Court Opinion

ID: 7950973
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:26:37.354937+00
Date Added: 2024-06-11T08:46:28.653122
License: Public Domain

Fellows, J.
(after stating the facts). It is apparent from the correspondence and other papers set out in this record that all of the parties including the board of appeal itself misconceived its functions. By section 1 of the act certain information is- required to be filed with the secretary of State. Sections 2 and 3 of the act are as follows:
“Sec. 2. From the papers so filed and the facts so reported and any other facts coming to his knowledge *323bearing upon the question, the secretary of State shall determine the proportion of the authorized capital stock of the company represented by its tangible property in Michigan. Any such corporation shall have the right on application, to be heard by the secretary of State touching the matter of the determination of the proportion of its capital stock represented by such property used in Michigan. Any, corporation aggrieved by the decision of the secretary of State, may, within ten days, appeal to a board of appeal, consisting of the auditor general, State treasurer and attorney general, whose decision in the matter shall be final.
“Sec. 3. Such company shall pay to the secretary of State a franchise fee of one-half a mill on each dollar of the proportion of its authorized capital stock represented by the tangible property owned and used in Michigan, determined as above provided. And in case such corporation has not at the time of application for admission carried on business at least six months outside of Michigan, it shall pay a franchise fee on its entire authorized capital stock, but such fee shall in no case be less than twenty-five dollars.”
It will be noted that under the concluding provision of section 3 foreign corporations situated as plaintiff is, which have not engaged in business outside of the State for six months, are required to pay the franchise fee upon their “entire authorized capital stock,” and that by the provisions of section 2 the determination of the secretary of State, which is reviewable by the board of appeal, is a determination of “the proportion of the authorized capital stock of the company represented by its tangible property in .Michigan.” The only provision for an appeal is where a portion of the tangible property is within and a portion without the State. In such case the decision of the secretary of State may be reviewed by this board of appeal, an administrative body, created to determine facts but not vested with judicial powers, and not authorized to settle legal questions. The pro*324ceedings of the board of appeal in the instant case were void. Plaintiff gained no rights under them, defendant was not bound by them.
The act in question was designed to regulate the admission of foreign corporations to the State, and to obtain a revenue by requiring as a condition to such admission the payment of a franchise fee. And in providing for the payment of a franchise fee the legislature quite carefully and specifically provided that the fee should be collected upon the authorized capital stock of the corporation. This is not a property tax and the value of the corporation’s assets do not in any way measure the amount to be paid except in those cases where a portion of the property is within and a portion without the State and then only in determining the “proportion” of its authorized capital stock represented by the tangible property within the State. Several States of the Union, Delaware included, have recently passed laws permitting corporations to issue stock having no par value. These laws have been passed since the act in question was originally enacted and we are informed since its last amendment. When one of the corporations so organized submits to defendant its papers, they show upon their face that the stock- had no par value; there is nothing upon the face of the papers showing the amount of the authorized capital stock. Defendant by the terms of the act could only grant license to do business here upon the payment of a franchise fee upon their authorized capital. He was therefore confronted with the proposition of refusing his certificate because our ¡statute did not authorize the admission of a foreign corporation so organized with no par value for its stock, leaving to this court the final determination of the correctness of his view, or of looking beyond the papers tendered ,to find a basis for determining the franchise fee. He chose the latter course. The *325question here involved is whether he was correct in his holding.
The State of Delaware could prescribe the terms and conditions under which corporations might be there organized. Such terms and conditions as it saw fit to prescribe regulated and controlled such corporations and became in effect a part of their charters. When by the provisions of the act of the legislature of that State corporations were permitted to issue stock with no par value, there was coupled with such right a proviso that for the purpose of franchise taxes such stock should be taken to be of the par value of $100 each. This provision was as effectively a part of the corporation’s charter as though written therein. And when such corporations came to this State seeking admission .here the secretary of State was authorized and required to examine all the provisions of their charters for the purpose of following the mandate of the legislature of this State that he collect, as a condition of here transacting business, a franchise fee upon their authorized capital stock. When he so examined such charters he found that the State of nativity of these corporations had fixed a value for taxation purposes of $100 per share. This made a basis for computing the franchise fee and is the only basis for such computation. Unless it may be used as a basis for such computation there is no authority to admit such corporations to do business in this State. We therefore hold that the no par value stock of corporations organized under the laws of Delaware must, for franchise fee purposes be taken to be of the par value of $100 each. The law of Delaware so provides. That law is a part of the charters of corporations organized under it.
In the instant case the plaintiff when originally incorporated in Delaware fixed the par value of its common stock at $10 per share; upon that par value it *326paid its franchise fee in this State. When it amended its articles of association to take advantage of the act of the Delaware legislature of 1917, it took with the advantages such disadvantages as ■ the act itself imposed. One of these disadvantages was fixing a value for taxation purposes of $100 per share. It therefore became amenable to section 5 of the act of this State under consideration (section 9067, 2 Comp. Laws 1915), and was required to pay the franchise fee therein provided for.
The writ will be denied.
Moore, C. J., and Steere, Brooke, Stone, Clark, Bird, and Sharpe, JJ., concurred.