EATON FARM BUREAU CO-OP V TWP OF EATON
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
EATON FARM BUREAU CO-OP,
UNPUBLISHED
December 21, 2001
Petitioner-Appellee,
v
No. 224187
Tax Tribunal
LC No. 00-203676
TOWNSHIP OF EATON,
Respondent-Appellant,
and
STATE TAX COMMISSION,
Respondent-Appellee.
EATON FARM BUREAU CO-OP,
Petitioner-Appellee,
No. 224418
Tax Tribunal
LC No. 00-203676
v
STATE TAX COMMISSION,
Respondent-Appellant,
and
TOWNSHIP OF EATON,
Respondent.
Before: O’Connell, P.J., and Sawyer and Smolenski, JJ.
PER CURIAM.
In these cases consolidated on appeal, respondent Township of Eaton and interveningrespondent State Tax Commission appeal as of right from the October 27, 1999, order of the
-1-
Michigan Tax Tribunal holding exempt from personal property tax drying and grading
equipment belonging to petitioner Eaton Farm Bureau Co-op. We reverse.
I. Facts
Petitioner is a farmer-owned cooperative organized as a domestic for-profit corporation.
The dispute between petitioner and respondent originated in 1993 when respondent assessed
petitioner $138,500 for personal property owned as of December 31, 1992. In 1994, respondent
assessed petitioner $132,000 for personal property owned as of December 31, 1993. Petitioner
appealed to the Tax Tribunal, claiming that the property was used for agricultural operations and
was therefore exempt from personal property tax under MCL 211.9(j). The State Tax
Commission was ultimately added as an intervening respondent. This Court granted amicus
curiae Michigan Municipal League Legal Defense Fund and Michigan Townships Association
leave to file briefs on appeal.
In its initial order, the Tax Tribunal referred to legislative history to discern the
Legislature’s intent in enacting MCL 211.9(j) and held that none of petitioner’s property
qualified for exemption from personal property tax. Petitioner appealed, and this Court rejected
the tribunal’s interpretation of MCL 211.9(j), concluding that the statutory provision applied to
farmer-owned cooperatives. Eaton Farm Bureau v Eaton Twp, 221 Mich App 663, 667; 561
NW2d 884 (1997) (Eaton I). This Court subsequently vacated the tribunal’s decision and
remanded the case for factual findings relevant to MCL 211.9(j). Eaton I, supra at 670.
Petitioner appealed to the Supreme Court, which remanded the case to this Court for
clarification of its opinion. See Eaton Farm Bureau v Eaton Twp, 457 Mich 887-888; 586
NW2d 232 (1998) (Eaton II). In response, this Court again vacated the tax tribunal’s 1995 order
and remanded to allow the tax tribunal
to consider all property for which petitioner is claiming the exemption and issue
findings of fact and conclusions of law concerning which items do and do not fall
within the exemption. Property directly used in farming operations is exempt, for
petitioner or anyone else. . . . Property only indirectly used in farming operations,
as described in the third sentence of subsection j, is exempt only for farmers, and
thus petitioner and other nonfarmers do not gain the benefit of that extension of
the exemption. [Eaton Farm Bureau v Eaton Twp (On Remand), 231 Mich App
622, 626; 588 NW2d 142 (1998) (Eaton III).]
On remand, following a July 20, 1999, evidentiary hearing, the Tax Tribunal found that
certain items belonging to petitioner, including the drying and grading equipment that is the
subject of this appeal, qualified for exemption from personal property tax. After petitioner
moved for reconsideration, the tribunal denied the motion, and gave an expanded rationale for its
decision exempting the drying and grading equipment from personal property tax. These appeals
followed.
II. Standard of Review
-2-
As noted in Eaton I, supra at 665, we review decisions of the Michigan Tax Tribunal to
determine whether the tribunal erred in applying the substantive law or adopted a wrong
principle. Factual findings of the tribunal are reviewed to determine whether they are supported
by competent, material and substantial evidence on the record. Michigan Bell Telephone Co v
Dep’t of Treasury, 445 Mich 470, 476; 518 NW2d 808 (1994). Failure to base a decision on
competent, material and substantial evidence on the record as a whole is an error of law.
Oldenburg v Dryden Twp, 198 Mich App 696, 698; 499 NW2d 416 (1993).
According to the doctrine of the law of the case, decisions made in this Court’s earlier
opinions in this case will, in general, not be reexamined. C A F Investment Co v Saginaw Twp,
410 Mich 428, 454; 302 NW2d 164 (1981) This doctrine applies to “issues actually decided,
either implicitly or explicitly, in the prior appeal.” Grievance Administrator v Lopatin, 462 Mich
235, 261; 612 NW2d 120 (2000).
