Union Steam Pump Sales Co. v. Deland

CourtSupreme Court of Michigan
Writing for the CourtFELLOWS
Citation185 N.W. 353,216 Mich. 261
PartiesUNION STEAM PUMP SALES CO. v. DELAND, Secretary of State.
Decision Date05 December 1921

216 Mich. 261
185 N.W. 353

UNION STEAM PUMP SALES CO.
v.
DELAND, Secretary of State.

Supreme Court of Michigan.

Dec. 5, 1921.


Original application for mandamus by the Union Steam Pump Sales Company against Charles J. Deland, Secretary of State. Writ denied.

Argued before STEERE, C. J., and MOORE, WIEST, FELLOWS, STONE, CLARK, BIRD, and SHARPE, JJ.

[185 N.W. 354]

B. D. Chandler, of Hudson, and Joseph L. Hopper, and Burritt Hamilton, both of Battle Creek, for plaintiff.

Boomhower & Beach, of Bad Axe, by permission of plaintiff.


C. F. Gates, of Sandusky, by consent of attorney for relator.

Merlin Wiley, Atty. Gen. (Samuel D. Pepper, and Clare Retan, Asst. Attys. Gen., of counsel), for defendant.

Beaumont, Smith & Harris, of Detroit, amici curiae.

FELLOWS, J.

Plaintiff is a domestic corporation located at Battle Creek. It tendered to defendant, Secretary of State, its annual report, required by section 5 of chapter 2 of part 5 of Act 84, Public Acts 1921, accompanied by a filing fee of $2. It did not tender the ‘annual franchise fee’ provided by Act 85, Public Acts 1921; defendant, solely on the ground of such failure, declined to accept and file such report. Plaintiff, contending that Act 85 is invalid, applied for mandamus. We issued an order to show cause, return was made, and the case was argued at length. General leave was granted to file briefs as amicus curiae, and several such briefs have been filed. All of them have been considered, but as some of them seek to raise new issues, it may be proper to here state that under our practice the parties to the case have control of the issues, and we find it necessary to only consider the issues raised by them. The constitutional questions thus raised are as follows:

‘(1) That the act offends section 1 of article 10 of the state Constitution by attempting to divert to the general fund a specific tax which is constitutionally payable into the primary school interest fund and other definite educational funds only.

‘(2) That the act offends section 4 of article 10 of the state Constitution by attempting to impose a specific tax which is not uniform upon the classes upon which it operates.

‘(3) That the act offends the Fourteenth Amendment of the Constitution of the United States by denying to persons within the jurisdiction of this state the equal protection of the laws.’

In our discussion we shall consider the following questions: (1) What is the character of the charge laid by the act? (2) Does the appropriation of the revenue thus raised to the general fund of the state offend section 1 of article 10 of the Constitution? (3) The question of uniformity under section 4 of article 10 of the state Constitution, and of equality under the Fourteenth Amendment to the federal Constitution.

1. In considering the character of this charge levied upon the franchises of corporations to do business as corporations in this state, we must look beyond the shadow to the substance, beyond the mere play of words to the actual accomplishment, beyond the terms employed and phraseology used to the thing done. A tax is a tax by whatever name it may be called. Its misnomer neither adds to nor detracts from its true character. That the legislation is not in the exercise of the police power of regulation must be, and we understand is, admitted. Vernor v. Secretary of State, 179 Mich. 157, 146 N. W. 338, Ann. Cas. 1915D, 128. That it is the exercise of the highest prerogative of sovereignty, that of levying taxes to meet the expenses of the government, is, we think, clear. That it is not a property tax, but is a tax on the franchise to do business as a corporation within the state, is likewise clear. That it is the levy of an excise tax may be admitted, if we accept the following broad definition of an excise found in 26 R. C. L. p. 236:

‘An excise is a tax imposed upon the performance of an act, the engaging in an occupation, or the enjoyment of a privilege.’

