Motion to Dismiss or Affirm — Michigan National Bank v. Michigan

| COPY

IN THE SUPREME COURT OF THE

October Term, 1960 -~

-™ i

——————e

MICHIGAN NATIONAL BANK, a banking association -

, aaa under the laws of the United States, ;

Appellant,

NATIONAL BANK OF WYANDOTTE, THE FIRST

NATIONAL BANK (THREE RIVERS, MICHIGAN),

COMMERCIAL NATIONAL BANK OF IRON MOUN.-

TAIN, THE NATIONAL BANK OF JACKSON, -and

THE FIRST NATIONAL BANK AND TRUST COM. ¢

| PANY OF KALAMAZOO, banking associations organized

under tip awe of the United States, ;

. — Plaintifs,

-_ STATE OF MICHIGAN, viene Or LEVENUVE

OF THE STATE OF MICHIGAN, and LOUIS M. NIMS.

STATE COMMISSIONER OF REVENUE,

Appellees.

_ ON APPEAL FROM THE SUPREME COURT OF THE

|‘ STATE OF MICHIGAN

MOTION TO DISMISS OR TO AFFIRM

7) s

PAUL L. ADAMS

. ATPTORNEY GENERAL

_ Samyel J. Torina.

Solicitor General

William D. Dexter

Assistant Attorney General

For Appelleés

ames, Business Address:

oan The Capitol

e Lansing, Michigan °

SPEAKERS-HINES & THOMAS, INC., LANSING, MICH., 1960

i

TABLE OF CONTENTS

6.

1. A Substantial Federal Question i is not Presented

A.

The Michigan tax structure: docs not dis-

criimigate against investors in shares of °

national bank stock within the meaning of

BASRA tee ;

Michigan is entitled to exempt 0 or + peeletes en-

tially tax savings share accounts lof savings

and loan associations without: violating §.

. O219 - atten Ap =

The ona of savings near" ait. associations

* ** is not in “substantial competition” with

the capital of national banks within the pur-

view of § 5219. A ae Rte pee nae

2. Appellant has not P perly Raised a Federal

Question

/ 3. The Decision of the State Court is Conclusive:

RELIEF

ADDENDU Me A

The Taxation of Intangible’ Property in ‘ian

. Page

INDEX OF CASES AND AU THORITIES CITED iii

OPINIONS BELOW PER AEE ne Nm

JURISDICTION wa! 2

. STATUTES Ss itRSS, 3.

QUESTIONS PRESENTED 7

STATEMENT OF THE CASE...

‘15

39

40

| Page ©

‘tine taxes imposed i in gen on financial busi-

ness in 1952 sini 42 |

| "AUTHORITIES CITED

Aberdeen Bank v, Chehalis County, (1897) 166 US

440 20, 21, 23

_ Adams v. Nashville, (1877) 95 US 19...... 21

_ Amoskeag Savings Bank v. Purdy; (1913) 231 US

‘373 17, 18

gank of induction. v. Boston, (1888) 125 US 60.17, 18, 21

Bank of Redemption v. Boston, Records and Briefs,

‘US Sup. Ct., Vol. 472, Oct. Term Ree ire “24 ~C«;

Bell’s ; Gap Railroad Co. v. Pennsylvania, 134 US 232. 20, 21.

Boyer v. Boyer, (1885), 113 US 689 ....21, 22

Commercial Nat. Bank, Columbus, Ohio,. et al., v.

Treas. Franklin County, Ohio, 45 F 2d 213__ . 2

Consolidated National Bank v. Pima County, 5 th |

. 142, 48 P 291 22

Davenport Bank v. Davenport, 123 US. 83... 17, 18, 21

First National Bank of Clendive v. Dawson County,

(1923) 66 Mont 321; 213 P 1097 ios . 22

First National Bank of Guthrie Center.v. Anderson

County Auditor, et al. (1926) 269 US 341_...__.15, 16

First National Bank \ v. Hartford, (1927) 273 US 548

paca .......9, 16, 17, 22, 24, 32, 38

First National Bank of Shreveport v. Louisiana Tax sss

Com., (1933) 289 US 60 22, 34

tidtinrs v. School Directors, (1874) 23 Wall (90 US)

480 _. : eee

Hoe nig v. Huntington National Bank; (1932) (CCA:

- 6th reais 59 F 2d 479; Cert. denicd 287 US 648 —

21, 24, 25, 26, 27, 28, 29, 31

ina: v. Mereantile Bank, 186 US. 458 ne,

iii.

; Page

Mercantile National Bank v. Hubbard, (1899) 98 F

Mercantile National Bank v. New York, (1887) 121

US 138 _...... pas _..21, 22, 23, 24

Merchants National Bank of Glendive * v. - Dawson

County, (1933) 93 Mont 310; 19 P 2d 892... ae

Michigan National Bank v. Dept. of ‘Revenue, 358

Mich 611 : 2

‘National Bank of Wellington v. Chem, 173 U s

RRR NG SMe mE Red Ne aed 21, 23

People v. The Commissioners, 4 Wall.(71 US) 244... 21

.People v. Goldfogle, (1924) 205 NYS 870; 123 Misc.

399, aff’d by App. Div, 211 NYS 85... PLACES 22, 32

People v. Weaver, (1879) 100 US 5390. 16, 17, 29

Tradesméns National Bank of Oklahoma City v. Okla-

‘oom Tax Com.,: ” (1940) 309 US ara dl oe 16

STATUTES AND MISCELLANEOUS CITED

‘Rule 16, Rev. Rules, United States Sup., Ct... 2

12 U.S.C. § 548 [§ 5219] Mar. 4, 1923, ch. 267, 42 Stat.

1499; Mar. 25, 1926, ch. 88, 44 Stat. 223 3-4-7-14- 15-

vosiiceccbeciameits 16-17- -20-22-23-24-26-27-29-30-31-33-34-35-43

12: US.C.A..§ § 1461-1468; June 13, 1933, ch. 64, § §.

a. << £ Y ne

28 U.S.C.A. § NE oi er se aoe 4 2

Mich. Pub. Acts 1893, Act 206 [Mich. Comp. Law §

211.1, et seq.; Mich. Stat. Ann. (Henderson) § 7.1,

et UE sic ideipicianiteeme Ane aa: 43

Mich. Pub. pore 1893, Act 206 { Mich. ain, Laws §

211.8(8); Mich. Stat. Ann. (Henderson) § 7.8(8)} 40

Mich. Pub. Acts 1921, Act 85, as amerded by Act 183,

Mich. Pub. Acts 1952 [Mich. Comp. Laws § 450.303;

Mich. Stat. Ann. (Henderson) § 21.203]... aad 42.

y é a .

P ° t .

: a . . .

. - sd .

cris oe

. \ “. :

< .

oe. ; - IW

. sg | ® ‘

: . « 3 . a 4

: . . ’

Mich, Puh. Acts 1923, ct 91 [Mich. Comp. Laws §

512.17; Mich. Stat. Ann. (Henderson) § 24.105] _

Mich: Pub, Acts 1939, Act 301 [Mieh. Comp. Laws §.

205.131, let seq.; Mich. Stat. Ann. (Henderson) §

7.556(1) et seq.] - ;

Mick. Pub. Acts 1949, rr 261 Mich. ‘Comp. Laws §

211.9; Mich. Stat. Ann. (Henderson), § 7.9].

Mich. Pub. Acts 1952, Act £80. [Mich. Comp. Laws § .

505.1; Mich. Stat. ‘ia (Henderson) § 24.64(1)]...

‘Mich. Pub. Acts 1952, -Act 183 [Mich. Comp. Laws §

456. 303, et’ seq.; Mich: Stat. Ann.< (Henderson) §

21,203, et seq.]

43

Page

sak ae

40-41

42 |

Mich. Pub. Acts 1953, ia 9 [Mich. Comp, Laws 6

205.132a; Mich. Stat. Ann 759 Cum. Supp. (Hender-

ee |) a REAR iee Scene ante ato Lneie Rare =

Mi ich. Pnb. Acts 1954, Act 144 [ Mich. Comp. Rows §

_ 450.303, et. seq.; Mich. Stat. Anny, —- §

21. 20°» et seq.] - ae oR leche <i

Mich. Pub. Acts 1954, re 157 [Mich. Comp, Laws. 6

489, 29, et seq.; - Mich. Staf. Ann. inaccurate §

{Sats of 20g) anes

7-Al

Mick. Pub. Acts 1954, Act 158. [Mich. ‘Comp. lows

490. 201, et seq.;° Mich. Stat. Amn. (Benderson; )§

3.091, et seq.] — ‘ ae

Mich, ‘Pub. Acts 1954, Po 180. {Mich. ‘Geen. ‘Laws

489.371, et seq,; Mich. ‘Stat Ann. cused: §

23.589(1), et seq.] ee SGHee ESR ea OR as

31 Harvard Law Review 321, 367... RAIS)

Wodsley, State Taxation of Banks [Chapel ‘Hin, The

University of North Carolina Press, (1935) } 2...

- 1 ft ‘ ee) ,

42

16

*

-

'- STATE OF MICHIGAN, DEPARTMENT OF REVENUE |

OF THE STATE OF MICHIGAN, and LOUIS M. NIMS, |

STATE COMMISSIONER OF: REVENUE, u

IN THE SUPREME COURT OF THE UNITED aren,

October Terni, 1960

No. 155

| MICHIGAN NATIONAL nan. a banking association

organized ay aaa the’ laws of the’ United States,

e _ Appellant,:

NATIONAL BANK OF WYANDOTTE, THE FIRST ;

NATIONAL BANK (THREE RIVERS, MICHIGAN),

COMMERCIAL NATIONAL BANK OF IRON MOUN.-

TAIN, THE NATIONAL BANK OF: JACKSON, and

THE FIRST NATIONAL ‘BANK AND TRUST COM.

