Avis Rent-A-Car System, Inc. v. City of Romulus, RENT-A-CAR

• Decision Date: 14 October 1975
• Docket Number: Docket No. 21134,RENT-A-CAR
• Citation: 65 Mich.App. 119,237 N.W.2d 209
• Parties: AVISSYSTEM, INC., Plaintiff-Appellee, v. CITY OF ROMULUS et al., Defendants-Appellants.
• Court: Court of Appeal of Michigan — District of US

Page 209

237 N.W.2d 209

65 Mich.App. 119

AVIS RENT-A-CAR SYSTEM, INC., Plaintiff-Appellee, v. CITY OF ROMULUS et al., Defendants-Appellants.

Docket No. 21134.

Court of Appeals of Michigan.

Oct. 14, 1975.

Rehearing Denied Nov. 24, 1975.

Released for Publication Jan. 22, 1976.

Miller, Canfield, Paddock & Stone by Samuel J. McKim, III, Detroit, for Romulus Schools.

Elsman, Young, O'Rourke, Bruno & Bunn by Edward M. Bunn, Detroit, for City of Romulus.

Aloysius J. Suchy, Corp. Counsel by George H. Cross, Asst. Corp. Counsel, Detroit, for Wayne County.

Barris, Sott, Denn & Driker by Eugene Driker, Detroit, for plaintiff-appellee.

Before BRONSON, P.J., and V. J. BRENNAN and D. E. HOLBROOK, Jr., JJ.

V. J. BRENNAN, Judge.

Defendants, City of Romulus, County of Wayne, and Romulus Community Schools, (hereinafter defendants) appeal as a matter of right from an order of summary judgment in favor of plaintiff in an action brought to recover taxes paid under protest to defendants.

Plaintiff, Avis Rent-A-Car System, Inc., is a foreign corporation which operates a car rental concession at Metropolitan Airport, located in the City of Romulus, County of Wayne, Michigan. Plaintiff had entered into an agreement dated September 16, 1966 with the Board of County Road Commissioners of the County of Wayne, under the terms of which plaintiff was granted 'the right to conduct and operate an exclusive 'drive-it-yourself' Automobile Rental Concession, in common with two others, at the Airport, for the convenience of the traveling public'. Pursuant to said agreement, plaintiff constructed four rental counters, two 'pick-up' areas on airport property, and a service building on the airport grounds which was leased from the County Road Commissioners. It is the status of the service building for tax purposes which has been the subject of continuing litigation between the parties.

In 1966, Romulus Township sought to tax Avis for the 'user or lessee portion' of the service building site pursuant to M.C.L.A. § 211.181; M.S.A. § 7.7(5). Avis commenced suit against the Township in 1967 seeking a declaratory judgment that the site was tax exempt under the statute as a 'use * * * 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 * * *'.

During the litigation the Michigan Supreme Court decided the case of Kent County v. Grand Rapids, 381 Mich. 640, 167 N.W.2d 287 (1969), which construed the statute in question in a manner favorable to plaintiff. Plaintiff thereupon moved for a summary judgment on the ground that there was no genuine issue of material fact and that plaintiff was entitled to relief as a matter of law. On May 12, 1970, the circuit judge filed his opinion granting plaintiff's motion for summary judgment and holding that the service building site was exempt from taxation by virtue of the specific exemption contained in M.C.L.A. § 211.181; M.S.A. § 7.7(5). A judgment was entered accordingly, from which the Township of Romulus perfected an appeal to this Court, but the appeal was later dismissed by stipulation.

Late in 1971, the City (formerly Township) of Romulus sought to levy a tax on plaintiff's service building as 'personal property'. Again, plaintiff filed suit and brought a motion for summary judgment, on the ground that the provisions of the general property tax act, upon which Romulus sought to levy a personal property tax on a service building site had been declared unconstitutional by the Michigan Supreme Court in Continental Motors Corp. v. Muskegon Twp., 376 Mich. 170, 135 N.W.2d 908 (1965). A consent judgment was entered in favor of plaintiff on July 19, 1972.

Meanwhile, efforts by the City of Romulus to persuade the Michigan Legislature to amend the applicable statute proved successful. The amendment, 1970 P.A. 174, M.C.L.A. § 211.181(2); M.S.A. § 7.7(5)(2), purported to establish new criteria for tax exemption for concessionaires. The amendment added the following language:

'(2) In counties of over 1,000,000 in order to determine whether a lessee or user at an airport is a concessionaire within the provisions of this act, and whether the use of real property used in connection with the concession operation is essential to the concession operation so as to come within the exception contained in this act, it is required that the following basic tests be met:

'(a) It shall have the exclusive right and duty to render a necessary or customary service, based on a contract entered into requiring that it render goods or services either to the grantor or to the general public on behalf of the grantor;

'(b) The service rendered must be available to the general public on a nondiscriminatory basis;

'(c) Use of real property in connection with a service concession must be a necessary and integral part of the concession operation.'

