Court Opinion

ID: 3213455
Source: CourtListenerOpinion
Date Created: 2016-06-15 15:07:04.728561+00
Date Added: 2024-06-11T12:34:57.251276
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

LYLE SCHMIDT FARMS LLC,                             FOR PUBLICATION
                                                    June 14, 2016
               Petitioner-Appellant,                9:25 a.m.

v                                                   Nos. 326609; 326611
                                                    Michigan Tax Tribunal
TOWNSHIP OF MENDON,                                 LC Nos. 14-005344-TT;
                                                            14-005347-TT
               Respondent-Appellee.

EQUITY TRUST CO. and LYLE SCHMIDT
FARMS, LLC.

               Petitioners-Appellants,

v                                                   No. 327909
                                                    Michigan Tax Tribunal
TOWNSHIP OF SHERWOOD,                               LC No. 14-007565-TT

               Respondent-Appellee.

EQUITY TRUST CO.,

               Petitioner-Appellant,

v
                                                    No. 327916
                                                    Michigan Tax Tribunal
TOWNSHIP OF SHERWOOD,                               LC No. 14-005340-TT

               Respondent-Appellee.

Before: MARKEY, P.J., and OWENS and BOONSTRA, JJ.

BOONSTRA, J.

                                         -1-
        In docket nos. 326609 and 326611, petitioner Lyle Schmidt Farm, LLC (“Schmidt
Farm”), appeals by right the Final Opinion and Judgments in lower court nos. 14-005344-TT and
14-005347-TT entered March 11, 2015, in favor of respondent Township of Mendon. In docket
nos. 327909 and 327916, petitioners Equity Trust Co. (“Equity Trust”) and Schmidt Farm appeal
by right the Final Opinion and Judgments in lower court nos. 14-007565-TT and 14-005340-TT
entered June 12, 2015, in favor of respondent Township of Sherwood. This Court granted Equity
Trust’s motion to consolidate the appeals.1 We affirm.

                   I. PERTINENT FACTS AND PROCEDURAL HISTORY

        This case concerns the ad valorem tax valuation of five parcels of real property located in
Michigan. Parcels 75-010-034-008-00 and 75-010-033-012-00 are located on Prairie Corners
Road in Mendon Township, which is in St. Joseph County. They consist of 34.3 and 76.3 acres,
respectively, of vacant agricultural land. Parcel 75-010-032-007-00 is located on Wakeman
Road in Mendon Township. It consists of 40.65 acres of vacant agricultural land. Parcel 12-
010-027-200-001-00, and Parcel 12-010-027-200-010-00 are located on Milligan Road in
Sherwood Township. They consist of 37.3 and 33.6 acres, respectively, of vacant agricultural
land.

        In 2003, the First National Bank of Three Rivers (“National Bank”) purchased all of the
five above parcels from Rex and Ann Croster through a foreclosure sale. On July 23, 2004,
Tony and Amy Wiegel purchased the five parcels from National Bank. There is no dispute that
when the Wiegels purchased the five parcels, all of the parcels were qualified agricultural
property pursuant to MCL 211.7dd(d). However, during the time the Wiegels owned the parcels,
they did not submit an affidavit pursuant to MCL 211.27a(7)(o) and, therefore, the July 23, 2004
transfer of the parcels to the Wiegels was considered a transfer of ownership pursuant to
MCL 211.27a(6). Because of this transfer of ownership, the parcels were “uncapped” and
respondents thus assessed the taxable values of the parcels for the year 2005 according to the
state equalized values of those parcels pursuant to MCL 211.27a(3). As a result, the taxable
values of the parcels increased in the tax year 2005 by substantially more than five percent or the
rate of inflation. On June 29, 2006, Equity Trust purchased parcel 12-010-027-200-010-00 and
12-010-027-200-010-00 from the Wiegels. Also on June 29, 2006, Schmidt Farm purchased the
other three parcels from the Wiegels.

        In 2006, Schmidt Farm and Equity Trust executed affidavits and filed them with the
appropriate registers of deeds, attesting that the parcels remained qualified agricultural property
pursuant to MCL 211.27a(7)(o). The taxable values of the parcels were thus not uncapped in
2006 as a result of the petitioners having purchased the property from the Wiegels. In 2007, the
Wiegels executed and filed affidavits indicating that the parcels had remained qualified
agricultural property after the Wiegels purchased them in 2004. The Wiegels possessed no
ownership interest in the parcels at the time they executed and filed these affidavits.

