TOWNSHIP OF CASCO V BOUNDARY COMMISSIONAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
TOWNSHIP OF CASCO, TOWNSHIP OF
COLUMBUS, and TOWNSHIP OF LENOX,
November 28, 2000
St. Clair Circuit Court
LC No. 98-000886-AA
MICHIGAN STATE BOUNDARY
WALTER WINKLE, PATRICIA WINKLE, and
CITY OF RICHMOND,
January 19, 2001
Before: Gribbs, P.J., and Neff and O'Connell, JJ.
Petitioners appeal by leave granted a circuit court order affirming a decision of the State
Boundary Commission (the commission). We affirm.
This case presents two issues of first impression. The first is whether the commission
had the jurisdiction and authority to determine the legal validity of an agreement entered into
pursuant to the provisions of 1984 PA 425, MCL 124.21 et seq.; MSA 5.4087(21) et seq. (Act
425 agreement). The second is whether competent, material, and substantial evidence supported
the commission's determination that the Act 425 agreements were merely a pretext to avoid
At the time of the proceedings below, the Winkles owned a parcel of land that was
situated in both Casco Township and Columbus Township, and that was close to the city of
Richmond. The parcel was also near Lenox Township, which abuts both Casco Township and
Columbus Township. In July 1996, the Winkles and other landowners in Casco Township and
Columbus Township filed a petition with the State Boundary Commission seeking to annex
approximately 157 acres of land into the city of Richmond, pursuant to the state boundary
commission act, MCL 123.1001 et seq.; MSA 5.2242(1) et seq. According to the Winkles, they
wished to develop their property commercially, and Richmond had the capacity to provide water,
sewer, and other services immediately and at minimal cost, while the townships would not
develop such capacity for several years. However, in November 1995, Columbus Township and
Lenox Township had filed an Act 425 agreement that indicated an intent to transfer a portion of
Columbus Township to Lenox Township.
In January 1996, Casco Township and Lenox
Township filed a similar agreement to transfer a portion of Casco Township to Lenox Township.
These agreements covered the Winkles' land.
In November 1997, the commission concluded that the two Act 425 agreements did not
meet the statutory criteria and approved the petition for annexation. The townships appealed to
the circuit court, arguing that MCL 124.29; MSA 5.4087(29) absolutely barred any method of
annexation or transfer of land covered in the Act 425 agreements and that the commission lacked
the legal authority to determine the validity of Act 425 agreements in the first place.
Circuit Judge Daniel J. Kelly, in a written opinion, concluded that the commission had
the authority to determine the validity of the Act 425 agreements and that, in this instance, the
commission correctly concluded that the townships entered into the agreements solely to avoid
the city's annexation and not for the sake of any development project that the enabling legislation
The court therefore concluded that the commission's decision was based on
"competent, material, and substantial evidence on the whole record," and was not arbitrary,
capricious, or an abuse of discretion. This Court granted the township leave to appeal.
The first issue for our consideration is whether the State Boundary Commission exceeded
its authority or jurisdiction when it undertook to decide the legal validity of the townships' Act
425 agreements. We conclude that it did not. This Court reviews the decisions of the State
Boundary Commission in accordance with the Administrative Procedures Act, MCL 24.201 et
seq.; MSA 3.560(101) et seq. Midland Twp v State Boundary Comm, 401 Mich 641, 671-672;
259 NW2d 326 (1977); Chase v State Boundary Comm, 103 Mich App 193, 203; 303 NW2d 186
(1981); MCL 123.1018; MSA 5.2242(18). Where an administrative agency exceeds its statutory
authority or jurisdiction, the reviewing court should set aside the agency's decision or order if the
agency prejudiced the petitioner's substantial rights. MCL 24.306(1)(b); MSA 3.560(206)(1)(b).