PANY OF KALAMAZOO; banking associations organized

' under the laws of the United States, —

_ ‘Intervening Plaintiffs,

v3, -:

,

- Appeliees,

ON ‘APPEAL FROM THE SUPREME COURT OF THE

i STATE OF MICHIGAN

MOTION TO DISMISS OR TO AFFIRM!

—+

ne

- Unless etherwi ise indicated, numbers in pare mtheses will refer to

pages of the Jurisdictional Statement; numbers in parentheses

followed’ by “a” will refer to pages in the printéd appendix fn the

Supreme Court below; and numbers in .parentheses followed by .

— will refer to pages of the appendices to.the Jurisdictional State-

' * “ment.

O°”

- 7 S “rr s

ie suant to- Rule 16 of the Revised Ruk es of the ry vos

Court of the U nited States, appellees move that appellant’s

appeal from the judgment (70b) of the Supreme Court of

Michigan, entered February 20, 1960, be dismissed on: the

— grounds:

1. It rats not present a substantial federal question;

2. Appellant has not properly raised any federal, que

. tion; »and

_ . 3. The judgment of the Supreme Court of ania is

conclusive. 7 | :

j | . . A ; t a

In the alternative, appellees niove that said judgment

_ be affirmed on the ground that it is manifest the ques-

tions on which the decision of the cause depends are so

unsubstantial as to need no further argument.

» :

. OPINIONS BELOW ——

The opinions of the courts below, and references there-

are correctly set forth by appellant (1b-69b).(2]

JURISDICTION

Appe ant attempts to invoke jurisdiction. of this Court

under 28 U.S.C.A. § 1257(2). For'the reasons set forth *- .

herein, the appeal should be dismissed.

{2} ts e ° 4 ome -

Opinion ‘of Judge Fred. N. Searl, acting as judge of the Court of:

Ciaims (1b44b) and opinion of we oe Supreme Court, re-

ported in 358 Mich, 611, 101 N. W. 2d 245 (45b-69b).

. °

é STATUTES INVOLVED |

Appellant takes too narrow a view of the statutes in-

volved. There are taxes‘imposed by statutes on_savings.

and loan and building and ‘loan associations which are

not imposed on national banking associations because of

-§ 521913) of the Revised. Statutes of the United States,

which statutes have not been cited by the appellant.(4]

General reference to. taxation of financial businesses in

Michigan is set forth on pp 40-43, infra, under veil

dum A.

(3)

"Mar. 4, 1923, ch. 267, 42 Stat. 1499: Mar. 25, 1926, ch. 88, 44 pra

223; 12 U.S.C. § 518, hereinafter referred to as § 5219 7

4) .

For convenient reference, § 5219 is set out in a yertiannt part, as

follows:

“The sain of ggch State may detertinn and direct,

subject to the provisions of this section, the manner and place

_ of taxing all the shares of national banking assoc iations loéated

within its limits. The several States may (1) tax said, shares,

or (2) include dividends derived therefrom in the taxable ‘in-

come of an owner or‘holder thereof, or (3) tax such associa-

tions on their net income, or (4) according to or measured by |

their net income, provided the following conditions are complied

with: rn ‘

“], (a) The imposition by any. State. of any one of the

above four forms of taxation shall be in lieu of the others,

’ except as hereinafter provided in subdivision (c) of this-clause.

“(b) In the case of a tax on said shares the tax imposed

shall not. be at a greater rate than is assessed upon other.

moneyed capital in the -hands of individual citizens of such

State coming into competition with the business of national —

banks: Provided, That bonds, notes, or other ev idlences of in-

debtedness in the hands -of individual citizens not employed.

or engaged in the banking or investment business and represent-

ing merely personal investments not made in competition with

such business, shall rnot.be deemed moneyed capital within -

the meaning of this section.”

Qo:

As evidencing congressiona] intent to exelude certain

institutions from § 5219, the, courts below significantly:

- relied upon the statutory provisions by. which Congress

has granted power to the states to tax. federally chartered

building and loan associations .created by the Home Own-

_ ers” Loan Act of 1933,(51 joint stock land banks, and agri-

cultural credit .corporations. y

The Michigan Supreme Court quotes and refers to these

statutes as follows rer:

| “The home owners’ Joan act was enacted by con-

-gress-in 1933 (ch 64, §§ 1-9, 48 Stat 128 [12 USCA,

‘S$ 1461,1468, inclusive, as sinvigted)). The purpose

of the act is set forth in section 5, ie USCA, § 1464,

; as eens? as follows:

= ‘(A)’ In order to provides local mutual thrift

institutions in which people may invest their funds

and in order to provide for the financing of homes,

the beard is authorized, under such rules.and regu-

lations as it may prescribe, to provide for the or- —

ganization, incorporation, examination, operation,

and regulation of agsociations to be known as ‘‘fed-

eral savings and loan ‘associations,’”’ and ‘to issue

charters therefor, giving primary consideration to

the best practices of local. mutual thrift and home-

financing sariciantaraae in tlie United States.’

“Tn determining States’ rights is tax such associa-

1idns, congress provided’ in 1 the same section:

“ “(Hh Such Sone ae including their fran-

3]

June 13, 19 i, ch. 64, § 1-9; “48 Stat. 128; §§ 1461 to 1468, inclusive,

Tith 12; U.S.C, 4. ‘ 0

——— TF

nh

chises, ital; reserves, and: surplus, and their

loans ee... shall be exempt from all taxa-

tidn now or hereafter imposed hy -the United States

(except the. taxes imposed by sections 14% and

1600 of title 26 with respect to wages paid after.

* December. 31, 1939, for employment after such date,

and-except, in the case of taxable years beginning

_ after December 31, 1951, income, war-profits, and

excess-profits taxes), and all shares of such associa-

tions shall be exempt both as to their value and

the income therefrom from al] taxation (except sur-

taxes, estate, inheritance; and gift taxes) now or

hereafter imposed by the United States; and no

State, tertitorial, county, municipal, or loeal tax-

ing authority shall impose any tax on such associa-

tions or their franchise, capital, reserves, surplus,

loans, or heomme greater than that imposed by such

aythority on other similar local “mutual - -or coop-

erative thrift, and home financing institutions.”

.“*The trial court commented upon congressional nc-

tion disclosing that congress did not consider savings

and loan associations to be in competition with either

State or national banks, and in its opinion said:

‘‘¢Tn providing for the taxation of ieee ae

* tutions by the State, congress could have made the

measuring stick, the limit on the rate of taxation.

that imposed on national bauks, also a creation of:

congress.: It could have made such measuring stick

the rate imposed by the Stafes on State banks and

it could have made it that infyosed on other pia

capital. It ‘did none of tese things. Instead,

provided that the tax imposed should not be greater

than that imposed otf “other shnilar local mutual

—6—. ‘

or pin aysinawana thrift = ‘home ‘finan nein

tions.’

‘* “Congress wee identified the. — ‘that

it considered to,be in competition with Federal sav-

_ ings and loan associations. Obviously, congress did

not considér savings and loan associations to be

“in competition with banks, either State or national.’

: ,

—_

“The liome owners’ loan act of 1933 provision mark.’

edly differs with the provision in regard to States’

riglits to tax joint-stock land banks (act of congress

July 17, 1916, ch 245, § 26, 39 Stat 389) where sail

gress provided:

‘‘*Nothing herein shall prevent the shares in

any ‘joint stock land bank from being included in

the valuation of the personal property of the own-

er or holder of such shares, ‘in assessing taxes im-

posed by authority: of the State within which the

bank is located; but such assessment and taxation

shall be in manner and. subject to the conditions

and limitations contained in section. 5219 of the

Revised Statutes with reference to the shares of

national banking associations.’

* 12 USCA, § 932—Reporter.

2

- “The congressional provision for national agricul-

tural credit ‘corporations {act of congress Match 4,

1923, ch 252, title 2, 4 211, 42 Stat 1469) also provided

a different test for State taxation than congress pro-

‘-vided for Federal ‘savings “and loan ners, as

is disclosed by the following:

ae ‘Taxation by a State of the shares in national - :

agricultural credit ee, or of dividends

ae ay

derivedtherefrom,or-of the income of said corpo-

rations, or real estate owned by them, shall be

-such only as is or may be authorized by law in the

case of national banking associations; an® taxation.

' by a State of the debentures or other obligations

of such corporations shall not be at a higher rate

than the rate applicable to other moneyed capital

in the hands of individual citizens thereof.” aD

—--—

* 2 USCA, 6 1261 Reporter, ae

QUESTIONS PRESENTED

. The jurisdictional statement of appellant does not prop-

erly state any federal question. We believe. the only pos-

sible federal question to be: ~~

Is Act 9, Michigan Public Acts of 1953,{61 which im-

posed for the year 1952 a tax of 51% mills on national

bank shares, invalid under § 5219 because the Michigan

legislature ha not treated a savings share account of a

savings. and loan association!) as being equivalent to a

share of national bank stock; when the national - bank

loats a portion of its deposit money on residential prop-

’ -erties and the savings and loan associations employ their

mutual share account moneys for the same general purpose?

(6] :

* Mich. Comp. Laws $ 205.132a; Mich. Stat. Ann. °59 Cum. Supp.

(Henderson) § 7.456(2a).

