Avis Rent-A-Car System, Inc. v. Romulus Community Schools

• Decision Date: 13 June 1977
• Docket Number: RENT-A-CAR,Nos. 2,3,s. 2
• Citation: 400 Mich. 337,254 N.W.2d 555
• Parties: AVISSYSTEM, INC., a Delaware Corporation, Plaintiff-Appellee, v. ROMULUS COMMUNITY SCHOOLS, a Michigan Municipal Corporation, and City of Romulus, a Michigan Municipal Corporation, Defendants-Appellants. The HERTZ CORPORATION, a Delaware Corporation, Plaintiff-Appellee, v. ROMULUS COMMUNITY SCHOOLS, a Michigan Municipal Corporation, City of Romulus, a Michigan Municipal Corporation, and County of Wayne, a body corporate, Defendants-Appellants.
• Court: Michigan Supreme Court

Page 555

254 N.W.2d 555

400 Mich. 337

AVIS RENT-A-CAR SYSTEM, INC., a Delaware Corporation, Plaintiff-Appellee, v. ROMULUS COMMUNITY SCHOOLS, a Michigan Municipal Corporation, and City of Romulus, a Michigan Municipal

Corporation, Defendants-Appellants.

The HERTZ CORPORATION, a Delaware Corporation, Plaintiff-Appellee, v. ROMULUS COMMUNITY SCHOOLS, a Michigan Municipal Corporation, City of Romulus, a Michigan Municipal Corporation, and County of Wayne, a body corporate,

Defendants-Appellants.

Nos. 2, 3.

Supreme Court of Michigan.

June 13, 1977.

Barris, Sott, Denn & Driker, Eugene Driker, Detroit, for plaintiff-appellee, Avis Rent-A-Car System, Inc.

Goodenough, Smith & May by David E. Nims III, Detroit, for plaintiff-appellee.

Miller, Canfield, Paddock & Stone, by Samuel J. McKim, III, Birmingham, for defendant-appellant, Romulus Community Schools.

Robert Reese, Southfield, for defendant-appellant, City of Romulus.

Aloysius J. Suchy, Corp. Counsel, County of Wayne, by John K. Godre, Detroit, for Wayne County.

COLEMAN, Justice.

Defendants Romulus Community Schools and the City of Romulus appeal the Court of Appeal's affirmance of summary judgments against them entered by the Wayne County circuit court for plaintiffs Avis Rent-a-Car System, Inc. (Avis) and The Hertz Corporation (Hertz). ¹

Under legislation enacted by 1970 P.A. 174, Romulus, the Romulus Community Schools and Wayne County have taxed Avis and Hertz for their operations at the Wayne County Metropolitan Airport (Metro). In each case, the trial courts found plaintiffs exempt and 1970 P.A. 174 unconstitutional.

The dispositive issues are whether 1970 P.A. 174 is an act in violation of Const.1963, art. 4, § 29 ² or art. 9, § 3 ³ or both, and, if so, whether the act is severable. (M.C.L.A. § 211.181; M.S.A. § 7.7(5)). ⁴

We find that subsection (2) of 1970 P.A. 174 is unconstitutional. We also find that it is severable because the balance of the act remains operable.

It is thus unnecessary to detail the factual differences between the Avis and Hertz cases.

I

1945 P.A. 327, the Aeronautics Code, permitted a political subdivision "to confer the privileges of concessions". This was amended by 1956 P.A. 163 to permit the subdivision "to enter into * * * grants of privileges of concessions with any person * * * for the operation, use or occupancy, either exclusively or in common with others, of all or any part of * * * any buildings or structures". (See M.C.L.A. § 259.133; M.S.A. § 10.233)

Avis and Hertz were granted concessions at Metro each "in common with two others". They also leased some airport land and built service buildings prior to passage of P.A. 174.

1953 P.A. 189 concerned taxing the lessees or users of tax exempt property. They were "subject to taxation in the same amount and to the same extent as though the lessee or user (was) the owner of such property". An exception was made "where the use is by way of a concession in or relative to the use of a public airport, park, market, fairground or similar property which is available to the use of the general public".

In 1966, Romulus tried to tax Avis for its use of the land at Metro. After Avis filed a motion for summary judgment, our opinion in Kent County v. Grand Rapids, 381 Mich. 640, 167 N.W.2d 287 (1969) was issued. The Court said if the agreement between the airport authority and the business "fully met the requirements of the aeronautics code" and granted a concession, the property was tax exempt. ⁵ Avis was granted a summary judgment.

Romulus filed another suit alleging the service building to be personal property. Avis won a consent judgment in July 1972. Hertz also won a challenge before the State Tax Commission in 1970 under act 189.

Between the two Avis court actions, Romulus is said to have sought help from the Legislature. 1970 P.A. 174 added a section to P.A. 189 applicable to concessions only in airports and only in "counties of over 1,000,000".