The legislative purpose behind the State Boundary Commission was to establish an
independent authority with "broad powers concerning annexations" and to allow annexations to
take place for the general benefit of the areas concerned, instead of for the private benefit of
individuals. Owosso Twp v Owosso, 385 Mich 587, 590; 189 NW2d 421 (1971). Subsection
9(2) of the Home Rule City Act, 1909 PA 279, MCL 117.9(2); MSA 5.2088(2), provides that the
commission has the power to determine "the validity of the petition or resolution" concerning
annexation and also recognizes the commission's duties concerning "processing and approving,
denying, or revising a petition or resolution for annexation . . . ." MCL 123.1011a; MSA
5.2242(11a), setting forth procedures, provides, "The commission shall have jurisdiction over
petitions or resolutions for annexation as provided in [MCL 117.9; MSA 5.2088]."
MCL 124.29; MSA 5.4087(29) states that where an Act 425 agreement "is in effect,
another method of annexation or transfer shall not take place for any portion of an area
transferred under the contract." Act 425 provides a mechanism through which "local units may
conditionally transfer property" in a manner "controlled by a written contract agreed to by the
affected local units." See MCL 124.22(1); MSA 5.4087(22)(1). MCL 124.30; MSA 5.4087(30)
in turn provides that a duly filed Act 425 agreement "is prima facie evidence of the conditional
transfer." Act 425 agreements thus allow municipalities conditionally to revise their borders
without recourse to, or interference from, the commission.
At issue is the commission's role in determining whether an Act 425 agreement is valid
for purposes of deciding whether the agreement bars the commission from entertaining a petition
for annexation concerning the same land. The plain wording of MCL 124.29; MSA 5.4087(29),
provides that "a contract under this act" presently "in effect" bars other forms of "annexation or
transfer" of the affected territory. This language expressly requires an Act 425 agreement that is
"in effect" and, therefore, necessitates a valid agreement. Consequently, this statutory bar to the
commission's consideration of an annexation petition requires an agreement that fulfills the
statutory criteria, rather than a fictional agreement intended only to deprive the commission of
The townships argue that either the circuit court should review the issue of jurisdiction de
novo or that the circuit court should have sole jurisdiction to determine the validity of an Act 425
agreement. According to the townships, any document purporting to be an Act 425 agreement,
once signed and filed according to the specified procedure, absolutely bars any action on the part
of the commission concerning the same territory, without regard to the substance of the
agreement. We disagree. In light of the broad grant of statutory authority to the commission
over matters relating to the establishment of boundaries and annexations, we hold that the
commission had the authority and jurisdiction to decide the validity of the Act 425 agreements.
Logic dictates that the commission had the authority to consider the validity of two agreements
that, if valid, would have barred its authority to process, approve, deny, or revise a petition or
resolution for annexation. The commission would not otherwise have been able to perform its
function of resolving the petition. See Shelby Charter Twp v State Boundary Comm, 425 Mich
50, 73-77; 387 NW2d 792 (1986) (the commission may proceed with an annexation petition
where it has identified only "pro forma" or "de minimus" exercises of statutory measures that
would otherwise supplant its jurisdiction); Judges of the 74th Judicial Dist v Bay Co, 385 Mich
710, 728-729; 190 NW2d 219 (1971) (an administrative agency is competent to determine its
own jurisdiction). The commission's determination was thereafter subject to review in the circuit
court. MCL 24.301; MSA 3.560(201), MCL 123.1018; MSA 5.2242(18); Rudolph Steiner
School of Ann Arbor v Ann Arbor Charter Twp, 237 Mich App 721, 731; 605 NW2d 18 (1999).
