46 Mich. 193 | Mich. | 1881
In many respects this case resembles the Michigan Southern & Northern Indiana R. R. Co. v. Auditor General 9 Mich. 448; and People v. The Michigan Southern & Northern Indiana R. R. Co. 4 Mich. 398.
Some prehminary questions have been raised, which it was claimed should dispose of the present controversy, without the necessity of passing upon what might be considered the merits, and these perhaps had better first be disposed of.
As to the proceedings in the Wayne circuit court in chancery commenced in 1862 and in which a decree was rendered restraining the Auditor General from collecting taxes claimed to be due the State from the company for the years 1858 and 1861 inclusive, on account of the discounts and Jackson branch bonds hereinafter referred to, I am of opinion such proceedings are not res ad/judicata against the State in this case. If in the present case the State sought to recover the taxes for 1858-9-60 and ’61 which were then in controversy
The Auditor General having assessed the company upon the reports made by it, for the several years covered by this action, and such assessments having been paid, it is claimed that in the absence of fraud by the company the action of the Auditor was final.
The Auditor General is required to ascertain and estimate, from the annual report made by the company, the amount of the tax chargeable against it, and for this purpose he may require the company to make farther and additional reports. It is not claimed that there was any fraud practiced by the company, and the Auditor General seems to have been satisfied with the annual reports as made, as
A question was suggested whether, admitting the position taken by the State to be correct, any suit would he until the
It seems to. me, in any view that can be taken of this case, we must hold that the opinions in the cases referred to in 4 and 9 Mich, settle beyond all controversy the liability of the company to pay taxes on the stock items of $261,410 and $584,518. We must in my opinion directly overrule both those cases before we can arrive at a different conclusion, and this we are not prepared to do. Upon this part of the case it is not necessary to repeat wliat was there said.
As to the item of $250,000 bonds issued and loaned to one Dwight. It appears that those bonds were issued to obtain money for constructing the road of the company, but before using them they were loaned to Dwight, he agreeing to return the same bonds at a time agreed upon, and giving as collateral thereto certain bonds of another railroad company.
Dwight failed to return the bonds as agreed, and the bonds received as collateral proved of no value. It is therefore evident that no sale or exchange of the company’s bonds was made or contemplated, but an unauthorized loan not sanctioned by the charter of the company or any one acting under authority for it. Had these bonds been exchanged for material to be used in the construction of the road, I can well see that the company should be obliged to pay a tax thereon, even although the material had been lost or destroyed before it was actually used by the company. Here there was neither sale nor exchange, but a loan, and the specific bonds loaned were to be returned, and it was only upon the failure to make such return that the company
The next item is that of $184,549.34, representing the aggregate amount of discounts allowed or paid by the company in making loans. This was expressly passed upon in 4 Mich., and it was there held the company was liable to taxar tion thereon. In my opinion the conclusion there arrived at should be adhered to. I think the popular understanding is that the amount of a loan is that represented by the face of the obligation and not the amount received, and this I think must have been the intent of the Legislature. This view avoids all danger and difficulties that might otherwise be raised in the sale and negotiation of bonds, growing out of the commissions paid, or because of the fixed rate of interest or otherwise the bonds sold above or below par.
The court below permitted the State to recover interest, and this I think was erroneous. "Whether the reports made by the company were correct or not, until an assessment or charge was made by the Auditor General and notice thereof given the company, it was not in fault for not paying. Some act by the. Auditor General was necessary before the tax became due and payable. Interest is allowed where money is withheld, either upon the ground of a promise express or implied to pay interest or as damages for default in retaining money due and owing another. But upon whatever ground it may be placed, in the absence of an express promise, until the principal becomes due, no promise to pay interest can be implied, or be awarded as damages.
I feel reluctant to take any steps in this cause, because the action of the Auditor General cannot be
Upon all of the questions which have been up previously, I adhere to the views which I expressed in the case decided in 9 Mich. I think that a loan made to the company cannot include money not loaned to them; and that if they borrow a sum for which they give obligations beyond the amount received, there is no loan made to them for the excess. The statute is designed, as I think, by its terms, to tax their actual receipts in money or its equivalent in property, or some other value, and not to tax their liabilities.
I agree that the stock dividends and issues of stock proportioned to that previously held by shareholders must stand on the same footing with original stock, and should be taxed as far as it is considered paid in. The arrangements allowing consolidation very clearly, in my opinion, were intended by the law to leave the Michigan company, which is the only one over which this State has any actual power of enforcing its laws directly, in its original position as to stock and loans, and to annex to its capital and loans those additions which are made proportional to the original amounts. The Michigan investment can never be less than what it was in the first place, and if gains are made which take the form of paid-up stock, each dollar of stock thus divided must be treated as having earned its share. There is no other possible way to discriminate between the Michigan and foreign investments, for neither stock nor loans are very often expended specifically in one place more than in another.
I am, therefore, of opinion that the items for bonds for which no equivalent was received, and the discount on bonds sold at less than par should not be taxed, but that the stock dividends to the amount reckoned as paid in should be taxed. No interest can be charged, because the tax has never been levied, and is not in default.
having been of counsel for the people in a former litigation between the parlies as to a similar subject-matter, did not sit in the ease.