Myers v. Post

The county of Kent consists of the cities of Grand Rapids and East Grand Rapids, and a large number of outlying townships. It owns a lot with a building on it of the value of $45,000 in the city of Grand Rapids. Notwithstanding the fact that the property was rented to a financially responsible party at a rental of $3,000 per year under a lease, which the lessee offered to renew on like terms for an additional term of five years, the board of supervisors of the county authorized the leasing of the property to the city of Grand Rapids for a period of three years at an annual rental of only $501. Of the 51 members of the board of supervisors who attended the meeting, 24 represented the city of Grand Rapids, 3 East Grand Rapids, and 24 the townships. The fire marshal of Grand Rapids stated at the meeting that it was essential that the city acquire the property in order to promote the efficiency of the fire department by the use of a portion of the property as a drill field and fire tower. The city also intended to use the building on the premises to store property belonging to the city police department. The city has contracts for furnishing fire protection to some of the outlying townships and receives pay for this service. There is no showing that the townships receive any police protection from the city. At a prior meeting of the board it was contended that the rental of $3,000 per year was inadequate. However, at the meeting at which the action was taken to rent the property to the city for $501 per year, it was openly charged that the members of the board who voted in favor of this action were acting in the interest of the city and not of the county, whose interests it was their duty to protect. The 24 members from Grand Rapids, together with the 3 from East Grand Rapids, voted in favor of leasing the property to the city. The 24 members from the townships voted against it. After a hearing on a bill filed by plaintiffs, some, as supervisors, and all as taxpayers, residing in the townships, the court rendered a decree restraining the entering into the lease on the ground that the action of the board was confiscatory in disposing of property at an inadequate price unless the general public benefit of the county at large be considered, and that under the evidence such imaginary consideration did not enter as an element in the transaction.

The board has a fiduciary relationship to the entire county and not to the city alone, notwithstanding the fact that approximately 80 per cent. of the taxable property of the county lies in the city. Defendants urged strongly that the city pays the larger part of the taxes, but they did not state, however, that in turn the city would indirectly receive the benefit of a larger part of the income from the property. It would require strong proof under the present circumstances to show that the indirect benefit to the entire county was the moving consideration in refusing to continue a lease from a responsible person at $3,000 a year instead of leasing it to the city for $501 a year. Even if there were such a showing, there is no claim whatsoever made that the townships at large received any benefit whatsoever from the city's police department which was to have the use of the building for storage purposes. The division of the vote indicates that supervisors from the city of Grand Rapids, aided by those from the city of East Grand Rapids, were acting wholly in the interest of the city and not of the county at large. The trial judge denounced the entire transaction as a fraud on the county. Even though there may be no wilful dishonesty in the transaction, it is a constructive fraud on the rights of the taxpayers of the county. It is analogous to an action by a board of directors who by their vote evidenced their personal interest instead of that of the corporation. Turner v. Calumet Hecla Mining Co., 187 Mich. 238; McKey v. Swenson, 232 Mich. 505.

The decree of the lower court is affirmed, with costs.

WIEST, CLARK, McDONALD, POTTER, SHARPE, NORTH, and FEAD JJ., concurred.