Continental Motors Corp. v. Muskegon Tp., 13 and C

• Decision Date: 28 December 1961
• Docket Number: No. 10,No. 13 and C,13 and C,10
• Citation: 365 Mich. 191,112 N.W.2d 429
• Parties: CONTINENTAL MOTORS CORPORATION, a Virginia corporation, Plaintiff and Appellant, and United States of America, Intervening Plaintiff and Appellant, v. TOWNSHIP OF MUSKEGON, a constitutional body corporate, Defendant and Appellee, and Orchard View School Districtounty of Muskegon, Intervening Defendants and Appellees.
• Court: Michigan Supreme Court

Page 429

112 N.W.2d 429

365 Mich. 191

CONTINENTAL MOTORS CORPORATION, a Virginia corporation, Plaintiff and Appellant, and United States of America, Intervening Plaintiff and Appellant, v. TOWNSHIP OF MUSKEGON, a constitutional body corporate, Defendant and Appellee, and Orchard View School District No. 13 and County of Muskegon,

Intervening Defendants and Appellees.

No. 10.

Supreme Court of Michigan.

Dec. 28, 1961.

Joseph T. Riley, Muskegon, for appellant, Continental Motors Corp., Butzel, Eaman, Long, Gust & Kennedy, Detroit, of counsel.

Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, I. Henry Kutz, Joseph Kovner, Attys., Dept. of Justice, Washington, D. C., George E. Hill, U. S. Atty., Grand Rapids, Mich., Abbott M. Sellers, Acting Asst. Atty. Gen., Robert J. Danhof, U. S. Atty., Muskegon, for the United States.

Charles A. Larnard, Muskegon, for Muskegon Tp., defendant-appellee.

Harry J. Knudsen, Muskegon, for Muskegon County, intervening defendant and appellee.

Poppen, Street & Sorensen, Muskegon, for Orchard View School Dist., intervening defendant and appellee. Harold M. Street, Muskegon, of counsel.

Nathaniel H. Goldstick, Corp. Counsel, City of Detroit, Julius C. Pliskow, Asst.Corp. Corp. Counsel, Samuel H. Olsen, Pros. Atty., for Wayne County, Aloysius J. Suchy and William F. Koney, Asst. Pros. Attys., Detroit, amici curiae.

Before the Entire Bench, except SMITH, J.

SOURIS, Justice (reversed and remanded).

Challenged here is a 1959 Muskegon township ad valorem tax levied against Continental Motors Corporation as possessor and user of machinery and other equipment, title to which was in the federal government. City of Detroit v. Murray Corporation, 355 U.S. 489, 78 S.Ct. 458, 2 L.Ed.2d 441, reversing 6 Cir., 234 F.2d 380, stands at the threshold of this case, for the defendant township relies upon the authority of that decision to support its contention that Michigan's general property tax act ¹ authorized in 1959 a tax upon the right to possess or use property owned by another measured by the value of the property possessed.

Continental attacks the construction placed upon our general property tax act by the United States Supreme Court in Murray. Continental claims the tax was invalid because in 1959 the general property tax act did not (contrary to the ruling in Murray) authorize a specific tax on the privilege of possessing or using tangible personal property but authorized only an ad valorem tax on the ownership of such property.

Defendant township, on the other hand, urges us to adopt the federal Supreme Court's construction in Murray of our general property tax act and refers to various subsections of section 14 and to section 24 of the act for support of its contention that taxation of possessory interests and interests other than full ownership of tangible personal property was authorized in 1959.

Ours is the primary duty to construe acts of the Michigan legislature, to determine the extent and the scope of their application. When a state court of last resort authoritatively construes a state statute, federal courts, including the Supreme Court, are bound by that construction. Alabama State Federation of Labor etc. v. McAdory, 325 U.S. 450, 470-471, 65 S.Ct. 1384, 89 L.Ed. 1725; Ryerson & Son v. Peden, 303 Ill. 171, 135 N.E. 423, 24 A.L.R. 1273; and 27 R.C.L. 44. But when a federal court, even the Supreme Court, construes a state statute, the courts of that state are not bound to follow the federal Court's construction. Alabama State Federation of Labor etc. v. McAdory, supra; Smithpeter v. Wabash R. Co., 360 Mo. 835, 231 S.W.2d 135, 19 A.L.R.2d 950; State ex rel. Nelson v. Meek, 127 Ark. 349, 192 S.W. 202, L.R.A. 1918F, 642; and Parsons v. Federal Realty Corp., 105 Fla. 105, 143 So. 912, 88 A.L.R. 275. Mr. Justice Butzel had occasion to express for this Court its recognition of this basic principle in Detroit Trust Co. v. Detroit City Service Co., 262 Mich. 14, 36, 247 N.W. 76, 83:

'Notwithstanding the profound respect we have for the opinions of the United States Supreme Court, we are not bound thereby in the construction of a Michigan statute.'

