Opinion ID: 839980
Heading Depth: 3
Heading Rank: 2

Heading: caselaw interpretations

Text: Petitioner argues that this Court, in analyzing the exemption under MCL 211.7o(1) and its predecessors, has construed occupation to mean charitable use and has not required physical possession by the exemption claimant. In making this argument, petitioner relies on cases that interpreted the third element of MCL 211.7o(1), that the property be occupied solely for a charitable purpose, and not the first element, that the real estate must be owned and occupied by the claimant. A review of this Court's caselaw yields no support for petitioner's argument. Our first case addressing the occupation requirement of Michigan's statutory tax exemption for nonprofit institutions was Detroit Young Men's Society v. Detroit, 3 Mich. 172 (1854). [4] In that case, the plaintiff was incorporated for the purpose of moral and intellectual improvement and owned a building in the city of Detroit that included a library. Id. at 180. The plaintiff offered for rent by third parties two stores on the first floor and two small offices on the second floor, but the remainder of the building . . . was used entirely for the purposes of the society. . . . Id. at 173 (opinion syllabus). Because the 1853 statute required actual [ ] occupation by the institution, [5] this Court held that the occupation must be exclusive and ruled that the property was subject to taxation, subject to a deduction of the value of the tenements actually used and occupied by them for the purposes for which they were incorporated, from the entire value of the lot and building. Id. at 184. In Webb Academy v. Grand Rapids, 209 Mich. 523, 525, 177 N.W. 290 (1920), the plaintiff, an incorporated educational institution, sought a property-tax exemption for educational institutions. [6] The plaintiff conducted school business on the property, but the founder of the school and his wife, a teacher at the school, lived on the property, along with a student who helped with upkeep in exchange for room and board. Id. at 532-533, 177 N.W. 290. This Court indicated that the owned and occupied element of the exemption statute was not at issue when it noted: That plaintiff was in full possession and control of the premises, and maintained an academy there, is not questioned. Id. at 535, 177 N.W. 290. It then agreed with the trial court that the property was occupied by the educational institution solely for the purposes for which it was incorporated and that the other minor uses, such as housing incidental to the school uses, did not defeat that conclusion. Id. at 539, 177 N.W. 290. Thus, this Court's decision focused on whether the property was occupied solely for the purposes for which the plaintiff was incorporated, not on whether actual occupancy was required to qualify for an exemption. Likewise, in Gull Lake Bible Conference Ass'n v. Ross Twp., 351 Mich. 269, 273, 88 N.W.2d 264 (1958), this Court noted that there was no dispute about whether the plaintiff owned or occupied the property. In that case, the plaintiff's stated purpose was [t]o promote and conduct gatherings at all seasons of the year for the study of the Bible and for inspirational and evangelistic addresses. Id. at 271, 88 N.W.2d 264. The plaintiff sought a property-tax exemption for charitable organizations. [7] Besides a tabernacle and youth chapel (for which the tax-exempt status was not contested), the property included an old hotel building used to house employees, a fellowship center building, a trailer campsite for persons attending the conference and living in trailers, cottages that were rented to persons attending the conference, a gravel pit, a picnic area, boat docks, a bathhouse, a beach, a playground, horseshoe and badminton courts, and parking areas. Id. at 272, 88 N.W.2d 264. This Court determined that the housing and recreational facilities on the property were necessary to fulfill the plaintiff's purpose. Id. at 275, 88 N.W.2d 264. Again interpreting the third element of the tax-exemption statute, this Court held that the property was occupied by the plaintiff solely for the purpose for which it was incorporated. Id. at 274-275, 88 N.W.2d 264. Finally, in Oakwood Hosp. Corp. v. State Tax Comm., 374 Mich. 524, 526, 132 N.W.2d 634 (1965) (Oakwood Hosp I) , the plaintiff was a nonprofit corporation that owned and operated a hospital. The plaintiff claimed a tax exemption for property on which its hospital facilities were located. [8] Id. Also on the property were six houses that provided housing near the hospital for the resident physicians and interns whose services and availability to the hospital at all times were essential to the operation of the hospital. Id. at 527, 132 N.W.2d 634. This Court held that the plaintiff was entitled to the tax exemption for the entire property, including the houses. This Court explained that housing the doctors and interns near the hospital was necessary to the proper functioning of the hospital. Id. at 530, 132 N.W.2d 634. Therefore, the houses were occupied in furtherance of and for the purposes for which plaintiff was incorporated and for hospital and public health purposes. Id. [9] Thus, this Court was again called on to address the third element of the tax-exemption statute: whether the property was occupied for the purposes for which the claimant was incorporated. This Court simply did not address the first element: whether the property was owned and occupied. [10]