City of Wyandotte v. State Bd. of Tax Admin.

• Decision Date: 08 December 1936
• Docket Number: No. 80.,80.
• Citation: 270 N.W. 211,278 Mich. 47
• Parties: CITY OF WYANDOTTE et al. v. STATE BOARD OF TAX ADMINISTRATION et al.
• Court: Michigan Supreme Court

278 Mich. 47

270 N.W. 211

CITY OF WYANDOTTE et al.

v.STATE BOARD OF TAX ADMINISTRATION et al.

No. 80.

Supreme Court of Michigan.

Dec. 8, 1936.

Suit by the City of Wyandotte and others, all municipal corporations of the State of Michigan, against the State Board of Tax Administration of the State of Michigan and others. From a declaratory decree, the defendants appeal.

Affirmed.

Appeal from Circuit Court, Ingham County, in Chancery; Leland W. Carr, judge.

Argued before the Entire Bench, except POTTER, SHARPE, and TOY, JJ.

David H. Crowley, Atty. Gen., and Gaylord N. Bebout and Arthur T. Iverson, Asst. Attys. Gen., for appellants.

Joseph W. Planck, of Lansing, for appellee City of Lansing.

W. Hugh Williams, of Wyandotte, for appellee City of Wyandotte.

Linsey, Shivel & Phelps, of Grand Rapids, for appellee Village of Lowell.

George R. Sidwell, of Ann Arbor, of counsel, for appellees.

BUSHNELL, Justice.

This is an appeal from a declaratory decree which determined that Act No. 167 of the Public Acts of 1933, as amended by Act No. 77 of the Public Acts of 1935 (Mason's 1935 Supp. §§ 3663-1 to 3663-28), the ‘General Sales Tax Act,’ is not applicable to the sale of gas and electricity by municipalities from municipally owned and operated utilities.

The title of the cause is sufficient to identify the parties. The City of Lansing and the Village of Lowell own and operate electric plants within their respective boundaries; the City of Wyandotte owns and operates a gas and an electric plant.

While defendant board's interpretation of the act is entitled to consideration, that interpretation is not binding upon judicial tribunals. Boyer-Campbell Co. v. Fry, 271 Mich. 282, 296, 260 N.W. 165, 98 A.L.R. 827.

Notwithstanding this well-recognized rule of law, it is of more than passing interest to note that following the enactment of the General Sales Tax Act, defendant board adopted a resolution on July 20, 1933, which declared water, gas, and electricity to be nontaxable under this act if sold by municipal public utilities.

Over two years later, on September 15, 1935, the board reversed its declared position and held such sales to be taxable under the act.

We have held that proceedings under tax laws must be closely scrutinized and strictly construed. McVannel v. Pure Oil Co., 262 Mich. 518, 522, 247 N.W. 735.

‘Tax exactions, property or excise, must rest upon legislative enactment, and collecting officers can only act within express authority conferred by law. Tax collectors must be able to point to such express authority so that it may be read when it is question in court. The scope of tax laws may not be extended by implication or forced construction. Such laws may be made plain, and the language thereof, if dubious, is not resolved against the taxpayer.’ In re Dodge Bros., 241 Mich. 665, 669, 217 N.W. 777, 779. This rule is cited with approval in Michigan Trust Co. v. City of Grand Rapids, 262 Mich. 547, 247 N.W. 744, 89 A.L.R. 840;J. B. Simpson, Inc., v. O'Hara, 277 Mich. 55, 268 N.W. 809; and Montgomery Ward & Co. v. Fry, 277 Mich. 260, 269 N.W. 166, the last two being sales tax cases.

The trial judge said: ‘Counsel for defendants point out that exemptions from taxation are as a general proposition to be strictly construed. There is no question, of course, as to this rule of interpretation of legislative enactments. It has, however, no application to the case at bar. The question here is not whether municipalities are exempted from the application of the sales tax law because of specific provisions therein, after having been included by the use of general terms. Rather the query is whether there is any inclusion of municipalities. When a subject or object to which a tax may be applied is once included within the purview of a legislative measure the presumption is that it is not to be removed unless an intention to grant an exemption is clearly indicated. However, in determining what objects or subjects are so included the rule of strict interpretation must be observed, there being no inference or presumption that the legislative body intended to include other than the persons or objects described.’

In an inheritance tax matter, we said: ‘It is also recognized as a general rule, supported by abundant authority, that the provisions of statutes of this nature, imposing a special tax, are not to be extended by implication beyond the clear import of the words used, since it is the duty of the taxing power to express the intent to impose such special burden in clear and unambiguous language. Eidman v. Martinez, 184 U.S. 578, 22 S.Ct. 515, 46 L.Ed. 697;English v. Crenshaw, 120 Tenn. 531, 110 S.W. 210 [17 L.R.A.(N.S.) 753, 127 Am.St.Rep. 1025]; 37 Cyc. p. 1556.’ People v. Welch's Estate, 235 Mich. 555, 564, 209 N.W. 930, 933.

Appellant argues that plaintiffs are included because the act says ‘the term ‘person’ includes any * * * corporation' and because 1 Comp.Laws 1929, § 76 reads:

‘In the construction of the statutes of this state, the following rules shall be observed, unless such construction would be inconsistent with the manifest intent of the legislature, that is to say: * * *

‘12. The word ‘person,’ may extend and be applied to bodies politic and corporate, as well as to individuals.'

See authorities therein annotated, none of which apply the word ‘person’ to municipalities in the manner urged by appellant.

The act, after defining the ‘retail sales' included, says (section 1 (b.2), Comp.Laws Supp.1935, § 3663-1(b.2): ‘The term ‘sale at retail’ includes sales of electricity for light, heat and power and sale of natural and artificial gas when made to the consumer or used for consumption or use rather than for resale.'

The tax is not imposed upon the consumer, but upon those ‘engaged in the business of making sales at retail, as hereinbefore defined,’ etc. Section 2 (Comp.Laws Supp. 1935, § 3663-2).

The word ‘municipality’ does not appear in the act nor does the language of the act indicate that the Legislature had municipally owned and operated utilities in mind when the law was enacted. On the contrary, it would appear from some of the provisions of the act that it can hardly be supposed that it was considered that self-governing municipalities were within its purview. A registration fee of $1 per year as a privilege tax is imposed on those conducting ‘such business' and a license is issued therefor. Section 3 (Comp.Laws Supp.1935, § 3663-3).

We denied the right of the city of Detroit to tax property owned by the state whether or not used for governmental purposes, quoting 4 Dillon on Municipal Corporations (5th Ed.) § 1396.

‘The sound principle is that property owned by a state or by the United States, or by a municipality, for public uses, is not subject to be taxed unless so provided by positive legislation.’ People ex rel. Auditor General v. Ingalls, 238 Mich. 423, 213 N.W. 713, 714.

‘The general sales tax is a privilege tax imposed upon the privilege of making retail sales, measured by the gross proceeds of such...