Diamond Match Co. v. Ontonagon, 188 U.S. 82 (1903)

Diamond Match Company v. Ontonagon

No. 96

Argued December 1, 1902
Decided January 19, 1903
188 U.S. 82

APPEAL FROM THE CIRCUIT COURT OF THE UNITED

STATES FOR THE WESTERN DISTRICT OF MICHIGAN

Syllabus

1. The Village of Ontonagon, Michigan, has power, either under its charter or under the statute of 1899 of Michigan, to assess logs in the boom or sorting boom in the Ontonagon River belonging to plaintiff in error.

2. The Legislature of Michigan could confer by statute upon the Village of Ontonagon the power to tax logs in transit to Ontonagon as provided in the act of 1899 for taxing personal property, and property which was in transit through the Ontonagon River, and then by the Chicago, Milwaukee & St. Paul Railway was properly assessed at Ontonagon, that being the place in the state nearest to the last boom or sorting gap of the stream in or bordering on the state in which said property naturally would be and was intended to be last floated during the transit thereof.

3. There may be an interior movement of property within the state which does not constitute interstate commerce though the property come from or be destined to another state, and where one hundred and eighty million feet of logs are cut, hauled and put into the Ontonagon River during two seasons for the purpose of saving, protecting, and preserving the same, and the owner cannot use more than twenty to forty million in any year, and it was not the intention to take all the logs down at the opening of the streams, but only to take down each season the number that could be used, the logs in the sorting gap cannot be regarded as property engaged in interstate commerce so as to be exempted from taxation under the laws of Michigan. Coe v. Errol, 116 U.S. 817, followed.

This is a bill in equity to restrain the collection of certain taxes levied under the following law of the State of Michigan:

Personal property of nonresidents of the state, and all forest products owned by residents or nonresidents or estates of deceased persons shall be assessed in the township or ward where the same may be, to the person having control of the premises, store, mill, dock, yard, piling ground, place of storage, or warehouse where such property is situated in such township, on the second Monday of April of the year when the assessment is made, except that, where such property is in transit to some place within the state it shall be assessed in such place, except that, where such property is in transit to some place without the state it shall be assessed at the place in this state nearest to the last boom or sorting gap of the stream in or bordering on this state in which said property will naturally be last floated during the transit thereof, and in case the transit of any such property is to be other than through any watercourse in or bordering on this state, then such assessment shall be made at the point where such property will naturally leave the state in the ordinary course of its transit, and such property so in transit to any place without the state shall be assessed to the owner or person, persons or corporation, in possession or control thereof, and in case such transit will pass said logs through the booms or sorting gaps, or into the places of storage of any person, persons, or corporation operating upon any such stream, then such property may be assessed to such person, persons, or corporation, and the person, persons, or corporation so assessed for any such property belonging to a nonresident of this state shall be entitled to recover from the owner of such property, by a suit in attachment, garnishment, or for money had and received, any amount which the person, persons, or corporation so assessed is compelled to pay because of such assessment, and shall have a lien upon said property as security against loss or damage because of being so assessed for the property of another, and may retain possession of such property until such lien is satisfied: Provided further, That any owner or person interested in said property may secure the release of the same from such lien by giving to the person, persons, or corporation so assessed a bond in an amount double the probable tax to be assessed thereon, but not less than the sum of two hundred dollars ($200), with two sufficient securities, conditioned for the payment of such tax by such owner or person interested, and the saving of the person, persons, or corporation assessed from payment thereof, and from costs, damages, and expense on account of his nonpayment, which bond, as to amount and sufficiency of surety, shall be approved by the county clerk of the county in which the assessment is made.

Pub.Laws, 1899, No. 32, p. 47.

It was contended that the taxes assessed were illegal and void

because said taxes were assessed in violation of and repugnant to the general provisions of the Constitution of the United States, and especially because said taxes were assessed in violation of, and said statutes of the State of Michigan are in violation of and repugnant to, those parts of Section 8 of Article I of the Constitution of the United States, which provide that: "The Congress shall have power . . . to regulate commerce with foreign nations, and among the several states," and Section 10 of said article, which provides that

[n]o state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws.

