Detroit Edison Co. v. Corporation & Securities Commission

Kelly, J.

Appellant filed its 1956 corporate annual report and paid the corporation and securities commission the sum of $1,131,061.63 as its annual franchise fee. The commission determined that the fee was deficient in the amount of $54,848.10. A re-determination was made at appellant’s request, and the deficiency was again assessed at the same amount. An appeal was taken to the corporation tax appeal board, during the pendency of which appellant paid the deficiency under protest.

When the proceedings on appeal were commenced,, appellant vigorously objected to a hearing before the chief assistant attorney general, the deputy State treasurer, and the deputy auditor general, contending that the 3 above named did not constitute a statutory board and, therefore, was an appeal board without jurisdiction. The objection was overruled, ■and the hearing proceeded with exception granted. *153The deputies sat throughout the hearing, and the board’s final decision increasing the deficiency from $54,848.10 to $62,436.72 was signed by the deputies in their own names.

Appellant presents 5 questions in its statement of questions involved. The first question presented is as follows:

“Do the chief assistant attorney general, the deputy State treasurer, and the deputy auditor general have any authority to perform the quasi-judicial duty of the appeal board provided for in section 9 of PA 1921, No 85, as amended, ‘to recompute the liability of the taxpayer,’ when that duty is imposed upon elected public officers, vis., the attorney general, the State treasurer, and the auditor general, as statutory members of this appeal board?”

The conclusion and the prayer for relief in appellant’s brief contain the following statements:

“The appellant concludes that the appeal board as composed of the deputy officers was an invalid board. It should have consisted of the elected public officers designated by the taxing statute. The decision of this invalid board was therefore a nullity. Appellant is entitled to a hearing before the statutory board. On the possibility, however, that such appeal board’s action may be held to be valid, the appellant has been compelled in order to protect its rights on appeal to raise the issues set forth in questions 2, 3, 4 and 5 above. # *
“Appellant respectfully requests this Court to reverse, set aside, and hold for naught the decision of May 29, 1959, entered by the invalidly constituted appeal board with instructions that the properly elected constitutional public officers hear the cause.”

PA 1921, No 85, § 9, as amended (CLS 1956, § 450-.309 [Stat Ann 1959 Cum Supp § 21.210]), provides in part:

*154“Any corporation conceiving itself to he aggrieved by any such redetermination may appeal within- 20 days after notification thereof to an appeal- board composed of the attorney general as its chairman, •the State -treasurer, and the auditor general as- its .secretary. .The appeal board shall recompute the liability of the taxpayer and shall notify the taxpayer and the commission promptly on its decision.
“The .commission and/or the corporation may, within 30 days after notification of such decision, and not after, appeal from the decision of the appeal board to the . Supreme Court of: the State.” 1 ■ ■ ■ n. >

The general principle that judicial dr quasi-judicial duties relating to the computátion of a tax ■cannot be delegated in the absence of express statutory authorization so to delegate, is set forth in 107 ALR 1482.

There is no doubt (and appellee so admits) that the statutory duty imposed on the attorney general, the State treasurer,, and the auditor general in appellant’s appeal was quasi-judicial in nature. Ap-pellee states:

“In advancing the argument that the board was properly constituted in the instant case, counsel for the appellee are not unmindful of the authorities referred to by the appellant in its brief limiting the activity of deputies to the ministerial duties of their principals but respectfully submit that the basic question here posed is one of the construction of .specific statutory language pertaining to the coin-position of the corporation tax appeal board during the sickness or absence of the auditor general and State treasurer and by specific designation of the ■attorney general to have the chief assistant attorney general sit in his stead.”

The Revised Statutes of 1846, chapter 12, § § 9 and 26, gave the treasurer and the auditor general the authority to appoint deputies:

*155“Sec. 9. The treasurer may appoint a deputy, for whose acts he shall be responsible, and may revoke such appointment at pleasure; and such deputy may execute the duties of the office during the sickness or necessary absence of the treasurer, and shall receive an annual salary at the rate of $700, payable quarter yearly.”
“Sec. 26. The auditor general may "appoint a de'puty, for whose acts he shall be responsible, and may revoke such appointment at pleasure; and such deputy may execute the duties of the office during the sickness or necessary absence .of. the auditor genéral, and shall receive an annual salary at the rate of $700, payable quarter yearly.”

The above-quoted sections, amended without significant change, are the law today. See CL 1948, §§ 12.9, 13.26 (Stat Ann §§ 3.83, 3.130)’.

By PA 1917, No 153, the legislature granted to the attorney general the right to appoint a deputy to sit for him on boards and commissions. This act provided :

“He (deputy attorney general) may also serve in place of the attorney general as a member of the Michigan securities commission, created by Act 46 of the Public Acts of 1915, and other boards and commissions of which the attorney general now is or may hereafter be an ex-officio member.”

