City of Detroit v. Detroit Commercial Coll.

• Decision Date: 08 September 1948
• Docket Number: No. 38.,38.
• Citation: 33 N.W.2d 737,322 Mich. 142
• Parties: CITY OF DETROIT et al. v. DETROIT COMMERCIAL COLLEGE.
• Court: Michigan Supreme Court

322 Mich. 142

33 N.W.2d 737

CITY OF DETROIT et al.

v.DETROIT COMMERCIAL COLLEGE.

No. 38.

Supreme Court of Michigan.

Sept. 8, 1948.

OPINION TEXT STARTS HERE Appeal from Circuit Court, Wayne County; Joseph A. Moynihan, judge.

Action by the City of Detroit and the treasurer thereof against the Detroit Commercial College, a corporation, for personal property taxes. Judgment for plaintiffs, and defendant appeals.

Affirmed.

Before the Entire Bench.

Clark, Klein, Brucker & Waples, Wilber M. Brucker and Arthur P. Boynton, all of Detroit, for defendant-appellant.

Raymond J. Kelly, Corp. Counsel, and John H. Witherspoon and Helen W. Miller, Assts. Corp. Counsel, all of Detroit, for appellees.

SHARPE, Justice.

The question involved in this case is whether defendant, Detroit Commercial College, is exempt from personal property tax by virtue of the provisions of 1 Comp.Laws 1929, § 3397, Stat.Ann. § 7.9 which provides:

‘The following personal property shall be exempt from taxation, to wit:

‘First, the personal property of benevolent, charitable, educational and scientific institutions incorporated under the laws of this state: * * *.’

The city of Detroit brought action for personal property taxes for the years 1942 through 1946 inclusive claimed to be due and owing from the Detroit Commercial College, a non profit educational corporation organized under Act No. 327, Pub.Acts 1931, as amended, Comp.Laws Supp.1940, § 10135-1 et seq., Stat.Ann. § 21.1 et seq. The amount of taxes and interest involved is the sum of $794.78.

Defendant college was incorporated in 1941. Its articles of incorporation state its purposes to be: ‘The purposes of this corporation are to operate a school for the training of men and women in the special accomplishments and skills necessary for those employed in the business world; to advance the efficiency and skill of those engaged in teaching commercial subjects in other institutions by advising and training them in advanced and modern methods of teaching; to assist men and women to prepare themselves for business and professional careers by training them in the various methods and techniques best suited to their prospective careers; to foster and encourage improved and advanced methods of commercial teachings, and to acquire, hold and dispose of any property necessary to its several purposes. The school does not propose to conduct an institution where the arts, sciences, professions and higher learning are caught and degrees and honors conferred. The school will award certificates stating the date of entry of the student in the school, his attendance record, the names of the courses pursued, the grades or marks attained in those courses, along with a statement from the student's teachers as to the degree of proficiency and learning attained in the various courses taken.’

Its articles of incorporation were submitted to the State board of education to have determined whether the college had met certain requirements of the statute providing for incorporation of an educational institution. The secretary of the State board of education certified as follows:

‘The Detroit Commercial College:

‘(1) possesses adequate housing space and administration facilities for its declared field, or fields of education;

‘(2) has an adequate educational program organized to give instruction leading to the diplomas which it proposes to offer;

‘(3) has adequate laboratory, library and other teaching facilities for the carrying on of the program proposed;

‘(4) has adequate staff, fully trained, for the teaching proposed;

‘(5) has at least 50% of its capital paid in or reduced to possession, as appears from the statements contained in Article IV, subparagraph (b) of the proposed Articles of Incorporation.’

It also appears that the college gives a two-year course in specialized educational training preparatory to the taking of a position in the business world. The school is designed to prepare students to enter the business world with specialized training in the field of business. It is not a preparatory school to furnish certificates for advanced credit in any junior or preparatory college or other educational institution. Upon completing a course, students are furnished with a certificate of accomplishments for use in the business world. The college offers courses for persons entering the business world and for teachers in shorthand, professional reporting and court practice, English and correspondence, typewriting, bookkeeping and accounting practice, business mathematics, constitutional and business law, geography, insurance, banking, advertising, real estate, stocks and bonds, Detroit business and business decorum.

When the cause came on for trial, both parties asked for a summary judgment. The trial court entered judgment in favor of the city of Detroit in the sum of $794.78.

It is appellant's position that its personal property is expressly exempt from taxation by virtue of 1 Comp.Laws 1929, § 3397, Stat.Ann. § 7.9; that the phrase ‘educational * * * institutions incorporated under the laws of this state’ in the personal property tax exemption statute refers to the educational corporations provided for in the following: ‘Sec. 170. Any number of persons, not less than three, may incorporate for the purpose of conducting a school, academy, seminary, college or other institution of learning where preparatory subjects or the arts, sciences, professions, special occupations and higher learning may be taught. Such corporations are hereinafter called educational corporations. Educational corporations may be organized for profit or by trustee corporations if so provided. Educational corporations organized for profit or as trustee corporations shall also comply with the provisions of this act relating to corpoations for profit or trustee corporations, as the case may be. Educational corporations shall be governed by the provisions of this act relating to corporations generally except as specifically otherwise provided.’ Act No. 327, Pub. Acts 1931, Comp.Laws Supp. 1940, § 10135-170, Stat.Ann. § 21.171.

Prior to 1939 the certification by the State board of education was not required as a condition precedent to incorporation. Act No. 162, Pub.Acts 1939, amended certain sections of the corporation code pertaining to the incorporation of educational institutions including section 171, Comp.Laws Supp.1940, § 10135-171, to provide that every educational corporation, before being authorized to file its articles of incorporation, shall be required to present a statement to the Michigan corporation and securities commission from the State board of education as to certain matters. Among these are that the proposed corporation possesses adequate housing space and administration facilities; and that it has an adequate educational program to give diplimas or degrees which it proposes to offer.

In our opinion the certification by the State board of education, while required by the act in question before articles of incorpoation can be filed, does not contol taxing officials and courts. The act if given the construction claimed for it by appellants would in effect delegate to the State board of education and to the corporation and securities commission the power to determine what corporations are entitled to enjoy exemption from taxation. Such authority cannot be delegated by the...