United States Gypsum Co. v. Department of Revenue

Edwards, J.

Appellant appeals from the dismissal on motion of its suit in assumpsit for recovery of certain taxes paid by it in relation to a period extending from the third quarter of 1953 through the second quarter of 1955.

This is still another attack upon the constitutionality of the business activities tax (PA 1953, No *550150)1 which we have recently affirmed. (See Armco Steel Corp. v. Department of Revenue, 359 Mich 430, and Eaton Manfg. Co. v. Department of Revenue, 359 Mich 459.) In this instance, however, plaintiff relies upon procedural omissions in legislative adoption of the final version of the tax bill which it asserts violated sections 22 and 23 of article 5 of the Michigan Constitution of 1908.

The applicable portion of section 22 provides:

“No bill shall be passed or become a law at any regular session of the legislature until it has been printed and in the possession of each house for at least 5 days.”

The applicable portion of section 23 provides:

“Every bill shall be read 3 times in each house before the final passage thereof.”

It is conceded that the original version of House Bill No 353, which became PA 1953, No 150, was before both houses for more than 5 days and was read at least twice by title and once in full before each house. This has been held repeatedly by this Court to be substantial compliance with sections 22 and 23, and no question is presented by this appeal in this respect. People, ex rel. Hart, v. McElroy, 72 Mich 446 (2 LRA 609); McClellan v. Judge of Recorder’s Court of Detroit, 229 Mich 203.

House Bill No 353 (exhibit D) was originally introduced by Representative Christman.* 2 Subsequent to its introduction, 2 substitute versions were presented (exhibits A and B). The second of these exhibits, introduced by Senator Higgins, was the final version of House Bill No 353 which ultimately became the business activities tax, PA 1953, No 150.

*551Exhibit B was first introduced in the senate on May 12th, printed in the senate journal on May 18th, and passed the senate on May 19,1953.3 The exhibit B (Higgins) version of House Bill No 353 went to the house on the same day where it was adopted the following day, May 20, 1953.3 4

There is no record that the substitute version was ever read in the house and, of course, it was not before that house for 5 days.

Appellees’ answer is that the substitute served the same purpose as that proposed by the original bill, was germane to it, and hence should not be regarded as a new bill.

This was essentially the issue presented to the Wayne county circuit court by appellant’s motion for summary judgment. The circuit judge had before him a factual record of the legislative proceedings presented under local court rule 14, subd (b), of the 3d judicial circuit:

“When public records are to he used as evidence, the party intending to use them may prepare a copy, synopsis or abstract of them, insofar as they are to be used, and may present such copy, synopsis or abstract to the adverse party at the hearing on the pretrial admission and discovery conference docket, and such copy, synopsis or abstract shall thereupon be admissible in evidence as admitted facts in the ease, if otherwise admissible, except insofar as its inaccuracy shall be pointed out, under oath, by the adverse party, in an affidavit filed and served before the ease is passed from the pretrial admission and discovery conference docket.”5

From the factual record thus presented, appellant makes the following comparison of the original bill and the substitute which was ultimately adopted:

*552“The caption of the Christman bill, in part, described it as prescribing certain specific taxes ‘on income.’ The Christman bill consisted of 14 sections and would have provided for a general unclassified tax of 1% on personal income and business income of every person who paid a Federal income tax. The tax base would have been the same as ‘taxable net income’ for Federal income tax purposes. Among its other salient features, the Christman bill would have expressly provided for:
“(a) a supplementary $600 ($1,200 if married) exemption for individual taxpayers only;
“(b) a 3-factor apportionment formula (applicable to corporations only) based on property, payrolls, and sales, for allocating multi-State income to Michigan ;
“(c) authority for the State commissioner of revenue to permit deviations from the 3-factor apportionment formula in ‘special cases’;
“(d) authority for the State commissioner of revenue to adjust for collusive misallocations, less than arm’s length transactions, and transactions between affiliated corporations;
“(e) combined returns;
“(f) procedures for compelling testimony and the production of books and records before the State commissioner of revenue;
“(g) immunity from prosecution for witnesses; “(h) publication of the department of revenue’s rulings and orders; and
“(i) maximum criminal penalties of $1,000 fine and/or 1 year’s imprisonment for violation of the act. * * *
“The Higgins substitute consisted of 23 sections and provided for a classified tax on the ‘adjusted receipts’ of businesses only at the rate of 4 mills, with a'special rate of 1 mill for public utilities. The tax base was to be adjusted receipts determined by allowing certain deductions from business gross receipts, but not permitting any deductions for depreciation or for wages and salaries paid. Among *553its other salient features the Higgins substitute expressly provided for:
“(a) exemption of the first $10,000 of adjusted receipts;
“(b) a standard 50% minimum deduction from gross receipts;
“(c) a single factor apportionment formula based -on receipts only, with special provisions for service businesses, transportation businesses, and financial businesses;
“(d) civil remedies to enforce collection, including injunctive relief.”

These are, of course, substantial differences both in content and impact as between the 2 versions. But the question for our decision really is whether •or not the new version was so completely different as to constitute a new bill within the meaning of the word as it is used in Const (1908), art 5, §§ 22 and 23.

