FORD MOTOR CO V CITY OF STERLING HEIGHTS
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STATE OF MICHIGAN
COURT OF APPEALS
FORD MOTOR COMPANY,
UNPUBLISHED
October 5, 2004
Petitioner-Appellant,
v
No. 246379
Tax Tribunal
LC No. 00-294924
CITY OF STERLING HEIGHTS,
Respondent-Appellee,
and
MICHIGAN CHAMBER OF COMMERCE,
Amicus Curiae.
Before: Griffin, P.J., and Cavanagh and Fort Hood, JJ.
PER CURIAM.
Petitioner appeals as of right the dismissal of its petition for review by the Michigan Tax
Tribunal (MTT) on the ground that it lacked subject matter jurisdiction.1 We affirm.
On August 28, 2002, petitioner filed its petition for review pursuant to 211.53a for
recovery of excess tax payments. Petitioner averred that, due to a mutual mistake of fact, it was
assessed and paid taxes in excess of the correct and lawful amount after it had double reported
certain property on its personal property tax statements. Respondent moved to dismiss the
petition on the ground that the MTT lacked subject matter jurisdiction in pertinent part because
the alleged mistake of fact was not mutual as required by MCL 211.53a. The MTT agreed,
holding, in pertinent part, that the alleged “incorrect reporting” was “neither a clerical error or
mutual mistake of fact made by the assessing officer and taxpayer” and, thus, it lacked subject
matter jurisdiction. This appeal followed.
1
Petitioner asserted the same claims against the Township of Bruce, the City of Woodhaven, and
Wayne County which were similarly dismissed by the MTT. The appeals that followed, docket
numbers 246579 and 246378, respectively, were resolved by substantially similar opinions
issued the same day as this opinion.
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Petitioner argues that the MTT erroneously concluded that it lacked subject matter
jurisdiction over its petition which sought a refund of excess taxes paid, pursuant to MCL
205.731(b), as a result of a mutual mistake of fact, as required by MCL 211.53a. We agree with
petitioner that the MTT had jurisdiction, but uphold the decision to dismiss on the substantive
basis of the MTT’s holding—that petitioner failed to state a claim on which relief could be
granted, MCR 2.116(C)(8). We review a decision of the MTT to determine whether it
committed an error of law or adopted a wrong legal principle; factual findings supported by
competent, material, and substantial evidence on the whole record will not be disturbed.
Professional Plaza, LLC v Detroit, 250 Mich App 473, 474; 647 NW2d 529 (2002); Michigan
Milk Producers Ass’n v Dep’t of Treasury, 242 Mich App 486, 490; 618 NW2d 917 (2000).
The Tax Tribunal Act, MCL 205.703 et. seq., grants the MTT exclusive and original
jurisdiction over property tax proceedings as follows:
The tribunal’s exclusive and original jurisdiction shall be:
(a) A proceeding for direct review of a final decision, finding, ruling,
determination, or order of an agency relating to assessment, valuation, rates,
special assessments, allocation, or equalization, under property tax laws.
(b) A proceeding for refund or redetermination of a tax under the property tax
laws. [MCL 205.731.]
Petitioner argues that, pursuant to MCL 205.731(b), the MTT had jurisdiction over its petition
for a refund under the property tax laws, namely MCL 211.53a of the General Property Tax Act,
which provides:
Any taxpayer who is assessed and pays taxes in excess of the correct and lawful
amount due because of a clerical error or mutual mistake of fact made by the
assessing officer and the taxpayer may recover the excess so paid, without
interest, if suit is commenced within 3 years from the date of payment,
notwithstanding that the payment was not made under protest.
Relying on Shell Oil Co v Estate of Kert, 161 Mich App 409, 421-422; 411 NW2d 770 (1987), a
contract case, petitioner claims that the excess payment was the result of a “mutual mistake of
fact” within the contemplation of the statute since “Ford mistakenly identified this property twice
on its personal property statement, and the assessor mistakenly based the assessment on that nonexistent property’s putative value.” Because the MTT is vested with the power and authority to
adjudicate tax refund cases, it had subject matter jurisdiction over petitioner’s petition. See In re
AMB, 248 Mich App 144, 166-167; 640 NW2d 262 (2001). Accordingly, we turn to the
substantive basis for the MTT’s holding—that petitioner failed to state a claim on which relief
could be granted. See MCR 2.116(C)(8).
