impose taxes at a rate higher than that authorized by law at the time of its adoption. Const 1963, art 9, § 31. In 1978, school districts in Saginaw County located entirely within a charter township were authorized by law to levy taxes at a rate of 10.05 mills. *359We find that, because it is now located entirely within Buena Vista Charter Township, defendant’s tax rate of 10.05 mills is not above the rate authorized by law at the time the Headlee Amendment was ratified. The category of school district into which defendant now fits existed in 1978, the tax in question was authorized by law (it was not a new kind of tax), and the rate (10.05 mills) was an authorized rate. When defendant’s geographical configuration changed, it then became eligible to tax according to the applicable preexisting tax structure. Furthermore, before the Headlee Amendment, a simple rearrangement of boundaries would have empowered the defendant to increase the tax from 9.05 to 10.05 mills. That is all that occurred post-Headlee. Therefore, no voter approval was required for defendant to raise its millage to 10.05 mills. [196 Mich App 366.]

See also Taxpayers United for Michigan Constitution, Inc v Detroit, 196 Mich App 463; 493 NW2d 463 (1992).

m

Thus, the key question presented in this case is whether RJA, § 6093, which authorizes levying the amount of the judgment on the tax rolls, is exempt from the Headlee election requirements because it was a tax “authorized by law” at the time the Headlee Amendment was ratified.5

*360RJA, § 6093(1) provides for the levying of the amount of the judgment on the tax rolls. The statute provides:

Whenever judgment is recovered against any township, village, or city, . . . the clerk of the court shall, on the application of the party in whose favor judgment is rendered, . . . make and deliver to the party so applying a certified transcript of the judgment, showing the amount and date thereof .... The party obtaining the certified transcript may file it . . . with the assessing officer or officers of the city or village, if the judgment is against a city or village. The supervisor or assessing officer receiving the certified transcript or transcripts of judgment shall proceed to assess the amount thereof with the costs and interests from the date of rendition of judgment to the time when the warrant for the collection thereof will expire upon the taxable property of the township, city, or village upon the then next tax roll of such township, city, or village, without any other or further certificate than the certified transcript as a part of the township, city, or village tax, adding the total amount of the judgment to the other township, city, or village taxes and assessing it in the same column with the general township, city, or village tax.

This provision was in effect at the time the Headlee Amendment was approved, and such statutes have a long history in Michigan law.6 Those statutes have uniformly been inteipreted to authorize, and indeed to require, city assessors or township supervisors to assess taxes to pay judgments, even where doing so would compel a levy in excess of otherwise applicable tax limitations. See Hammond v Place, 116 Mich *361628, 632; 74 NW 1002 (1898) (“[The statute] clearly provides for the payment of judgments, exclusive of the limitations to taxation established by municipal charters”); Shippy v Mason, 90 Mich 45, 48; 51 NW 353 (1892) (“It is not necessary that the common council shall authorize the assessment of this judgment. The common council has no power to pass upon its validity, or to prevent its assessment”); Hazel Park v Municipal Finance Comm, 317 Mich 582; 27 NW2d 106 (1947) (following Hammond and Shippy).7

These cases, of course, preceded the ratification of the Headlee Amendment, and thus we must consider whether Headlee abrogates or eliminates the authorization § 6093 provides for the levying of taxes to pay judgments. However, we see nothing in the Headlee Amendment that can be construed as being intended to treat § 6093 as anything other than a previously *362authorized tax that is exempt from the election requirement.

The plain language of art 9, § 31, excludes from its scope the levying of a tax, or an increased rate of an existing tax, that was authorized by law when that section was ratified. In construing provisions of our constitution, the primary rule is that of “common understanding.” Federated Publications, Inc v Michigan State Univ Bd of Trustees, 460 Mich 75, 84; 594 NW2d 491 (1999). The Court of Appeals, however, did not analyze the language of art 9, § 31, but rather primarily examined drafters’ notes relating to the amendment. This reliance on extrinsic evidence was inappropriate because the constitutional language is clear.8 As Justice Cooley said:

The object of construction, as applied to a written constitution, is to give effect to the intent of the people in adopting it. In the case of all written laws, it is the intent of the lawgiver that is to be enforced. But this intent is to be found in the instrument itself. . . . “Where a law is plain and unambiguous, whether it be expressed in general or limited terms, the legislature should be intended to mean what they have plainly expressed, and consequently no room is left for construction.” [Cooley, Constitutional Limitations (Little, Brown and Company, 1868), p 55.]

