In re Detroit Props. Corp., No. 9

CourtSupreme Court of Michigan
Writing for the CourtFEAD
Citation236 N.W. 850,254 Mich. 523
Docket NumberNo. 9,April Term.
Decision Date01 June 1931
PartiesIn re DETROIT PROPERTIES CORPORATION et al.

254 Mich. 523
236 N.W. 850

In re DETROIT PROPERTIES CORPORATION et al.

No. 9, April Term.

Supreme Court of Michigan.

June 1, 1931.


Certiorari to Corporation Tax Appeal Board.

In re Detroit Properties Corporation and Union Guardian Trust Company, receiver. Certiorari to the Corporation Tax Appeal Board to review affirmance of a levy of corporation privilege tax by the Secretary of State.

Determination of board affirmed.

Argued before the Entire Bench.

[236 N.W. 850]

Beaumont, Smith & Harris, of Detroit (M. S. Harlan and Richard W. Larwin, both of Detroit, of counsel), for plaintiffs.

Paul W. Voorhies, Atty. Gen., and Charles Rubiner, Asst. Atty. Gen. (Alice E. Alexander, of Lansing, of counsel), for defendants.


FEAD, J.

This is certiorari to the Corporation Tax Appeal Board to review affirmance of a levy of corporation privilege tax by the secretary of state.

The Detroit Properties Corporation was incorporated under the laws of this state to

[236 N.W. 851]

buy and hold real estate, stocks, bonds, or other securities and to deal in the same. A bill of complaint was filed against it by a creditor, alleging, in substance, that the corporation was solvent, but confronted with immediate financial embarrassment, and praying, among other things, for the appointment of a receiver, with authority to continue the business of the defendant and ‘to protect and preserve its franchise and privileges.’ The court appointed Union Guardian Trust Company temporary receiver with the usual powers and also authority ‘in general to operate the business of the defendant as fully as the defendant operated same and in the manner best calculated in the opinion of the receiver to fully protect that business, to the end that the business of the defendant may be preserved as well as its assets.’

The issue is whether the corporation is subject to the privilege fee which, by C. L. 1929, § 10140, every domestic corporation is required to pay ‘for the privilege of exercising its franchise and of transacting its business within this state,’ and which accrued after the appointment of the receiver and its taking control of the corporate property and business. The question is one of first impression with this court.

The privilege fee is an excise tax, not upon the right to be a corporation, but upon the activities of the corporation in the exercise of its corporate franchise, or, as it is sometimes expressed, upon the franchise ‘to do’, not upon the franchise ‘to be.’ Union Steam Pump Sales Co. v. State, 216 Mich. 261, 272, 185 N. W. 353;In re Detroit & Windsor Ferry Co., 232 Mich. 574, 205 N. W. 102;In re Truscon Steel Co., 246 Mich. 174, 224 N. W. 653;Cobbs & Mitchell v. Corporation Tax Appeal Board, 252 Mich. 478, 481, 233 N. W. 386. Actual transaction of business by a domestic corporation is not a condition of the tax. It is imposed on the right to transact. In re G. H. Hammond Co., 246 Mich. 179, 224 N. W. 655; C. L. 1929, § 10140.

In all the cases cited or found, where the power to impose a similar tax during receivership has been denied, it has appeared that the corporation was insolvent, or in process of liquidation, or had been prohibited by law or injunction from exercising its franchises, or the proceedings were for dissolution, the receiver was not operating the business, and the life or right of the corporation to do business had ceased. Jones v. Winthrop Savings Bank, 66 Me. 242;Johnson v. Johnson Brothers, 108 Me. 272, 296, 80 A. 741, Ann. Cas. 1913A, 1303;State v. Bradford Savings Bank & Trust Co., 71 Vt. 234, 44 A. 349;Commonwealth v. Lancaster Savings Bank, 123 Mass. 493;Greenfield Savings Bank v. Commonwealth, 211 Mass. 207, 97 N. E. 927;Keeney v. Dominion Coal Co. (D. C. Ohio) 225 F. 625;State of Ohio v. Harris (C. C. A.) 229 F. 892.

In holding a receiver liable for a tax ‘for the privilege of operation of the street railway in public ways' in Collector of Taxes v. Bay State Street Ry., 234 Mass. 336, 342, 125 N. E. 614, 616, the court used language applicable to all the above cases: ‘There are numerous cases which have held that a corporation in the hands of a receiver is not subject to a franchise tax. Those are cases, however, where the corporation has been prohibited by law or by injunction from exercising its franchises and the receiver is not using them, or the corporation is in process of liquidation.’