By stipulation, the bill was dismissed as to the Township of Ontonagon and the Township of McMillan. As to the other defendants, the bill was submitted on an agreed statement of facts and the pleadings. The court sustained the assessment and dismissed the bill. This appeal was then taken under section 5 of the Judiciary Act of 1891.

The following is the stipulation of facts:

It is hereby further stipulated by and between the complainant and the defendants Village of Ontonagon, and George Ducleau, its treasurer, that the following statements of fact are true, and may be used in evidence on the hearing of said cause by either of the parties to this stipulation, subject to objections for immateriality, to-wit:

1. The complainant is a corporation organized and existing under and by virtue of the laws of the State of Illinois, with its principal office and place of business in the City of Chicago in said state; that it is engaged, and has been from the date of its organization, in the manufacture and sale of matches, and that, in the prosecution of its business, it purchased and became the owner of a large amount of pine wood, timber, etc., situate on the Ontonagon River and its tributaries in Ontonagon County and other counties in the State of Michigan, and that for many years prior to 1896 it owned and operated extensive sawmills and plant near the mouth of the Ontonagon River, and within the corporate limits of the defendant Village of Ontonagon; that, in its usual course of business, it cut or purchased a sufficient quantity of timber to supply its mills during the following season, not exceeding forty million of feet, board measure, and placed the same during the winter upon and in said Ontonagon River and its tributaries, there to remain until the breaking up of the ice in said river in spring time, when they were and are driven down the river to the pier jams, booms, and sorting grounds of the complainant, located above said mills, and outside of the limits of defendant, the Village of Ontonagon.

2. That, in the summer of the year 1894, extensive forest fires swept over said pine lands of the complainant, and other pine lands, situate on said Ontonagon River, doing great damage to the timber thereon; that, in order to preserve the timber so injured by said fire, it became and was necessary to cut all of said timber and put the same into the waters of the above-named stream for preservation; that, during the winter of 1894 and 1895, said complainant, in order to preserve said timber, was compelled to cut and did cut about 180,000,000 feet of logs, and for the sole purpose of preservation placed the same in said river and its tributaries, there to remain until the complainant could float said logs down said river and streams to its mills to be manufactured into lumber; that it was not the intention or purpose of the complainant after the opening of navigation and during the season of 1896 to remove all said logs, but only such amount as could be manufactured at its said mills during the season, and that the capacity of said mills did not exceed about the amount of forty million feet per annum, as hereinbefore stipulated.

3. That the navigation of said river and stream is closed by reason of the formation of ice about the first of December of each year, and is not open until after the first of May, following in each year.

4. That, in the month of August, A.D. 1896, the complainant’s said mills were destroyed by fire, and that thereafter it became necessary, and the complainant did transport said logs by the Chicago, Milwaukee & St. Paul Railway, from Ontonagon to its sawmills located at Green Bay, in the State of Wisconsin. That, in the regular prosecution of its business of manufacturing said logs into lumber, said complainant has not, during any season since 1896, transported a larger quantity of said logs than it could manufacture into lumber at its mills at Green Bay, said quantity being on an average of less than forty million feet of logs, board measure.

5. That, for the purpose of preserving said logs and preventing the same from floating down said river and into Lake Superior, said complainant was compelled to and has utilized certain jam piers, booms, and appurtenances constructed by the plaintiff across said river, more than one mile above the mouth thereof, and beyond the limits of said Village of Ontonagon; that, by reason of said appliances said logs have been held in said river and upon the banks thereof above said jam piers, booms, etc., said complainant only passing through said piers such quantities as it could transport and manufacture into lumber at its said mills from time to time during each successive season since the year 1896; that, during each successive season, it has been the usual and necessary practice of the complainant to pass through said piers, booms, etc., such quantities of logs as said railway company could furnish facilities for transportation, thence down the river to the place of delivery, as described in paragraph 2 of another stipulation of facts made herein, to said railway company, to be loaded upon cars for transportation, and that said place of delivery was near the mouth of said river and within the corporate limits of said defendant the Village of Ontonagon; that all of said logs so delivered to said railway company are transported over its lines to Green Bay, Wisconsin, leaving the State of Michigan at a point near the Village of Iron Mountain, in said state.