(7) a” .

Federal. statutes permit chartering of only those institutions -

known as “savings and loan associations”. Michigan law permits

organizing of both savings and loan and building and loan as-

‘sociations. Their functions are similar and both entities are herein

termed “savings and loan associations”. ' a

” a

‘

————— —-8

By their motion to dismiss or r aflirm, appellees raise ‘the,

following issues: *

>

Se question presented is too: nsubstantial to war-

ral nent argument. :

2. The appellant has not property raised any federal

question.

3h. The judgment of the Supreme Court of Michigan is

= conclusive,

-

STATEMENT OF THE CASE

_ Appellees cannot accept the appellant’s statement of

the case, Appellant ‘would lead this Court to believe that :

national banking associations have beer singled out for

special tax treatmant, as distinguished from general cor-

poratiéns. and others. tonducting financial businesses in.

Michigan. An examination of the tax strueture of the

state. of Michigan, \as it affects financial institutions, clear-

- ly disproves this ¢ontention.[8] — -\

.

.

: Sinee the appellant has limited its case to’ alleged dis-

criminatory treatment Of savings and loan associations,

it may be.assumed that all financial businesses in Michi-

van, exeept such associations, are subject to state taxes

“equivalent to those imposed on appellant.

Thus, appellant’s complaint is limited to alleged partial

. preferentiai treatment of both federal and state chartered

£8) :

For a general discussion of Michigan’s taxation of financial busi-

nesses, see Addendum A, pp 40-4, infra, ds

ey Late et ere

aes 9] : }

savings and loan associations, whose share accounts and

total assets represent a small but unknown portion of thie’

: total financial business ‘in Michigan in 1952.

\~ J oe é ; . .

; ai Reference is made to the trial court's épinion ” ‘in Ap. |

pendix A yof the Jurisdictional Statement for a proper

‘statement of the case (1b-6b). As there indicated, ' ap-.

-pellant neous to bring: ‘its Gause within, the rule of

s

First National Bank Vv. meee {1927) 2 273 US 548,

- .

The eisai positions of the parties were stated” thusly

by the trial court: 3

«Plaintiff eontends that. ‘the Michigan Intangible

-Tax Act fails to meet the requirements of Section.

5219 in two particulars: (1) Michigan National Bank

shares afe taxed at a greater rate than other moneyed ;

‘capital in the hands of individual ¢itizens coming into.

competition with ‘the .business of the plaintiff bank,:

(2) that the Michigan Statute: ‘levies a {ax upon ‘the

privilege of ownership’ of shares in national banks;

that this is not the legal equivalent of a tax upon the

shares in such banks and is not one: of the alternate —

_ methods of taxation permitted.”’ (2byt9]

8 es | as %

‘*Tnitially,. the moneyed capital alleged by plaintiff

to be in competition with it and to be taxed at a lesser

rate included building. or savings and loan associa. :

tions, insurance corporations, credit union, finance

-¢ompanies, and monies in the hands of individuals and

. partnerships. :

[9]

Contention °(2) has been abandoned by the appellant, since it

is not mentioned in the Jurisdictional Statement. \

°¢@ . ?

i : ? .

.

+ —40—

‘ 4 & ° - .

‘Shortly before the commencement of trial, plaintiff

- abandoned iis claim insofar.as insurance corporations,

credit, unions, finance companies and individuals and |

partnerships were concerned, and its counsel stated :

‘that it would confine its case to the competition which”

national banks face in. this. state with building and |

savings and loan associations, ‘both state and federal.

‘‘Without attempting to state in detail the proofs

* * %, it may. be said that plaintiff claims that the

‘proofs bring the case within the rule stated in First

| National Bank v. be birt 273 U.S. 548: ee ey ? (3b)

“Tn support of ‘such mama plaintiff offered a mass

of statistical evidence as-to the capital, assets, sav-

ings accounts, loans and investments of national banks, —

nationally, state- wide and of the plaintiff national

-bank. Liké evidence was offéred as.to the business of

the savings/building and loan associations, nationally,

state-wide and in the seven cities in which plaintiff

id business.

“Plaintiff further offered the tectiniony of officers

of, the loan associations and of the plaintiff banks as ° -

to the existence of competition, between the two types

_ of institutions, -

‘And plaintiff forcefully urges that such evidence

establishes that both plaintiff and defendant make »

loans upon the security of mortgages on residential

real property and that in- that field there exists, in

fact, substantial competition between the plaintiff bank

and the several savinge/bul ity aid loan associations.

; .

/ P a)

ing: and loan associations. o. ¢

‘ . . -

“Plaintiff further contends that the rate. of tax

‘Jevied against the shares of national’ banks i is several

times that: levied against the shares of savings, ‘build.

~

“Defendants take issue with plaintiff upon the ex- -

istence of competition in fact, and upon the existence |

of discrimination in the rate of tax against the two.

types of institutions. :

‘With reference to competition, in fact, defendants

contend that the savings and loan.dssociation operat-

ing in the area-of plaintiff bank are small: institutions

as compared to the plaintiff; that they function solely

. in a very narrow-and restrigted field compared. to the

varied activities of plaintiff and,other national banks;

that the savings and loan associations’ basie organiza-

tion ’and.financial structure are so different from na-

tional banks that’ they cannot be compared with such

- institutions; that the alleged competing. savings and

loan associations concentrate tbeir loans in conyen-—

_ tional loan activity prolibited to plaiutiff bank while

plaintiff concentrated its loan activity in fields (F.H.A.

and V.A.) not ‘utilized by’ the savings. and Igan associa-

tions; that the proofs offered do not sustain a finding

‘ that the capital employed by savings and loan associa-

tions in 1952 represented a substantial -portion of

capital employed in any alleged competition by the

-savings and loan associations with the business, of ‘the

plaintiff and‘other national banks; that plaintiff had

no difficulty in obtaining all the capital it needed in

_ 1952 and could not trace any part of its capital to any

investment’ and that in 1952 it loaned only its deposit

money on security of real estate. .

i ‘e-: =

“And defendant summarizes its position on this :

i . ‘ : i

%

competition? ??

= ke : J ~~

a, : « a fs = o © se

factual issue as follows: ‘in the last’ analysis, savings

and. loan associations cannot be in ‘‘substantial compe-

tition with the business-of national banks’? hecause they.

cannot and do not eng: age sufficiently in the activities

characteristically carried on. by the national banks:

‘Stated anothey way, if they are riot comparable in-

stitutions in substance, how can they va int substantial

y

, iz

°

erent »

at ‘pon the issue of discrimidation, it 4s defendants’

contention that the Michigan Intangible Tox from the

stand point of the economic empact, impdres- an equiv~«

--alent tar burden on national banks cnd savings and

loan assoc iations.

we t

“Defendants further’ present .cettain serious con-

tentions of law which if decided in favor of defend-

ants, .make othe determination of ethe above issues of...

fact. uinportant. These, to a certain extent, overlap:

aud may be briefly: ‘summarized : first, that. the. states’

hav eothe ‘power. to give preferéntial tax treatment to.

thrift. «and home. financing institutions such as mutual:

_csavings banks and savings/building and loan associa-

trons upon the ground of publie polity without violat-

ing section 5219; and, secondly, that Congress by the

enactment of the 1933 Home Owners’ Loan -Act “has

made it clear that the provisions of section 5219 do

not gpply to ashlee ‘building and Joan associations.

“The banks of Michigan are not unanimous in this’

litigation. ras . | es

’

“The Michig: in- Bankers Association has heen —per-

: mitted to file a brief as amicus curiae in which it states

the poplin of its members in these words: *

° wad .

—13—

‘*.« The Michigan Bankers: Asséciation has follourd

the trial of this case and requested per mission. to file

this: brief becausé of its conviction that the present

y: system of the State of Mic higan-for the taxation of

banks is reasonable froin ilic vieacpoint of the public,

equitable from.the view point of the competitors, and

practical from the viewpoint of the banks themselvas.

. Actual experience with the taxation system shows

’ that it hay produced a reasonable amoint of revenivc

: "3 to the State; that it has not created any competitive

disadvantage among the various types of institutions;

‘and that it. has proven to ‘be simple-to administer.

8

‘Such « system is obviously desirable, and this Asso-

ciation, believing the system to be entirely legal with-

in the limitations of the Federal Constitution. and

Statutes, does not want to’ see it de ‘stroyed.’

‘And their counsel ‘takes substantially _the same )

position: upon the several questions presented’ as sate

-}_ the~Attorney General on behalf of the defendants.’

" (4b-7b) (Emphasis muppiaet) Wee ee °

‘

The trial court stan that Michigan had authoyity

to grant preferential tax treatment to thrift and heme fi-

nan¢ing institutions, stich as mutual savings banks angl Intl.

ing and loan tissociations, so long as it was founde d upon

just reason, and did not operate as an unfriendly diserimina- |

tion against investments in national bank shares. The court

concluded that the partial exemption, rulel 151 was dispositi ive,

—, _@

j10) - 4 ; “s

_ Reference will ‘be made throughout this brief to this, rule, w hich.

can be generally stated, as follows: A state may exe mpt or pref-

erentially tax some moneyed capital employed in competition with

some phases of the business of national banks pong. invalidat-,

ing a tax on national bank shares, ‘so long, as the ¢xémption or

preferential treatment is for just reason and not as a hostile, or

wnfriongily discrimination.

|

&

ee

of the issues since Michigan’s tax treatment of savings and

loan ‘associations as compared to national ‘banks ‘is based

upon just reason and is not made with the hostile purpose:

of diseriniinating against national banks.

