Detroit Edison Co. v. Department of Treasury, 13

Citation382 Mich. 497,170 N.W.2d 39
Decision Date03 September 1969
Docket NumberNo. 13,13
PartiesThe DETROIT EDISON COMPANY, a New York and Michigan corporation, Plaintiff-Appellant, v. The DEPARTMENT OF the TREASURY of the State of Michigan, the Corporation Franchise Fee Division of the Department of Treasury, Allison Green, as State Treasurer, and Lloyd L. Anderson, as Deputy State Treasurer, Defendants-Appellees.
CourtSupreme Court of Michigan

Fischer, Sprague, Franklin & Ford, Detroit, for Detroit Edison Co., plaintiff-appellant; Harvey A. Fischer, Gerald C. Simon, and George A. Leininger, Jr., Detroit, of counsel.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., William D. Dexter and Robert J. Taube, Asst. Attys. Gen., Lansing, for defendants-appellees.

Before the Entire Bench.

BLACK, Justice (for reversal).

Stimulated by no judicial bravos, the present attorney general has--for this latest Edison Case 1--delivered an errant encore of that Aria buffa which, nearly a decade ago, his predecessor chanted before a not very enthusiastic Court. See what we have come to know as the second Edison Case (Detroit Edison Co. v. State, 361 Mich. 290, 105 N.W.2d 227, decided September 16, 1960). The attorney general intoned then, and attorney general Kelley chants now, that the remedy of review before the corporation tax appeal board (provided by P.A.1921, No. 85, as amended by P.A.1954, No. 153; C.L.S.1956 and 1961, § 450.309) 2 was and is exclusive; the 1959 official [382 Mich. 502] crescendo having been that 'jurisdiction is lodged exclusively in the corporation tax appeal board pursuant to P.A.1921, No. 85, as amended.' (361 Mich. 290, 296, 297, 105 N.W.2d 227). We thought that song had ended with our wholly negative decision of 1960, but the melody seems to linger on, and on, and on.

We hold again, as in the second Edison Case, that the administrative remedy contended for by the attorney general is Not exclusive. We hold further that Edison has rightfully sought review, pursuant to the administrative procedures act (P.A.1952, No. 197; C.L.S.1961, §§ 24.101 et seq.), of the whole of what in great part is now conceded to be another gross over-assessment of Edison's statutorily payable franchise fees. 3 The judgment of the Court of Appeals is therefore reversed with remand for reinstatement of the circuit court's order denying the treasury department's motion for accelerated judgment.

First: The Question of Exclusive Remedy

When the second Edison Case came to consideration and decision, all of the Justices agreed upon the result reached: that result being reversal upon unanimous determination that the remedy of review provided by section 450.309 is Not exclusive. Our differences then were as to the Preferred method of achieving such a result upon the record made, and each of the preferences was selective without disparagement of the other. Two Justices, this writer and Justice Souris, stood for reversal on ground that the court of claims act provided an alternately available forum for determination of Edison's claim for reimbursement of what the corporation and securities commission had compelled it to pay in order to obtain a certificate of corporate good standing. Three others, Justices Carr, Dethmers and Kelly, grounded their judgment of non-exclusivity on an even broader base; that 'It is significant that the legislature (referring to the act of 1921 as amended) did not specify that the remedies to a corporation, thereby afforded, would be exclusive.' (p. 307, 105 N.W.2d p. 236). Two others, Justices Edwards and Talbot Smith, grounded their votes for the same result on the equally tenable view that 'plaintiff's (Edison's) normal administrative remedy had been barred by the refusal of the commission to issue the redetermination called for by the statute.'

As against the second Edison Case Division 2 erred seriously when the assigned judges agreed (13 Mich.App. at 157, 163 N.W.2d at 666):

'In our opinion plaintiff's exclusive method of review from the redetermination by the treasury department was an appeal to the appeal board. The circuit court, not having jurisdiction, should have granted defendants' motion for accelerated judgment.'