1
 Equity Trust Co v Twp of Sherwood, unpublished order of the Court of Appeals, entered
August 27, 2015 (Docket Nos. 327909, 327916, 326609, and 326611).

                                                -2-
        In 2008, Schmidt Farm protested the then-current assessments of its three parcels before
the Mendon Township board of review and, according to Equity Trust,2 Equity Trust protested
the assessments of its two parcels before Sherwood Township’s board of review, requesting that
the taxable values of those parcels be reassessed, i.e., “recapped,” according to their 2004 values.
The boards of review denied these protests, which denials were not appealed to the Michigan
Tax Tribunal (MTT).

        In 2014, petitioners again petitioned their respective township’s board of review for
reassessment of their parcels for the tax year 2014. Petitioners argued that the taxable values of
the five parcels should be recapped according to their 2004 taxable values because the Wiegels
had submitted affidavits pursuant to MCL 211.27a(7)(o) and (8) with regard to those parcels.
Respondents again denied the petitions.

        Petitioners appealed to the MTT, again arguing that the taxable values of the five parcels
should be assessed according to their 2004 values because the Wiegels had submitted affidavits
pursuant to MCL 211.27a(7)(o) and (8). Respondents argued that the Wiegels’ purchase of the
parcels and failure to file the relevant affidavits concerning qualified agricultural property
uncapped the parcels, and that their affidavits filed in 2007 did not require the parcels to be
recapped at their 2004 values because the Wiegels lacked an interest in the parcels at the time
they filed their affidavits.

        The MTT denied all of petitioners’ appeals. See Equity Trust Co v Sherwood Twp,
unpublished opinion of the MTT, (Docket No. 14-005340), issued June 12, 2015 (Equity Trust
I); Equity Trust Co v Sherwood Twp, unpublished opinion of the MTT, (Docket No. 14-007565-
R), issued June 12, 2015 (Equity Trust II); Lyle Schmidt Farm, LLC v Mendon Twp, unpublished
opinion of the MTT, (Docket No. 14-005347), issued March 11, 2015 (Schmidt Farm I); Schmidt
Farm, LLC v Mendon Twp, unpublished opinion of the MTT, (Docket No. 14-005344),
March 11, 2015 (Schmidt Farm II). The MTT held that the Wiegels did not meet the
requirements of MCL 211.27a(8) because they were not owners of the parcels at the time they
filed the affidavits.

       Following the MTT’s denials, the MTT also denied Equity Trust’s post-judgment motion
to add the tax year 2015 to its appeal concerning its two parcels. These appeals followed and
were consolidated as described above.

                                 II. STANDARD OF REVIEW

       The Michigan Constitution provides for judicial review of administrative agency
decisions. Const 1963, art 6, § 28. However, this Court’s review of MTT decisions “is limited.”
Mt Pleasant v State Tax Comm, 477 Mich. 50, 53; 729 NW2d 833 (2007). The MTT’s “factual
findings are final if they are supported by competent, material, and substantial evidence on the
whole record. If facts are not disputed and fraud is not alleged, our review is limited to whether
the Tax Tribunal made an error of law or adopted a wrong principle.” Mich Props, LLC v

2
 No evidence of Equity Trust’s 2008 petition to the Sherwood Township board of review is
contained in the lower court record.

                                                -3-
Meridian Twp, 491 Mich. 518, 527-528; 817 NW2d 548 (2012). “Evidence is competent,
material, and substantial if a reasoning mind would accept it as sufficient to support a
conclusion.” Galuszka v State Employees Retirement Sys, 265 Mich. App. 34, 45; 693 NW2d 403
(2004), quoting City of Romulus v Mich Dep’t of Environmental Quality, 260 Mich. App. 54, 63;
678 NW2d 444 (2003). With regard to determining whether the MTT’s “factual findings are
supported by competent, material, and substantial evidence . . . [m]ore than a scintilla of
evidence is required, although a preponderance of the evidence is not necessary.” Canterbury
Health Care, Inc v Dep’t of Treasury, 220 Mich. App. 23, 28; 558 NW2d 444 (1996). However,
to the extent that an appeal from a decision of the MTT requires this Court to construe a statutory
provision or question of law, this Court’s review is de novo. Moshier v Whitewater Twp, 277
Mich. App. 403, 407; 745 NW2d 523 (2007); Schwass v Riverton Twp, 290 Mich. App. 220, 222;
800 NW2d 758 (2010).