The Michigan Supreme Court based its judgment on.the

_ same rationale as that of the trial court.

a

° ERe ying A A

A SUBSTANTIAL FEDERAL QUESTION Is

BOF a

_, It is believed that appellant has not presented a* sub-

stantial federal question to this Court of alleged violation

of § 5219 ‘Because: ¥

A. The Michigan tax structure does not discriminate’

against investors in shares of national bank stock within

the meaning of § 5219.

B. Michigan 4 entitled to exempt or preferentially tax

savings share accounts of savings and’ loan associations

without violating-§ ¢ 5219. rw ere ¢

C. The capital of savings and loan associations, rep-

resenting savings: share accounts, invested in the narrow

and restricted field’of first mortgage home financing is not - .

in “substantial compétition” with the capital of national,

banks within the purview of ‘S$ 5219. a

6,

min,

A. The Michigan tax structure does not discriminate

against investors in shares of national bank stock with:

in the meaning of § 5219,111)

‘There i is no substantial federal question presented because

the state of Michigan has followed previous decisions of.

this Court under § 5219. Despite appellant’s msistence that

only the rate of the tax must be considered, the cases here-

inafter cited clearly establish that in applying the statute

the concern is with comparing the total tax burden on

“national bank shares and on the alleged competing moneyed

capital.. Further, exact mathematical equality of burden.

is not required. Appellees offered expert testimony -before

the trial judge td show the substantial tax equivalencehe-

tween the two. It is the only such evidence in the record. It

was relied upon” by fhe courts below (41h, 68h). Its verity

is substantiated by the fact that the -Michigan Bankers

Association, in its brief amicus curiae, states that this tax

_is:-“* * *equitable from the viewpoint of the competitors

o 9.099 Bae 46b) =

*

As stated i in

First National Bank of Guthrie Palle v. Anderson,

County Auditor, et al., (1926) 269 US 341, at p 348:

eg, ‘The restriction is, not intended ‘4 exact mitthe-

maticak equality in the taxing of national bank shares

and such other moneyed capital,-nor to do more than

|) ° . m

‘Since: savings and loan associations | may be exempted or pre-

ferred tax- wise under the partial exemption - rule based on public

policy or on congressional ‘manifestation of intent ‘in pari materia

legislation, there cannot be, substantial competition within the -

purview of, § 5219, nor can there be —discrimination within the:

meaning of § 5219.

—16—

require such practical equality as is reasonably attain- |

able in view of the differing situations of such prop-

erties. But every clear discrimination 2gainst national |

- bank sires and j in favor ofa relatively mate rial mart

of otlter moneucd capital employed in substantial com- ©

petition with national banks is a violation of both the

letter and:spirit of the restriction. People v. Weaver,

2 100 U.S. 539; Boyer v. Boyer, 113 U.S. 689, 701; Na-

= tional Bank of Wellington v. Chapman, 173 U. S. 205,

216.’’ ( Emphasis supplied, except. cases)

Appellant's ‘mechanical comparison—measurement by.

rate alone—is not an application of 6.5219. A long and con-

"sistent line of decisions under § 5219 developed the prop-~

osition that it is the effect of the tax, not merely its rate,

“which is controlling. . .~%

This was recognized in °

People v. Weaver, (1879) 100 US 539,

where if was held that the actual ietidnees a practical

~ burden of the tax upon the taxpayer was controlling. To

the same effect are .-

First Vational Bank v. Hartford, iia (1927) 973

US 548, 060, 561;

First National Bank of Guthrie Cue Vv. Aniovec,.

supra, (1926) 269 US 341; 347, 348; ee.

: Frade smen’s, National Bank of ee oe City v.

‘Oklahoma Tax Commission, (1940) 309 US S 560,

y 567 ; ‘

‘31 Harvard Law Review, 321, 367, ‘‘Indirect En-

croachment on -FederAl Authority by the | ee

Powers of the Statep’’; and 7a

‘ ee

a

Woosley, State Taxation of Banks [Chapel Hill, The

University of North Carolina Press (1935) ], p 24.

It is to be noted that the Court in the Hartf ord case, supra,

in deciding that discrimination did exist, stated, at pp 991-

> 592: |

«@ °° The court below assumed, and it was not

F questioned upon the argument here, that this tax is not *

to be taken as an equivalent or ‘substitute for the ad

~ valorem tax levied upon bank sharegand no question of -

. the possible equivale nce of the two schemes of ta ration

is presented.* * * ” (Emphasis supplied) ,

. A .. ;

Davenport Bank v. Davenport, 123 US 83;

Amoskeag Savings Bank v. Purdy, 231 U S 373; and,

Bank of Redemption v. Boston, 125 US 60, -

indicate that the silebvtonit tax burden: ‘required by § 5219

is met by an asset comparison or a capital account com-

parison between savings banks and national banks. The

“combined effect of these three cases and that of People v.

Weaver, supra, (1879) 100 US 539, justifies either of two

comparatives in determining the question of4iscrimination :

vast se e . sips }

(1) The measure of total assets to total assets (as in-

ferred in the Bank of Redemption and Weaver cases); or —

\

(2) The reserves and undivided profits. of the savings

and loan associations with the actual value of national bank

stock (the Amoskeag, Weaver and Davenport cases).

Appellees’ testimony established that there are several -. . :

_ possible methods of comparing the effect of a state tax

structure on the two types of unlike institutions involved

’

—— oo

_in this case. One method, as stated above, is the comparison

6¥ the tax effect on the total assets by each institution,

which seems te be.a significant comparison when the al-.

leged competition relates to the employment’ of assets: in “

the real estate mortgage field. This comparative is -in ac-

cord with Bank of Redemption, supra. Under this compara- .

tive, there was approximate tax equality in 1952 between ~

the two, institutions under consideration (68b) (121

A second method [ ( oF above ] specifically approved‘as to

mutual savings banks (Bank of Davenport and Amoskeag

Savings Bank cases, supra), involves a comparison of the’

tax impact on the eapital, surplus and undivided profits of

a national bank with the tax impact on all the reserves and

undivided profits of the savings and loan associations’ in

question. Taking into consideration the total taxes imposed

upon each type of institution (except the unemployment and

real property taxes which are imposed equally.on these in-

stitutions), the resulting percentages are 5.2 for savings

and loan associations and 5.6 for the appellant bank:{13] —

Iiftreference to the comparison that the appellant insists

upon, Professor Woodworthl!41 stated that in light of the

facts developed in his preceding testimony, such comparison .

““* * * is completely absurd. It ignyrrathe economic

realities of the businesses of the-two}| institutions and

[12}

** Exhibits 213 (1279a) and 226 (1292a).

F13}

3 (981a-985a); 208 (1270a); and 209 (1278a-12 arta). On this method

‘of comparison, see Professor Woodworth’s testimony (862a).

[14]

George Walter Woodworth, Profedser of Finance at the School

of Business Administration, University of Michigan, and —

ing in money ‘and banking.

Computations were » mods from information contained in Exhibits

‘

we ro.

rests on the superficiality that [a] savings and loan.

— share-account is le gully an equity rather than a deposit

_ debt and being an equity share is comparable to shares.

. of national bank stock.® *"*” (861a) (Emphasis Sup)- -

ey

Appellant does not deny, and both of the courts ilow

_ specifically found, that thé tax. structure of the state of

: . Michigan subjected economic equivalents to comparable tax -

treatment. The Supreme Court stated :

i e

°

“The record establishes that there was practical |

equality of the total tax imposed upon building and

loan associations and. upen national banks, and any

_ . difference would be justified as_ partial exemptions

~ @& ve

*

‘We reiterate ane approve the finding of the trial

court :

4-¢'T hat Michigan ’s tax treatment of savings build-

‘ing and loan associations is based upon just cause ©

- and does not evidence an intent to create or foster a

_ hostile or unfriendly discrimination agama national

’ banks.’ ”’ (68b- 69b) 115)

{15)

This finding of o lower courts was based upon evidence offered

by the appellees pertaining to the question of discrimination. In

the testimony of Mr. Carlson, (747a, et seq.) and Professor Wood.

worth (S808a, et seq. }, and in Exhibits 208 (1270a), 208A (127ia),

208B (1272a), 210 (12 275a), 212 (1278a), 13 (1279a), and 226 (1202a),

the appellees carefully’ presented the impact. of the Michigan tax

structure on the institutions in question: This testimony and these

exhibits are uncontroverted.

It is therefore clear that the appellant has not presented

« to this Court a substantial question of discrimination he-

_ tween taxes imposed on its investors and upon savings and

loun assoe iations’ s savings share account holders.

8

'B. Michigan is entitled to exempt or preferentially tax

savings share accounts of savings and loan associations

. without — § 5219.9

Even if signific ‘ant tax diserimination could he said to ;

‘exist, Michigan 's thegtiment of savings and loan associations .

does not violate § 5219.

o

“This Court early relied upon, the ‘“partial exemption”’

rule. whick was dev eloped to leave intact the-states’ right,

for public policy reasons, to e3 xempt or preferentially tax.

sole moneyed capital without violating § 5219. In origin

and purgpse, it is not, unlike the power of thé states to -

exempt certain property from ad valorem taxation without |

|

|

Violating due process, “equal protect ion, and uniformity pro--

‘visions Of conetitniean:

-

Thus, this‘Court in ayn te

Ader deen Bank vy. Chehalis County, 166 US 440, at

» 454, ’ ;

*

quoted the following from.