In order that this question of allegedly exclusive remedy may be settled with new finality, we formally adopt the following portion of Justice Carr's opinion of the second Edison Case (361 Mich. pp. 306, 307, 105 N.W.2d p. 236):

'The motion to dismiss was granted on the ground that the court of claims was without jurisdiction to hear and determine the matter. It was the opinion of the presiding judge that under P.A.1921 No. 85, as amended by P.A.1954, No. 153 (C.L.S.1956, §§ 450.309, 450.310 (Stat.Ann.1959 Cum.Supp. §§ 21.210, 21.210(1))), plaintiff was limited to the remedies allowed by the procedure therein set forth. The specific sections cited provide for notice to a corporation subject to the provisions of the act as to the amount of its franchise fee liability, with the right to ask for a redetermination thereof by the commission within a period of 20 days after receipt of such notice. Review by an appeal board composed of the attorney general, the State treasurer, and the auditor general, may be claimed by either the commission or the corporation, with subsequent review by this Court. The amendments made further permitted a demand for a refund on the part of a corporation for an excessive payment made by it for franchise fee liability with the right of review by the appeal board and subsequently by this Court. Such methods of procedure were indicated to be independent, it apparently being the intention of the legislature that either or both might be followed.

'It is significant that the legislature did not specify that the remedies to a corporation, thereby afforded, would be exclusive. In view of the decision of this Court in In re Consolidated Freight Co., 265 Mich. 340, 348, 251 N.W. 431, it may be assumed that the legislature intended that the review in this Court should be confined wholly to questions of law, in other words, an appeal in the nature of certiorari. If, therefore, the statutory procedure under the 1954 act, above cited, is exclusive, a corporation considering itself aggrieved by being required to pay the amount of the franchise fee as fixed by the commission has no remedy by which factual issues can be tried in court.'

Second: The Administrative Procedures Act

It will not take long to point out that this act (P.A.1952, No. 197 as amended) by section 1 thereof defines 'agency' as meaning 'any state board, commission, department, bureau or officer, authorized by law to make rules or to adjudicate contested cases, except the workmen's compensation commission, the employment security commission, the department of revenue, the public service commission and those in the legislative and judicial branches.' 4 The section quoted expressly includes all boards, commissions, departments, bureaus and officers except those expressly excepted. Neither the former corporation and securities commission nor the present treasury department and the officers and directors thereof are expressly excepted. Edison therefore was and now is possessed of right to review, under the administrative procedures act, the aforesaid redetermination; a redetermination which, as shown by its complaint below, was made under the first paragraph of said section 450.309. Indeed, the administrative procedures act provides that available remedy which eliminates need for determination of a serious constitutional question, to which we now briefly advert.

The constitutional question, stated baldly from and upon questions put and answers made during oral argument of this case, is whether the paragraph 2 remedy provided by said section 450.309 could, as the attorney general would apply it here, 5 provide Edison with that kind of due process which authorities like In re Murchison, 349 U.S. 133, 75 S.Ct. 623, 99 L.Ed. 942; Lookholder v. State Highway Commissioner, 354 Mich. 28, 91 N.W.2d 834; and Glass v. State Highway Commissioner, 370 Mich. 482, 122 N.W.2d 651 minimally require. The significance of these authorities is appropriately summed up in the recent text of 16 Am.Jur.2d, Constitutional Law, § 582, p. 988:

' § 582. Requirements of fairness and impartiality.

'Due process requires that the tribunal be a fair and impartial one. Impartiality is lacking where a member of the tribunal has a pecuniary interest in the outcome of the proceeding. And a statute which compels a litigant to submit his controversy to a tribunal of which his adversary is a member does not afford due process of law.'

Consider the appeal board which the second paragraph of section 450.309 constitutes. It is composed of 3 members. One is the attorney general. One is the State treasurer. The latter has already decided the issue which the attorney general says must be reviewed by the appeal board; the treasurer having sat as a statutory redeterminer of the assessment now in question. As for the attorney general, granting him the utter purity of a Galahad, we can only say (as in Offutt v. United States, 348 U.S. 11, 14, 75 S.Ct. 11, 99 L.Ed. 11 and repeated in In re Murchison, Supra, 349 U.S. at 136, 75 S.Ct. 623) that to perform its high function in the best way 'justice must satisfy the appearance of justice.' The attorney general's appearance as advocate now for review by the appeal board, then his nimble ascendancy to the appeal board for decisional purposes, and then his return to advocacy for the purposes of appeal under the third paragraph of the same section; all this naturally raises the appearance--only that of course--of injustice. No more need be said.

Upon remand the circuit court will proceed toward prompt determination of all meritorious issues raised by plaintiff's complaint and whatever answer thereto the attorney general files. From such determination any party deeming itself or himself aggrieved may appeal directly to ...

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