The cases in which the power to tax has been upheld are many, but some of them have aspects which cause them to be more or less distinguishable from that at bar.

In some states the tax is on the franchise of the corporation ‘to be’ and seems to be collectible until legal dissolution or its equivalent. Kirkpatrick v. State Board of Assessors, 57 N. J. Law, 53, 29 A. 442;In re United States Car Co., 60 N. J. Eq. 514,...

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16 practice notes
  • State ex rel. State Corp. Comm'n v. Old Abe Co., No. 4418.
    • United States
    • New Mexico Supreme Court of New Mexico
    • September 12, 1939
    ...Justice Brice in Lowden v. State Corporation Commission, supra, cites as authority the Michigan case of In re Detroit Properties Corp., 254 Mich. 523, 236 N.W. 850, 851, as supporting its position that actual engaging in business is not a condition to liability for the tax levied. The statu......
  • Dooley v. City of Detroit, Nos. 53
    • United States
    • Supreme Court of Michigan
    • May 9, 1963
    ...State, 216 Mich. 261, 185 N.W. 353, and including In re Truscan Steel Co., 246 Mich. 174, 224 N.W. 653; In re Detroit Properties Corp., 254 Mich. 523, 236 N.W. 850; Udylite Corp., v. Michigan Corporation & Securities [370 Mich. 206] Commission, 319 Mich 1, 29 N.W.2d 132; and Chicago, Duluth......
  • Lowden v. State Corp.. Comm'n., No. 4214.
    • United States
    • New Mexico Supreme Court of New Mexico
    • February 18, 1938
    ...tax. It is not unlike the tax imposed by a statute of the state of Michigan and construed in Re Detroit Properties Corporation et al., 254 Mich. 523, 236 N.W. 850, 851, in which it is said: “The privilege fee is an excise tax, not upon the right to be a corporation, but upon the activities ......
  • People of State of Michigan Haggerty v. Michigan Trust Co, No. 598
    • United States
    • United States Supreme Court
    • May 16, 1932
    ...state, if they have spoken, pronounce the final word. The decision of the Supreme Court of Michigan in Re Detroit Properties Corporation, 254 Mich. 523, 236 N. W. 850, 852, is a controlling adjudication as to the meaning and application of the privilege fee exacted of Michigan corporations.......
  • Request a trial to view additional results
16 cases
  • State ex rel. State Corp. Comm'n v. Old Abe Co., No. 4418.
    • United States
    • New Mexico Supreme Court of New Mexico
    • September 12, 1939
    ...Justice Brice in Lowden v. State Corporation Commission, supra, cites as authority the Michigan case of In re Detroit Properties Corp., 254 Mich. 523, 236 N.W. 850, 851, as supporting its position that actual engaging in business is not a condition to liability for the tax levied. The statu......
  • Dooley v. City of Detroit, Nos. 53
    • United States
    • Supreme Court of Michigan
    • May 9, 1963
    ...State, 216 Mich. 261, 185 N.W. 353, and including In re Truscan Steel Co., 246 Mich. 174, 224 N.W. 653; In re Detroit Properties Corp., 254 Mich. 523, 236 N.W. 850; Udylite Corp., v. Michigan Corporation & Securities [370 Mich. 206] Commission, 319 Mich 1, 29 N.W.2d 132; and Chicago, Duluth......
  • Lowden v. State Corp.. Comm'n., No. 4214.
    • United States
    • New Mexico Supreme Court of New Mexico
    • February 18, 1938
    ...tax. It is not unlike the tax imposed by a statute of the state of Michigan and construed in Re Detroit Properties Corporation et al., 254 Mich. 523, 236 N.W. 850, 851, in which it is said: “The privilege fee is an excise tax, not upon the right to be a corporation, but upon the activities ......
  • People of State of Michigan Haggerty v. Michigan Trust Co, No. 598
    • United States
    • United States Supreme Court
    • May 16, 1932
    ...state, if they have spoken, pronounce the final word. The decision of the Supreme Court of Michigan in Re Detroit Properties Corporation, 254 Mich. 523, 236 N. W. 850, 852, is a controlling adjudication as to the meaning and application of the privilege fee exacted of Michigan corporations.......
  • Request a trial to view additional results

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