In re Dodge Bros., Inc.

• Decision Date: 14 February 1928
• Docket Number: No. 25.,25.
• Citation: 217 N.W. 777,241 Mich. 665
• Parties: In re DODGE BROS., Inc.
• Court: Michigan Supreme Court

241 Mich. 665

217 N.W. 777

In re DODGE BROS., Inc.

No. 25.

Supreme Court of Michigan.

Feb. 14, 1928.

Certiorari to Corporation Tax Appeal Board.

Proceedings by the Secretary of State assessing a privilege tax against Dodge Bros., Inc. On appeal to the Corporation Tax Appeal Board, the assessment was affirmed, and taxpayer brings certiorari. Assessment set aside, and matter remanded to Secretary of State to reassess privilege tax in accord with opinion.

Argued before the Entire Bench. Beaumont, Smith & Harris and Archibald Broomfield, all of Detroit (John W. Eckelberry, of Detroit, of counsel), for plaintiff.

William W. Potter, Atty. Gen., and Harry A. Metcalf and Kit F. Clardy, Asst. Attys. Gen., for defendant.

WIEST, J.

This is certiorari to review the decision of the corporation tax appeal board in the matter of the privilege tax to be paid the state for the year 1926 by Dodge Bros., Inc., a foreign corporation, duly admitted to do business here and having its place of business at the city of Hamtramck, this state. Dodge Bros., Inc., herein styled plaintiff, is a corporation organized under the laws of the state of Maryland, with its home office in the city of Baltimore. May 1, 1925, it was admitted to do business in this state and thereby subjected itself to the privilege tax imposed by Act No. 85, Public Acts 1921, as amended by Act No. 233, Public Acts 1923. The obligation to pay the annual privilege tax is not contested, but the basis for its computation is the question of law we are asked to determine.

Plaintiff, at the time of its annual report, had $1,393,993.32 on general deposit in banks located in the state of Michigan, had $36,280.17, cash on hand, in this state, had due it $939,990.13 on land contracts covering property sold by it in this state, and had due it on accounts receivable $6,719,402.57. In computing the annual privilege fee plaintiff excluded from consideration all of the above items, on the ground that situs thereof was the domicile of the corporation in the state of Maryland, and tendered the secretary of state (the privilege tax collector) the sum of $46,667.66, inclusive of $2, filing fee. The secretary of state, in computing the privilege tax, included the above-mentioned items and exacted the maximum tax of $50,000. Plaintiff took an appeal to the corporation tax appeal board, and that board affirmed the action of the secretary of state; and plaintiff reviews by certiorari.

In this jurisdiction the court has adhered to the common-law rule of situs of domicile.

In Saginaw Manufacturing Co. v. Secretary of State, 226 Mich. 1, 196 N. W. 616, bonds bought outside of the state, and kept outside by a domestic corporation, were held to have situs at domicile of the owner and to be subject to the privilege tax.

In White Bros. Lumber Co. v. Tax Appeal Board, 222 Mich. 274, 192 N. W. 570, capital stock of a foreign corporation, owned by a domestic corporation, was held to have situs at the domicile of the owner and to be subject to the privilege tax.

In Re Pantlind Hotel Co., 232 Mich. 330, 205 N. W. 99, 49 A. L. R. 1291, capital stock of a domestic corporation, owned by a foreign corporation, was held to have situs at the domicile of the owner and was not subject to the privilege tax in this state.

[4] Tax exactions, property or excise, must rest upon legislative enactment, and collecting officers can only act within express authority conferred by law. Tax collectors must be able to point to such express authority so that it may be read when it is questioned in court. The scope of tax laws may not be extended by implication or forced construction. Such laws may be made plain, and the language thereof, if doubious, is not resolved against the taxpayer. Credits, by way of deposits in banks, upon accounts receivable, and payments to be received on land contracts, are all intangible assets, and situs thereof is the domicile of the owner, unless fixed elsewhere by some positive tax law. Situs of domicile, with reference to intangibles, is not at all affected by the mere place of business, for the law, short of statute to a different end, does not admit of a so-called business situs changing or interfering with the situs of domicile. In re Pantlind Hotel Co., supra. This is but saying that common-law situs governs unless modified or abrogated by statute.

The case before us does not involve a property tax or rights of interstate commerce, but only the question of situs of intangible property, under our law, to be considered factors in computing the corporation privilege tax. Does the corporation privilege tax statute modify or abrogate the common-law rule of situs? Such common-law rule of situs may be changed by statute and a situs established for the purposes of a corporation privilege tax apart from that of domicile without offending the fundamental law or judicial pronouncements. Plaintiff, with the privilege of carrying on its business in this state, must comply with the corporation privilege tax law, so far as the express provisions thereof are within the powers of the state. If the statute is inclusive of the mentioned...