THEODORE H SCHWASS V TOWNSHIP OF RIVERTON
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STATE OF MICHIGAN
COURT OF APPEALS
THEODORE H. SCHWASS, JOAN E.
SCHWASS, ROY D. HACKERT, and SUSAN
HACKERT,
FOR PUBLICATION
September 30, 2010
9:05 a.m.
Petitioners-Appellants,
v
No. 292737
Michigan Tax Tribunal
LC No. 00-325734
TOWNSHIP OF RIVERTON,
Respondent-Appellee.
Before: BORRELLO, P.J., and JANSEN and BANDSTRA, JJ.
PER CURIAM.
Petitioners appeal by right an order of the Michigan Tax Tribunal (MTT) affirming
respondent’s assessment of their real property. We affirm. This appeal has been decided
without oral argument. MCR 7.214(E).
Petitioners are two husband-and-wife couples, Roy and Susan Hackert and Theodore and
Joan Schwass. All the real estate at issue was owned by two partnerships, Tero Farms and KaJo
Farms, of which Roy Hackert and Theodore Schwass were the only partners. The partnerships
deeded the real estate parcels to one or the other of the individual partners and their respective
spouses. Following these conveyances, respondent reassessed the parcels and raised the taxable
values of the property beginning with tax year 2006. Petitioners asserted that the conveyance of
property from the partnerships to the individual partners was not a transfer that would operate to
remove the cap. The MTT initially adopted the hearing referee’s proposed opinion in its final
order affirming the assessment. However, after petitioners filed their claim of appeal, the MTT
issued a “Corrected Final Opinion and Judgment,” in which it concluded that the hearing
referee’s statutory basis for deciding the matter was erroneous, but that the error was harmless
because the conveyance was not one of the identified exceptions to uncapping.1 The MTT
therefore affirmed the result that petitioners’ property was subject to uncapping unless an
affidavit was filed stating that the property was qualified agricultural property.
1
Because the incorrect statutory basis of the original final order has been vacated, we need not
address petitioners’ argument that the decision contained erroneous legal reasoning.
-1-
We review de novo legal questions decided by the MTT. See Cowles v Bank West, 476
Mich 1, 13; 719 NW2d 94 (2006); see also Blaser v East Bay Twp, 242 Mich App 249, 252; 617
NW2d 742 (2000). Statutory interpretation is a question of law subject to de novo review.
Detroit v Ambassador Bridge Co, 481 Mich 29, 35; 748 NW2d 221 (2008).
The Michigan Constitution and Michigan statutory law permit real property’s taxable
value to be reassessed according to the following year’s state equalized value upon the sale or
transfer of the property. Const 1963, art 9, § 3; MCL 211.27a(3); Signature Villas, LLC v Ann
Arbor, 269 Mich App 694, 696-697; 714 NW2d 392 (2006). This is known as “uncapping” the
taxable value. Id. at 697. Uncapping occurs whenever a “transfer of ownership” occurs. MCL
211.27a(3). “[T]ransfer of ownership” 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). The statute lists several types of conveyances
that qualify as a “transfer of ownership,” including “[a] conveyance by deed.” MCL
211.27a(6)(a). The statute also lists certain types of conveyances that are excepted from this
definition, and which do not give rise to uncapping. MCL 211.27a(7).
In the instant case, the property was conveyed by deed. Accordingly, the conveyance
was a “transfer of ownership” under MCL 211.27a(6)(a) unless one of the exceptions of MCL
211.27a(7) was applicable. Before the property was conveyed, it was owned by a partnership.
Under Michigan law, “[a] partner is a co-owner with his partners of specific partnership property
holding as a tenant in partnership[.]” MCL 449.25(1). Petitioners assert that there is no
functional difference between a tenancy in partnership, which existed here, and a joint tenancy.
Accordingly, they contend that the joint tenancy exception set out in MCL 211.27a(7)(h) should
control, and the taxable value should not be uncapped.
We disagree. The statutory scheme unambiguously identifies the types of conveyances
that do not trigger uncapping, and conveyances involving tenancies in partnership are not among
those listed. See MCL 211.27a(7). Nor can we assume that the Legislature intended to include
tenancies in partnership when it used the term “joint tenancy” in the exception provided by MCL
211.27a(7)(h). In Wengel v Wengel, 270 Mich App 86, 93; 714 NW2d 371 (2006), this Court
identified the five types of co-ownership in this state, listing joint tenancies and tenancies in
partnership separately: “In Michigan, there are five common types or forms of concurrent
ownership that are recognized relative to the ownership of real property, and those are tenancies
in common, joint tenancies, joint tenancies with full rights of survivorship, tenancies by the
entireties, and tenancies in partnership.” Although joint tenancies and tenancies in partnership
are similar, they remain legally distinct forms of ownership, and the Uniform Partnership Act
does not identify property held by a partnership as property held in “joint tenancy.” Moreover,
because MCL 449.25 was enacted by 1917 PA 72, long before the process of “uncapping” was
devised by the Legislature, it cannot be said that the Legislature was unaware of tenancies in
partnership at the time it enacted MCL 211.27a(7) in 1982. See 1982 PA 539. Petitioners
essentially ask this Court to make a policy decision, an argument more properly addressed to the
Legislature. It is well settled that “questions of Michigan tax policy are determined by the
Legislature, not the courts.” TMW v Dep’t of Treasury, 285 Mich App 167, 180; 775 NW2d 342
(2009).
-2-
Affirmed. No taxable costs pursuant to MCR 7.219, a public question having been
involved.
/s/ Stephen L. Borrello
/s/ Kathleen Jansen
/s/ Richard A. Bandstra
-3-
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