Bell's Gap Railroad Co. v. Pennsylvania, 134 US 232,

237, in regard’ to the partial exemption rule of :

¢ =919: : ; ; ‘ —

y Sas a =

———— : ;

“e* * * All such regulations, and those of like — .

character, so long as they proceed within reasonable +

= Bhs : : ‘

limits and general usage, are within the diseretion |

of the state legislature, or the peapke of the State in

’ framing their constitution. But clear and hostile dis-

- criminations against, particular persons and Classes,

“ espee ially such as are of av unusual character, un-

known to the practice’ of our governments, might be

obnoxious to the constitutional prohibition.

The following decisions clearly establish the partial ex-

emption rule—prescribe: its limitations—and bring savings

and | loan associations within its scope :

People vi Commissioners, + Wail :°H4, 256

| Hepburn r. School Directors, 23° Wail 480, 485

Adams v. Nashville, (1877) 95 US 19, 2200 ~

Boyer v. Boyer; W353 US 689, 693

Mercantile Bank v. New York, (A887) [21.08 1%,

145, 161 pas ae,

National Bank of Weilington rv. Chapman, 173 US

205, 214 ae

Aberdeen’ Bank v. Chehalis Count yg supra, 166 US

440,460 - ae ¢ | 7

- + Bell's Gap Railroad Co, v. Pennsiylrania, supra, U4

US 239,237 . |

Dave mport ‘Bank vr. Dave nport, supre. T23US R23, RH

Bank ‘of Re dle mption rv. Boston, supra. 125 US 60,

67-68 °

Mere antile National Bank . Hubbard, (1899) 98 F

465, 471; aff'd sub nominee Lander v., Mercantile

_ Natiowal Bank, 186 U S 458

Hoénig v. Huntington Walioutd honk, (1982) (COA

(6th C ‘ireuit) 59 F 2d 474; Cert, denied 287° US 648

©» o-

a ne J a ee

o, @ 89 oF:

Mien.

First National Bank a Saints v. Louisiana Tax

Commission, (1083) 289 US 60..

Péople v. Gold fogle, (1924) 205 NYS 870, 123 Mise

399, aff'd by App Div, 211 NYS 85

First National Bank of Glendive v. Dawson County,

oo Mont 321 213 P 1097 © te

Me vohanie’” National Bank of Gle ndive v. Dawson

County, (1933) 93 Mont 310; 19 P 2d 892 i

Consolidated National Bank v. Pima County, 5 Ariz,

142, 48 P 291

To prevail, appellant must cireumveré the clear import.

Of these decisions, which is simply, that a state’s tax on

hank shares is not invalidated by § 5219 if the state exempts

or preferentially taxes for. public policy reasons some

moneyed capital. The leading § 5219 case of Me re antulle Bank

*, New York, supra, 121 U S 138, quoted and relied. upon

Attn in Hartford, supra, applied the partial exemp-

tion rulé to mutual savings }anks and, determined that the

exemption and preferential treatment’ accorded | some.

" money ed capital in New York did not violate § 5219. Coun-

sel for the. Mercantile Bank, relying upon Boyer v. Boyer,

-. supra, 133 US 689, argued that the partial exemption ruie

“was not applicable because ‘the exémption of moneyed cap-

ital in New York was -,

. ~ . /

s<@ @ @

void,’ ve US 138, ake

_ No tax was ial by es York on savings banks’ and

municipal bonds. By reliance on Hepburn v. School Direc-

tors, supra, 23 Wall 480, this Court determined that § 5219

_ was not thereby violated and stated, at p 161:

NY

* of a ‘very mater ial part’ relatively’ of the

whole, and renders the taxation of national bank shares -

ae Pa —23— ¢@

» +* * * The only limitation, upon deliberate reflee-

tion, we now think it necessary fo add, is that these’

exemptiéns should be founded upon just reason, and

hot Operate as an unfrie ndly discrimination against in--

vestments in national bank shares. However large,

therefore, may be the amount of moneyed eapital in

the hands of. individuals, in the shape of deposits in.

savings banks as now orgi nized, which the poticy of the

State erempls from taxation -for its own purposes,

that exemption cannot affect the rule for the taxation

of shares in national bauks, provided they are taxed

at a rate not greater than other moneyed capital in

the hands of individual citizens ‘otherwise subject to

- taxation. a US 138, at tp 161 | [Saipones supplied)

° * *

“[quoted in Aberdeen Bank v. ‘Chehalis*County, supra, -”=

U S 440, at P 460].

The rule was otherwise stated in National Bank of Wel-

lington v. Chapman, supra, 173 US 205, at p 214:

‘ce * * exemptions from. tax: ition, however large,

_such as deposits in savings banks or moniés belonging

to charitable institutions, which are exempted for

reasons of public potiey and not as an unfriendly dis.

crimimtion as ugainst” investments in \national bank

‘ shafes, cannot be regarded as forbidden Dy the Federal

statute.’’

This established ruie of partial exemption founde dl

state public polity conside rabionsAias not been’ altefed or

changed by any ‘decisions invol ing § 5219. Furthe

the congressional creation of federal savings and loat asso. |

‘ciations by the Home Owners’ Loan Act of 1933 demon-

strates a congressional ‘¥ecognition and affirmance of the

proposition that savings and loan associations are not to

more,

-

.

o

be compared to national banking associatians for purposes

of determining the- validits v of state tax systems.

.

‘ - ° = e

Appellant attempts. to corivert its unsupported argument

into a substantial federal question in this causegby asserting ;

that the pirtial exemption rule was dependent upon the

lack of factual competition betwéen the moneyéd capital of

_such institutions and of national hanking associations; and,

_ further, that no sound public policy reason exists to justify

prefer ential tax treatment of savings and loan associations. 4

The difficulty with this argument is that it does not jibe

» with the language employed by this Court on numerous oc-

-. easions in interpreting § 5219; it is inconsistent with con- ~

gressional treatment of federal savings and loan —.

tions by the Federal Home Owners’ Loan Act of 1933;

requires the Hartford case, supra, 273 US .548, to be read 8 as

overruling the Mercantile case, supra, 121.US 138; and-it.

ighores the actual proof of competition in some of the par-

tial exemption cases, including Bank of Redemption’ v:

Boston, supra, 125 US 60, and Hoenig v. Huntington Na-

tional Bank, supra, (CCA 6th Cireuit) 59 F 2d 479.

The appeHant is in error in its contention that the partial

exemption rule is not applicable where there is factual com-

‘petition, as is illustrated by tlie record in. Bank of Redemp-

tion, supra, *125..0 S 60, Records and Briefs, US Sup. Ct.

Vol. 472, ‘Vet. Term 1887. [16] eae :

weiscactaiaatehs : erg a

ug - 2% oe eae’ ‘

As there stated: "s

**d. The stipulation of fatts reads in part: “Said savings bank in

the year 1885, aud’in the years before- that, received deposits and.

loaned a part thereof: (1) on promissory notes secured by col-

lateral securities such as they were by law allowed to invest their

deposits in; (2) on notes of cities and towns; (3) on promissory

notes with two sureties, called ‘loans on personal security’, in most

cases with collateral other than ‘such as mentioned befort (except

\ \

e °

a

Appellant’s fallacy (that the partial exemption rule is

based upon an absence of factual competition) is’ further

- illustrated by reference to. the Hoenig cases [Commercial °

Nat. Bank, Columbus, Ohid, et al.,v. Treasurer of Franklin

County, Ohio, 45 F 2d 213, reversed ‘by a divided court,

Hoenig v. Huntington National Bank, supra, (CC ‘A 6th

Cireuit) 59 F 2d 479, certiorari denied 287 -US 648]. The

District Court in the Hoenig litigation Appointed a Speci ial

Master, Who took’ voluminous evidence. pertaining to the. .

question of the competition between savings and Joan asso-

ciations and national banking associations in Ohio i in 1926. —

In his report to the District Judge, the Special Master -

found that a xelatively large and material part of the

moneyed capital of building and — associations was em-

in the case of notes of corporations which wire taken without

collateral and to a large amount), * * *.”° (P 25-Record)

2. The stipulation further indicates that the notes of the’ sav-

) mgs banks were not ‘materially different, in terms and conditions,

ne from the bank notes and for that reason it was further stipulated

that: ‘In the ordinary course of: the. business of horrowing and

ivaning | money in Massachusetts persons engaged in obtaining loans

oy such notes or negotiating them for themselves or others during

Aaiad years applied for. and procured them indiscriminately at said

savings banks and said ‘national banks wherever they cauli ‘ob-

tain them on the best terms; and said savings banks usually made

_—sact-toans” on ‘Tonger ‘terms and lower rates * **.” (P 26- Record)

3. Of. approximately $66,000,000 of total assets of the savings

banks in Boston in 1882, $25,000,000 were investéd in the type of

“notes desgribed above. (P 71-Record) . vo

‘.