III. Analysis
In Eaton III, supra at 626, this Court decided that, under MCL 211.9(j),1 all property
directly used in farming operations is exempt from personal property tax, regardless of who
owns it, with one distinct exception: property only indirectly used in farming operations, as
described in the third sentence of subsection j, is exempt only for farmers. To fall within the
purview of the third sentence of subsection j, property must be machinery “used to prepare the
crop for market operated incidental to a farming operation that does not substantially alter the
1
MCL 211.9(j) reads as follows:
The following personal property is exempt from taxation:
***
(j) Property actually being used in agricultural operations and the farm
implements held for sale or resale by retail servicing dealers for use in agricultural
production. As used in this subdivision, "agricultural operations” means farming
in all its branches, including cultivation of the soil, growing and harvesting of an
agricultural, horticultural, or floricultural commodity, dairying, raising of
livestock, bees, fur-bearing animals, or poultry, turf and tree farming, raising and
harvesting of fish, and any practices performed by a farmer or on a farm as an
incident to, or in conjunction with, farming operations, but excluding retail sales
and food processing operations. Property used in agricultural operations includes
machinery used to prepare the crop for market operated incidental to a farming
operation that does not substantially alter the form, shape, or substance of the crop
and is limited to cleaning, cooling, washing, pitting, grading, sizing, sorting,
drying, bagging, boxing, crating, and handling if not less than 33% of the volume
of the crops processed in the year ending on the applicable tax day or in at least 3
of the immediately preceding 5 years were grown by the farmer in Michigan who
is the owner or user of the crop processing machinery.
-3-
form, shape, or substance of the crop and is limited to cleaning, cooling, washing, pitting,
grading, sizing, sorting, drying, bagging, boxing, crating, and handling.” MCL 211.9(j). If the
machinery does substantially alter the form, shape, or substance of the crop, or if it performs an
operation other than the twelve enumerated operations (cleaning, cooling, etc.), then the third
sentence’s limitation on exemption does not apply, and, if the machinery is “actually used in
agricultural operations,” it is tax exempt under the first sentence of MCL 211.9(j).
The rule applied by the Tax Tribunal on remand is different from this Court’s
interpretation of MCL 211.9(j). Roughly stated, the tribunal concluded that if farmers
themselves directly use property in farming operations, that property is tax exempt; if someone
other than a farmer uses property in farming operations, it is not tax exempt. For example, at one
point in its opinion on remand, the tribunal said (regarding other property of petitioner that is not
at issue in this appeal), “[T]he fertilizer equipment was used by Petitioner’s employees, not by
farmers directly in their farming operations, therefore, the tribunal finds the personal property
listed in Petitioner’s fertilizer equipment . . . is not directly used in farming operations, and is not
tax exempt.” Eaton Farm Bureau Co-op v Eaton Twp (Eaton IV), 1999 WL 1400140 (Mich Tax
Tribunal, October 27, 1999), p 3. At another point, it said, “[S]ome of the personal property
listed in the feed mill equipment grouping on Petitioner’s exhibit P-5 was directly used by
farmers, . . . and as such [is] tax exempt.” Id. at 4.
Had the tribunal adhered to this rule, it would have reached the correct result and found
that petitioner’s drying and grading equipment was not exempt from personal property tax.
However, the tribunal made an exception to its rule and concluded that all the drying and grading
equipment was “fully exempt,” despite the fact that none of it was used by farmers, because it
was “needed and directly involved in preparing the crop for market.” Id. It expanded on this
reasoning in its December 9, 1999, order denying reconsideration, saying, “The Tribunal found
the dryer and grading equipment . . . did not ‘substantially alter the form, shape, or substance of
the crop’ and was allowed under the exemption for ‘grading’ and ‘drying’ as well as being ‘held
for sale or resale by retail servicing dealers for agricultural production,’ therefore, directly being
used in farming.”
The phrase “preparing the crop for market” mirrors language in the third sentence of
MCL 211.9(j) (“prepare the crop for market”). The tribunal’s choice of this phrase to explain its
conclusion indicates that it found the drying and grading equipment exempt under that third
sentence even though we had previously decided (1) that exemption under the third sentence
requires ownership by a farmer, and (2) that petitioner is not a farmer. Eaton I, supra at 625626. The tribunal’s conclusion is thus both a violation of the doctrine of the law of the case and
an error in applying the substantive law.
The alternative basis for exemption stated by the tribunal in the order denying
reconsideration – that the drying and grading equipment was “‘held for sale or resale’” and
qualifies for exemption under the first sentence of MCL 211.9(j)—cannot support the tribunal’s
conclusion because it is not based on competent, material and substantial evidence in the record
as a whole and therefore is an error of law. There is nothing in the record that suggests petitioner
was holding this equipment for sale or resale.
-4-
The tribunal’s conclusion that petitioner’s drying and grading equipment is tax exempt is
without either legal or factual support and qualifies both as an error in applying the substantive
law and as adoption of a wrong principle.
Reversed.
/s/ David H. Sawyer
/s/ Michael R. Smolenski
-5-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
