Market Place v. City of Ann Arbor
Decision Date | 12 July 1984 |
Docket Number | Docket Nos. 70084,71129 |
Citation | 351 N.W.2d 607,134 Mich.App. 567 |
Parties | The MARKET PLACE a Co-Partnership, Plaintiff-Appellant/Cross-Appellee, v. CITY OF ANN ARBOR a Municipal Corporation, Defendant-Appellee/Cross-Appellant. |
Court | Court of Appeal of Michigan — District of US |
Arthur E. Carpenter, Ann Arbor, for plaintiff-appellant/cross-appellee.
Mel Laracey, Asst. City Atty., Ann Arbor, for defendant-appellee/cross-appellant.
Before HOOD, P.J., and R.B. BURNS and SHUSTER *, JJ.
Plaintiff appeals as of right from an order granting defendant's motion for accelerated judgment and a subsequent denial of its motion for rehearing. Defendant appeals by leave granted from an order setting aside a grant of summary judgment to it.
The Market Place, a delicatessen, commenced business in Ann Arbor in September, 1980. In April, 1981, the city sent the Market Place a bill for $164 as a license fee imposed pursuant to Chapter 80 of Title VII of the City's Ordinance Code. The ordinance mandates that, in order to engage in business, all new businesses in the city must pay a fee equal to the tax rate that would be assessed on that business's personal property for ad valorem taxes, but pro rated for the months prior to December 31, or tax day. 1
The Market Place paid the $164 fee and subsequently filed this action challenging the city's authority to impose the fee. The Market Place requested a refund and sought class certification for "all persons broadly defined, who have paid a levy under Chapter 80 of Title VII within six years prior to the filing of this action".
Both parties filed motions for summary judgment. The Market Place argued that the city had no authority under its generalized police or regulatory powers to impose the fee because the fee was actually a tax unrelated to any regulatory costs. Defendant admitted that the city imposed the fee as a revenue-raising device, but argued that the city had the authority to do so.
The trial court found that the license fee was indeed a tax but that the city had the authority to impose that tax for two reasons. First, the court found that the city had the authority to impose taxes on business property pursuant to Sec. 9.1 of the Ann Arbor City Charter. That section of the charter grants the city the authority to assess and impose ad valorem taxes on real and personal property.
Second, the trial court found that the city had the authority to impose the tax as a "holdover" power under authority existing prior to the city's adoption of its home rule charter in 1956. The court relied upon Sec. 2 of the home rule cities act, the "saving" clause: "Each city now existing shall continue with all its present rights and powers until otherwise provided by law." M.C.L. Sec. 117.2; M.S.A. Sec. 5.2072. The court found that prior to 1956 Ann Arbor was a fourth class city.
The fourth class cities act provides:
"Every city incorporated under the provisions of this act, shall, in addition to such other powers as are herein conferred, have the general powers and authority in this chapter mentioned; and the council may pass such ordinances in relation thereto, and for the exercise of the same, as they may deem proper, namely:
* * *
* * *
"Thirty-ninth, The council may also license transient traders which shall be held to include all persons who may engage in the business of selling goods or merchandise after the commencement of the fiscal year and the license fee in such cases may be apportioned with relation to the part of the fiscal year which has expired, but such traders, if they continue in the same business, shall not be required to take out a second license after the commencement of the next fiscal year: Provided, Such goods or merchandise have been assessed for taxes for said fiscal year * * *." M.C.L. Sec. 91.1; M.S.A. Sec. 5.1740.
The trial court agreed with defendant's argument that, pursuant to the fourth class cities enabling legislation above, Ann Arbor could and did adopt the authority to license transient traders and exact a fee from them in its pre-home rule city charter. 2 Because the trial court found that the city's exaction of a new business license fee was a valid exercise of its municipal power, the court granted summary judgment to defendant. GCR 1963, 117.2(1).
The Market Place moved for reconsideration. The trial court did reconsider the motion for summary judgment and subsequently issued an order setting aside the summary judgment granted to defendant. The trial court agreed with plaintiff's argument that Ann Arbor had never been a fourth class city. Thus, the city never had the authority to tax transient traders under the fourth class cities act. Without such authority prior to the city's adoption of its home rule charter, the city could not retain any such authority under M.C.L. Sec. 117.2; M.S.A. Sec. 5.2072.
The trial court continued:
Ann Arbor moved for reconsideration of the order setting aside the summary judgment. The trial court denied the motion. The city then filed a motion for accelerated judgment, GCR 1963, 116.1(2), arguing that the trial court implicitly found the license fee to be a property tax and that because plaintiff's complaint sought a refund of this property tax the Tax Tribunal, not the circuit court, had exclusive jurisdiction over the action, M.C.L. Sec. 205.731(b); M.S.A. Sec. 7.650(31)(b).
The Market Place argued in reply that the license fee was not a property tax but an excise tax and, therefore, an ultra vires exercise of defendant's authority inasmuch as the Ann Arbor Charter Commission did not include the authority to impose excise taxes in the 1956 Charter. Accordingly, argued plaintiff, the circuit court should hold the tax void.
The circuit court granted the city's motion for accelerated judgment and denied plaintiff's motion for rehearing.
The issues we must address in this appeal are: (1) what is the nature of the transient trader or new business license fee, a property or excise tax? and (2) does the city have the authority to impose the tax?
In Dooley v. Detroit, 370 Mich. 194, 121 N.W.2d 724 (1963), the Court was asked to determine whether Detroit's city income tax was a property or excise tax. The Court stated, pp. 205-206, 121 N.W.2d 724:
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