Detroit International Bridge Co. v. Corporation Tax Appeal Board
Headline: Court upheld Michigan’s annual corporate privilege fee against a bridge company, allowing the State to tax the bridge operator and rejecting the company’s claim of exclusive foreign-commerce protection.
Holding: The Court affirmed the state court’s judgment, holding the bridge company did not prove it was exclusively engaged in foreign commerce and therefore the state’s privilege fee statute could be applied to the corporation.
- Allows states to collect annual privilege fees from corporations with domestic powers.
- Requires companies to prove exclusive foreign commerce to avoid state privilege taxes.
- Applies to bridge operators that have authority to do domestic business and hold property.
Summary
Background
A Michigan corporation owns and operates a highway bridge connecting Detroit and Sandwich, Ontario, and charges tolls. The state secretary of state assessed privilege fees of $3,000 for 1929 and $2,935.95 for 1930 under a Michigan statute. The company argued its charter limited it to building and operating the bridge and that in 1930 it was engaged only in foreign commerce, so the fee violated the Constitution’s protection for foreign commerce; the Michigan Supreme Court rejected that claim and affirmed the fee determinations.
Reasoning
The central question was whether the state could impose the privilege fee without violating foreign-commerce protections. The Court required the company to prove it had no power to carry on any non-foreign business. The full text of the company’s articles included a clause allowing it to maintain offices, buy and sell property, and conduct business inside and outside Michigan. Because the record did not show the corporation was confined solely to foreign commerce, the Court held the statute could be applied and affirmed the judgment.
Real world impact
The decision means businesses that operate across borders cannot avoid state privilege taxes simply by saying they do only foreign commerce unless they clearly show their charter and activities exclude domestic business. State officials may assess fees based on corporate capital and surplus when corporate powers allow domestic activities. The Court affirmed the tax assessment.
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