The enactment of 1970 P.A. 174 resulted in a third suit brought by plaintiff to have the service building site declared tax exempt. In its motion for summary judgment, plaintiff contended that its use of the service building site satisfied the three criteria imposed by 1970 P.A. 174, that 1970 P.A. 174 was unconstitutional in that it violated the requirements of Article 9, § 3 of the Michigan Constitution, which requires that property taxes shall be uniform in application, and that 1970 P.A. 174 is a 'local or special act' and is violative of Article 4, § 29 of the Michigan Constitution. The circuit judge agreed with each of plaintiff's contentions and granted summary judgment accordingly. From this judgment, defendants have perfected the instant appeal.

The Michigan Legislature in 1945 enacted the Michigan Aeronautics Code, M.C.L.A. § 259.1 Et seq.; M.S.A. § 10.101 Et seq., for the purpose of furthering 'the public interest and aeronautical progress'. The act provided for the creation of the Michigan Aeronautics Commission and the Michigan Department of Aeronautics charged with the duty, Inter alia, of developing a statewide system of airports. 1945 P.A. 329 provided for the creation of the Michigan Aviation Matching Fund, 'for the purpose of matching the political subdivisions of the state in the construction and improvement of publicly owned airports and landing fields, and in assisting the several political subdivisions in matching federal funds, within the State of Michigan'. M.C.L.A. § 259.501.

In 1953 the Michigan Legislature enacted 1953 P.A. 189, M.C.L.A. § 211.181; M.S.A. § 7.7(5), providing for the taxation of lessees and users of tax-exempt property, 'except where the use is by way of a concession in or relative to the use of a public airport * * *'. Finally, as noted, Supra, our Legislature passed 1970 P.A. 174, amending 1953 P.A. 189 (M.C.L.A. § 211.181; M.S.A. § 7.7(5)), providing for stricter standards in qualifying for concessionaire status and the concomitant tax exemption at a public airport.

From the foregoing excerpts from Michigan statutes, the public policy of this state regarding aeronautics is clear. Since the development of aeronautics is considered to be very much in the public interest, safe and convenient air trial is to be encouraged. Airport development is to be fostered by the use of matching funds and by providing tax incentives to encourage businesses to provide necessary customer services for the convenience and comfort of air travellers. By its most recent act, 1970 P.A. 174, the Michigan Legislature has apparently determined that at least one airport in the state, Wayne County Metropolitan Airport, has reached such a point of development that tax exemptions previously given to concessionaires may now be restricted without contravening settled state policy. Plaintiff in the instant case is contending, in effect, that the Michigan Legislature has sought to implement this new policy by the enactment of a statute which is constitutionally invalid. The learned circuit judge held that plaintiff was correct. We agree.

Plaintiff argues that 1970 P.A. 174 contravenes the Michigan Constitution in that it is a local or special act. Article 4, § 29 of the Michigan Constitution provides:

'The legislature (should) pass no local or special act in any case where a general act can be made applicable, and whether a general act can be made applicable shall be a judicial question.'

The parties agreed that a population classification which limits the present application of a legislative act does not make the act local or special if the population classification bears a reasonable relationship to the purpose of the statute and the statute applies whenever the population classification is met. See Airport Community Schools v. State Board of Education, 17 Mich.App. 574, 170 N.W.2d 193 (1969), and cases cited therein. The decisive issue in the instant case, therefore, is whether the population classification in 1970 P.A. 174 has a reasonable relationship to the purpose of the statute. See Monroe v. Judge of Police Court of Grand Rapids, 311 Mich. 76, 18 N.W.2d 371 (1945).

We fully agree with the well-reasoned opinion of the circuit judge, and we quote at length and with approval therefrom. 'This Court can 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. As this Court stated in its 1970 Opinion, the entire purpose of Act 189 seems to be to encourage the development of airports. Obviously, the Board of County Road Commissioners deemed it essential to have Avis as a concessionaire at the Airport, and this Court earlier observed that, in this day and age, a car rental concession is a necessity for the efficient operation of a large municipal airport.

'The effect of Act 174, however, is to discourage airport development in heavily populated areas, the very areas that most need such development. Compare ...