In re Truscon Steel Co.

• Decision Date: 29 March 1929
• Docket Number: No. 138.,138.
• Citation: 224 N.W. 653,246 Mich. 174
• Parties: In re TRUSCON STEEL CO.
• Court: Michigan Supreme Court

246 Mich. 174

224 N.W. 653

In re TRUSCON STEEL CO.

No. 138.

Supreme Court of Michigan.

March 29, 1929.

Certiorari to Corporation Tax Appeal Board.

Certiorari by the Truscon Steel Company to review an order of the corporation tax appeal board, affirming computation of secretary of state as to amount of privilege fee to be paid by petitioner. Action of secretary of state and appeal board affirmed.

Argued before the Entire Bench. Butzel, Levin & Winston, of Detroit (A. J. Levin and I. Z. Acoff, both of Detroit, and O. P. Lambert, of Youngstown, Ohio, of counsel), for plaintiff.

Wilber M. Brucker, Atty. Gen., and Harry A. Metcalf, Asst. Atty. Gen. (Alice Alexander, of Lansing, of counsel), for defendant.

FELLOWS, J.

The Truscon Steel Company is a Michigan corporation maintaining an office at Detroit, where a small amount of business is conducted. Its main plant and executive offices are maintained at Youngstown, Ohio. The controversy here involves the use of three items of intangible personal property in the computation of the specific tax required by Act 85, Public Acts 1921, as amended. These items are as follows: (1) Due from banks located outside the State for money on deposit, $404,353.33; (2) notes and accounts receivable, $4,903,298.75; and (3) deferred charges amounting to $77,113.06. These sums are attributable to the business outside the state, having been acquired by and used in such business. We again have before us the question of whether the maxim, ‘mobilia sequuntur personam’-movables follow the person-shall be followed in the computation of this excise, or whether we should adopt for convenience the theory of business situs. The same question has been before us on four occasions: White Bros. Lumber Co. v. Corporation Tax Appeal Board, 222 Mich. 274, 192 N. W. 570;Saginaw Manufacturing Co. v. Secretary of State, 226 Mich. 1, 196 N. W. 616;In re Pantlind Hotel Co., 232 Mich. 330, 205 N. W. 99, 49 A. L. R. 1291;In re Dodge Bros., 241 Mich. 665, 217 N. W. 777. In each of these cases we have recognized the common-law rule that the situs of intangible property is the domicile of its owner, and, in the Dodge Brothers Case, we pointed out that it was within the province of the Legislature to change this rule, but that, until changed by the Legislature, we could not adopt a ‘business situs' instead of the situs of the owner for the purposes of the act. Two of these cases involved domestic corporations, two foreign corporations. We applied the rule alike to both classes. It resulted in the use of the intangibles in making the assessment upon the two domestic corporations and their elimination in the cases of foreign corporations. Unless we overrule these cases, which we are not inclined to do, the computation made by the secretary of state must be upheld.

But counsel for the company insists that, if the act is to be so construed, it offends section 2, art. 10 of the state Constitution, and the Fourteenth Amendment to the federal Constitution. This contention was made in Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N. W. 353, where the constitutionality of the act was assailed and its validity sustained. But, as counsel has approached the federal question, at least, from a somewhat different angle, we should again consider that question. It is true that following the common-law rule results in the consideration of intangibles of Michigan corporations in making the computation and their rejection when held by foreign corporations. But both computations are made in accordance with the same rule of law, with the adoption of the same legal fiction, if the should call it such. The fact, that the adoption of such rule requires the Michigan corporations to pay a much higher rate to this state under our statutes than the Pantlind Company is required to pay to Delaware, the state of its domicile, and the Dodge Company to Maryland, the state of its domicile, both of which states levy but a fraction of what is here levied, does not render the act invalid.

A tax upon intangibles which have come to rest in a state other than the domicile of their owner, and are there only for safe keeping, even though placed there in an attempt to escape taxation, is invalid. Buck v. Beach, 206 U. S....