Mfrs. Nat. Bank of Detroit v. City of Detroit

• Decision Date: 30 June 1938
• Docket Number: No. 34.,34.
• Citation: 285 Mich. 273,280 N.W. 760
• Parties: MANUFACTURERS NAT. BANK OF DETROIT v. CITY OF DETROIT et al.
• Court: Michigan Supreme Court

285 Mich. 273

280 N.W. 760

MANUFACTURERS NAT. BANK OF DETROIT

v.CITY OF DETROIT et al.

No. 34.

Supreme Court of Michigan.

June 30, 1938.

Suit in equity under the Declaratory Judgment Act by the Manufacturers National Bank of Detroit against the City of Detroit and others to contest the propriety of the method used in assessment and levy of certain personal property taxes against plaintiff's shareholders. From a decree of dismissal, plaintiff appeals.

Affirmed.

SHARPE and POTTER, JJ., dissenting.

Appeal from Circuit Court, Wayne County, in Chancery; Henry G. Nicol, judge.

Argued before the Entire Bench.

Bodman, Longley, Bogle, Middleton & Farley, of Detroit, for appellant.

Raymond J. Kelly, Corporation Counsel, and Walter Barlow, Chief Asst. Corporation Counsel, both of Detroit, for appellees City of Detroit and A. E. Cobo, Treasurer.

NORTH, Justice.

The circuit judge dismissed plaintiff's bill in chancery upon the filing of which an injunction was issued to restrain the collection of taxes for the payment of which plaintiff was liable under the statute. Dismissal of the bill of complaint was on the ground that plaintiff had an adequate remedy at law. It may also be fairly inferred that the ruling was prompted by the statute in this State which forbids the issuing of an injunction to stay the collection of taxes. The general tax law of this State provides:

‘No injunction shall issue to stay proceedings for the assessment or collection of taxes under this act.’ 1 Comp.Laws 1929, § 3507 (Stat.Ann. § 7.168).

I am not in accord with the conclusion of Mr. Justice SHARPE that the decree of the circuit judge should be reversed, this being done on the ground that plaintiff did not in fact have an adequate remedy at law. There can be no question but that plaintiff was legally bound to pay to tax levied upon the shares of its capital stock. It is so provided by statute and we have so held in recent decisions.

‘In case of taxes assessed upon the shares of the capital stock of any bank he [the tax collector] shall call upon the cashier of such bank and demand payment thereof, and thereupon it shall be the duty of such cashier to pay the same, and charge the amount so paid against the shares of stock so taxed.’ 1 Comp.Laws 1929, § 3437 (Stat.Ann. § 7.90).

In National Bank of Detroit v. Detroit, 272 Mich. 610, 262 N.W. 422, under the above statute, this court held (page 424):

‘The bank becomes liable for the payment of the taxes, with the right to obtain repayment from its stockholders. Eyke v. Lange, 104 Mich. 26, 63 N.W. 535. If it wrongfully paid taxes illegally exacted under protest, the action for recovery would not be against its stockholders, but against the political subdivision to which the tax had been paid.’

Further, in National Bank of Detroit v. Detroit, supra, we definitely held that in an action at law brought by the bank itself for the recovery of taxes assessed on shares of its capital stock the bank could recover from the city the amount paid if the taxes were illegally assessed and paid by the bank under protest. In support of this holding we cited Security National Bank v. Young, 8 Cir., 55 F.2d 616, 84 A.L.R. 100; McFarland v. Central National Bank of Topeka, Kan., 8 Cir., 26 F.2d 890. It follows that in this jurisdiction the bank does have a complete and adequate remedy at law and the holding of the trial court to this effect should be affirmed.

In arriving at an opposite conclusion my brother has cited the cases hereinafter noted, but it seems to me an examination of these cases discloses that they are clearly distinguishable and not in point in view of the law of this jurisdiction.

Cummings v. National Bank, 101 U.S. 153, 25 L.Ed. 903, is perhaps the principal case relied upon; but in this case it is important to note that the Supreme Court of the United States pointed out the express provision of the law of the State from which the case came by saying:

‘The Statute also answers another objection made to the relief sought in this suit, namely: that equity will not enjoin the collection of a tax except under some of the well known heads of equity jurisdiction, among which are not a mere overvaluation, or the illegality of the tax, or in any case where there is an adequate remedy at law. The Statute of Ohio expressly provides for an injunction against the collection of a tax illegally assessed, as well as for an action to recover back such taxes when paid, showing clearly an intention to authorize both remedies [legal and equitable] in such cases.’

