205 N.W. 102 | Mich. | 1925
Lead Opinion
The secretary of State levied a tax on the Detroit Windsor Ferry Company under Act No. 85, Pub. Acts 1921 (Comp. Laws Supp. 1922, § 11361 [1-14]), as amended by Act No. 233, Pub. Acts 1923. The company claimed it was an illegal tax, and appealed to the corporation tax board. That board sustained the tax, and the company reviews by certiorari.
The Detroit Windsor Ferry Company operates its ferries to Windsor and Bob-Lo, Canada, and to Belle Isle, in the State of Michigan. The company made the report required by the act, and the secretary of State computed its tax, as prescribed by the act.
Section 4 of the act, as amended, prescribes that:
"Every corporation organized or doing business under the laws of this State, excepting those hereinafter expressly exempted therefrom, shall, at the time of filing its annual report with the secretary of State of this State, as required by section seven hereof, for the privilege of exercising its franchise and of transacting its business within this State, pay to the secretary *576 of State, an annual fee of two and one-half mills upon each dollar of its paid-up capital and surplus, but such privilege fee shall in no case be less than ten dollars nor more than fifty thousand dollars."
It is further provided in section 5 that:
"None of the property or capital, of any corporation subject to paying the privilege fee prescribed in section four, which is located without the State of Michigan, and none of the capital or surplus of such corporation represented by property exclusively used in interstate commerce, shall in any case enter into the computation of the net amount of the authorized capital, or the capital and surplus, as the case may be, upon which the computation of the privilege fees shall be made." * * *
The company assails this act as unconstitutional, for the reasons (1) Because the act is in violation of article 1, § 8, of the Constitution of the United States (the commerce clause), and (2) Because the act as to the corporation contravenes the 14th Amendment to the Federal Constitution (equal protection of the laws).
1. The ferry company is a Michigan corporation, and its property is located in Michigan. Its principal business is foreign commerce. The tax imposed is a specific tax — an excise tax. Union Steam Pump Sales Co. v. Secretary of State,
The act makes reference to the capital and surplus and takes the into account in fixing the tax, but the reference is not for the purpose of taxing the property but to determine what is a fair price to charge for the franchise privileges. The owners of the company are at liberty at any time to operate its boats in foreign commerce as individuals without the payment of this tax. How and in what manner does this interfere with foreign commerce? *577
The questions presented have been ruled adversely to the company in Kansas City, etc., R. Co. v. Kansas,
"The supreme court of Kansas sustained the tax, thus defining its nature: 'The fee collected is a tax upon the right of corporate existence — the franchise granted by the State to be a corporation — to do business with the advantages associated with that form of organization.' Kansas City, etc., R. Co. v.Sessions,
This was approved. The same principle appears inMaine v. Railway Co.,
In the last named case it was said by Mr. Justice Clarke:
"While a State may not use its taxing power to regulate or burden interstate commerce (United States Express Co. v.Minnesota,
The rule forbidding a tax on interstate commerce applies with equal force to foreign commerce, but this does not aid the company, for the tax in question is not one upon interstate or foreign commerce, but a privilege tax imposed as an incident to the right to be a corporation, and exercise corporate functions by means of paid-up capital and surplus. The rule is too well settled that a State may not impose a tax upon interstate or foreign commerce to require the citation of authority. It is equally well settled that the privilege tax here involved is not one upon interstate or foreign commerce. The yardstick employed to measure the privilege tax scales the charge for corporate privileges granted and not to measure mere receipts from interstate or foreign commerce.
The objections are without force and the determination of the corporation tax appeal board is affirmed, with costs against plaintiff. *579
McDONALD, C.J., and CLARK, SHARPE, MOORE, STEERE, and FELLOWS, JJ., concurred. BIRD, J., did not sit.
Addendum
The motion is denied.