                                         III. ANALYSIS

        Petitioners argue that the MTT erred by determining that MCL 211.27a(8)(b) allows only
a current, not a former, owner of qualified agricultural property to file an affidavit pursuant to
MCL 211.27a(7)(o), and that because the Wiegels were former owners of the five parcels when
they filed their 2007 affidavits, the parcels should have been recapped at 2004 values. We
disagree.

        All real property in Michigan is subject to ad valorem tax under the General Property Tax
Act (GPTA), MCL 211.1 et seq. One classification under MCL 211.34c of assessable real
property is “[a]gricultural real property[, which] includes parcels used partially or wholly for
agricultural operations, with or without buildings.” MCL 211.34c(2)(a). “On or before the first
Monday in March in each year, the assessor shall make and complete an assessment roll,” which
contains information such as “a full description of all the real property liable to be taxed[,]” the
assessor’s estimate of “the true cash value and assessed value of every parcel of real property[,]”
and the assessor’s calculation of “the tentative taxable value of every parcel of real property[.]”
MCL 211.24(a)-(c). A property’s “true cash value” is “the price that could be obtained for the
property at private sale . . . .” MCL 211.27(1). This Court has explained the process by which
real property’s taxable value is assessed as follows:

       Pursuant to the Michigan Constitution and the GPTA, property may not be
       assessed at more than 50 percent of its “true cash value,” or fair market value.
       Additionally, [Article 9, § 3 of Michigan’s 1963 Constitution 3 ] limits annual
       increases in property valuation for taxation purposes until ownership of the
       property is transferred. An assessment, or “taxable value,” may not be annually
3
  “For taxes levied in 1995 and each year thereafter, the legislature shall provide that the taxable
value of each parcel of property adjusted for additions and losses, shall not increase each year by
more than the increase in the immediately preceding year in the general price level, as defined in
section 33 of this article [defining the “General Price Level” as “the Consumer Price Index for
the United States as defined and officially reported by the United States Department of Labor”],
or 5 percent, whichever is less until ownership of the parcel of property is transferred.” Const
1963, art 9, § 3.

                                                -4-
       increased at more than the rate of inflation or five percent, whichever is less.
       Because this limitation undervalues property in relation to market factors, a “state
       equalized valuation” is calculated and maintained to more accurately reflect
       property value increases. The Michigan Constitution permits the property’s
       taxable value to be reassessed according to the following year’s state equalized
       value upon the sale or transfer of the property. [Signature Villas, LLC v Ann
       Arbor, 269 Mich. App. 694, 696-697; 714 NW2d 392 (2006) (citations omitted).]

In other words, before ownership of property is transferred, its taxable value may increase no
more than the lesser of the rate of inflation or five percent. Id.; Const 1963, art 9, § 3. But,
“[u]pon a transfer of ownership of property after 1994, the property’s taxable value for the
calendar year following the year of the transfer is the property’s state equalized valuation for the
calendar year following the transfer.” MCL 211.27a(3). This assessment of a property’s value
according to the state equalized valuation after a transfer of ownership is commonly referred to
as the property’s taxable value becoming “uncapped.” See, e.g., Klooster v City of Charlevoix,
488 Mich. 289, 297; 795 NW2d 578 (2011), quoting MCL 211.27a(3) (“After certain ‘transfer[s]
of ownership’ occur, however, property becomes uncapped and thus subject to reassessment
based on actual property value.”).

        A “transfer of ownership” under the GPTA is “the conveyance of title to or a present
interest in property, including the beneficial use of the property, the value of which is
substantially equal to the value of the fee interest.” MCL 211.27a(6). However, a transfer of
ownership does not include

       [a] transfer of qualified agricultural property, if the person to whom the qualified
       agricultural property is transferred files an affidavit with the assessor of the local
       tax collecting unit in which the qualified agricultural property is located and with
       the register of deeds for the county in which the qualified agricultural property is
       located attesting that the qualified agricultural property will remain qualified
       agricultural property. [MCL 211.27a(7)(o).4]

“ ‘Qualified agricultural property’ means unoccupied property and related buildings classified as
agricultural . . . .” MCL 211.7dd(d).