The meaning of the phrase “mutual mistake of fact” as provided in MCL 211.53a
presents an issue of statutory construction. Our goal is to ascertain and give effect to the intent
of the Legislature; thus, we first consider the statute’s language. In re MCI Telecommunications
Complaint, 460 Mich 396, 411; 596 NW2d 164 (1999). If the plain and ordinary meaning of the
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language is clear, judicial construction is neither necessary nor permitted. Sun Valley Foods Co
v Ward, 460 Mich 230, 236-237; 596 NW2d 119 (1999). The fair and natural import of its
terms, in view of the subject matter of the law, governs. In re Wirsing, 456 Mich 467, 474; 573
NW2d 51 (1998). Here, on March 8, 2000, the MTT issued an “order designating definition of
‘mutual mistake of fact’ as precedent” as that phrase is used in MCL 211.53a. General Products
Delaware Corp v Leoni Twp, 2001 WL 432245 (MTT Docket No. 249550, March 8, 2001). We
accord deference to the MTT’s interpretation of a statute it is legislatively charged with
enforcing, although we are not bound by that interpretation. See Judges of the 74th Judicial Dist
v Bay Co, 385 Mich 710, 727-729; 190 NW2d 219 (1971); Bechtel Power Corp v Dep’t of
Treasury, Revenue Division, 128 Mich App 324, 329; 340 NW2d 297 (1983).
MCL 211.53a was enacted following our Supreme Court’s decision in Consumers Power
Co v Muskegon, 346 Mich 243; 78 NW2d 223 (1956)2, which held that equitable principles did
not apply to cases seeking recovery of excess taxes paid by mistake because taxation powers are
controlled by constitutional and statutory provisions. Id. at 247-251. In that case, the
respondent’s assessor calculated and levied the excess tax and the petitioner, which failed to
discover that the amount was excessive, paid the tax. Id. at 246. The excess tax was the result of
the assessor misplacing the decimal point when entering the tax data into the tax and assessment
rolls so that instead of, for example, the proper tax of $32.94 being entered, the erroneous tax of
$329.40 was entered. Id. at 251-252. In other words, the error was not based on misinformation,
it was because of an obvious clerical or arithmetical mistake. The Court concluded that “[t]o
grant the relief requested by the plaintiff would require this Court to exercise legislative
prerogatives—namely, to write into the statute the right to recover taxes paid under mutual
mistake.” Id. at 251.
Subsequently, in 1958 the Legislature exercised its authority and provided a limited
remedy in cases of excess taxation, i.e., “Any taxpayer who is assessed and pays taxes in excess
of the correct and lawful amount due because of a clerical error or mutual mistake of fact made
by the assessing officer and the taxpayer may recover the excess so paid . . . .” MCL 211.53a.
In 1967, the Legislature more directly addressed the issue raised in Consumers Power Co, supra,
by enacting MCL 211.53b(1) which provides: “If there has been a clerical error or a mutual
mistake of fact relative to the correct assessment figures, the rate of taxation, or the mathematical
computation relating to the assessing of taxes . . . .” MCL 211.53b(2) granted the right to
recovery to both the taxpayer and the assessing officer.
There are, however, clear limits to a taxpayer’s right to recover excess tax payments
under MCL 211.53a. A mistake of law rather than of fact does not accord relief. Noll
Equipment Co v Detroit, 49 Mich App 37, 41-43; 211 NW2d 257 (1973). An error that is not
clerical in nature—the result of typing, transposing, or calculating assessment figures
incorrectly—is not correctable under the statute. International Place Apartments-IV, supra at
109. Similarly, the statute does not permit recovery of excess taxes paid because of a unilateral
2
Consumers Power Co, supra, was overruled in part by Spoon-Shacket Co, Inc v Oakland Co,
356 Mich 151, 171; 97 NW2d 25 (1959).
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mistake of fact, i.e., a mistake of fact that is not made by both the assessing officer and the
taxpayer. It is this mutuality requirement with regard to the mistake of fact that is at issue here;
precisely, what is a “mutual mistake of fact made by the assessing officer and the taxpayer?”