6. That, at the close of the season of 1898, the logs in controversy were held by said complainant and detained and preserved by said jam piers, booms, etc., in said Ontonagon River, above and beyond the limits of said defendant the Village of Ontonagon, waiting the delivery for transportation, as aforesaid, during the following season of the year 1899, and that all of said logs were a part of the entire quantity cut and put in said river during the winter of 1895 and 1896, and had since that date been so held and detained by the complainant in its regular course of business; that all of said logs were so held and detained, and, by reason of the ice in said river, could not be floated down the same until about the middle of May, 1899, and that said logs so assessed, as charged in said bill of complaint, were not at the time said assessment was made, and on the second Monday of April, A.D. 1899, were not, except as stated in paragraph 4 of another stipulation, made herein, and never had been, within the corporate limits of the said defendant the Village of Ontonagon.

7. That the logs in controversy at the time said assessment was made by said defendant the Village of Ontonagon were and had been for more than one year prior thereto, in the manner above described, held and detained by the complainant within the municipal limits of the Township of McMillan, in said County of Ontonagon, and were assessed for the purpose of levying a tax thereon, for the year 1899, by the proper officers of said Township of McMillan, claiming the right so to do under the general statutes and laws of the State of Michigan.

It is further stipulated and admitted by the parties to this stipulation that the assessment of the complainant’s logs in controversy was not valid unless it shall be held as a question of law that the defendant the Village of Ontonagon had the legal right to assess said logs in said river outside and beyond the geographical limits of said village, as being in transit, under the statutes of the State of Michigan in such case made and provided.

The other stipulation of facts referred to is as follows:

1. Complainant shipped by rail from the Village of Ontonagon to its mills at Green Bay, Wisconsin, for sawing there, the following quantities of logs at the following times, out of its logs in the Ontonagon River, described in the bill of complaint:

Forty-two million feet in the season of 1897; thirty-seven million feet in the season of 1898, and fourteen million feet in the season of 1899 up to the date of the seizure of logs by the Village of Ontonagon for the satisfaction of the tax levied and assessed in and by said village in the year last named.

2. Within the Village of Ontonagon, is, and has been, situated in and throughout the year 1899 the last boom or sorting gap in said river, from which complainant’s logs in said river are taken and placed upon the railroad cars for shipment to its said mills at Green Bay, and said boom or sorting gap is the last place in said river where said logs are floated before shipment by rail as aforesaid.

3. During the season of 1899, beginning about June 1, and up to the time of the seizure above mentioned, about-million feet of the ten (10) million feet of logs mentioned in the bill of complaint, were driven down the said river from the boom, pier jam, or sorting grounds outside of said village, to the boom or sorting gap within said village, above described, and shipped thence by rail to complainant’s said mills at Green Bay.

4. About five hundred thousand feet of complainant’s said logs in said river have been (in said river of slough) constantly within said village since 1898, for the purpose of shipment by rail to the destination as aforesaid.

5. The Village of Ontonagon is a duly incorporated village under the general law of Michigan, to-wit: act No. 3 of the Laws of Michigan of the year 1895, entitled "An Act to Provide for the Incorporation of Villages within the Michigan, and Defining Their Powers and Duties," and is situate on said river and in the Township of Ontonagon, one of the defendants herein.

6. The water transit of said logs of complainant has heretofore always ceased since the burning of complainant’s mills, described in the bill of complaint, in said village, whence the same are shipped by rail as aforesaid.

7. Said river and its tributaries are streams of water or rivers, all within the State of Michigan and within the County of Ontonagon (and as to some small part within the Counties of Gogebic and Houghton) in which County of Ontonagon said village is situated.

8. Pursuant to and in accordance with the acts of the Legislature of Michigan mentioned in the answer of said village in this suit, namely, Act No. 319 of the Laws of 1893, and Act No. 263 of the year 1895, and pursuant to and in accordance with a vote of the electors of the said village, duly held therein, and pursuant to, and in accordance with the action of its council, said village, in the year 1894, borrowed the sum of thirty thousand dollars ($30,000), and issued and sold its bonds therefor, and in the year 1895 borrowed the further sum of twelve thousand dollars ($12,000), and issued its bonds therefor, and all of said bonds, being in principal and interest about forty thousand dollars ($40,000), were at the date of filing the bill of complaint in this cause, outstanding, and said bonds outstanding constitute a valid charge against said village and against the taxable property thereof.