Corporation & Securities Commission v. McLouth Steel Corp.

J. H. Gillis, J. The question that again confronts this Court deals with the proper computation of the Michigan franchise fee. 1 Defendant McLouth Steel Corporation contends that the balance sheet item *412 captioned “reserve for Federal income taxes” is not includable in surplus for franchise fee computation purposes. Defendant further contends, by way of affirmative defense, that the issue raised in this case is barred by the doctrine of res judicata, citing McLouth Steel Corporation v. Corporation & Securities Commission (1963), 372 Mich 76. The trial court granted defendant’s motion for accelerated judgment and the plaintiff, Lenton G. Sculthorp, commissioner of the Michigan corporation and securities commission, appeals. The McLouth Case has recently been cited by this Court 2 where it was said that the case could not be considered as precedent as it was a 4-4 decision. While seven justices agreed with the contention that the corporation and securities commission is not bound by the accounting procedures employed by the taxpayer (a private corporation), the four justices voting for affirmance agreed with the trial court that the reserve account was properly carried as a liability, was not part of surplus, and not subject to imposition of the privilege fee. This Court has recently had occasion to consider the effects of a Supreme Court decision rendered by less than a majority of the Court. Corporation & Securities Commission v. American Motors Corporation (Appeal re Detroit Edison Company) (1966), 4 Mich App 65. In this case at p 67, we held: “While it is true that a decision made by less than a majority of the Court is not precedent as to future cases, it is controlling as to the parties involved and to the issues decided.” The parties in the present case are the identical parties involved in McLouth Steel Corporation v. Corporation & Securities Commission, supra. *413 Plaintiff attempts to distinguish, the present case from McLouth on the theory that McLouth dealt with the years 1957-1959 and the instant case involves franchise fees for 1960 and subsequent years. The same proposition was raised in W. H. Atkinson Co. v. State Board of Tax Administration (1941), 299 Mich 315, 318: “The attorney general urges us to hold that: “ ‘The doctrine of res judicata should not be employed to thwart exertion of the sovereign power of taxation; and a prior judgment of seven years’ standing, on an action to recover taxes paid under protest, is not conclusive of a subsequent levy of the same tax upon the same person for a subsequent period.’ ” Our Supreme Court in answer replied, at pp 318, 319: “We cannot place a time limit upon the rule res judicata for it operates for all time as between the parties when the same questions are subsequently presented. * * * The parties to the former action and to this being the same, the subject matter of the former and this action being the same, the point of law in the former and this action being the same, the adjudication in the former action, having become final, is res judicata.” The years involved in McLouth were not determinative of the basic issue which concerned the propriety of treating the disputed items as a liability rather than a surplus for franchise fee purposes. The legal effect of the McLouth decision 3 was to affirm the trial court’s approval of treating the reserve item as a liability and absent a showing that *414 the applicable law or defendant’s accounting procedures have changed, plaintiff is bound by the result of McLouth, irrespective of the years involved. Judgment affirmed. No costs, a public question being involved. T. G. Kavanagh, P. J., and McGregor, J., concurred. Footnotes [1] Provision for the franchise fee computation is to be found in CL 1948, § 450.304. This section has been amended at various times, pertinent here are amendments by PA 1959, No 276, PA 1961, No 227, PA 1962, No 216, PA 1963, No 63 (Stat Ann 1965 Cum Supp § 21-.205). [2] Ecorse Screw Machine Products Company v. Corporation & Securities Commission (1965), 1 Mich App 414, affirmed, 378 Mich 415. [3] CLS 1961, § 600.230 (Stat Ann 1962 Bev § 27A.230) : “When the justices of the Supreme Court are equally divided as to the ultimate decision of any case properly before the Court on review the judgment of the court below shall be affirmed.”