IV. "Shark Repellent"
The second issue for our consideration is whether the commission erred in concluding
that the underlying agreement was illusory and therefore not valid. We review the commission's
findings for whether competent, material, and substantial evidence existed to support the
See Midland Twp, supra at 672; MCL 24.306(1)(d); MSA
Act 425 agreements are statutorily authorized to allow local units to establish "an
economic development project," MCL 124.22(1); MSA 5.4087(22)(1), which is statutorily
defined as follows:
"Economic development project" means land and existing or planned
improvements suitable for use by an industrial or commercial enterprise, or
housing development, or the protection of the environment, including, but not
limited to, groundwater or surface water. Economic development project includes
necessary buildings, improvements, or structures suitable for and intended for or
incidental to use as an industrial or commercial enterprise or housing
development; and includes industrial park or industrial site improvements and
port improvements or housing development incidental to an industrial or
commercial enterprise; and includes the machinery, furnishings, and equipment
necessary, suitable, intended for, or incidental to a commercial, industrial, or
residential use in connection with the buildings or structures. [MCL 124.21(a);
The circuit court, in reviewing the commission's findings, noted that an advertisement
soliciting petition signatures in opposition to the annexation contained the statement, "Help us in
the preservation of farmland and open space." The court continued:
MCL 124.21(a); MSA 5.4087(21)(a) . . . requires that a valid Act 425
Agreement must provide for improvements to the property necessary for the
planned industrial, commercial or housing development. The . . . Commission
requested information from the townships by way of questionnaires regarding the
provision of water and sewer services. The Columbus Township questionnaire
indicated that 1) Columbus did not provide public water service; 2) Columbus did
not provide sanitary sewer service, and 3) it could provide water services by the
"fall of 1997" and that "Sewers [were] under study." The Casco Township
questionnaire answers stated that 1) Casco did not provide public water services
or sanitary sewer services, 2) public water services could be provided by the "fall
of 1997"; 3) Casco did not provide an answer regarding when sanitary sewer
services could be provided. They apparently indicated that water would be
available to the Act 425 Agreement land, however, they do not indicate when
water could be available to the annexed property. . . . Thus, the information
presented to the . . . Commission for industrial, commercial, or industrial
development may have been found to be more illusory than genuine.
The . . . Commission further determined that the Act 425 Agreements were
simply agreements to share services and not a true transfer of property. The . . .
Commission stated that "the parties did not provide evidence of such transfer,
which minimally could have included a showing of a transfer to Lenox Township
of property tax records and voting records of any residents in the Act 425 area."
The circuit court concluded that the townships had not entered into any real plan for economic
development. The court further concluded that the purpose of the agreements was to bind
nonparties in derogation of their rights, to limit the authority of the commission, and to "ward off
any attempts by municipalities to annex a portion of the Townships."
While the precise reasoning behind the commission's disregard of the Act 425 agreements
is not entirely clear, it apparently concluded that the townships' entered into the conditional
transfers as an act of subterfuge intended to preclude the commission's jurisdiction and to avoid
future annexation. The circuit court, after reviewing the administrative record, agreed with the
commission and dubbed the Act 425 agreements "shark repellent."
The townships do not dispute the specific factual findings underlying the commission's
conclusions. Rather, the townships argue that transfer of neither tax records nor voting records is
required for a valid transfer of land under an Act 425 agreement. However, the commission did
not rule that they were necessary, only that they were relevant considerations. The townships
also emphasize MCL 124.30; MSA 5.4087(30), which provides that the filing of an Act 425
agreement constitutes "prima facie evidence" of the existence of the conditional transfer of land.
The statute, however, does not preclude a finding that the agreement was a sham. In our view,
the parties who had filed the annexation petition with the commission developed a record that
supported the commission's conclusion that the agreements were essentially an attempt to avoid
annexation. Further, the Act 425 agreements themselves only vaguely contemplated a plan of
development at some point in the future. On the basis of the factors discussed in Judge Kelly's
carefully considered opinion, we conclude that competent, material, and substantial evidence
existed to support the commission's conclusion that the two Act 425 agreements were illusory in
nature and that the townships entered into them in order to avoid future annexation.
V. Contract Rights
The townships' final contention is that the commission's decision interfered with their
contract rights in violation of US Const, art I § 10, and 1963 Const, art 1, § 10. "Vested rights
acquired under contract may not be destroyed by subsequent State legislation or even by an
amendment of the State Constitution." Campbell v Judges' Retirement Bd, 378 Mich 169, 180;
143 NW2d 755 (1966).
This argument fails.
No subsequent legislation or constitutional
amendment interfered with the townships' Act 425 agreements.
/s/ Peter D. O'Connell
/s/ Roman S. Gribbs
/s/ Janet T. Neff