That the charge here laid is a specific tax is, we think, settled by the former decisions of this court. In Kitson v. Ann Arbor, 26 Mich. 325, and

[185 N.W. 355]

Youngblood v. Sexton, 32 Mich. 406, 20 Am. Rep. 654, local specific taxes were involved. In the later case they were levied by the state but for local purposes. In People v. Walling, 53 Mich. 264, 18 N. W. 807, the power exercised was the police power. In these cases the taxation was upon the business of selling intoxicating liquor, and it was held not to license what was otherwise prohibited by law. In Walcott v. People, 17 Mich. 68, the tax was upon the business of conducting an express company within the state. It was held to be a specific tax. In Chambe v. Judge of Probate, 100 Mich. 112, 58 N. W. 661, and in Union Trust Co. v. Wayne Probate Judge, 125 Mich. 487, 84 N. W. 1101, in which cases the first and second inheritance tax laws were involved, it was held that the inheritance tax, a tax on succession, was a specific tax. In Union Trust Co. v. Detroit Common Council, 170 Mich. 692, 137 N. W. 122, the mortgage tax was held to be a specific tax. And in Jasnowski v. Board of Assessors, 191 Mich. 287, 157 N. W. 891, the automobile tax was held not to be a tax upon property but a privilege tax, a specific tax. These cases, we think, fix beyond question the character of the charge here laid. It is a specific tax.

2. The Constitution of 1850 contained the following provision:

‘All specific state taxes, except those received from the mining companies of the upper peninsula, shall be applied in paying the interest upon the primary school, university and other educational funds and the interest and principal of the state debt in the order herein recited, until the extinguishment of the state debt, other than the amounts due to educational funds, when such specific taxes shall be added to, and constitute a part of the primary school interest fund.’ Section 1, art. 14, Constitution of 1850.

The Constitution of 1909 substituted for this provision section 1, art. 10, which reads as follows:

‘All subjects of taxation now contributing to the primary school interest fund under present laws shall continue to contribute to that fund, and all taxes from such subjects shall be first applied in paying the interest upon the primary school, university and other educational funds in the order herein named, after which the surplus of such moneys shall be added to and become a part of the primary school interest fund.’

These provisions, when placed in juxtaposition, show a radical change, in language at least, in the fundamental law upon the subject of contributing revenues raised by the state to the primary school fund. The important question in the case, and to our mind the crucial one, is the construction of the following words found in the Constitution of 1909:

‘All subjects of taxation now contributing to the primary school interest fund under present laws shall continue to contribute to that fund. * * *’

In cases of doubtful construction we may turn to the debates of the constitutional convention and to the history of the times. By the amendments to article 14 of the Constitution of 1850, submitted to and adopted by the electors at the fall election of 1900 (Public Acts 1901, p. 404), and the enactment of Act 173, Public Acts 1901, provision was made for a change in the manner of assessing railroad properties. This change greatly augmented the primary school fund. The constitutional provision and statute were attacked as unconstitutional in the United States District Court for the Western District of this state. On April 6, 1906, the Supreme Court of the United States finally disposed of the cases sustaining the tax. By the report of the Auditor General for the year 1907 (page 127), it will appear that every county in the state save one received from the state for primary schools in the year 1906 more money than it returned to the state for state taxes. By the report of the Auditor General for the year 1908 (page 139), it will likewise appear that every county in the state save three received in primary school money in the year 1907 more than it paid the state for state taxes. These years were doubtless the high tide, as they included back taxes and penalties. But the members of the constitutional convention who framed the Constitution knew, and the people who adopted it knew, that the primary school fund had been greatly increased. The people were no doubt jealous of the primary school fund. It was devoted to a most beneficent purpose; it was collected and turned over by the state without effort on the part of the local officers, and it materially relieved the burden of local taxation. But a dollar paid in taxes is no more nor less than a dollar, whether paid for local or state purposes. The state, unless it be permitted to look to other subjects of taxation, must collect its revenues by direct taxes upon the tangible property within its borders. The members of the constitutional convention and the people alike were familiar with the primary school fund; both knew of the then recent increase in its amount. (It will be noted that the convention assembled October 22, 1907, and the Constitution was adopted at the November election, 1908.) So likewise both the members of the convention and the people knew that the state government must have revenues to meet its necessities or cease to function. As tersely stated by Mr. Justice McKenna in Merrick v. Halsey & Co., 242 U. S. 568, 37 Sup. Ct. 227, 61 L. Ed. 498: ‘It costs something to be governed.’

