Goodenough v. State

• Decision Date: 02 October 1950
• Docket Number: No. 4,4
• Citation: 328 Mich. 502,44 N.W.2d 161
• Parties: GOODENOUGH v. STATE et al., BROOKS v. STATE et al.
• Court: Michigan Supreme Court

Page 161

44 N.W.2d 161

328 Mich. 502

GOODENOUGH v. STATE et al., BROOKS v. STATE et al.

No. 4.

Supreme Court of Michigan.

Oct. 2, 1950.

Daniel W. Goodenough, Detroit, for appellant.

Stephen J. Roth, Attorney General, Edmund E. Shepherd, Solicitor General, Lansing, T. Carl Holbrook, Daniel J. O'Hara, Assistants Attorney General, for appellees.

BOYLES, C. J., and REID, NORTH, DETHMERS, BUTZEL, CARR, BUSHNELL and SHARPE, JJ.

PER CURIAM.

Our former opinion rendered in this cause is reported in 328 Mich. 56, 43 N.W.2d 235. A motion for rehearing has been made by plaintiff Margaret B. Goodenough. Plaintiff and defendants have each filed a brief. They agree and we admit that in stating the factual situation there was in our former opinion an inaccuracy which resulted in our ordering judgment for plaintiff in a wrong amount. In substance we stated that by reason of there having been included in computing plaintiff's intangibles tax a claimed or alleged interest in the nonprofit-producing intangibles which were owned and held by the Pennsylvania trustees, plaintiff's tax was increased in the amount of $21.58. Such was not the fact. Instead the resultant increase was $7.09. The items of the tax constituting the total of $21.58 were as follows:

                Item 1--  Tax on plaintiff's
                          individually owned
                          intangibles                   $19.39
                Item 2--  Tax computed on the
                          erroneous assumption of
                          plaintiff having some
                          beneficial interest in the
                          nonprofit-producing
                          intangibles belonging to
                          the trust                       7.09
                Item 3--  Plaintiff's tax computed at
                          3% on one-ninth of the
                          gross income from the
                          profit producing intangibles   15.10
                                                        -------
                               Total..................  $41.58
                          Less deduction (C.L. 1948
                          § 205.133, Stat.Ann. 1950
                          Rev. § 7.556(3)
                                                         20.00
                                                        -------
                              Amount of tax...........  $21.58
                

In view of the foregoing, and notwithstanding plaintiff's contention to the contrary, our former holding that plaintiff should recover the full amount of $21.58 was erroneous. The issue presented may be narrowed down as follows:

No sound reason is advanced for challenging the validity of item 1 above noted;

Defendants now admit that assessment of the portion of the tax noted above in item was illegal;

Hence there remains only the controversy as to the validity of that portion of the tax noted above in item 3.

The following is quoted from plaintiff's original brief: 'It is conceded at the very outset that a tax may be assessed by the State of Michigan against appellant's right to net income in a trust estate located in Pennsylvania. * * * This right (to share in the profits of the Pennsylvania trust) has value as property and its benefits are enjoyed in Michigan. There can be no question that a proper tax with the proper measure may be levied.'

She also says in her brief: 'Appellant agrees that due process does not prohibit double taxation or the taxation of equitable interests. * * * It is the net income only in which the appellant beneficiary has any right.'

As to item 3 plaintiff challenges the validity of the tax solely on the grounds that the measure of the specific tax is rendered invalid because the tax is one on property over which the State of Michigan has no jurisdiction, and that while she has only a one-ninth interest in the net income, her tax was computed on one-ninth of the gross income from the profit producing intangibles. She asserts that by so computing the tax she was deprived of property without due process of law, in violation of the United States Constitution, Article XIV, § 1, and Article II, 16, of the State Constitution, 1908.

The applicable portions of the statute provide: 'That for the purpose of computing the tax imposed under this act, the gross income, including taxes, charges and other deductions which may be made therefrom, shall be the basis upon which the tax shall be measured.' C.L. 1948, § 205.131(d), Stat.Ann. 1950 Rev. § 7.556(1)(d). And 'the tax on income producing intangible personal property shall be 3 per cent of the income * * *.' C.L. 1948, § 205.132, Stat.Ann. 1950 Rev. § 7.556(2). The precise issue presented is this: Was item 3 of plaintiff's intangibles...