MCL 211.53a.
This is an issue of first impression. The phrase "mutual mistake" has "acquired a peculiar
and appropriate meaning in the law," MCL. § 8.3a, so we may first turn to a legal dictionary in
an attempt to ascertain its meaning. See People v Jones, 467 Mich 301, 304-305; 651 NW2d 906
(2002). Black’s Law Dictionary defines “mutual mistake” as “[a] mistake in which each party
misunderstands the other’s intent” and as “[a] mistake that is shared and relied on by both parties
to a contract.” Black’s Law Dictionary (7th ed, 1999), p 1017. A “mistake” is defined as “[a]n
error, misconception, or misunderstanding; an erroneous belief.” Id. In the context of property
tax law, neither definition of “mutual mistake” is very helpful except that we may derive that
implicit in the concept of mutuality is a temporal or “at the same time” component. That is, for
something to be mutual, it must be shared by or common to both parties. So, a “mutual mistake
of fact” is a shared or common error, misconception, misunderstanding, or erroneous belief as to
a material fact. MCL 211.53a, then, requires that both the assessing officer and the taxpayer
have the same erroneous belief regarding the same material fact which directly caused both the
excess assessment and excess payment of taxes.
Here, the assessing officer and the taxpayer, petitioner, were not operating under the
same mistake of fact. The direct cause of the excess assessment was the assessing officer’s
reliance on petitioner’s personal property statements which were represented as full and true
statements of all tangible personal property owned or held by petitioner.3 It is undisputed that
the assessing officer did not conduct any independent inventory as to petitioner’s assets;
accordingly, the assessor’s “mistake of fact” was his erroneous belief that petitioner’s disclosure
of property was accurate. The direct cause of petitioner’s excess payment of the taxes was its
own mistake as to the nature of its personal property. In other words, its “mistake of fact” was
its erroneous belief that it owned specific personal property that was taxable. Because the
assessing officer and petitioner were not operating under the same mistake of fact, a refund under
MCL 211.53a was not available and petitioner failed to state a cognizable claim under MCL
205.735.
The key to the “mistake of fact” analysis under MCL 211.53a, then, is to determine what
mistake of fact directly caused the assessor’s excess assessment and compare it to the mistake of
fact that directly caused the taxpayer’s excess payment; if they are the same, the mutuality
requirement of MCL 211.53a is met. When an assessor assesses a tax in excess of the correct
and lawful amount and the taxpayer pays it, there is always a mistake that is mutual in the sense
that both parties made a mistake; but, there is not always a “mutual mistake of fact.” If the
assessor’s over-assessment resulted from an error in professional judgment with regard to the
3
In its General Products Delaware Corp opinion, as discussed above, the MTT held that such
consideration of the petitioner’s personal property tax statement was irrelevant to the “mistake of
fact” determination. Id. at 37-39. We disagree since reliance on the statement directly caused
the excess tax assessment.
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subject property and the taxpayer’s over-payment was the consequence of oversight, there would
be no “mutual mistake of fact” giving rise to a remedy under MCL 211.53a; albeit there may be
a remedy available under MCL 211.154.4 However, for example, if the assessor’s error was
because of his reliance on an incorrect survey representation by a third party of a boundary line
and the taxpayer paid the taxes relying on that same misrepresentation, there would be a mutual
mistake of fact for which relief would be available under MCL 211.53a.
The Tax Tribunal attempted to explain this nebulous concept of “mutual mistake” as it
applies to property tax law as follows:
Mutuality occurs at an intersection of the parties’ respective specific focus upon a
singular fact or set of facts, and the resulting mistaken belief. That is, the statute’s
phrase “mutual mistake of fact” necessitates mutuality as to both the referenced
fact being materially the same information, specifically contemplated by both
parties, and the mistaken belief concerning that fact be formed by both parties.