We have often applied these principles in interpreting constitutional provisions. For example, in Durant v Michigan, 456 Mich 175, 191-192; 566 NW2d 272 (1997), also a Headlee Amendment case, this Court said:

*363In Traverse City School Dist v Attorney General, 384 Mich 390, 405; 185 NW2d 9 (1971), we stated that the primary rule of constitutional interpretation is the rule of “common understanding” described in 1 Cooley, Constitutional Limitations (8th ed), p 143:
“A constitution is made for the people and by the people. The interpretation that should be given it is that which reasonable minds, the great mass of the people themselves, would give it. ‘For as the Constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark or abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that that was the sense designed to be conveyed.’...”

See also Bolt v City of Lansing, 459 Mich 152, 160; 587 NW2d 264 (1998); Council of Organizations & Others for Education About Parochiaid, Inc v Governor, 455 Mich 557, 569; 566 NW2d 208 (1997).

The issue involved in this case was squarely presented in Detroit v Highland Park, 878 F Supp 87 (ED Mich, 1995). The taxpayer contended that a writ of mandamus to force the levying of taxes in excess of 20 mills without voter approval was unconstitutional. The court rejected that view;

The Headlee Amendment does not prevent imposition of a tax or tax increase that was authorized prior to the time the Headlee Amendment took effect. Taxpayers United v City of Detroit, 196 Mich App 463; 493 NW2d 463 (1992). MCL 600.6093 [MSA 27A.6093] was enacted prior to the Headlee Amendment. Therefore, a tax increase necessitated by a valid court judgment is not within the prohibitions of the Headle.e Amendment. [Id. at 89.]

*364See also Bylinski v Allen Park, 8 F Supp 2d 965 (ED Mich, 1998).

While these federal court decisions are not precedentially binding on questions of Michigan law, we agree with the courts’ analyses. Section 6093 was a preexisting authorization for the levy of the judgment tax, and thus the levy is not subject to voter approval.

rv

The Court of Appeals based much of its analysis on the view that the Revised Judicature Act, of which § 6093 is part, is a procedural statute not designed to “advance social, industrial or commercial policy in substantive areas.” Connelly v Paul Ruddy’s Equipment Repair & Service Co, 388 Mich 146, 151; 200 NW2d 70 (1972). It reasoned that § 6093 provides the procedure for levying a judgment tax, but does not give specific statutory authority to supersede existing taxation levels.

However, while many provisions of the RJA are unquestionably procedural, it does include provisions of substantive law. See, generally, McDougall v Schanz, 461 Mich 15; 597 NW2d 148 (1999).9 Section 6093 in particular cannot be characterized as merely procedural. To begin with, that section constitutes the *365only authority for judgment tax levies. If § 6093 is not viewed as substantively authorizing a judgment tax, then such taxes could never be levied. Second, when originally enacted, the judgment tax provisions now found in RJA, § 6093 were in a separate statute. 1887 PA 312. That was years before the provision was included in the first Judicature Act, and long before it was placed in the RJA. The provision hardly loses its substantive character because it was readopted as part of a codification.

v

The Court of Appeals also found imposition of the judgment levy to violate Hamtramck’s charter taxation limitation. MCL 117.5(a); MSA 5.2084(a) provides that a city shall not have the power:

To increase the rate of taxation now fixed by law, unless the authority to do so is given by a majority of the electors of the city voting at the election at which the proposition is submitted, but the increase in any case shall not be such as to cause the rate to exceed 2%, except as provided by law, of the assessed value of the real and personal property in the city.

The Hamtramck City Charter incorporates that limitation. Hamtramck City Charter, ch XVIII, §§ 4, 23.

However, we agree with the defendant that cases such as Hazel Park v Municipal Finance Comm, supra, and Simonton v Pontiac, 268 Mich 11; 255 NW 608 (1934), make clear that the specific provisions of § 6093 control over the otherwise applicable limitations of the home rule cities act. Even the Court of Appeals acknowledged that “ ‘every municipal charter *366is subject to the Constitution and general laws of this State.’ ” 227 Mich App 146, quoting Hazel Park v Municipal Finance Comm, 317 Mich 599. Indeed, Simonton dealt with a similar situation, finding that the predecessor statute to RJA, § 6093 “ ‘provide [d] for the payment of judgments, exclusive of the limitations to taxation established by municipal charters.’ ” 268 Mich 21. The constitution in effect at the time of Simonton and Hazel Park provided that municipal charges axe “subject to the Constitution and general laws of this state.” Const 1908, art 8, § 21. The current constitution has almost identical language. Const 1963, art 7, § 22. The home rule cities act specifically provides that each city charter shall limit taxes, “except as otherwise provided by law . . . .” MCL 117.3(g); MSA 5.2073(g).10

The Court of Appeals took the position that because the Headlee Amendment limited the Legislature’s power to amend existing charters to increase tax limits beyond those existing at the time of ratification, it must follow that RJA, § 6093 can no longer be read to authorize a judgment tax levy in excess of existing limits. However, the flaw in that reasoning is that the Headlee Amendment’s limitation is on the *367Legislature’s ability to enact new legislation to amend existing charters. Section 6093 does not do so. It is legislation that long preceded the Headlee Amendment and, by both its terms and judicial precedent, authorized the imposition of a tax rate necessary to pay the judgment even if the effect is to raise tax rates above otherwise applicable limits.

