Argo Oil Corp. v. Atwood, Motion No. 156.

• Court: Supreme Court of Michigan
• Citation: 264 N.W. 285,274 Mich. 47
• Docket Number: Motion No. 156.
• Parties: ARGO OIL CORPORATION v. ATWOOD, Secretary of State.
• Decision Date: 31 December 1935

274 Mich. 47

264 N.W. 285

ARGO OIL CORPORATION

v.ATWOOD, Secretary of State.

Motion No. 156.

Supreme Court of Michigan.

Dec. 31, 1935.

Mandamus proceeding by the Argo Oil Corporation, a Michigan corporation, against Orville E. Atwood, Secretary of State.

Writ denied.

Argued before the Entire Bench.

J. M. Hatch & Son, of Marshall, for petitioner.

David H. Crowley, Atty. Gen., and Edmund E. Shepherd, Asst. Atty. Gen., for defendant.

FEAD, Justice.

Section 2 of Act No. 150, Pub.Acts 1927 (Comp.Laws 1929, § 3577), imposes a tax of 3 cents per gallon on gasoline used in motor vehicles on highways. While the tax is imposed upon the owners and drivers of vehicles, by whom it is ultimately paid, it is collected and paid to the state by wholesale distributors, who are required to have license, issued by the secretary of state, to engage in the business. On or before the 20th day of each month the distributor is required to make report to the secretary of state of all gasoline received by him during the preceding calendar month and to pay the tax thereon.

Plaintiff is a wholesale distributor. Its average monthly payments of tax for 1935 have been about $4,800. It has made application to the secretary of state for a license for 1936. The secretary of state refuses to issue the license until plaintiff files with him a bond, in the penal sum of $15,000, as fixed by the secretary of state, with corporate surety, in conformity with the statute as amended by Act No. 166, Pub.Acts 1935.

Plaintiff seeks writ of mandamus to compel the secretary of state to issue it a license for 1936 without bond, on the ground, among others, that the statute is invalid as vesting legislative and arbitrary power in the secretary of state to fix the amount of the bond.

The statute, after providing for sworn application by a distributor, requiring certain information and such other as the secretary of state may demand, provides: ‘At the time of applying for such license every applicant shall pay to the secretary of state as an annual license fee the sum of five dollars, * * * and if the applicant cannot satisfy the secretary of state as to his financial responsibility he shall file with the secretary of state a surety bond payable to the state of Michigan, upon which said applicant shall be the obligor, in the sum of not less than three thousand dollars nor more than twenty-five thousand dollars, conditioned that the applicant shall comply with the laws pertaining to wholesale distributors of gasoline and will promptly file true reports and pay the taxes and penalties provided for or required by this act, which bonds shall be approved as to amount and sureties by the secretary of state, Provided, That every applicant for a license for the calendar year nineteen hundred thirty-six and thereafter, shall file a corporate surety bond with the secretary of state in such amount as shall be fixed by him except that the amount shall never be less than one thousand dollars nor more than twenty-five thousand dollars.’

The proviso was added by Act No. 166, Pub.Acts 1935; the remainder of the section quoted was a re-enactment of part of Act No. 192, Pub.Acts 1931.

Taking into account the fact that one and two-thirds months' taxes accumulate before the distributor is required to report and pay the preceding month's tax, the fluctuations of business, and delays in report and payment which sometimes occur, the secretary of state has adopted a uniform rule fixing the penal sums of the bonds at three times the average monthly tax for prompt payers of it and four times for those who have not been prompt in payment, the latter evidently suggested by section 6 of Act No. 150 of Pub.Acts 1927, Comp.Laws 1929, § 3581 as amended by Act No. 192, Pub.Acts 1931. Plaintiff does not claim the secretary of state has acted arbitrarily in its case, nor does it challenge the fairness of the rule adopted except as it, or any other rule, necessarily would be discriminatory against the small distributors and in favor of the larger distributors because the statute provides a maximum of penal sum to be required. The attack is upon the statute itself, not upon the discretion exercised by the secretary of state thereunder if the law be valid.

It is too well settled to need the citation of supporting authorities that the Legislature, within limits defined in the law, may confer authority on an administrative officer or board to make rules as to details, to find facts, and to exercise some discretion, in the administration of a statute. The difficulty is in determining whether the limits are sufficiently defined to avoid delegation of legislative powers. Exhaustive annotations of the general subject will be found in 12 A.L.R. 1435; 54 A.L.R. 1104; 92 A.L.R. 400.

Confined to the matter of the power to fix the amount of bonds, the following cases are illustrative of the difficulty. In People v. J. O. Beekman & Co., 347 Ill. 92, 179 N.E. 435, it was held that where the statute set up three factors for the secretary of state to consider in setting the amount of the bond, (1) the method of transacting business; (2) financial standing of the applicant; and (3) his experience, ability, and general reputation, the standard was not sufficiently definite, and it permitted arbitrary discrimination between worthy applicants because of their financial standing. On the other hand, in Sheppard v. Owl Refining Co. (Tex.Civ.App.) 68 S.W. (2d) 1101, it was held that the statute set up a sufficient standard to authorize an officer to fix the penal sum, in providing for ‘a good and sufficient’ distributor's bond of $1,000 to $25,000; and in Gross v. Commonwealth, 256 Ky. 19, 75 S.W.(2d) 558, a statute (Ky.St.Supp. 1933, § 2739j-76) was sustained which provided for a bond from the operator of a taxi ‘in such penal sums or maximum amounts as said Commission may deem necessary for the reasonable protection of the patrons of the operator of the motor vehicle for hire and of the public in the collection of damages for which the operator may be liable by reason of the operation of any motor vehicle for hire.’

It is not necessary to discuss or distinguish these or other cases because the statute at bar sets up a standard of purpose, policy and power so definite that the acts of the officer may be tested and tried thereby according to the ordinary processes of judicial inquiry. In such case there is no grant of legislative power.

If it be possible, we must construe the statute to render it valid, not invalid, to confer administrative, not legislative, power on the secretary of state, and...