Hudson Motor Car Co. v. City of Detroit

• Decision Date: 10 November 1937
• Docket Number: No. 69.,69.
• Citation: 275 N.W. 770,282 Mich. 69
• Parties: HUDSON MOTOR CAR CO. v. CITY OF DETROIT et al.
• Court: Michigan Supreme Court

282 Mich. 69

275 N.W. 770

HUDSON MOTOR CAR CO.

v.CITY OF DETROIT et al.

No. 69.

Supreme Court of Michigan.

Nov. 10, 1937.

Action by the Hudson Motor Car Company against the City of Detroit and another. From a judgment for defendants, plaintiff appeals.

Reversed and remanded. Appeal from Circuit Court, Wayne County; Max E. Neal, Judge.

Argued before the Entire Bench.

Beaumont, Smith & Harris, of Detroit (Frank E. Cooper, of Detroit, of counsel), for appellant.

Walter Barlow, of Detroit (Raymond J. Kelly, of Detroit, of counsel) for appellees.

POTTER, Justice.

Plaintiff sued defendant, the City of Detroit, a municipal corporation of the State of Michigan, and the city treasurer of the City of Detroit, to recover taxes claimed to have been arbitrarily, unjustly, and fraudulently assessed against it. It claims such taxes were involuntarily paid by it to prevent a levy upon the sale of its property to satisfy the tax warrant in the hands of the collecting officer and specifically charges the assessment of its property was intentionally discriminatory; the board of assessors failed to exercise its fair and impartial judgment in making the assessment; the assessment was not fixed at the cash value of the property assessed, but in willful disregard thereof; and the assessment of plaintiff's property, as it was assessed, denied to plaintiff the equal protection of the laws, and resulted in a violation of the constitutional mandate requiring uniformity of taxation. April 14, 1934, the board of assessors of the City of Detroit demanded plaintiff file a statement of its taxable property with it. April 24, 1934, plaintiff filed with the board of assessors of the City of Detroit a statement of its taxable property. May 2 or 3, 1934, it filed a statement of the so-called book value of its property; and May 11, 1934, the board of assessors of the City of Detroit fixed the taxable value of plaintiff's personal property at $12,140,180. The board of assessors did not fix the value of plaintiff's property in time so it could ask for review of the valuation by the common council of the City of Detroit. May 23, 1934, plaintiff requested the State Tax Commission to order the board of assessors of the City of Detroit to produce before it its assessment rolls, and to review the assessment of plaintiff's property. The State Tax Commission did this, but it did not act until after the assessment rolls had been delivered to the city treasurer. July 15, 1934, the city treasurer demanded of plaintiff the payment of the taxes levied and assessed against its property then due; and July 31, 1934, plaintiff paid one-half the taxes levied and assessed against its property, in the amount of $248,387.09. Such payment was made under protest against the assessments of plaintiff's property, both real and personal, in respect to which appeals were then pending before the State Tax Commission. August 20, 1934, plaintiff petitioned the common council of the City of Detroit to cancel the assessment made against its property and adjust the same in accordance with the findings of the State Tax Commission. December 11, 1934, the council denied plaintiff's petition. December 15, 1934, defendants again demanded payment of the other half of the taxes levied and assessed against plaintiff's property, based upon the assessment made by the board of assessors of the City of Detroit; and December 31, 1934, plaintiff paid taxes in the sum of $248,387.13, the total amount of taxes levied and assessed against the plaintiff's property and collected by defendants under and by virtue of such assessment being $496,774.22. This half of the tax was likewise paid under protest. The basis and ground of the alleged illegality of the tax mentioned in this protest was that the city board of assessors fixed the valuation of plaintiff's personal property at $12,140,180 and levied, assessed, and collected the tax thereon from plaintiff based upon such valuation, whereas, the valuation of the personal property of plaintiff as fixed by the State Tax Commission was $11,000,000; and there had been levied and assessed against the personal property of plaintiff taxes in the sum of $299,340.42, whereas, had the tax been levied and assessed in accordance with the valuation fixed by the State Tax Commission, the tax levied and assessed against its personal property would have amounted to but $271,227. And it is to recover the difference between the tax levied and assessed upon the personal property of plaintiff upon the valuation fixed by the board of assessors of the City of Detroit and what would have been due had such tax been levied and assessed upon the valuation as fixed by the State Tax Commission, alleged to be in the sum of $28,113.42, that this suit is brought.