The circuit judge (we think correctly) viewed the legal situation thus:

“The legislature has the right to amend any bill by enlarging or diminishing, being bound only to the territory included in the bill. Attorney General v. Rice, 64 Mich 385; Pack v. Barton, 47 Mich 520; Attorney General v. Amos, 60 Mich 372, 380. In this latter ease it was held that it was immaterial whether the method pursued by the legislature was by amendment or by substitute for the original bill so long as the substitute was for the same purpose as the original bill and not for another and different purpose; in other words, is the substitute bill in harmony with the objects and purposes of the original bill and germane thereto ? See, also, People, ex rel. Hart, v. McElroy, 72 Mich 446 (2 LRA 609); Moeller v. Wayne County Board of Supervisors, 279 Mich 505, 517; Allied Mutual Ins. Co. v. Bell, 353 Mo 891 (185 SW2d 4, 158 ALR 415); and annotation 158 ALR 421.”

*554The circuit judge held exhibit B to be germane.

Appellant contends that the substitute was substantially different from the original, and that the procedure employed by the legislature defeated the public-knowledge purpose of article 5, §§22 and 23 (Const 1908). The public-knowledge purpose is not spelled out in the constitutional requirement — and may have been fulfilled (for all this record shows) beyond the greatest expectations of 1908. Differences there certainly were, as we have indicated, but the question remains as to whether or not there was sufficient similarity of purpose as to be described as germane.

The question of when an amendment or substitute is germane to the original bill is a difficult one. See 158 ALR 421, annotation. The test is whether or not the change (by either method) represented an amendment or extension of the basic purpose of the-original, or the introduction of entirely new and different subject matter. 1 Sutherland, Statutory Construction (3d ed), § 805.

If the actual situation revealed the latter purpose, this Court has not hesitated to hold void legislation enacted to evade the procedural requirements which the Constitution places on legislation. Sackrider v. Board of Supervisors of Saginaw County, 79 Mich 59; Attorney General v. Detroit & Saline Plank Road Co., 97 Mich 589.

Where, however, the changes fall within the general purpose of the original bill, or are extensions of it, the Court has termed them germane.

In an early case involving the then-constitutional prohibition against introduction of any new bill after the first 50 days of the legislative session, Mr. Justice Cooley wrote the opinion of the Court:

“The facts in the case are that within the 50 days a bill was introduced for the organization of the *555township of Montmorency, and that after the 50 days had expired this hill was so changed as to make it a hill for the organization of the county of Montmorency. The territory embraced in each bill was the same. The relator contends that the second was to all intents and purposes a new bill; the defendants insist that it was only the first bill amended.
“It may be said of the 2 that they had in view the same general purpose, to give to the inhabitants of the territory described a distinct municipal government. The first contemplated a government of one grade; the second, one of another; but there was no departure in the second from the general intent of the first. Neither does any necessary inference arise that in the change made there was a purpose to evade the constitutional command. The question being one of organizing the inhabitants of a particular territory for the purposes of local government, the legislature, on consideration of the scheme proposed, concluded to modify it to the extent of conferring county powers where only township powers had been proposed.

“To attempt on this record to indicate the limits of constitutional power in the amendment of bills previously introduced would be uncalled for and therefore unwarranted. It suffices to say that in this ease, where the general purpose has been kept in view, and a design to circumvent or disregard the Constitution is not apparent, it cannot be held that the constitutional authority has been exceeded. No one disputes that whatever is within the proper scope of amendment is as much admissible after the 50 days as before, and this must embrace whatever is germane to the purpose which the bill had in view. And if in any case we doubt whether the Constitution has been disregarded, we must defer to the legislative judgment. Sears v. Cottrell, 5 Mich 251; People v. Mahaney, 13 Mich 48.” Pack v. Barton, 47 Mich 520.

*556In a more recent case dealing with 1 of the identical constitutional requirements relied on herein, the Court, after a review of case precedent, held:

“It would appear from the foregoing cases that that part of Const 1908, art 5, § 23, is not violated if the amendments are germane to the purpose of the original bill, even though not read 3 times, provided the original bill complies with section of the Constitution above quoted.” Moeller v. Wayne County Board of Supervisors, 279 Mich 505, 517.

Turning directly to the issue of germaneness, we find that the Higgins substitute for the original version, House Bill No 353, was, like the original, (1) a bill to raise revenue; (2) a tax on income; (3) a bill to set up machinery for collecting and enforcing-same. These major purposes were all within the-original objectives of the bill as first introduced and as described in the title of the original version of' the bill.6

Further, though certainly not controlling of decision, we have in this instance the recorded legislative-view through the adoption of the substitute that it was germane and within the purposes of the original bill.

There is, of course, a strong presumption that constitutional requirements have been met in enacted legislation. 1 Sutherland, Statutory Construction (3d ed), § 905. And attacks upon tax statutes (particularly as here — belated ones) are not favored. Thoman v. City of Lansing, 315 Mich 566.

*557On the factual situation shown by this record, we hold that the Higgins substitute, exhibit B, was germane to House Bill No 353 as originally introduced, and hence that no constitutional violation was established.

Affirmed. No costs, a public question being involved.

Dethmers, C. J., and Carr, Kelly, Smith, and .Souris, JJ., concurred with Edwards, J.

See, currently, CLS 1956, § 205.551 et seq., as amended (Stat Ann 1960 Rev § 7.557[1] et seq.).

1 House Journal 1953, p 449.

2 Senate Journal 1953, pp 1130, 1274-1292, 1304-1307.

2 House Journal 1953, pp 1612-1615.

Honigman, Michigan Court Buies Annotated, 1959 Supp, p 291.

House Bill No 353, entitled: “A bill to provide for the raising-of additional public revenue by proscribing certain specific taxes on income; to provide for the ascertainment, assessment and collection thereof; to prescribe certain exemptions; to prescribe the powers and duties of the State department of revenue with respect thereto; to provide for the disposition of revenues received therefrom; and to-prescribe ioenalti.es f0r violations of the provisions of this act.” 1 House Journal 1953, p 449.