Wolgamood v. Village of Constantine

4 N.W.2d 697, 302 Mich. 384, 1942 Mich. LEXIS 478
CourtMichigan Supreme Court
DecidedJuly 1, 1942
DocketCalendar No. 41,891.
StatusPublished
Cited by15 cases

This text of 4 N.W.2d 697 (Wolgamood v. Village of Constantine) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wolgamood v. Village of Constantine, 4 N.W.2d 697, 302 Mich. 384, 1942 Mich. LEXIS 478 (Mich. 1942).

Opinion

Starr, J.

Plaintiffs appeal from a decree entered November 1, 1941, dismissing their petition to have *388 defendants adjudged guilty of contempt for violation of decree dated January 25, 1941, and entered January 27, 1941.

In 1936 the electors of the village of Constantine, at a special election called for that purpose, voted to issue revenue bonds in the amount of $107,000 for the purpose of constructing a municipally-owned electric light plant and distribution system. The trust mortgage securing such bond issue, executed by the defendant village to the Union Guardian Trust Company, provided, in part:

‘ ‘ The general credit of the village shall not' be pledged for any payment required under this mortgage or the bonds, but any such payment shall be made from, and to the extent of, the revenues of the plant and system. * * *
“Rates: The village shall charge and maintain rates for electricity furnished by said plant and system, sufficient to provide for full and prompt payment of principal and interest on said bonds, to pay all expenses of operation and of the maintenance of said plant and system in good repair and working order, and to build up a reserve for depreciation thereof. * * *
“Surplus Revenue: Any surplus revenue after providing for the operation and maintenance and bond and interest redemption funds shall be used to set up a reserve to meet any deficiencies in the operation and maintenance fund, and to establish and maintain a reserve for depreciation; and at the end of each-fiscal year such amounts as the village council shall deem necessary shall be set apart and placed in said funds. Any surplus remaining after providing for such funds may be used for extensions and improvements of said plant and system or for the purchase and retirement of bonds.”

Such bonds were sold and the proceeds used for the construction of the light plant and distribution *389 system. In 1939 the village council authorized an additional issue of revenue bonds in the amount of $38,000 and obtained a grant of about $26,000 from the public works administration for the purpose of extending and enlarging the light plant and system. Such additional bonds were on equal rating with the first issue and were secured by supplemental trust mortgage to the Union Guardian Trust Company.

In March, 1939, prior to the' issue of the additional $38,000 of bonds, plaintiffs, as taxpayers of the defendant village, filed bill of complaint and later amended bill of complaint alleging, among other things, diversion of the general funds of the village; that the sale of the first issue of bonds was unlawful; that losses in the operation of the plant were hidden by the device of increasing accounts payable; that the published rates for current were not collected; that there, was unlawful discrimination in rates charged customers; that the proposed additional issue of bonds would be unlawful; and that a part of the proceeds of such bonds would be used to cover losses in operation. Defendants answered and moved to dismiss the amended bill of complaint. Upon a hearing on defendants’ motion the court dismissed plaintiffs’ amended bill. Plaintiffs then appealed, and in our decision in that case (Wolgamood v. Village of Constantine, 292 Mich. 222, 226) we stated:

“In deciding this case we have in mind that the cause was not heard on its merits; and that upon a motion to dismiss, the allegations stated in the bill are to be taken as true. * * * It therefore becomes necessary to analyze the claims of plaintiffs as stated in their amended bill of complaint. * * *
“In our opinion plaintiffs’ bill of complaint contains charges which, if true, would entitle a court *390 of chancery to grant relief. They are entitled to have these charges heard.
“The order of the trial court (dismissing plaintiffs’ bill) is reversed.”

The case was then tried upon its merits. The trial court determined, among other things, that the bond issues were lawful and valid; that defendant village was guilty of unlawful discrimination in its rates for electric current; that the rates charged for current were “far below the amount required to take care of the cost of generation, distribution, bonds and interest and depreciation,” and that an advertisement published by defendants did not correctly and accurately show the actual financial condition of the electric light plant as of May 31, 1940. In pursuance of the trial court’s opinion a decree dated January 25, 1941, was entered, providing, in part:

“ (1) That the defendants be and they are hereby enjoined from directly or indirectly publishing any advertisements or statements relative to the financial condition of the defendants’ electric plant that are misleading and do not state the whole truth.
“(2) That the defendants are ordered to charge and maintain rates for electricity furnished by the Constantine electric plant sufficient to provide for full and prompt payment of principal and interest on the bonds referred to in the bill of complaint, and to pay all expenses of operation and of maintenance of said plant and system in good repair and working order, and to build, up a reserve for depreciation of said plant, and the defendants are hereby enjoined from charging and maintaining rates not sufficient "for the purpose in this paragraph stated.
“(3) That the defendant, Village of Constantine, is hereby restrained from discriminating among its customers.
“(4) That the defendants are enjoined from us *391 ing any device whatsoever to collect a rate less than the established rate.”

In pursuance of such decree an injunction was issued against defendants. No appeal was taken from the decree.

In April, 1941, the court, after a hearing on an order to show cause, determined that defendants were guilty of contempt of court for violation of the provisions of the above-quoted decree of January 25, 1941. Such order stated, in part:

“The court does hereby find that the defendant village is guilty of contempt of court in that it did violate paragraphs (2) and (4) of the decree (above quoted) * * * and it is the judgment of the court that it should be punished therefor and that the punishment be and the same is hereby fixed as a fine of $200, provided, however, the payment of said fine is suspended for a period of 30 days, and if said village at the next billing of the customers of its municipal lighting plant sends out its bills in accordance with said decree and injunction and as herein later specified, then said village shall not be required to pay said fine, but otherwise the fine shall be paid 30 days froxp and after the date of this order.

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Bluebook (online)
4 N.W.2d 697, 302 Mich. 384, 1942 Mich. LEXIS 478, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wolgamood-v-village-of-constantine-mich-1942.