Opinion ID: 843023
Heading Depth: 1
Heading Rank: 9

Heading: interpreting the statute

Text: The first task is to decide whether subsection c of MCL 208.53 allows defendant to characterize receipts from planning and design services rendered entirely outside Michigan as Michigan sales. Four separate entities have interpreted this provision in the course of these proceedings. The hearing referee and the Court of Claims adopted the interpretation advocated by plaintiff and found that § 53(c) does not allow defendant to characterize the out-of-state services as Michigan sales. The Commissioner of Revenue and the Court of Appeals agreed with defendant's interpretation and determined that § 53(c) does allow defendant to characterize the out-of-state services performed for Michigan construction projects as Michigan sales. The nonuniformity of these conclusions signals that the correct construction of this statute is not obvious. [3] When the correct construction of a statute is unclear and reasonable minds differ about its interpretation, it is necessary to engage in judicial construction to ascertain the Legislature's intent. [4] In re MCI, 460 Mich. at 411, 596 N.W.2d 164. In construing a statutory provision, courts must reconcile the provision with other provisions of the statute, if possible. And one part of a statute should not be construed so as to render another part nugatory or ineffective. See, e.g., Altman v. Meridian, 439 Mich. 623, 635, 487 N.W.2d 155 (1992); Farrington v. Total Petroleum, Inc., 442 Mich. 201, 209, 501 N.W.2d 76 (1993). According to plaintiff, receipts derived from planning activities, design activities, or construction activities are deemed Michigan sales only if the activities occur in this state. This interpretation must be rejected. Subsection a expressly addresses services performed in Michigan. If § 53(c) were to be interpreted to mean that the services had to be performed in Michigan in order to be considered Michigan sales, then subsection c would be reduced to a redundancy. By finding that services performed for construction projects located in Michigan are Michigan sales, each provision of the statute is given effect. When the statute is interpreted in this fashion, § 53(a) provides that when the business activity is in Michigan, the sales of other than tangible personal property are Michigan sales. Section 53(b) covers the situation where business activities are both in Michigan and outside Michigan. If a greater proportion of the business activity is in Michigan, then the sales of other than tangible personal property are characterized as Michigan sales. Section 53(c) addresses the situation where services are performed for planning, design, or construction projects in Michigan. Another consideration that weighs in my determination is that a construction that nullifies the effectiveness of a statute should be avoided if possible. In re Petition of State Hwy. Comm., 383 Mich. 709, 714-15, 178 N.W.2d 923 (1970). Rather, when engaging in judicial construction, a court must bear in mind the purpose of the statute. When faced with two alternative reasonable interpretations . . ., we should give effect to the interpretation that more faithfully advances the legislative purpose behind the statute. Adair, 452 Mich. at 479-480, 550 N.W.2d 505. Apparently, the Legislature added subsection c in response to a concern advanced by Michigan-based engineering and architectural firms that, without it, they would be at a competitive disadvantage with out-of-state firms. They feared that out-of-state architects and engineers would gain a competitive advantage when bidding on Michigan construction projects if their services for in-state projects were not treated as Michigan sales. [5] The interpretation advocated by defendant addresses the concerns that appear to have prompted the enactment of this statute. Finally, we defer to the construction given a statute by the agency chosen to enforce it. Breuhan v. Plymouth-Canton Community Schools, 425 Mich. 278, 283, 389 N.W.2d 85 (1986). Defendant has historically interpreted § 53(c) as ascribing services performed for construction projects to the state in which the construction occurs. [6] I give weight to this interpretation.