The attorney general’s right to designate assistant attorneys general to sit on administrative boards has been granted by CLS 1956, §14.35 (Stat Ann 1952 Rev §3.188), which provides as follows:

“In addition to a deputy provided by law, the attorney general may appoint such assistant attorneys' general as he may deem necessary, and who when appointed to such office shall take and subscribe the constitutional oath of office. Any such assistant attorney general may, when designated thereto by his principal, serve in the place of the attorney general *156as a member of the public debt commission created by Act No 13, Public Acts of 1932, Extra Session, and on any other board or commission of which the attorney general is now or may hereafter be an ex-officio member, appear for the State in any suit or action before any court or administrative body, or before any grand jury, with the same powers and duties and in like cases as the attorney general.”

The claim was made in Chemical Bank & Trust Co. v. County of Oakland, 264 Mich 673, that action taken by the loan board in approving the issuance of bonds was void because the deputy attorney general, instead of the attorney general, acted thereon without authority. In disposing of this claim, this Court stated (pp 685, 686):

“It is claimed the action of the loan board was invalid because the attorney general did not act in person thereon. The approval of the issuance of the bonds in question was made by the loan board, the State treasurer and the auditor general being present, and the attorney general being represented by the deputy attorney general. It is claimed the deputy attorney general had no power to act. PA 1917, No 153 (CL 1929, § 184), provides that the attorney general may appoint a deputy attorney general. ‘He (deputy) may also serve in place of the attorney general as a member of the Michigan securities commission created by PA 1915, No 46, and other boards and commissions of which the attorney general now is or may hereafter be an ex-officio member.’ What are ex-officio services? They are services imposed by law upon a public officer by virtue of his office. ‘They are services which relate to the public interests, or business of the county or State, as contradistinguished from those relating to the private interests of individuals.’ Gilbert v. Justices of Marshall County, 18 B Mon (57 Ky) 427, 430. ‘When the State requires services to be *157performed by its officers, for which no remuneration is allowed, they must be regarded as ex-officio services, for which no charge can be made.’ Allin v. Mercer County, 174 Ky 566, 570 (192 SW 638). See, also, Wortham v. Grayson County Court, 13 Bush (76 Ky) 53. The attorney general is ex officio a member of the loan board and the deputy attorney general had a right to act thereon.”

The attorney general is an ex-officio member of the corporation tax appeal board and the deputy attorney general and assistant attorneys general were empowered by statute to act for the attorney general as a member of said board.

Appellee calls attention to the fact that the attorney general, State treasurer, and auditor general are ex-officio members of many State boards or commissions. Appellant answers by stating:

“The rule of law under which the appellant has challenged the authority of the deputies to sit for their principals in the instant ease involves situations where the members have a quasi-judicial duty to make a tax computation. * * * We have carefully examined the powers of each of the boards and commissions listed by the appellee. Not one involves the computation of a tax or the extent of a taxpayer’s liability (except the corporation tax appeal board which is the one under discussion).”

The legislature in clear and certain language created the corporation tax appeal board “composed of the attorney general as its chairman, the State treasurer, and the auditor general as its secretary.” (CDS 1956, §450.309 [Stat Ann 1959 Cum Supp §21.210].)

The legislature clearly provided that the attorney general had the privilege and power to designate his deputy or assistant to represent him on the board. The legislature did not grant a similar right to the State treasurer or to the auditor general. TJn-*158til such a right to so designate is granted to the State treasurer and the auditor general we conclude that it is the legislative wish and mandate that the State treasurer and the auditor general personally act as members of the corporation tax appeal board.

The legislative enactment (in existence without substantial change since 1846) giving power to the State treasurer and the auditor general to appoint a deputy who “may execute the duties of the office during the sickness or necessary absence” of the treasurer or auditor general, cannot be construed to authorize the deputy to exercise quasi-judicial discretion and in an ex-officio capacity recompute the liability of the present appellant as a taxpayer.

We do not agree with appellee that “this Court has the authority to review the substantive questions presented even though it were to determine the board was not properly constituted” because “a nonprejudicial or harmless error has generally been said not to constitute a basis for reversal of a case.”

We agree with appellant’s contention that: “The board being invalid, there was no hearing and no decision. Without such a hearing and decision there is nothing for this Court to review.”

The decision of the appeal board is reversed, set aside and held for naught, and the cause is remanded for further proceedings consistent with this opinion. No costs, a public question being involved.

Dethmers, C. J., and Carr, Black, and Souris, JJ.r concurred with Kelly, J.