Union Trust Co. v. Durfee

• Decision Date: 29 January 1901
• Citation: 125 Mich. 487,84 N.W. 1101
• Court: Michigan Supreme Court
• Parties: UNION TRUST CO. et al. v. DURFEE, Probate Judge. [*]

84 N.W. 1101

125 Mich. 487

UNION TRUST CO. et al. v. DURFEE, Probate Judge. ^[*]

Supreme Court of Michigan

January 29, 1901

Application by the Union Trust Company and others for a writ of prohibition to restrain Edgar Durfee, judge of the probate court of Wayne county, from proceeding under the inheritance tax law. Writ denied.

Horace M. Oren, Atty. Gen., and Roger I. Wykes, for respondent.

HOOKER J.

The legislature has made two attempts to impose a tax upon legacies and inheritances. The first of its enactments was passed in 1893, and was held unconstitutional. See Chambe v. Probate Judge, 100 Mich. 112, 58 N.W. 661. Upon the argument of that case it was conceded by the attorney general that if the act imposed a tax upon property it violated section 11 of article 14 of our constitution which provides that 'the legislature shall provide a uniform rule of taxation, except upon property paying specific taxes'; but it was claimed that the tax prescribed was a specific tax, and therefore one within the exception of the section. The act provided (section 20) that 'all taxes levied and collected under this act shall be paid into the treasury of the state for the use of the state and shall be applicable to the expenses of the state government, and to such other purposes as the legislature shall by law direct.' Pub. Acts 1893, No. 205. We held that, if it could be regarded a specific tax, it was in violation of section 1 of article 14 of the constitution requiring a different application of specific taxes than that prescribed, and it is perhaps a fair inference that it was the opinion of the court that, if it were not to be so regarded, it must be taken as a general tax upon property void for want of uniformity. We may remark in passing that the interpretation given of this decision in Dos Passos on Inheritance in Tax Law, p. 51, wherein it is said that 'in Michigan, however, a statute was held void for failure to distinctly state the tax, and the object to which it was to be applied,' is erroneous. Instead of omitting to state the application to be made of the fund, the law stated it with fatal accuracy. The author states the decision correctly on page 45. The court had previously held that an omission to state the object of a special tax was unimportant, as it would be presumed that it was the intention that the fund should be applied in conformity to the requirements of the constitution. See Walcott v. People, 17 Mich. 66. In 1899 the legislature passed the second act, imposing a tax upon legacies and inheritances. Act No. 188, Pub. Acts 1899. This act is now before us on an application for a writ of prohibition to restrain the probate court for the county of Wayne from applying and enforcing its provisions in the matter of an estate pending therein. As before, the attorney general seems to concede that, if this is a tax upon property, it is in violation of section 11 of article 14, unless it can be called a specific tax upon property, and therefore within its exception; a concession (if we are right in understanding it to be made), which is, in our opinion, justified by the Case of Chambe and the later case of Pingree v. Auditor General (Mich.) 78 N.W. 1025. The latter case has settled the rule that an ad valorem tax upon property must conform to the uniform rule for the general taxation of property, and that such is not a specific tax, which will be found unequivocally stated in each of the opinions filed in that case. The chief justice (Grant) said: 'A tax based upon the assessed cash value of property assessed is not a specific tax. It is an ad valorem tax, and any enactment by a legislature that it is a specific tax does not make it so; otherwise, the legislature could determine what was meant by the use of terms in the constitution which have a well-defined meaning. The fact that in imposing a specific tax the value of the thing taxed is taken into consideration in determining the amount of it does not change the nature of the tax.' Mr. Justice Montgomery's opinion begins with the statement: 'I think it cannot be maintained that a tax on property based on assessments is a specific tax. The definition of 'specific tax' stated by Judge Cooley is a tax which 'imposes a specific sum, by the head or number, or by some standard of weight or measure which requires no assessment beyond a listing and specification of the objects to be taxed.'' And it quotes approvingly the language of the Massachusetts court in Com. v. Hamilton Mfg. Co., 12 Allen, 302, that: "The statute does not require that there should be any return made of the personal property held by corporations to the board of commissioners, who are to fix the amount on which the assessment is to be reckoned; nor is there any valuation or estimate of such property to be made in order to arrive at the amount of the excise or duty.' In the same opinion the court say: 'It certainly cannot be intended that the legislature can legitimately impose a tax on property in the name or under the guise of laying an excise tax. Such legislation would be a palpable evasion of a distinct and clearly defined constitutional restriction, and would substitute an unequal and arbitrary system of taxation upon property for one which was intended to be equal and proportional.' In no case to which my attention has been called has a tax imposed on the property of a corporation at a valuation fixed by assessors been treated as a tax on a franchise, as distinguished from a tax on property.' This reduces the most prominent point in the case to the question whether or not this law imposes an ad valorem tax on property. If it does, it is not a specific tax, and therefore not within the exception of section 11. Counsel for the relator contend that this tax is such a tax. Respondent's contention is that it is a tax upon the transfer of property, and is based upon the proposition that inheritance is not a natural right, but a creature of the statute and the bounty of the public. The conclusion that this statute imposes an ad valorem tax upon property can only be avoided by saying that it is not a tax upon the property, and that, therefore, the ad valorem feature, which, so far as assessment upon the value is concerned, is certainly present, is wanting, because it is not an assessment upon the value of the property taxed. In short, the claim of the respondent is that this is a tax upon a privilege, viz. the privilege of succession, and that there is a legal distinction between a tax upon the property itself, assessed upon the basis of its value, and a tax upon this privilege, assessed upon the basis of its value, which is measured by the value of that which is the subject of the privilege, viz. the property. Unless this is a distinction without a substantial difference, the respondent is right. The power of the state to tax civil rights as privileges is undoubted. It extends so far as to cover occupations and sales. Every laborer or farmer, merchant, mechanic, or professional man may be taxed for the privilege of pursuing his calling (Cooley, Tax'n, 570 et seq.; Webber v. Virginia, 103 U.S. 344, 26 L.Ed. 565; Shepperd v. Commissioners, 59 Ga. 535); and every merchant who sells goods, or farmer who raises and sells cattle, may be required to pay a tax for the privilege of selling (Cooley, Tax'n, 31, 177, 578, 602). 'The legislature may raise revenues by capitation taxes, by special taxes upon carriages, horses, servants, dogs, franchises, and upon every species of property, and upon all kinds of business and trades.' People v. Mayor, etc., of Brooklyn, 4 N. Y. 419; Stuart v. Palmer, 74 N.Y. 183; People v. Equitable Trust Co., 96 N.Y. 387; Bank v. Apthorp, 12 Mass. 252; In re McPherson, 104 N.Y. 306, 10 N.E. 685; 1 Derby, Tax'n, 316. These are not taxes upon property, and have not usually been called such. They are held to be taxes upon privileges or civil rights held and exercised by sanction of law. Among civil rights sanctioned by law is the right of succession of property, and many cases hold that such a tax is a tax upon a privilege, and not a tax upon property, and that such taxes are not usually prohibited by the provisions of state constitutions requiring uniformity of taxation, because taxes on property are alone referred to in such provisions. Among the cases cited by counsel are the following: Strode v. Com., 52 Pa. St. 182; Scholey v. Rew, 23 Wall. 352, 23 L.Ed. 99; Mager v. Grima, 8