Romulus again taxed Avis and Hertz. The school district and county intervened as defendants in the circuit court cases commenced thereafter by plaintiffs.

Avis and Hertz claimed that P.A. 174 violated art. 4, § 29 which prohibits the passing of any "local or special act in any case where a general act can be made applicable". Determining "whether a general act can be made applicable shall be a judicial question".

The trial court in Avis said legislation can make population classifications which "have a reasonable relation to the purpose for which the statute is enacted". The court could "see absolutely no reasonable relationship between the population of a county in which an airport is located and the entitlement of a concessionaire in that airport to tax exempt status under Act 189". Noting that Romulus had cited statistics concerning airport traffic, the court said this "proved the inherent defect in Act 174" because "there is no correlation between the county in which an airport is located and the traffic which passes through the airport".

The court also discussed art. 9, § 3 which requires that "(e)very tax other than the general ad valorem property tax shall be uniform upon the class or classes on which it operates". The court said P.A. 189 created "a single class". Act 174 "takes this single class and creates a subclass of airports alone" and further creates a "subclass of airports located in counties of one million people ". (Emphasis in original.)

The result would permit Romulus "to collect taxes from a single concessionaire at a single airport in a single county, while no other local unit of government can collect from similar concessionaires at airports or other like property in any other county of this state". The court said it was "shown absolutely no basis for the legislature having created a subclass of a subclass of a class".

The Court of Appeals affirmed the lower court's constitutional findings. ⁶ Regarding art. 4, § 29, it said "the decisive issue * * * is whether the population classification in 1970 P.A. 174 has a reasonable relationship to the purpose of the statute". It adopted "the well-reasoned opinion of the circuit judge" on this point.

The Court also agreed that art. 9, § 3 was violated. The Court said there "must be a reasonable basis for a classification which seeks to treat property differently for tax purposes". The Court was "unable to discern real or substantial differences which reasonably suggest the propriety of substantially different treatment as between Wayne County airports and airports in other counties".

II

We agree with the trial court and Court of Appeals that Const.1963, art. 4, § 29 is violated by 1970 P.A. 174. It is a local act passed in a case where a general act could be applied.

In Attorney General ex rel. Dingeman v. Lacy, 180 Mich. 329, 146 N.W. 871 (1914), the Legislature wanted to establish a domestic relations court "(in) each county * * * which has a population of upwards of two hundred fifty thousand". Wayne was the only county that qualified. It was "certain that the law can never become operative in a vast majority of the counties". Quoting from a treatise, the Court said population classification "must have a reasonable relation to the subject matter of the legislation, and must furnish some fairly apparent reason for legislation differing from that applicable to other municipalities having a substantial difference in population". A population classification "can never be sustained where it is, as in the case at bar, a manifest subterfuge". ⁷

The plaintiff in Hayes v. Auditor General, 184 Mich. 39, 150 N.W. 331 (1915), was a county agent for Kent County. Agents in "counties having a population of one hundred fifty thousand or more" were specially compensated. Only two counties qualified Wayne and Kent. The Auditor General refused to pay saying the legislation was local in a case where a general statute should have been passed.

The Court ordered payment. It distinguished Lacy. The county agent was a state officer performing a state function. The agent dealt with problems "practically limited to communities with congested population". Counties greater than 150,000 "must have congestion of population, and must * * * have numerous cases * * * requiring the services of a county agent".

The Legislature might have considered that "it costs much more to live in a large town than in the smaller counties". The Court noted that others, such as probate judges, had their salary based on county population. Also see Chamski v. Board of Auditors, 288 Mich. 238, 284 N.W. 711 (1939) and Tribbett v. Marcellus, 294 Mich. 607, 293 N.W. 872 (1940).

The plaintiff in Monroe v. Judge of Police Court of Grand Rapids, 311 Mich. 76, 18 N.W.2d 371 (1945), pled guilty in the Grand Rapids police court which was established before the Legislature was prohibited from passing local acts. After the prohibition was effective, an act was passed preventing the taking of appeals from police courts in cities "of a population of not less than one hundred thousand * * * nor more than two hundred thousand". Plaintiff said this was a local act.

The Court agreed. It was "unable to see any distinction between the needs incident to this phase of the law in cities having a population between 100,000 and 200,000 and other cities having a population slightly less than 100,000 or more than 200,000". The Court found there was not "a just basis of classification such as would sustain the provision". ⁸

In Wayne Circuit Judges v. Wayne County, 383 Mich. 10, 172 N.W.2d 436 (1969), the Court considered a "legislative design for financing probation services". It did "not apply to probation departments heretofore established in any county of over 500,000 population". The Court said the legislation was "to discharge the state's responsibility for the correction and rehabilitation of criminals". If population was related to this "it would be that in the populous areas * * * there is a greater...