* * *
The concept of mutual mistake in property tax law, in its application, is that
mutuality must be present at both the level of referenced fact and the mistaken
belief. The test criteria is simple. If each party references the same factual data,
but draws different mistaken beliefs, or references different factual data, but
draws the same mistaken belief, there is no “mutual mistake of fact.” [General
Products Delaware Corp, supra at 21-22.]
We generally agree with the MTT’s characterization of the “mutuality” test but we find it more
complicated than necessary. It, as well as the MTT’s thirty-plus page opinion on the matter, are
not “user friendly.” Comparing the “mistake of fact” that directly caused the assessor’s excess
assessment to the “mistake of fact” that directly caused the taxpayer’s excess payment will
provide the necessary information to determine whether the requisite mutuality exists for which
MCL 211.53a affords recovery.
Petitioner relies on contract law principles to support its interpretation of the phrase
“mutual mistake of fact” as “a belief by one or both of the parties not in accord with the facts,”
that “relate[s] to a basic assumption of the parties upon which the contract is made and which
materially affects the agreed performances of the parties.” See Shell Oil Co, supra at 421-422.
In its opinion, the MTT rejected the proposition that the “mutual mistake” terminology used in
contract law is equally applicable to property tax law. See General Products Delaware Corp,
supra at 29. We agree. Contract law principles are not necessarily analogous to tax law
principles. The relationship between the parties to a contract is vastly different from the
association between the taxpayer and tax assessor. A contractual relationship arises by
4
Accordingly, the dissent’s apparent concern that no remedy is available in the event of such
unilateral mistakes is not persuasive.
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contract—a bargained-for exchange of obligations entered into by choice and requiring mutual
assent or a “meeting of the minds” on all essential terms—and the relationship is governed by
those terms. Quality Products & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 372-373;
666 NW2d 251 (2003). The taxpayer’s and tax assessor’s association arises by operation of law
and is governed by the law. Equitable principles may relieve contracting parties of obligations
induced by mistake—particularly since a mutual mistake of fact destroys the necessary meeting
of the minds requirement for formation—but such principles are not equally necessary, or
applicable, in the area of tax law. See Consumers Power Co, supra at 246-251. Contrary to the
dissenting opinion, it should be apparent that we are not relying on “equitable considerations,” as
might be applicable in contract law cases, in construing the term “mutual mistake.”
However, even if such equitable principles did apply to property taxation disputes, as
petitioner promotes, these principles would not intercede to provide relief unless there was a
“mistake” of fact. The traditional mistake of fact doctrine found in contract law is an equitable
doctrine that defines “mistake” as follows:
A mistake within the meaning of equity is a non-negligent but erroneous
mental condition, conception, or conviction induced by ignorance,
misapprehension, or misunderstanding, resulting in some act or omission done or
suffered by one or both parties, without its erroneous character being intended or
known at the time. [27A Am Jur 2d Equity § 7, pp 525-526.]
In other words, “mistakes” that are the result of the mistaken party’s own negligence, and which
are to their detriment, are not relieved by equity. See e.g., Bateson v Detroit, 143 Mich 582, 584;
106 NW 1104 (1906); Dombrowski v Omer, 199 Mich App 705, 709-710; 502 NW2d 707
(1993); Villadsen v Villadsen, 123 Mich App 472, 477; 333 NW2d 311 (1983).