         In other words, where title to qualified agricultural property is conveyed, there is no
“transfer of ownership” of the property under the GPTA (and thus no uncapping) if “the person
to whom the qualified agricultural property is transferred files an affidavit . . . attesting that the
qualified agricultural property will remain qualified agricultural property.” MCL 211.27a(7)(o).
Further, MCL 211.27a(8) provides for “recapping” the taxable value of qualified agricultural
property where an affidavit under MCL 211.27a(7)(o) is not filed within the year of the transfer
of title of the qualified agricultural property, but is filed later:

4
 Before December 22, 2015, the passage from MCL 211.27a(7)(o) was contained in
MCL 211.27a(7)(n). 2015 PA 243.

                                                 -5-
       If all of the following conditions are satisfied, the local tax collecting unit shall
       revise the taxable value of qualified agricultural property taxable on the tax roll in
       the possession of that local tax collecting unit to the taxable value that qualified
       agricultural property would have had if there had been no transfer of ownership of
       that qualified agricultural property since December 31, 1999 and there had been
       no adjustment of that qualified agricultural property’s taxable value under
       subsection (3) since December 31, 1999:

       (a) The qualified agricultural property was qualified agricultural property for
       taxes levied in 1999 and each year after 1999.

       (b) The owner of the qualified agricultural property files an affidavit with the
       assessor of the local tax collecting unit under subsection (7)(o).

However, even if qualified agricultural property becomes recapped, the owner of that property is
not entitled to a refund of property taxes collected before the recapping occurred.
MCL 211.27a(9).

        At issue here is whether the Wiegels’ affidavits satisfy MCL 211.27a(8). We conclude
that the MTT did not err by determining that they did not. The primary goal of statutory
construction is to determine the intent of the Legislature by reasonably considering the purpose
and goal of the statute. Frankenmuth Mut Ins Co v Marlette Homes, Inc, 456 Mich. 511, 515;
573 NW2d 611 (1998). To determine the Legislature’s intent, this Court looks at the specific
language of the statute. Gauntlett v Auto-Owners Ins Co, 242 Mich. App. 172, 177; 617 NW2d
735 (2000). “Courts may not speculate regarding legislative intent beyond the words of the
statute. Hence, nothing may be read into a statute that is not within the manifest intent of the
Legislature as derived from the act itself.” Mich Ed Ass’n v Secretary of State, 489 Mich. 194,
217-218; 801 NW2d 35 (2011) (quotation omitted). “The words used by the Legislature are
given their common and ordinary meaning.” Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 206;
815 NW2d 412 (2012).

        MCL 211.27a(8) provides that, as long as all of its enumerated conditions are satisfied,
the taxable value of a parcel shall be recapped as if there had been no transfer of ownership of
the parcel since December 31, 1999, and no consequent uncapping of the parcel’s taxable value
since that date. See Gauntlett, 242 Mich. App. at 177; see also Skotak v VicTanny Int’l, Inc, 203
Mich. App. 616, 619; 513 NW2d 428 (1994) (“[T]here is no broader classification than the word
‘all.’ In its ordinary and natural meaning, the word ‘all’ leaves no room for exceptions.”). The
parties do not dispute that the parcels are qualified agricultural property; nor is there a dispute
that the Wiegels filed affidavits indicating that the parcels were qualified agricultural property.
The only dispute is whether they were “owners” of the parcels when they filed their affidavits,
i.e., whether the term “owner” as used in the statute encompasses former as well as current
owners.

        MCL 211.27a(11) defines various terms used in MCL 211.27a, but the term “owner” is
not among those statutorily defined terms. This Court may consult a dictionary to define terms
that are undefined in the statute. Koontz v Ameritech Servs, Inc, 466 Mich. 304, 312; 645 NW2d
34 (2002). Black’s Law Dictionary (10th ed) defines an owner as “[s]omeone who has the right

                                                -6-
to possess, use, and convey something; a person in whom one or more interests are vested.” See
also People v Beam, 244 Mich. App. 103, 109; 624 NW2d 764 (2000), quoting Black’s Law
Dictionary (7th ed) (“An ‘owner’ is defined as ‘[o]ne who has the right to possess, use, and
convey something.”); Twichel v MIC Gen Ins Corp, 469 Mich. 524, 538 n 2; 676 NW2d 616
(2004) (CAVANAGH, J., concurring in part and dissenting in part) (quoting Black’s Law
Dictionary (7th ed) for the definition of “owner”). Therefore, an owner is “[s]omeone who has
the right to possess, use, and convey something; a person in whom one or more interests are
vested.” Black’s Law Dictionary (10th ed) (emphasis added); Koontz, 466 Mich. at 312. The fact
that the verbs in the definition of the word “owner” are in the present tense means that the term
“owner” refers to a condition that is “being, existing, or occurring at this time or now[.]”
Deschaine v St Germain, 256 Mich. App. 665, 672; 671 NW2d 79 (2003), quoting Random House
Webster’s College Dictionary (2001) (defining the term “present tense”). Thus, contrary to
petitioners’ argument that MCL 211.17a(8)(b) encompasses owners who used to own property—
i.e., former owners of property—the common and ordinary meaning of “[t]he owner of the
qualified agricultural property,” MCL 211.27a(8)(b), is the person who currently holds
ownership rights in the property.