Vi

We conclude that the city’s levy under § 6093 to pay the judgment did not constitute a violation of the Headlee Amendment or of the home rule cities act and the Hamtramck City Charter. Accordingly, the judgment of the Court of Appeals and the order of the Michigan Tax Tribunal are reversed.

Cavanagh, Kelly, Taylor, Young, and Markman, JJ., concurred.

MCL 600.6093; MSA 27A.6093.

227 Mich App 135; 575 NW2d 296 (1997).

MCL 117.1 et seq.; MSA 5.2071 et seq.

The Headlee Amendment added the emphasized language.

A judgment levy tax falls within the exception contained in Const 1963, art 9, § 6, because it is a tax which has “tax limitations” provided by “general law.” “ ‘A general law is one which includes all persons, classes and property similarly situated and which come within its limitations.’ ” Tribbett v Village of Marcellus, 294 Mich 607, 618; 293 NW 872 (1940), quoting Punke v Village of Elliott, 364 Ill 604, 608-609; 5 NE2d 389 (1936). The judgment levy statute is such a law because it applies to all holders of judgments against townships, cities, and villages. It places a limit on the amount of the tax by requiring the addition of “the total amount of the judgment” to existing taxes.

The current provision has its origins in 1887 PA 312, and has been carried forward since that time. See 1897 PA 235, 1897 CL 10483; 1915 PA 314, ch XXIV, §§ 5-7; 1929 CL 14690-14692; 1948 CL 624.5-624.7. Earlier statutes had comparable provisions, e.g., 1883 PA 63; 1871 CL 463, 6630; 1857 CL 331, 4917.

The one case on which the Court of Appeals relies for the contrary position is Morley Bros v Carrollton Twp Supervisor, 312 Mich 607; 20 NW2d 743 (1945). The Court of Appeals said:

The Michigan Supreme Court held that although there was some difficulty in reconciling the statute requiring that the amount of a judgment must be assessed on the next tax roll with subsequent legislation enacted as the result of the adoption of the fifteen-mill tax limitation under Const 1908, art 10, § 21, construing the acts together mandated that while the township could not avoid inclusion of a judgment in its budget in order to avoid payment, nevertheless, the county tax allocation board, to satisfy a judgment, must reduce other budgeted amounts so that the resulting tax rate falls within the fifteen-mill limitation. [227 Mich App 145.]

The flaw in reliance on Morley is the difference in the constitutional provisions in question. The provision in question in Morley Bros, Const 1908, art 10, § 21, permitted no exceptions to the 15-mill limitation. This is in clear contrast to Headlee’s language permitting the levy of taxes authorized by previous legislation.

We note, in addition, that we have previously disapproved use of those notes given that they were not published until after the Headlee Amendment was ratified. Durant v State Bd of Ed, 424 Mich 364, 382, n 12; 381 NW2d 662 (1985).

For example, ch 38 of the RJA establishes the right to a cause of action to abate public nuisances. MCL 600.3801 et seq.; MSA 27A.3801 et seq. Similarly, ch 43 of the RJA establishes both the power to issue, and the right to request, a writ of habeas corpus. MCL 600.4301 et seq.; MSA 27A.4301 et seq. Indeed, the title of the RJA refers to such things as “the organization and jurisdiction of the courts,” court “powers and duties,” and “the forms and attributes of civil claims and actions,” all of which can refer to substantive rights. See Kingsley Associates, Inc v Moll PlastiCrafters, Inc, 65 F3d 498, 507-508 (CA 6, 1995).

Each city charter shall provide:

For annually laying and collecting taxes in a sum, except as otherwise provided by law, not to exceed 2% of the assessed value of the real and personal property in the city. Unless the charter provides for a different tax rate limitation, the governing body of a city may levy and collect taxes for municipal purposes in a sum not to exceed 1% of the assessed value of the real and personal property in the city, subject to section la of chapter 7 of the municipal finance act, Act No. 202 of the Public Acts of 1943, as amended, being section 137.1a of the Michigan Compiled Laws.