4. Bank assets in Boston in 1882 amounted to approximately

$111,000,000 and savings bank assets amounted -to approximately -

$66,000,000, which was in excess of the ~~ of ‘all bank stock in

Boston: 4{P 71-Record)

savings banks in Mecsae huxeits, amounting to ap-

15,000,000, included government bonds, railroad bonds,

cash, real-estate, loans on real -extate mortgages,

_proximately |

bank deposit:

and loans of approximately $62,000,000 which were on personal

security. -(P 43-Record) a

ployed in the making of loans of a a ormal to’national

banks and in substantial competition with the ‘business of,

national sor in Ohio. are iia are °

The District Judge agreed with these findings. In his,

‘Special Findings of, Fact and Separate Conelusions of |

Law’? [Hoenig Cireuit Conrt of Appeals Record, pp 81, 82], ,

he referred at length to the varied and substantial activity.

of the’ sa¥ings and loan associations-in Ohio, which con-

stituted the same activity carried ‘én by national banks’ in

Ohio and ia Columbus. Ile stated, after analysis of the

facts: ar ‘

‘As a conclusion from the above facts, it is found

that while not all of the business.done by building and

‘ loaf companies comes.into competition with the plain-

tiffs and. other national banks in the City of Columbus,

ap relatively: large, and material part of the moneyed |

capital of building and lean associations in the City of

Columbus is employ ed i in the making of loans of a kind

normal to national banks and in substantial. competi-

tion with the business of the plaintiff banks and other

national banks in the C ity of Columbus in the making

of mortgage loans bv such natioral hanks and the em-

ployment of their capital for said purpese.’’ ( pp 81,

82. Record)

— of such substantial factual competition, the Dis-

trict Court held that § 5219 was violated by the Ohio tax

on national bank shares. The dissenting judge in the Cir- -

cuit Court of Appeals arrived at the same conclusion by

the same reasoning.

wat

It is thus apparent that the Circuit Court.6f Appeals, in

reversing the District Court, was well aware of the sub-

stantial factual competition found to exist by the Master

a

.

‘ *

—2i— i

A

and by the-District Court. Without meritioning the finding

of substanitial factual competition; the majority in the/Toe-

nig case found no ‘substantial competition’? within “§ 5219

because of th. marked differences between savings and,loan

institutions and national banks and because the partial .ex-

emption rule controlled.

’.

° : . \

The following table is a comparison of some of .the sta-

tistical information set forth in the Hoenig record with the

same information for Michiyan for the year 1952. :

©

” ae

43

< ¥

_ ie

* 4

* “HOENIG” FACTS* (1926) ° : FAC TS IN THIS © - SE asd) :

"Numbers i in brackets cefer to PARES | of the aioonly ? rec ord. yee .

SS eeneaebaent Sagem Oe cc - o econ none * —_- pagan narepemren career eons ~—— = a ag aaa nae see

sine of “AM National _ Assets of All S& wy aie of 2) hues aa All National “ of AIS&L Ratio of (+

Banks in Ohio (1) Ass't ns iti n Ohio (2) - to (1) "Banks i in Mic h. (a Ass'n ns in Mic h. CH) ‘to (3)

fa ~ ——-$9.17,979,000, . : J |

- [Beport of the comp- $928,381,733. — : . Sa $3.728,3 40,000 ; $53.4,314,000 1

troller of the Currency,”s ©. (78,316) [Exh. 226) - {Exh. 6] a Se

1926, P. AMA) os ‘ . oe ’

= — — Taye _—<<- ° Oo <2 == a = —=—=. oo __-——- =~ > > =— = = = ee = = - =

“Total Real ‘Estate Total Real FKstate > Ratig of 4% Total Real Salas - "Total Real Estate Ratio of 81.25

Loans of Banks at Loans of Ass’ns at* ~ to >.14% Loans of Nat’l Banks ~ — Loans ef Ass‘ns in (80.4) Lo

Beginning of Year ‘Beginning of Year - in the U.S. in Percent the U.S. in Percent 76%

and Pere ent of Assets and Perc ent of Assets of ‘Total Assets: of Total Assets

$48,712,000 $811,078.17 1.35 oe r ‘ee 81.20 10.7 7

- om (87, 65) =5.19% (38, 81j=91% W240 [Exh. 230, 224A] « (AIS & LE 7 ae

> : ; . ° ; : © ‘Michigan = 80.4%) (10.6)

oo ¢ 3 9 : 2 (Exh, 209, 224A]

— —— ——————— 2. SSS — ——<—= = — a —_——-_ -_—_— = <= — = ee —_—— —— =

De outed Deposits plus Ratio of 79.6% Deposits ee “Share Deposits of Ratio of 84.85%

~All National Banks Running Stoc k"of = to 711.3% All Nat'l Renhe All Ass’ns + (87.0%) to

, in Ohio All Ase’ ns in Ohio in the U. in the U.S. 91.8°%

p “$076, 125. 000 (ot, 343) $738, 348, 784 316], ‘ . or 8% of total assets 84.8% of sathdansett * 9 :

\ = 71.3% of = 79.6% of 1.12 : ~ {Exh, 224] “87.0% in Michigan = * Se

q. ‘f assets total assets ae (Mich. Nat'l Bank [Exh, 221, 223A] (94) -

, se . * is abso 91.8%)

. ° —— ————————SS SS = a = —_——_—— —— nn 1 SS eee ——— > —— ——— —~o— —- on — . a-:-— ——

AV erage. Inv estinent** “ 7” “Ohio assoc ciations hind bot h deposits and savings share account hicldets. Avera ‘Shareholding

._-“-e—“«—— » “ Some persons undoubtedly had both types of accounts. ° The record 9 ——-—----—_-—_-———

Brae $197 —s does not disclose tlie averagé per capita holding in both. accounts. ¢ $1419 (8-15-52)

i Average Outstanding Loan The average investment of $497 includes reserves and undivided Average Outstanding Loan °

— profits of $22 per share.- .

$2805 . ee, $1872 (8-I5-52).

;

° ,

— U — ~ a A Z

‘

> _° hy : y

is o)

ae

This table aptly demonstrates (as do many other refer-

gnees to the Hoenig record found in the appellees’ brief

before the Michigan Supreme Court {pp 113-114, 161-171 })

- that savings and loan associations in Ohio at the time of the

- Hoenig decision were more formidable financial institutions

‘and were as much in competition with the business of na-

tional banks as were the 16 savings and loan associations in

Michigan, in 1952. oe

us clear that appellant is asking this Court to set

loan associations and to overrule the clearly established

precedent of this Court that kept intact the partial exemp-

tion rule from the early case of People y. Weaver, supra,

(1879) 100 US 539, to date—some 81 years—based only on

the reediike argument that ah Fumaterial issue [factual

competition] was not decidedyin. the fartial exemption

cases, 17]

[17]

Appellant attempts this also by ignoring the limitations con-

‘ tained in the partial exemption rule, ie., that the exemption (1)

miust be partial only, (2) must not operate as an‘ unfriendly or.

hostile discrimination against owners of national bank stock, and

(3) must be based on just reason and sound public policy, While

not contending that the Michigan’ tax structure operates.us an

unfriendly or hostile discrimination -or that the exemption is

‘not partial only, appellant is asking this Court to overritle the

established public ‘policy concerning savings and loan associations

and other mutual thrift institutions as‘far as § 5219 is concerned.

The contention of the appellant that the established public poliey

concerning sayings and loan associations should be ignored is an-

swered by the lower court as follows (3S8b-39b): )

“Plaintiff further alleges that there has been ouch a sub-

stantial change in the purp ose and character of building’ and

loan associations since the savings bank ceases and the Hubbard

case that those authorities are, no longer applicable.

s

—

previous recognition of established publie policy -

ting mutual thrift instittitions such as savings and.

‘

Stes

The capital of savings and loan associations, represent-

ing savings-share accounts, invested in the narrow and

restricted field of first mortgage home financing is not »

in “substantial ects with the capital of national

banks within the purvitw of § 5219.

Because of the absence of pieatandial competition”?

under § 5219, there is: still no substantial federal question.

In consistently ruling out savings and loan associations |

and mutual savings banks from-consideration under § 5219,

the courts wer@well aware of two things: (1) That mutual

savings banks ay! savings and loan associations’ were re-

3

“This same contention was answered by the Circuit Court.

of Appeals in the Hoenig case. It is'answered by the testi-

-mony of Professor Woodworth in this. case and Congress by

its definition of the purpse of the 1933 act effectively settles

the question of the character and purpose-of these -institutions.

“The Michigan Act has not been substantially changed since —

‘its adoption in 1887. It continues to provide that building and’

‘loa associations shall not do a banking business and- shall

not accept or advertise -fot deposits. It has been amended to.

make it compatiblé with the Fetleral 1933 Statute. Its purposes

are to continue to be?those stated in-the Ke@eral Act, namely:

**Po provide local mutual thrift institutions in which peo- -

ple may invest their funds’ and (which) ‘provide for ‘the

financing of -homes.’

- “The proofs do not support a finding that there has been

any material difference between the Michigan institutions of

_the present day and those organized Under the Federal Statute.

**

“Both the reasoning.of the courts in the savings bank cases,

‘the Hubbard case and the Hoenig case, and the provisions of

the 1983 Act relating to Federal Saving and Loan institutions, -

and those of the Revenue Code giving preferred, treatment to’

such associations in their income taxes (26 U.8.C.A. 116C, 591)

furnish convincing proof that Congress had determined and the

others recognized just reason for the éxemption of [or] pre-

ferred tax’ treatment of these associations.”

/

- 2

. , stricted by legislation to ve rv limited activity and were not

permitted to engage in the banking business; and (2) that

- they were organizations whose business was the direct and

active use of the pooled~ ~funds of their members as con-

trasted to national banks, which, as ordinary profit stock

_ corporations, utilized moneys from sourées Other than their

7 investors to carry on their general banking business.

