Case Name: AUDITOR GENERAL v. MacKINNON BOILER & MACHINE CO.
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1917-12-28
Citations: 199 Mich. 489
Docket Number: Docket No. 9
Parties: AUDITOR GENERAL v. MacKINNON BOILER & MACHINE CO.
Judges: Kuhn, C. J., and Moore, Steere, and Brooke, JJ., concurred with Bird, J.
Reporter: Michigan Reports
Volume: 199
Pages: 489–496

Head Matter:
AUDITOR GENERAL v. MacKINNON BOILER & MACHINE CO.
1. Taxation — Exemption—Powers op Legislature.
There is no constitutional restriction on the power of the legislature to exempt land from taxation, and it can exercise the power of exemption as it chooses.
2. Same — Special Assessments — Property Owned but Not Used by Governmental Agency.
Vacant, unimproved lots, not being used for governmental purposes of the State university, are subject to a special assessment for local improvements. Ostrander, Stone, and Fellows, JJ., dissenting.
Appeal from Bay; Tappan, J., presiding.
Submitted January 11, 1917.
(Docket No. 9.)
Decided December 28, 1917.
Petition by Oramel B. Fuller, auditor general, for the sale of land delinquent for taxes: On objection filed by the MacKinnon Boiler & Machine Company. From a decree for plaintiff, defendant appeals.
Affirmed.
S. G. Houghton, for plaintiff.
Kinnane & Lane, for defendant.
On the question of liability to local assessments for benefits of property exempt from general taxation, see notes in 18 L. R. A. (N. S.) 451; 32 L. R. A. (N. S.) 303; 44 L. R. A. (N. S.) 57; L. R. A. 1916F, 864; 35 L. R. A. 33.

Opinion:
Bird, J.
In the year 1905 C. A. Kent of Detroit conveyed certain lands in Bay City to the regents of the university, the same being a gift, for the use and benefit of the university. Subsequently the regents sold a portion thereof to petitioner. Prior to the sale, however, a special assessment for sewer purposes had been made thereon by the local authorities. The assessment remaining unpaid the premises were inelud ed in the auditor's annual petition filed in the circuit court of Bay county for the sale of lands for delinquent taxes. Petitioner intervened and made the objection that at the time the assessment was made it was the property of the university, and therefore invalid, as no valid tax or assessment could be levied thereon. This objection was overruled at the hearing, and petitioner has appealed.
The one question presented for solution is whether vacant real estate owned by the university, but not actually used for any purposes in connection with its affairs, can be subjected to a special assessment for local improvements. Counsel for relator argues that the assessment is invalid on the ground that the board of regents is a constitutional body, has independent control of the affairs of the university, and therefore its property is not subject to the acts and control of the legislature.
We think it is clear that if this property is exempt from the assessment in question it must be so by force of some legislative acts. The Constitution does not deal with' exemptions from taxation. There being no constitutional restriction on this power of the legislature, it follows that it can exercise the power of exemption as it chooses. It has exercised this power by declaring in section 7 of the tax law that "all public property belonging to the State of Michigan shall be exempt from taxation." 1 Comp. Laws 1915, § 4001. This and similar language has been the subject of much construction by the courts, and in the majority of cases it has been held not to include special assessments for local improvements. Chicago Schools v. City of Chicago, 207 Ill. 37 (69 N. E. 580); State v. Robertson, 24 N. J. Law, 504; School District of Ft. Smith v. Board of Improvement, 65 Ark. 343 (46 S. W. 418); Sioux City v. School District, 55 Iowa, 150 (7 N. W. 488); City of Atlanta v. Presbyterian Church, 86 Ga. 737 (13 S. E. 252, 12 L. R. A. 852); Hassan v. City of Rochester, 67 N. Y. 528; Sewickley M. E. Church's Appeal, 165 Pa. 475 (30 Atl. 1007); Inhabitants of Essex County v. City of Salem, 153 Mass. 141 (26 N. E. 431); Cooley on Taxation (2d Ed.), p. 172.
The holding in most of the cases is that these words of exemption apply only to general taxation. It appears, however, to have been settled in this State that these words of exemption protect public property from local assessments (City of Big Rapids v. Board of Sup'rs of Mecosta Co., 99 Mich. 351 [58 N. W. 358]); but this has been construed to mean such property as is used for governmental purposes (Newberry v. City of Detroit, 164 Mich. 410 [129 N. W. 699, 32 L. R. A. (N. S.) 303]). In this case it was held that a public park was not exempt from special assessment for paving purposes because not being used for governmental purposes. If the general words of exemption in the statute do not apply to property owned by a municipality which is not used for governmental purposes, a like reasoning seems to lead to the conclusion that real estate owned by the university, but not used for governmental purposes, would not be included within the exemption. The university as well as the municipality is a corporate entity, made so by force of the Constitution, and both are State agencies.
The reason which underlies the exemption of public property from general taxation is that it would be without profit to assess public property as the tax would have to be paid out of the general fund to which all contributed, but this reason does not exist when special assessments are made for local improvements. Whenever property is exempt from special assessment the remaining property owners included within the special assessment district must pay for the benefits which accrue to the exempt property. This is so mani festly unfair that I am of the opinion that it was not the intention of the legislature to exempt property from special assessments which was owned but not used by the public authorities for governmental purposes. This question was before the California court on a similar state of facts involving its university, and the same arguments were urged in support of the exemption. But that court held that inasmuch as the property of the university was not made use of in connection with the affairs of the university, it was subject to the special assessment. It was there said in part:
"The principle is well established that' where any of such lands are not directly and necessarily used for a public purpose they may be subjected to the payment of special assessments for benefits. And this is in consonance with justice and equity. For to assess certain lot owners upon a street for all the cost of the work, part of which is for the benefit of a public institution, is to enhance the value of the university property at the expense of the few, instead of by taxation upon all the people at the expense of all. So it is said in Hassan v. City of Rochester, 67 N. Y. 528:
" 'A different rule would compel individual lot owners to pay-assessments levied for improvements which, were a benefit to the State lands, without any adequate advantage, and in many instances impose a burden which would be extremely onerous and produce great injustice.' " City Street Imp. Co. v. Regents of the University of California, 153 Cal. 776 (96 Pac. 801, 18 L. R. A. [N. S.] 451).
In view of the fact that the record discloses that the property in question was vacant unimproved lots in the city of Bay City, and that they were not being used for governmental purposes of the university, we think the conclusion of the trial court should be affirmed.
Kuhn, C. J., and Moore, Steere, and Brooke, JJ., concurred with Bird, J.