Decision in Public National Bank of New York v. Keating, 2 Cir., 47 F.2d 561, 81 A.L.R. 497; and Whitney National Bank v. Parker, C.C., 41 F. 402, cited by my brother, seems to be based largely on the Cummings Case just above noted and distinguished; and in the first of the two cases last above cited it is said of the jurisdiction in which the case arose (page 562 of 47 F.2d), ‘There is no adequate remedy in the state courts at law. * * * By this suit in equity, a multiplicity of suits will be avoided.’ Also in the Whitney National Bank Case, supra, the same reason for equity taking jurisdiction to avoid a multiplicity of suits is urged. Obviously under the law of Michigan a suit in equity is not necessary to avoid a multiplicity of suits because the whole matter can be adjudicated in a single suit at law brought by the bank.

The remaining case cited by my brother is Knopf v. First National Bank of Chicago, 173 Ill. 331, 50 N.E. 660. In this case the Illinois court recognized the right of equity to enjoin the collection of taxes in that State where the levy of such taxes was without authority and therefore in violation of the rights of every taxpayer in the tax district. Obviously under such circumstances the controverted question could not be adjudicated in a single suit at law, as in the instant case. Because of the situation with which it was confronted, the Illinois court said (page 661):

‘In conformity with this principle, this court has constantly recognized the right of an individual or individuals to restrain an entire tax that is without authority and void.’

Since it is a matter of great importance in the administration of public affairs (Birmingham v. Oakland County Sup'rs., 276 Mich. 1, 268 N.W. 409), the levy or collection of taxes should not be restrained by injunction, at least other than in exceptional cases where denial of injunctive relief would result in irreparable injury.

‘When a tax as assessed is only a personal charge against the party taxed, or against his personal property, it is difficult in most cases to suggest any ground of equitable jurisdiction. Presumptively the remedy at law is adequate. If the tax is illegal and the party makes payment, he is entitled to recover back the amount. The case does not differ in this regard from any other case in which a party is compelled to pay an illegal demand; the illegality alone affords no ground for equitable interference, and the proceedings to enforce the tax by distress and sale can give none, as these only constitute an ordinary trespass. To this point the decisions are numerous (citing many decisions including those of this court). The exceptions to this rule, if any, must be of cases which are to be classed under the head of irreparable injury; * * * where the recovery of damages would be inadequate redress. A case would be exceptional, also, if under the law no remedy could be had to recover back moneys paid.’ 4 Cooley Taxation (4th Ed.), § 1641.

See, also, City of Detroit v. Wayne Circuit Judge, 127 Mich. 604, 86 N.W. 1032;Henry v. Gregory, 29 Mich. 68. Especially should the law as above stated be followed in this jurisdiction wherein by statute it is provided that an injunction shall not issue to stay proceedings for the assessment or collection of taxes. 1 Comp.Laws 1929, § 3507 (Stat.Ann. 7.168). Nothing appears in this record indicating that plaintiff would have suffered any unusual hardship if, as it had a right to do, it had paid the tax under protest and thereafterproceeded in an action at law to recover the amount paid if the protest made were meritorious. Aside from appellant's erroneous contention that it did not have an adequate remedy at law, there is nothing in this record to sustain the claim that equity has jurisdiction. The circuit judge was right in concluding that plaintiff had an adequate remedy at law and in entering a decree dismissing its bill of complaint. The decree is affirmed, with costs to appellees.

WIEST, C. J., and BUTZEL, BUSHNELL, CHANDLER, and McALLISTER, JJ., concurred with NORTH, J.

SHARPE, Justice (dissenting).

Plaintiff filed a bill of complaint under the declaratory judgment statute (Act No. 36, Pub.Acts 1929, 3 Comp.Laws 1929, § 13903 et seq.) for the purpose of contesting the propriety of the method used in the assessment and levy of certain personal property taxes for the year 1934 against the shareholders of plaintiff bank.

The following statement of facts as found by the trial judge is sustained by the evidence introduced when the cause came on for trial:

‘Plaintiff, the Manufacturers National Bank of Detroit, was organized under the laws of the United States as a national banking association. Its original capital, consisting of three million dollars ($3,000,000), divided into 60,000 shares of the par value of $50 each and a paid in surplus of $1,500,000, and paid in undivided profits of $750,000, making a total invested capital of $5,250,000, was paid in and deposited with the Detroit branch of the Federal Reserve Bank of Chicago, on July 28, 1933, and on that date the bank received its certificate of authority from the comptroller of the currency to commence business, but it did not receive any deposits or incur other debts or liabilities prior to August 10, 1933.

‘Pursuant to the requirements of 12 U.S.C.A. § 282, at the time it received its certificate of authority to commence business, and on July 28, 1933, it...