This concept of “negligent” mistakes is not novel; rather, in contract law a party to a
contract will not be relieved of his obligation to perform unless (1) both parties were mistaken
regarding a material fact, Gortney v Norfolk & Western R Co, 216 Mich App 535, 542; 549
NW2d 612 (1996), or (2) one party’s negligence led the other party to erroneously believe there
was a meeting of the minds regarding a material fact, Warren v Maccabees Mut Life Ins Co, 83
Mich App 310, 315; 268 NW2d 390 (1978). “[T]he parties are mutually mistaken, though their
mental errors are not quite identical. In spite of this ‘mutuality,’ there is a contract, due to the
negligence of the one and the reasonableness of the other.” Id., quoting 3 Corbin on Contracts, §
608, p 671. Further, as explained by our Supreme Court in Spoon-Shacket Co, Inc v Oakland
Co, 356 Mich 151, 156; 97 NW2d 25 (1959), citing the dissenting opinion in Consumers Power
Co, supra at 251, “equity can and should intervene whenever it is made to appear that one party,
public or private, seeks unjustly to enrich himself at the expense of another on account of his
own mistake and the other’s want of immediate vigilance—litigatory or otherwise.” So, neither
equitable principles nor the dissenting position espoused in Consumers Power Co, supra, support
an equitable recovery under MCL 211.53a when the purported “mistake of fact” that led to the
excess tax was the direct result of the taxpayer’s negligence.
We also note and disagree with the interpretation of MCL 211.53a set forth as dicta in
Wolverine Steel Co, supra at 674: “We believe s 53a alludes to questions of whether or not the
taxpayer had listed all of its property, or listed property that it had already sold or not yet
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received, etc.” This interpretation does not incorporate the “mutuality” component of the
analysis and, thus, is rejected. MCR 7.215(J)(1). The Wolverine Steel Co Court also implied
that MCL 211.53a and 211.53b were to be read in pari materia so as to limit the type of “mutual
mistakes of fact” referenced in MCL 211.53a to those explicitly stated in 211.53b, i.e., “mutual
mistake[s] of fact relative to the correct assessment figures, the rate of taxation, or the
mathematical computation relating to the assessing of taxes.” Id. at 674-675. The MTT also
adopted that very narrow interpretation of MCL 211.53a through the use of the in pari materia
rule of statutory interpretation, declaring that MCL 211.53a is specifically limited in application
to those special circumstances relieved under MCL 211.53b. General Products Delaware Corp,
supra at 24. However, as argued by amicus curiae, the Michigan Chamber of Commerce, such a
restrictive interpretation of MCL 211.53a ignores the clear legislative intent not to so limit the
types of “mutual mistakes of fact” as evidenced by the omission of such provision. See
Farrington v Total Petroleum, Inc, 442 Mich 201, 210; 501 NW2d 76 (1993). Neither we nor
the MTT may engraft such a limitation. See id.
In sum, the MTT properly concluded that petitioner was not entitled to relief under MCL
211.53a. Petitioner was not assessed and did not pay taxes in excess of the correct and lawful
amount due because of a mutual mistake of fact made by itself and the assessing officer. MCL
211.53a. But, did the MTT have the right to dismiss the petition sua sponte? The tax tribunal
rules, R 205.1101 et seq., do not address sua sponte dismissals; therefore, we turn to the
Michigan Rules of Court. R 205.1111(4). MCR 2.116(I)(1) provides: “If the pleadings show
that a party is entitled to judgment as a matter of law, or if the affidavits or other proofs show
that there is no genuine issue of material fact, the court shall render judgment without delay.”
Here, the dispositive issue was one of law; specifically, the construction of MCL 211.53a. There
were no disputed issues of fact. The pleadings showed that respondent was entitled to judgment
as a matter of law since the averred over-assessment and excess payment were not the result “of
a clerical error or mutual mistake of fact made by the assessing officer and the taxpayer.” MCL
211.53a. Accordingly, the MTT had the right, and duty, to dismiss the action. MCR 2.116(I)(1).
For this reason, the MTT properly denied petitioner’s motion to amend its petition because such
amendment would be futile—recovery is not afforded on the grounds asserted. See MCL
205.731, 211.53a; Lane v KinderCare Learning Centers, Inc, 231 Mich App 689, 697; 588
NW2d 715 (1998).
Petitioner also contends that the MTT inappropriately relied on MCL 205.735. However,
the MTT’s reference to MCL 205.735(2) (which confers jurisdiction on the MTT over
assessment disputes) was likely an effort to illustrate the thorough nature of its consideration of
petitioner’s petition alleging overpayment by means of double payment and need not be
considered further here since petitioner disavows an assessment dispute.
Affirmed.
/s/ Mark J. Cavanagh
/s/ Karen M. Fort Hood
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