Comp.Laws 1929, § 3444, as amended by Pub.Acts 1931, No. 32, provides that any person ‘may pay any tax, whether levied on personal or real property, under protest, to the treasurer, specifying at the time, in writing, signed by him, the grounds of such protest, and such treasurer shall minute the fact of such protest on the tax roll and in the receipt given. The person paying under such protest may, within thirty days and not afterwards, sue the township for the amount paid, and recover, if the tax is shown to be illegal for the reason shown in such protest.’

There is a broad distinction between the rule applicable where payment is voluntarily made under the provisions of this statute and where the payment is involuntarily made by the taxpayer to prevent a levy upon and sale of property to pay the tax. In the one case, the party suing to recover the tax paid on account of its invalidity is limited to the grounds of invalidity set forth in the protest, and may recover only ‘if the tax is shown to be illegal for the reason shown in such protest.’ Peninsula Iron Co. v. Township of Crystal Falls, 60 Mich. 79, 26 N.W. 840;Cox v. Welcher, 68 Mich. 263, 36 N.W. 69,13 Am.St.Rep. 339;Mills v. Township of Richland, 72 Mich. 100, 40 N.W. 183;Hinds v. Township of Belvidere, 107 Mich. 664, 65 N.W. 544;Lingle v. Township of Elmwood, 142 Mich. 194, 105 N.W. 604. But there never has been any rule requiring a specific protest when taxes are paid involuntarily. In such cases, the party suing to recover back the taxes is not limited to the specific grounds of illegality mentioned and set forth in the protest accompanying the payment. The party suing in such case seeks to recover money paid without consideration under legal pressure, and recovers, if at all, upon that theory. First National Bank v. Watkins, 21 Mich. 483;Atwell v. Zeluff, 26 Mich. 118;Louden v. East Saginaw, 41 Mich. 18, 2 N.W. 182;Lyon v. Receiver of Taxes, 52 Mich. 271, 17 N.W. 839;Woodmere Cemetery Ass'n v. Township of Springwells, 130 Mich. 466, 90 N.W. 277;Newberry v. City of Detroit, 184 Mich. 188, 150 N.W. 838.

‘Out statutes provide that in some cases a person may pay taxes in advance of the time they can be enforced, and do so under protest. This protest, which is made under an exceptional statute, is required to be specific. But such a payment, under no stress of process, is a voluntary payment, and could not be recovered back without statutory permission. Where payments are involuntary, and made under legal duress, there has never been any rule requiring a specific protest. The attempt to compel payment where there is no legal burden is regarded as a legal injury, and payment made to avoid the seizure and sale of property to pay the wrongful claim can be recovered back as an extorted sum for which there was no consideration. The principle is so familiar, under our own decisions, as to need no citation of cases.’ Cox v. Welcher, 68 Mich. 263, 36 N.W. 69,13 Am.St.Rep. 339.

The taxes paid by plaintiff were paid after demand made by the collecting officer armed with a warrant authorizing him to levy and collect the taxes, and were not voluntarily paid but were involuntary exactions.

The Legislature shall provide a uniform rule of taxation, except on property paying specific taxes, etc. Article 10, section 3, Constitution 1908.

‘All assessments hereafter authorized shall be on property at its cash value.’ Article 10, section 7, Constitution 1908.

‘The constitution requires assessments to be made on property at its cash value. This means not only what may be put to valuable uses, but what has a recognizable pecuniary value inherent in itself, and not enhanced or diminished according to the person who owns or uses it.’ Perry v. City of Big Rapids, 67 Mich. 146, 34 N.W. 530,11 Am.St.Rep. 570.

‘By constitutional enactment all tax assessments must be made on property at the true cash value.’ Hayes v. City of Jackson, 267 Mich. 523, 255 N.W. 361, 364.

‘The constitution requiring assessments to be at the true cash value, it became necessary, in order to protect tax payers, to have some means provided whereby in case of an overvaluation they might have it corrected. The constitutional provision is as much designed for securing against overvaluation as undervaluation.’ Avery v. East Saginaw, 44 Mich. 587, 7 N.W. 177, 178.

Cities are municipal corporations, deriving their powers from the State,-State agencies for carrying on local municipal government; but within the range of the Constitution and the general home rule act for cities, the electors thereof may make, alter, amend, revise, or repeal the charter of the city, which is the organic law of the city, and to be considered as other organic acts are considered. Streat v. Vermilya, 268 Mich. 1, 255 N.W. 604.

The Legislature shall provide by general law for the incorporation of cities, and such general law shall limit their rate of taxation for municipal purposes. Article 8, section 20, Constitution 1908.

‘Under such general laws, the electors of each city and village shall have power and authority to frame, adopt and amend its charter and to amend an existing charter of the city of village heretofore...