Even if not controlling, such opinions often are highly persuasive. However, with all due respect, we are not persuaded that the construction placed upon our general property tax act in the Murray case is correct.

It is of some significance, we believe, that the Murray decision was reached on the same day decision was reached in United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424, affirming our decision in 345 Mich. 601, 77 N.W.2d 79; and United States et al. v. Township of Muskegon, 355 U.S. 484, 78 S.Ct. 483, 2 L.Ed.2d 436, affirming our decision in Township of Muskegon v. Continental Motors Corporation, 346 Mich. 218, 77 N.W.2d 799. It is significant because the Supreme Court's opinion in Murray states that the practical operation and effect of the tax there in question were identical to those upheld in the other two cases from Michigan decided that day. The other two cases, however, involved a specific statutory authorization for imposition of a tax upon the right to use real property the ownership of which is for any reason exempt from taxation whenever such real property is leased, loaned or otherwise made available for use in connection with a business conducted for profit. P.A.1953, No. 189 (C.L.S.1956, §§ 211.181, 211.182 [Stat.Ann.1960 Rev. §§ 7.7(5), 7.7(6)]). We are unable to adopt the Supreme Court's construction in Murray of our general property tax act as it then related to personal property because there was then no specific statutory authorization for imposition of a tax upon the right to use another's tax exempt personal property comparable to P.A.1953, No. 189, and because our prior decisions tend to support a contrary construction. City of Detroit v. Phillip, 313 Mich. 211, 213, 20 N.W.2d 868; In re Ever Krisp Food Products Co., 307 Mich. 182, 196, 11 N.W.2d 852; Crawford v. Koch, 169 Mich. 372, 379, 135 N.W. 339; and Pingree v. Auditor General, 120 Mich. 95, 102, 78 N.W. 1025, 44 L.R.A. 679.

As this Court noted in C. F. Smith Co. v. Fitzgerald, 270 Mich. 659, 672, 259 N.W. 352, citing Pingree v. Auditor General, supra, the Constitution of this state (Constitution 1908, art. 10, § 3) authorizes only two general methods of taxation, ad valorem and specific. The tax here involved was levied by the township pursuant to authority claimed to be found in the general property tax act before its amendment by P.A.1959, No. 266. The first section of that act declares that all property in the state, real and personal, unless expressly exempted, shall be subject to taxation. The exemptions are not, at this point in our discussion, relevant. Section 13 provides that the taxable situs of personal property, with certain exceptions hereafter noted, shall be the township in which the owner resides.

Neither of those two sections of the act authorizes taxation of other than the owner of personal property. However, section 14, which deals with the exceptions to the previously stated general rule as to taxable situs of personal property, provides the basis for the township's claim that taxation of possessory interests is authorized. We do not read section 14 as authorizing anything but the assessment of an ad valorem tax upon personal property and its collection from one other than the owner in certain specified circumstances. For example, the third subsection of section 14 provides that personal property of minors and others under guardianship shall be assessed to the guardian, and subsection 4 provides for the assessment of personal property belonging to decedents' estates to the executors, administrators, or trustees thereof. In subparagraph 5, personal property under the control of a trustee or agent may be assessed to such trustee or agent. Each of these examples provides also for the taxable situs of such property, generally other than the township of the owner of such property. Each subsection of section 14 refers to a situation where possession or control of tangible personal property by other than the owner thereof results from a legal relationship between the possessor and the owner which is for the benefit of the owner. In other words, in each instance, possession of the tangible personal property by a guardian, executor, administrator, trustee or agent is not for the possessor's benefit but is, rather, for the benefit of the owner of the personal property. Under such circumstances, it hardly can be said that anything contained in section 14 of the act, before the act's amendment by P.A.1959, No. 266, authorized the taxation of such possessory rights, there being an absence of any benefit to the possessor from such possession.

Section 18 of the act provides for a written statement, under oath, of all tangible property of every person, firm or corporation having property not exempt from taxation, together with a statement indicating whether the property is owned by such person, firm or corporation or 'held for the use of another.' See, also, section 19.

Section 24 provides for the preparation of an assessment roll and requires that where property is assessed to one other than the owner, it shall be assessed separately from his property and shall show in what capacity it is assessed to him, 'whether as agent, guardian or otherwise.'

From all of the foregoing, it seems quite apparent to us that the general property tax act as it related to tangible personal property, until passage of P.A.1959, No. 266, imposed a tax only upon the ownership of such property; in other words, imposed only the ordinary ad valorem personal property tax and did not provide for taxation of limited interests in such property. This conclusion is supported by provisions which subsequently appear in the...