¢ The question thus posed is: How can fundamentally dif-

ferent institutions, which cannot be compared, be said to

be in ‘substantial competition” within the meaning of

§ 52197 | iene ae

power does not attempt to answer this question but

assumes that savings and loan associations are in sub-

‘stantial competition with national banks because both in-

stitutions operate in the home’ financing field. To substan-

tiate this, appellant. showed ‘that it employs a part of ‘its

assets ‘in the traditional home financing field of the savings

and loan associations.[18) |

ot.) . | ;

Appellant, in its statement as to jurisdiction, poses a question’

_ Of competition between savings and loan associations and national

banks for deposit money. It is submitted that the competition with

which § 5219.js concerned is other moneyed, capital in eompetition

with the money that would be invested in national bank stock and

not money that would be deposited in tiational banks. The express’

holding of Hoenig v. Huntington "National Bank, supra (1932)

(CCA 6th Circuit) 59 F 2d 479 “(cemt.. degied 287 US G18) fore-

«auch argument. As there stated at pp 482-483:

s to the alleged ‘competition for. deposits,’ it is evident

fr n the. universal expressions of ‘opinion by the Supreme

urt that ‘competition, in the sense intended, is limited to

the employment of moneyed capital ‘substantially us in the

loan and investment features of banking.’ Deposits constitute

moneyed capital, but national banks are not ‘taxed upon their

deposits any more than are savings banks and building as- -

6 ° ed ; t . \

e

Appellant gives no recognition in its-argument to the

established rufdythar the issue of ‘substantial competition

+ With the business of national banks presents a mixed ques-

tion of fact and of law. As stated-bscthis Court in the case

of First National Bank vy. Hartford, supra, (1927) 273 US

M48, at p 352:

Or,

“*e *-* The validity ofthe tax complained of de-

pends upon’ whether or not the moneyed fapital in the

stateathus favored is employed:i in such a manner as to

‘bring it into substantial competition ? with the business |

4

of national banks.

“The question thus raised involves considerations

hoth of fact ard of law..To answer it, it ix necessary-to

ascertain the nature and extent of the moneyed capital.

in the hands of individual citize ns within the state and

the relation-of its employment, in poirt of competition,

to the business of plaintiff and other national banks

[QUESTION OF FACT]. It is necessary also to as-.

certain the preeise meaning to beqgiven the statute as

“applied ty the facts in hand in order to determine’

whether the particular, moneyed: capital awd the var-

ticular competition with which we are here concerned

soviations: cand We. are hove seleiavile concerned . walks with

what is done with such “moneyed capital after it is secured,

not with competition to’ obtain it. There is clearly no dis.

tinction in law between the competition for deposits as be-

* tween national banks aml savings banks: and the sdine_ com.

petition as betwee n onAtional banks and building assoc iations.

Thus Mereantilé Nat. Bank v. New York, supra, seems directly

in point on this issue.” :

as otherwixe stated in | People y ¥. Gioldfogle, supra, (1924) 205

NYS. S70, at p S79, 123 Mise, 399 (aff'd by App. Div. 211 NYS 8&5):

— oe Far were depositor in the national bank itself j is” lend. |

ing money to the bank, often at interest, but such persons do

hot aciually compete for business with a | national bank.”

°

- bank shares.

= a ;

gre meaeved capital “ind competition within the spirit

and purpose of the statute [QUESTION OF LAW)

The question is thus a “mixed one of Riw ant Tet, ain

—in dealing with it we may review the facets in order

correetiy to apply the aie

(Bracketed inaterial and emphasis added)

The fact of “‘competition”’ is the “nature and extent of.

the moneyed capital’? and the ‘relation of its emplovment,

in point of competition, te the business of * ie nations:

_ bangs. " The law of “competition is ‘tte ascertain ths

precise meaning to be given the statute as apolied to the

facts in hand in order te determine whether the partiontar

moneyed capita! and the particular competition : ° 7 are

moneyed capital and competition within the spirit and pur

pose of the statute’? Ultimate dééision i< te be made by

the application of the lar of Stcompetition’’ to the con

clusions reached as to fygetual competition io determine

“whether the eompetition, is of such a character of quatity

“that it will substantially interfére with the operation and

preper functioning of national banks and thus constitute a

-hostile and unfriendly discrimination against fhe business

of natjonal banks and discourage investments in national

fa

If competition is found to-be sulistantial in amount but

not of the kind or quality: which evidences an Cutent te dis-

criminate against national bank. shares: oF create an un-

friendly or hostile attitude against the Susiness of national

banks and’ this jeoparadize the national baaking system,

such competition is not ‘‘substantt: al’? as a matter of law,

as the phrase “substantial competition is used in the de-

« isiongegute rpreting { 0219. 119]

[19]

In some cases the courts have used the phrase Sother moneved

. .

capital” as being limited to capital emplered ino substantial com-.

e

— we

It. clearly follows that the phrase ‘‘substantial competi

tion’? does not méan competing. however keen or large in

amount, within a limited segment of the national banking

busine. +, if means competition, of a serious character, with

the major or characteristic functions of 1 yational banking

business. It is believed this interpretation and application )

of “substantial competition’? has been the concern of the =

courts in dee iding the ‘ 4219 cases, Viewing ‘‘substantial

in. this light, it 13 of course necessary to de-

competition’

‘termine the nature and character of the institutions com-

peting, as well as the employment of their capital, to see

what phases of the business of national banks could be ad-

versely affected if Such moneyed capital were tax exempt:

or taxed at a lower rate than national bank shares. This

was well reeoguized by this Court in First Vational Bank

of Shreveport v. Louisiana Tax Commission, supra, (1933)

289 US 60, which realistically approached this problem and

held that savings and loan associations were not compar-

able and were of-a completely different charaéter than -na-

tional banking associations. Therefore, they could not be —

in substantial competition as a matter of haw.

Appellees’ witness Professor George Walter Woodworth,

Professor o7 Pinance at the School of Business Administra-

tion, University of Michigan, who testified at length con;

cerning the nature and activities and economic strueture of

commercial national banks, enutual banks, and savings ‘and —

loan ASSOC iations, concluded that savings and loan associa-

-{ions were not in substantial competition in a true, factual,

or econanic sense with appellant or other national banks.

Only brief references to his testimony have been made here.

petition with the business of national. banks, while, in other ‘cases, -

the courts have referred to “moneyed capital” as the kind of

capital that can compete in a legal sense. a

Verbatim reading of his testimony clearly indicates the true

‘nature of the competitive situation at har’ (803a-910a).201

The Michigan Suprenfcon specif ically found that

“The record i in this appeal discloses Nhat Michigan

building and loan associations operated in a narrow,

restricted field, are markedly different in character,

‘purpose and organization from national banks, and

are not in (substantial competition). with ‘national

banks,’’(68b)

e.

It is therefore clear that the appellant has rot met the tests

‘of ‘substantial competition’? within the purview of § 5219

and thereby has failed to present a substantial’ federal ques-

tion for review by this Court.-

2.

APPELLANT HAS NOT PROPERLY RAISED A

FEDERAL QUESTION. —Ss

_ The foregoing analysis ofthe applicable statutory and

ease law’ establishes that a proper federal question ° in the

instant case can be predicated only upon: _

(1) Changes in the character and purpose of savings

and loan associations doing business in Michigan in 1952

rendering inapplicable the partial exemption ‘rule.

[20] 4, or ’

His testimony is analytical, instructive and informative. It was

developed in reference to the specifie circumstances of this cause.

It was, significantly, the only expert opinion offered at the trial

of this ‘catise concerning the eemNpeTipen of national banks and

savings and. toan associations.

nd

a

°

= ee

(2) A,showing that the tax stricture of Michigan evi-

denees, on the part. of the Michigan legislature, a. hostile

and unfriendly discrimination against liivestors In national-

bank stock. om a :

Since appellant doeg not contend that either of these con-

ditions existed in 1952, it has not ‘aid. a foundation. to

properly raise a federal question for review #nd adjudica- .

tion by this Court. : - : ‘ |

j 3

‘ | . ; )

‘ m a nae bs 3. ‘ :

_ THE DECISION OF THE STATE COURT

- ‘18 CONCLUSIVE. oe

‘The trial court, after an séxhinnstive-amntyits c of the ap-

plicable decisions of this: Cc ‘ourt, stated:

aoe cen

“ee 8 poe een

» “*I.: Since J887, the Courts have consistently held.

in every case squarely involving the question that the

state may exempt or prefer oy the ground of public

"policy mutual savings bank and other like ‘institutions,

“provided suehr exemption is based on _just reason. and

is not made for the hostile purpose @€ an cuntriendly

discrimination with national hanks. ;

®

“2. That the power of the State to make-such ex-

emptions on the ground of public policy is an important |

one, grounded in history and on precedent. The inten-

_ tion of Congress to ‘destroy it should not be lightly”

‘inferred. |

bs

e

“*3. The“1923 and 1926 amendments to section 5219

and the amendments to the Federal Reserve Act

amen

\

ji ane —37—

deadening the powers of the antinnel banks were not

intended to ‘take from the-State such long established

‘and well redognized power.

“4. That from their beginnings and continuously.

-* throughout-their history,.buiding and loan associations

have been similar in character and purpose to and of

‘the same general class of. mutual thrift and home ft1-

nancing institutions as mutual savings banks.

©

.

“5. That Congress in the Home Owners Loan Act

of 1933 definitely recognized and approved such classi-

fic ition of savings/hpilding ¢ and loan associations and

the propriety of differen it tax trgatmenits of banks and

“such associations and in effect, said that money in-

vested in such associations is not moneyed capital in

1° competition with the ‘business of national banks, °

@

-

“6. That Michigan’s tax treatment of} savings:

huilding and loan assoctations is based upon just cause

aid does not evidence an intent to Create or, foster a

hostile or unfriendly discrimination against national

banks}? > (41b-42b) a ee

.

.

