Dick & Don's Greenhouses, Inc. v. Comstock Tp.

• Decision Date: 22 February 1982
• Docket Number: Docket No. 52734
• Citation: 315 N.W.2d 573,112 Mich.App. 294
• Parties: DICK & DON'S GREENHOUSES, INC., Petitioner-Appellant, v. COMSTOCK TOWNSHIP, Respondent-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 573

315 N.W.2d 573

112 Mich.App. 294

DICK & DON'S GREENHOUSES, INC., Petitioner-Appellant, v. COMSTOCK TOWNSHIP, Respondent-Appellee.

Docket No. 52734.

Court of Appeals of Michigan.

Submitted June 2, 1981.

Decided Jan. 6, 1982.

Released for Publication Feb. 22, 1982.

Alan H. Silverman, P. C., Kalamazoo, for petitioner-appellant.

Bauckham, Reed, Lang, Schaeffer & Travis, P. C., Kalamazoo, for respondent-appellee.

Before R. B. BURNS, P. J., and ALLEN and GILLESPIE, ^* JJ.

PER CURIAM.

This is an appeal from a Michigan State Tax Tribunal dismissal of the appellant's petition for review of personal property tax assessments.

In 1970, Donald J. Smith and Richard Smith formed a partnership known as Dick & Don's Greenhouses for the purpose of conducting a greenhouse business. In 1972, the two partners also formed a corporation named Dick & Don's Greenhouses, Inc. (petitioner), with each partner owning 50% of the stock of the corporation. The partnership remained in existence and owned real estate and the buildings thereon. It leased both to the corporation, which operated the business.

In 1976, the partnership sold the greenhouses and other improvements to the corporation, retaining ownership of the underlying land, which it leased to the corporation. The corporation subsequently constructed additional greenhouses on the leased real estate.

In December, 1978, respondent issued a notice of assessed value to the partnership, which covered the value of the greenhouses and other buildings which had been sold to the corporation. In March, 1979, after the partnership appeared before the board of review, the township reduced the partnership's assessed valuation to reflect the land value only and assessed the value of the greenhouses and other buildings situated upon the leased real estate as personal property of the corporation. The assessment was at a total value of $64,100.

Petitioner's theory is that it owns buildings upon the leased land of another, which buildings are "personal property" pursuant to M.C.L. § 211.8(d); M.S.A. § 7.8(d), and that as personal property "actually being used in agricultural operations", it is exempt from taxation pursuant to M.C.L. § 211.9(j); M.S.A. § 7.9(j). The petitioner admits that the buildings are permanently affixed to the underlying realty.

The issue is whether M.C.L. § 211.8(d); M.S.A. § 7.8(d) and M.C.L. § 211.9(j); M.S.A. § 7.9(j) apply to a situation where, as in this case, title to the buildings is severed. The Michigan State Tax Tribunal ruled that these sections do not establish an exemption under the circumstances of this case.

"This Court's authority to review a decision of the Tax Tribunal is very limited. On appeal, we are bound by the factual determinations of the Tribunal. Ironwood v. Gogebic County Board of Comm'rs, 84 Mich.App. 464, 469, 269 N.W.2d 642 (1978). Where, as here, no fraud is alleged, our review is limited to the question of whether the Tribunal committed an error of law of (sic ) adopted a wrong principle. Consolidated Aluminum Corp., Inc. v. Richmond Twp., 88 Mich.App. 229, 231, 276 N.W.2d 566 (1979), Const.1963, art. 6, § 28.

"For the purpose of taxation, real property includes 'all lands within the state, and all buildings and fixtures thereon'. M.C.L. 221.2; M.S.A. 7.2." Michigan National Bank, Lansing v. City of Lansing, 96 Mich.App. 551, 553, 293 N.W.2d 626 (1980).

See also, City of Detroit v. Norman Allan & Co., 107 Mich.App. 186, 189, 309 N.W.2d 198 (1981).

The tests to be applied to ascertain whether property is real property or personal property are:

"(1) Annexation to the realty, either actual or constructive;

"(2) Adaptation or application to the use or purpose of that part of the realty to which it is connected or appropriated; and

"(3) Intention to make the article a permanent accession to the realty. Morris v. Alexander, 208 Mich. 387, 175 N.W. 264 (1919); Peninsular Stove Co. v. Young, 247 Mich. 580, 226 N.W. 225 (1929). The intention which controls is that manifested by the objective, visible facts. The permanence required is not equated with perpetuity. It is sufficient if the item is intended to remain where affixed until worn out, until the purpose to which the realty is devoted is accomplished or until the item is superseded by another item more suitable for the purpose." Michigan National Bank, Lansing v. City of Lansing, supra, 96 Mich.App. at 554, 293 N.W.2d 626.

See San Diego Trust & Savings Bank v. San Diego County, 16 Cal.2d 142, 105 P.2d 94 (1940). See also Sequist v. Fabiano, 274 Mich. 643, 265 N.W. 488 (1936); Jackson Lodge No. 113, B.P.O.E. v. Camp, 303 Mich. 370, 6 N.W.2d 549 (1942).

The pole barns and greenhouses which are the subject of this case are clearly real property.

What, then, was the legislative intent in passage of M.C.L. § 211.8(d); M.S.A. § 7.8(d)?

The statute provides in part:

"Sec. 8. For the purposes of taxation, personal property shall include:

(a) All goods, chattels and effects within the state.

(b) All goods, chattels and effects belonging to inhabitants of this state, located without this state, except that property actually and permanently invested in business in another state shall not be included.

(c) All interests owned by individuals in lands, the fee of which is in this state or the United States, except as otherwise provided in this act.

(d) All buildings and improvements located upon leased lands, except where the value of the real property is also assessed to the lessee or owner of those buildings and improvements.

(e) Tombs or vaults built within any burial grounds, and kept for hire or rent, in whole or in part, and the stock of a corporation or association owning the tombs, vaults, or burial grounds.

(f) All other personal property not enumerated in this section, and not especially exempted by law."

The obvious purpose of the Legislature in the enactment of the above statute was to reach for taxation buildings erected on leased lands, such as airports, federal and state lands or any other lands where title to the underlying properties remains in the owners and the use is granted by, usually, long-term ground leases. The purpose of this statute is not to define what is personal property.

Section 9 of the statute provides, in pertinent part:

"Sec. 9. The following personal property shall be 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, poultry, or fish, turf and tree farming, and any practices performed by a farmer or on a farm as an incident to, or in conjunction with, farming operations."

The respondent admits that the use of the buildings in question here is for agricultural purposes.

It...