Wyandotte Chemical Corporation v. City of Wyandotte

• Decision Date: 01 December 1961
• Docket Number: Civ. No. 20923.
• Citation: 199 F. Supp. 582
• Parties: WYANDOTTE CHEMICAL CORPORATION, a Michigan corporation, Plaintiff, v. CITY OF WYANDOTTE, a municipal corporation of the State of Michigan, Ira J. Kreger, its Treasurer, School District of the City of Wyandotte, a Michigan third-class school district, County of Wayne, a County of the State of Michigan, and Harold E. Stoll, its Treasurer, Defendants.
• Court: U.S. District Court — Western District of Michigan

199 F. Supp. 582

WYANDOTTE CHEMICAL CORPORATION, a Michigan corporation, Plaintiff, v. CITY OF WYANDOTTE, a municipal corporation of the State of Michigan, Ira J. Kreger, its Treasurer, School District of the City of Wyandotte, a Michigan third-class school district, County of Wayne, a County of the State of Michigan, and Harold E. Stoll, its Treasurer, Defendants.

Civ. No. 20923.

United States District Court E. D. Michigan, S. D.

December 1, 1961.

Edward P. Wright, Patrick J. Ledwidge, Detroit, Mich., for plaintiff.

Joseph R. Zanglin, Wyandotte, Mich., Charles A. Swaby, Detroit, Mich., Aloysius J. Suchy, William F. Koney, Detroit, Mich., for defendants.

KAESS, District Judge.

Plaintiff complains that defendants have intentionally discriminated in the assessment and taxation of property, depriving plaintiff of the equal protection of the laws and due process of law guaranteed by the 14th Amendment to the United States Constitution. The alleged discriminatory amount ($119,260.05) is being held by defendant KREGER upon the order of this court, in a separate fund, pending the outcome of this controversy. Defendants have moved to dismiss, alleging lack of jurisdiction and statutory prohibition.

The provision in the 14th Amendment that no state shall deny to any person within its jurisdiction the equal protection of the laws, does not prevent a state from adopting a reasonable system of taxation. No "iron rule of equal taxation" is imposed upon the tax structure of a state. Clear and hostile discrimination against particular persons and classes, however, would be obnoxious to the constitutional prohibition. Bell's Gap Railroad Co. v. Pennsylvania, 134 U.S. 232, 10 S.Ct. 533, 33 L.Ed. 892 (1890); Puget Sound Power & Light Co. et al. v. County of King et al., 264 U.S. 22, 44 S.Ct. 261, 68 L.Ed. 541 (1924).

Plaintiff asserts that Michigan law requires all property, real and personal, be assessed and taxed equally under a uniform rule of taxation—Article X, Section 3, of the Michigan Constitution of 1908. The complaint recites that real property in Wyandotte was assessed at 40% of true value, after depreciation allowance; whereas plaintiff's personal property was assessed at percentages varying from 50% to 100%.

Controversies between industrial taxpayers and Michigan taxing authorities have evidently occurred frequently in the last few years. Litigation concerning the present parties was previously averted in 1958 by an administrative resolution of the Michigan State Tax Commission concerning alleged disparity in property assessment. Evidently whatever "settlement" the parties may have thought they had at the time did not prevent substantially the same type of controversy to occur once more.

We cannot express too strongly our view that this tax question should be answered on the local level. There appears little doubt that Michigan is a "one tax" state according to the Constitution and statutes of the state. See Michigan Statutes Annotated §§ 7.1, 7.24 and 7.27, Comp.Laws 1948, §§ 211.1, 211.24, 211.27. Certainly administrative action should conform with the required law and not arbitrarily carve out a separate class for separate consideration when such is prohibited by specific law.

Much as the court would prefer to defer this problem to the state level, it is recognized that the federal court does have jurisdiction over this case as it has been pleaded. Improper execution of the laws through duly constituted agents, which results in arbitrary discrimination of taxable property in the same class, as defined by state law, and thereby taking property without due process of law and failing to give it the equal protection of the law, constitutes a federal question beyond all controversy. Sioux City Bridge Company v. Dakota County, Nebraska, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340 (1923); Raymond v. Chicago Union Traction Co., 207 U.S. 20, 28 S.Ct. 7, 52 L.Ed. 78 (1907).

It should be pointed out that this court is inclined to agree with the defendants that industrial property could reasonably be classified separately and assessed under a different method while conforming to the dictates of equal protection of the laws. Nashville, Chattanooga & St. Louis Railway Co. v. Gordon Browning, 310 U.S. 362, 60 S.Ct. 968, 972, 84 L.Ed. 1254 (1940). However, when the Constitution prohibits such a separate classification, and the statutes do not...