How. 490, 12 L.Ed. 1168; Tyson v. State, 28 Md. 587; Eyre v. Jacob, 14 Grat. 438; U.S. v. Perkins, 163 U.S. 629, 16 S.Ct. 1073, 41 L.Ed. 287; State v. Alston, 94 Tenn. 674, 30 S.W. 750, 28 L. R. A. 178; State v. Hamlin (Me.) 30 A. 76, 25 L. R. A. 632; Maryland v. Dalrymple (Md.) 17 A. 82, 3 L. R. A. 372; Knowlton v. Moore, 20 S.Ct. 750, 44 L.Ed. 969; Magoun v. Bank, 170 U.S. 288, To view preceding link please click here 18 S.Ct. 594, 42 L.Ed. 1037; To view preceding link please click here Walcott v. People, 17 Mich. 68, 83; Youngblood v. Sexton, 32 Mich. 413. There are cases which hold a succession tax to be a tax upon property. See In re Cope's Estate, 191 Pa. St. 1, 43 A. 79, 45 L. R. A. 316; State v. Ferris, 53 Ohio St. 314, 41 N.E. 579, 30 L. R. A. 218; State v. Gorman, 40 Minn. 232, 41 N.W. 948, 2 L. R. A. 701; Curry v. Spencer, 61 N.H. 624, 60 Am. Rep. 337. And see State v. Switzler, 143 Mo. 287, 45 S.W. 245, 40 L. R. A. 280. Many other cases might be cited in support of the proposition that it is a tax upon the privilege, rather than upon property, which will be found by consulting the briefs, or some of the cases above cited. We are of the opinion that the overwhelming weight of authority supports it.

It being assumed that it is not a tax upon property, it is said that neither is it a specific tax, because...