Marston, C. J.
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 [208]*208and the collection of which was restrained by the decree rendered in that case, the company might well say the State was concluded, and the mere fact that the decision was acquiesced in by the State, from necessity, would be no answer. Such, however, is not the present case. This action was commenced in 1880 and the State was permitted to recover taxes for the years 1872 and subsequent thereto. The decree in the Wayne circuit would not prevent the State from claiming and seeking to recover taxes accruing subsequent to the years or taxes then passed upon. This is a new controversy, for a new cause of action, and in which some of the legal questions then passed upon are again raised, and the decision of the court thereon is of no importance except as a precedent. In this case it is not conclusive. Such was the view of Mr. Justice Campbell upon a similar question in the case in 9 Mich., already referred to, and as that case is reported there does not seem to have been any diversity of opinion on this point. The parties are bound in so far as regards the subject-matter then involved, but are at liberty to raise anew the same legal questions in a case arising subsequently, even although the facts may be substantially alike in other respects. The principle is that a party shall not be twice vexed for the same cause; but this is not the same cause but one arising since then, and the State is not in this case seeking to recover any portion of the taxes the collection of which was restrained in that case.
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 [209]*209lie did not call for anything farther. An examination of one of- the reports made, all being alike, shows that the company gave therein the aggregate amount upon which it claimed the State could tax it, but whether correct or not, or whether the company was not liable to pay a tax upon the items in controversy in this case the Auditor General from the report could not determine. The company did not set up or present the facts in its report concerning these disputed items and leave it to the Auditor General to exercise his judgment and make an assessment therefrom. Had the company done so and the Auditor made his assessment therefrom, or had he called for a further report, or in any way passed upon the facts and made an assessment accordingly, the question presented would have been very different. In this case the Auditor General seems to have accepted the conclusion of the company as to the amount upon which it was liable to pay taxes, and having done so the amount of the tax was a matter of computation, a merely ministerial act. The only discretion or judgment he exercised, if any, was to not call for a farther report, but this was not a discretion or judgment passed upon any facts, but if anything, simply that he would not ask for or look into the facts at all. The law declared that the company should pay a certain tax upon its capital and loans actually employed in this State. From this the Auditor General had no power to exempt or relieve the corporation, and if in making and filing its report the corporation did not set forth the correct amount, the neglect or failure of the Auditor General to perform his duty would not operate as a payment or discharge to the company. The State ought not to be concluded by the mere non-action of one of its officers. It is sufficient for the protection of all, to hold the State bound, where án officer ascertains the facts and passes judgment thereon. The company made out its-report upon a mistaken basis, and if it thereby misled the Auditor the State should not be the loser.
A question was suggested whether, admitting the position taken by the State to be correct, any suit would he until the [210]*210Auditor General of Ms own motion or by mandamus bad charged the tax sought to be recovered. As I understood counsel for the railroad company, they did not wish to press this objection, if upon such assessment hereafter being made, a recovery could be had. The company desired, and the public interests demand, that the entire matter in dispute should be passed upon on the merits. In such cases courts do frequently pass upon the merits, where the objection does not go to the jurisdiction of the court. See Youngblood v. Sexton 32 Mich. 406.
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 [211]*211endeavored to realize from the collaterals which it held.
Free access — add to your briefcase to read the full text and ask questions with AI
Marston, C. J.
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 [208]*208and the collection of which was restrained by the decree rendered in that case, the company might well say the State was concluded, and the mere fact that the decision was acquiesced in by the State, from necessity, would be no answer. Such, however, is not the present case. This action was commenced in 1880 and the State was permitted to recover taxes for the years 1872 and subsequent thereto. The decree in the Wayne circuit would not prevent the State from claiming and seeking to recover taxes accruing subsequent to the years or taxes then passed upon. This is a new controversy, for a new cause of action, and in which some of the legal questions then passed upon are again raised, and the decision of the court thereon is of no importance except as a precedent. In this case it is not conclusive. Such was the view of Mr. Justice Campbell upon a similar question in the case in 9 Mich., already referred to, and as that case is reported there does not seem to have been any diversity of opinion on this point. The parties are bound in so far as regards the subject-matter then involved, but are at liberty to raise anew the same legal questions in a case arising subsequently, even although the facts may be substantially alike in other respects. The principle is that a party shall not be twice vexed for the same cause; but this is not the same cause but one arising since then, and the State is not in this case seeking to recover any portion of the taxes the collection of which was restrained in that case.
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 [209]*209lie did not call for anything farther. An examination of one of- the reports made, all being alike, shows that the company gave therein the aggregate amount upon which it claimed the State could tax it, but whether correct or not, or whether the company was not liable to pay a tax upon the items in controversy in this case the Auditor General from the report could not determine. The company did not set up or present the facts in its report concerning these disputed items and leave it to the Auditor General to exercise his judgment and make an assessment therefrom. Had the company done so and the Auditor made his assessment therefrom, or had he called for a further report, or in any way passed upon the facts and made an assessment accordingly, the question presented would have been very different. In this case the Auditor General seems to have accepted the conclusion of the company as to the amount upon which it was liable to pay taxes, and having done so the amount of the tax was a matter of computation, a merely ministerial act. The only discretion or judgment he exercised, if any, was to not call for a farther report, but this was not a discretion or judgment passed upon any facts, but if anything, simply that he would not ask for or look into the facts at all. The law declared that the company should pay a certain tax upon its capital and loans actually employed in this State. From this the Auditor General had no power to exempt or relieve the corporation, and if in making and filing its report the corporation did not set forth the correct amount, the neglect or failure of the Auditor General to perform his duty would not operate as a payment or discharge to the company. The State ought not to be concluded by the mere non-action of one of its officers. It is sufficient for the protection of all, to hold the State bound, where án officer ascertains the facts and passes judgment thereon. The company made out its-report upon a mistaken basis, and if it thereby misled the Auditor the State should not be the loser.
A question was suggested whether, admitting the position taken by the State to be correct, any suit would he until the [210]*210Auditor General of Ms own motion or by mandamus bad charged the tax sought to be recovered. As I understood counsel for the railroad company, they did not wish to press this objection, if upon such assessment hereafter being made, a recovery could be had. The company desired, and the public interests demand, that the entire matter in dispute should be passed upon on the merits. In such cases courts do frequently pass upon the merits, where the objection does not go to the jurisdiction of the court. See Youngblood v. Sexton 32 Mich. 406.
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 [211]*211endeavored to realize from the collaterals which it held. Even if the company had power to ratify the loan, this eonld not be considered simply as a ratification, but as an effort to protect itself from the injurious effects of an illegal transaction. The company was held liable to taxation upon this item in the case in 4 Mich., upon the facts as there presented, upon the presumption that the^ bonds received were the equivalent of those issued, but as was said in 9 Mich., no such presumption can here be indulged in, it affirmatively appearing that the bonds received were of no value.
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.
Campbell, J.
I feel reluctant to take any steps in this cause, because the action of the Auditor General cannot be [212]*212anticipated, or any step taken to enforce a tax that he has not levied. But as the questions do not differ materially from those which have arisen before, I am not disposed to withhold my views.
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.
Graves, J. concurred.
[213]*213Cooley, J.
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.