        Therefore, we conclude that the MTT did not err in concluding that MCL 211.27a(8)(b)
allows only a current, not a former, owner of qualified agricultural property to file an affidavit
pursuant to MCL 211.27a(7)(o). Koontz, 466 Mich. at 312; Black’s Law Dictionary (10th ed).
There is no dispute that the Wiegels sold the five parcels to petitioners in 2006, and that after the
Wiegels sold the parcels they no longer had “the right to possess, use, and convey” the parcels.
Black’s Law Dictionary (10th ed); Koontz, 466 Mich. at 312. Indeed, petitioners do not dispute
that the Wiegels did not currently own the five parcels when they filed their 2007 affidavits.
Therefore, the MTT’s finding that the Wiegels did not own the parcels when they filed the
affidavits is “supported by competent, material, and substantial evidence on the whole record.”
Mich Props, LLC, 491 Mich. at 527. Because the Wiegels were not the owners of the parcels
when they filed the affidavits, their affidavits did not satisfy MCL 211.27a(8)(b). Koontz, 466
Mich. at 312; Black’s Law Dictionary (10th ed). Thus the MTT did not err by upholding
respondents’ denials of petitioners’ request to recap the parcels at issue. Mich Props, LLC, 491
Mich. at 527-528.

        Further, petitioners’ reference to Revenue Admin Bulletin 2006-7 does not dictate a
different result. Pursuant to MCL 205.3(f), the Treasury Department “may periodically issue
bulletins that index and explain current department interpretations of current state tax laws.”
MCL 205.3(f). Such a bulletin “is only an interpretation of a statute and does not have the force
of law[.]” Uniloy Milacron USA Inc v Dep’t of Treasury, 296 Mich. App. 93, 100; 815 NW2d
811 (2012). Although “agency interpretations are entitled to respectful consideration, [] they are
not binding on courts and cannot conflict with the plain meaning of the statute.” In re Complaint
of Rovas Against SBC Mich, 482 Mich. 90, 117-118; 754 NW2d 259 (2008). Bulletin 2006-7
refers to a “purchaser,” rather than an "owner," filing an affidavit. We do not interpret the
bulletin as dispensing with the ownership requirement of the statute and, in any event, such an
interpretation would conflict with the plain meaning of the statute. Complaint of Rovas, 428
Mich. at 117-118.

       Similarly, petitioners’ reference to the legislative history of MCL 211.27a(8) is
unpersuasive. Our Supreme Court has that “in Michigan, a legislative analysis is a feeble

                                                -7-
indicator of legislative intent and is therefore a generally unpersuasive tool of statutory
construction.” Frank W Lynch & Co v Flex Technologies, Inc, 463 Mich. 578, 587; 624 NW2d
180 (2001). Further, nothing in the Senate Legislative Analysis, SB 709, cited by petitioners,
contradicts the conclusion that MCL 211.27a(8)(b) does not encompass former property owners.

       Finally, the MTT’s decision in William White Trust v Twp of Mendon, unpublished
proposed opinion and judgment of the MTT, entered February 22, 2010, adopted by final
judgment June 29, 2010 (Docket No. 347179), in addition to being not binding on this Court, see
Const 1963, art 6, § 28, does not conflict with the MTT’s decisions in this case. William White
Trust did not concern a former owner of property filing an affidavit under MCL 211.27a(8)(b).

        In sum, the MTT properly determined that MCL 211.27a(8)(b) allows only a current, not
a former, owner of qualified agricultural property to file an affidavit pursuant to
MCL 211.27a(7)(o). The MTT’s finding that the Wiegels were former, not current, owners of
the five parcels when they filed their 2007 affidavits was supported by competent, material, and
substantial evidence. Therefore, the MTT properly upheld respondents’ denials of petitioners’
request to recap the five parcels at their 2004 taxable values. Mich Props, LLC, 491 Mich. at
527-528.

       Affirmed.

                                                           /s/ Mark T. Boonstra
                                                           /s/ Jane E. Markey
                                                           /s/ Donald S. Owens

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