These conclustyns were favorably reiterated by the Mich-

igan_ Supreme Court (50b-51b). “In addition, the Sapreme

C ‘ourt of Michigai\specitic: lly found: fe

+ Saat ie ti ;

(7) “ The-recoyd in this appeal discloses that Mich-

-igan buitding and-loan associations operated in a par-

row, restricted field, are markedly different in -char-:

acter, purpose and organization from national banks,

and are not in ‘substantial competition’ with national |

banks.”’ (68b) (Italies added) .

(8) “The: record. established that there was prac-

es, \

x.

oe.

tical equality of the total tax imposed upon building

und loan associations and upon national banks, and

any difference would he justified as partial exemptions

under: the deeisions of the supreme court of the U nited

States quoted above. The réstriction contained in RS

§ 5219 has to do with the actual incidents and practical ‘.

band of the tax imposed. * * *’’ (68b)

Findings “4,7 “6” and “8” above _ are factual in na-

ture and conclusively indicate that the partial exemption

gases are dispositive of the federal question sought to be

raised yee the appellant.

Even assuming that the. wnsiial exemption rule is no long-

er applicable because findings of fact ‘4,’’ ‘*6”’-and ‘‘8”’

were in error and the argument of appellant in this cause

were otherwise valid, the finding of the Michigan Supreme’

Court.that there was no ‘‘substantial competition’’ (Find-

ing ‘‘7"? above, a mixed question of fact and law under

the Hart ford case) between the 16 savings and. loan associ-

ations in’ question and the appellant national bank is still

conclusive, .-

_— =

RELIEF.

It is respectfully’ submitted, for the. reasons herein

- stated, that this honorable Court should either dismiss the

appeal of the appellant or affirm the judgment of the lower

court. | ; - |

Respectfully submitted,

PAUL L.-ADAMS

ATTORNEY GENERAL

Samuel J. Torina

Solicitor General

William .D. Dexter

«\ssistant Attorney General

For Appellees .

Business Address:

The Capitol

Lansing, Michigan

_ ADDEN DUM A

/THE TAXATION OF INTANGIBLE PROPERTY

.. °°, IN MICHIGAN e

The State of Michiga: in has always’ taxed the shares of

national banks. Prior to 1939, certain shares were ‘taxed

a pursuant: te the statutory formula under the ad valorenr

a tax law, whicle govered ‘all real and pérsonal property in

Mic higan./21 to was very difficult; if not impossible, ‘to,

stub jet, to ad valorem faxation’ intangible personal prop-

erty at theerdinary ad valorem rates.’ ‘It is a matter of

common historic: il knowledge that such intangibles were

not disclosed for ad.valorem taxation purposes and that.:

it was impossible for local assessors to ferret out intangible

property and place it orf the local ad valorem property tax

rolls. In an effort to meet this problem, ‘many. states pro-

vided for the taxation of intangible personal propérty at

a mueh lower rate than the ad valorem rate. By lowering

a the rate on intangible property, these states hoped to get -

fuller disclosures of such properties for tax purposes. In

niany States, even though the new intangibles tax rate was

only a fraction of the old ad valorem tax rate, the amount |

aie ace property increased.

: e ‘intangible tax act in 1939, bank

shar es were taxed ina manner similar to the shayes of other

financial institutions and corporations’ — aut a rate of 6%

of the divided income -but not less than 1/10th, of one per

‘cent or more than 3/10ths of one per cent per par, face or

contributed value of the Share.l22] .

Jl 211 . ; :

“Net 206, Mich. Pub. Acts 18933 [Mich. Comp. Laws § eS) 5

Mich, Stat. Ann. (Henderson) §: 7.8(8)].

[22 es

Vet 1, Mich. Pub. Acts 1939 [Mic¢h. Comp. Laws § 205.131, et

. Seq.; Mich. Stat. Ann. (Henderson) § 7.556(1), et seq.] —.

>

a

Subsequent -to the. original enactment, amendments

changed the rates and’ ‘ds to bank shares, provided for the’

collection of the tax at the source.[23] :

_ In 1952 the legislature amended ‘the intangibles tax ac ;

and provided that.in the case of income-producing bank

shares,. the tax should be measured by 314% of ineome or

~1/10th of one per cent of par value, whichever is greater.

A tax’ at the same rate was imposed upon all other intangi-

bles with: the exception of bank: deposits and savings and

loan shares, which were taxed at the-rate of 1/25th of one .-

“per cent to the savings shareholder or the bank depositor.

However, these taxes were required to he returned by the

institutions. They could elect to absorb ‘them.

In 1952 the legislature further amended the act to pro-

vide for an additional instangibles tax on shares of hanks

and trust companies equal to 4 mills per, dollar .of the

hook value. Before this 4- “mill. tax became-due and payable,

‘the legislature in 1953 adopted Act.9, effective March 25

- of that year, which is the statute in question here, It pro-

vided phat for the calendar ‘year ™ 92 and thereafter, tie

exclusive tax oni all shares of banks and trust companies

shoiffd be 514 mills per dollar, measured by the capital, f

surplus and undivided profits represented by each shareof.

the common stock for such year. Preferred stock: of any

such institution was taxed st the same rate [ay

) ns eo aa a

Act 301, Mich. Pub. Acts 1939, as amended by Act 25, Mich. Pub. .

Acts 1941; Act 16%, Mich. Pub. Acts 1945; Act 175, Mich. Pub. Acts * >

_ 1947; Act 308, Mich. Pub. Acts 5049; and. Acts 76 and 246, Mich.

Pub. Acts 1951.

[24] |

Act 9, Mich. Pub. Adts 1953 [Mich, Comp, ‘Laws 205..%2a; Mich.

Stat. Ann. (Henderson) Be7 556 (2) ] ,

a ee

OTHER TAXES IMPOSED IN MICHIGAN ON

‘FINANCIAL BUSINESS IN 1952

In 1952, federal avd state savings and loan associations

were taxed at the raté of 1/10th of a mill on authorized

capital stock.[23] Foreign co orations doing business in :

p ep g

Michigan were subject to the same tax, the amount of their

taxable property being determined in accordance with a

statutory formula. (26)

All financial businesses (individuals, partnerships, corpo-

rations) alate personal property ‘and _ prop-

[25] °

Aet 183, Mich. Fub. Acts 19524[Mich. Comp. Laws § 450.308, et

seq.; Mich. Stat. Ann. (Hepderson) § 21.203, et seq.]

By Act 144, Mich. Pub. Acts 1954 [Mich: Comp. Laws & 450.363,

et seq.; Mich. Stat.,Ann. (Henderson) § 21.203, et seq.], the legis-

lature repealed the franchise and privilege taxes imposed on for-

eign and domestic building and loan associations.

By Act 157, Mich. Pub. Acts 1954 [Mich. Comp. Laws § 489.29,

et seq.; Mich. Stat. Ann, (Henderson) § 23. 572, et sey.], the legis:

lature imposed a privilege tax on domestic buijding and loan

_ associations equal to 1/4th, mill on the amount of capital and re-

serves; and a franchise tax equal to 1/10th mill on authotized.

¢

capital.

By Act 158, Mich. Pub. Acts 1954 [Mich. Comp. Laws § 489.201,

et seq.: Mich. Sjat. Ann: (Henderson) § 2%, 591, et seq! * reign

_and state building ‘and loan associations were subject to a’ priv-

ilege tax equal to 1/4th mill on capital and reserves and a. frane hise

tax equal to 1/10th mill on ‘paid-in capital. ;

By Act -180, Mich. Pub. Acts 1954 [Mich. Comp. Laws Ԥ 489.371,

et seq.; Mich. Stat. Ann. (Henderson ) § 2HORI(1), et seq.], federal

savings and loan associations were subject to a privilege tax equal

‘to 1/4th mill on capital and reserves.

[26] ; ;

Act 85, Mich. Pub. Acts 1921, as amended py Act 183, Mich. Pub.

Acts 1952 [Mich. Comp. Laws § 450.303; Mich. Stat. Annz (Hender-

son) § 21.203] . & Pcie

&

e ; » —43—

erty in Michigan pay uniform ad valorem taxes,271 (except

in the case of banks and trust companies as to person-

_ alty)(28] the amount ef which is determined by the local

rate.

y

Domestic insurance companies are subject to-an annual .

tax of 5 mills, measured hy capital, surplus and unassigned

funds. The maximum tax is $50,000.[291 Foreign insurance

companies pay premium taxes ranging from 2% to 3% of

their gross premiums recdived from Michigan sources.[30]

i ears : ty

Federal and domestic credit unions are exempt from fil

taxation except real and tangible personal property taxes.

All other financial businesses other than ‘eelioaal banks, i

including state banks and trust companies, were subject

to miscellaneous state tax measures, which included use

tax on their purchases and sales tax on their sales, being

of the nature that could not be imposed upon national ,

banking associations under the provisions of ¢ 5219.

[27]

Act 206, Migh. Pub, Acts 1893 (Mien, Comp. Laws § 211.1, et seq.;

Mich. Stat. Ann. a) § 7.1, et seq.]

{28]

Act 261, Mich. Pub. Acts 1949 [Mich. Comp. Lats | § 211.9; Mich.

Stat. Ann. (Henderson ) § 7.9]

[29].

Aet 180, Mich. Bub. Acts'1952 [Mich. 4 ‘ompe).aws § 505.1; Mich.

Stat. Ann. (Herderson) § 24.64(1)]

130] *

Act 91, Mich. Pub. Acts 1923 , [Sien. Comp. Laws & | 61: sual. Mich.

Stat. Ann. (Henderson) § 24.105] :

Je