Turning now to the debates of the constitutional convention (pages 767, 768, 769), and to the address to the people (page 1434), it likewise becomes apparent that that body clearly had in mind in making the change that the then sources of revenue applicable to the primary school fund should be retained,

[185 N.W. 356]

but the restrictions do not go beyond that. The great field lying beyond these limits, through which the state might search for...

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41 practice notes
  • Duluth, S.S. & A.R. Co. v. Michigan Corp. and Securities Commission, No. 45
    • United States
    • Supreme Court of Michigan
    • September 10, 1958
    ...The distinction between such a fee and a tax upon property was clearly pointed out in Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N.W. 353, and later in Re Truscon Steel Co., 246 Mich. 174, 224 N.W. 653, and in Re G. H. Hammond Co., 246 Mich. 179, 224 N.W. 655. The ......
  • People v. Detroit, G. H. & M. Ry. Co., No. 75.
    • United States
    • Supreme Court of Michigan
    • October 30, 1924
    ...us is the exercise of a sovereign right or a governmental function. Justice Fellows stated in Union Steam Pump Co. v. Secretary of State, 216 Mich. 261, 185 N. W. 353, that the levying of taxes to meet the expenses of government is the highest prerogative of government, and the Supreme Cour......
  • Williams v. City of Detroit, No. 5
    • United States
    • Supreme Court of Michigan
    • September 22, 1961
    ...referred to we may have reference to the record of the proceedings and debates thereof. Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 266, 185 N.W. 353. The committee of the whole reported to the convention a proposal to reenact section 1 of the schedule of the Constituti......
  • Doe v. Director of Dept. of Social Services, Docket No. 116069
    • United States
    • Court of Appeal of Michigan (US)
    • February 19, 1991
    ...constitution, we may look to the debates of the Constitutional Convention for guidance. Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N.W. 353 (1921). In submitting Committee Proposal 26 to the Committee of the Whole on February 1, 1962 (which became Const.1963, art. ......
  • Request a trial to view additional results
41 cases
  • Duluth, S.S. & A.R. Co. v. Michigan Corp. and Securities Commission, No. 45
    • United States
    • Supreme Court of Michigan
    • September 10, 1958
    ...The distinction between such a fee and a tax upon property was clearly pointed out in Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N.W. 353, and later in Re Truscon Steel Co., 246 Mich. 174, 224 N.W. 653, and in Re G. H. Hammond Co., 246 Mich. 179, 224 N.W. 655. The ......
  • People v. Detroit, G. H. & M. Ry. Co., No. 75.
    • United States
    • Supreme Court of Michigan
    • October 30, 1924
    ...us is the exercise of a sovereign right or a governmental function. Justice Fellows stated in Union Steam Pump Co. v. Secretary of State, 216 Mich. 261, 185 N. W. 353, that the levying of taxes to meet the expenses of government is the highest prerogative of government, and the Supreme Cour......
  • Williams v. City of Detroit, No. 5
    • United States
    • Supreme Court of Michigan
    • September 22, 1961
    ...referred to we may have reference to the record of the proceedings and debates thereof. Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 266, 185 N.W. 353. The committee of the whole reported to the convention a proposal to reenact section 1 of the schedule of the Constituti......
  • Doe v. Director of Dept. of Social Services, Docket No. 116069
    • United States
    • Court of Appeal of Michigan (US)
    • February 19, 1991
    ...constitution, we may look to the debates of the Constitutional Convention for guidance. Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N.W. 353 (1921). In submitting Committee Proposal 26 to the Committee of the Whole on February 1, 1962 (which became Const.1963, art. ......
  • Request a trial to view additional results

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