ProMed Healthcare v. City of Kalamazoo, 224440
| Decision Date | 01 February 2002 |
| Docket Number | 224440 |
| Parties | PROMED HEALTHCARE, Petitioner-Appellant, v. CITY OF KALAMAZOO, Respondent-Appellee.MICHIGAN COURT OF APPEALS |
| Court | Court of Appeal of Michigan (US) |
Before: O'Connell, P.J., and White and Smolenski, JJ.
Petitioner ProMed Healthcare appeals as of right from the Tax Tribunal order denying its request for tax-exempt status concerning ad valorem taxation on its personal property by respondent City of Kalamazoo. Below, ProMed claimed that it qualified for either the "public health exemption," MCL 211.7r, or the "charitable purpose exemption," MCL 211.7o. Petitioner and respondent presented the dispute to the Tax Tribunal pursuant to a lengthy stipulation of facts. The Tax Tribunal ruled that ProMed was not entitled to either of the claimed tax exemptions. ProMed appeals as of right. We affirm.
In Rose Hill Center, Inc v Holly Twp, 224 Mich App 28, 31; 568 NW2d 332 (1997), this Court set forth the standard by which we review decisions of the Tax Tribunal:
Judicial review of a determination by the Tax Tribunal is limited to determining whether the tribunal made an error of law or applied a wrong [legal] principle. Generally, this Court will defer to the Tax Tribunal's interpretation of a statute that it is delegated to administer. The factual findings of the tribunal are final, provided that they are supported by competent, material, and substantial evidence on the whole record. [Citations omitted.]
In its initial opinion, the Tax Tribunal ruled that a petitioner seeking a tax exemption bears the burden of proving its entitlement to the exemption beyond a reasonable doubt. After ProMed filed a motion for reconsideration, the Tax Tribunal modified its ruling, determining that a petitioner need only establish its entitlement to an exemption by a preponderance of the evidence. The Tax Tribunal concluded that ProMed had failed to establish its entitlement to either of the claimed tax exemptions by a preponderance of the evidence. On appeal, the parties contest the burden of proof that should be applied to a petitioner's request for tax-exempt status. We conclude that the Tax Tribunal correctly applied the preponderance of the evidence standard in the present case.
In order to determine the applicable burden of proof in tax exemption cases, we begin by examining precedent from our Supreme Court. In Ladies Literary Club v City of Grand Rapids, 409 Mich 748, 754; 298 NW2d 422 (1980), the Court quoted with favor the following passage from Justice Cooley's treatise on taxation:
Exemptions are never presumed, the burden is on a claimant to establish clearly his right to exemption, and an alleged grant of exemption will be strictly construed and cannot be made out by inference or implication but must be beyond reasonable doubt. [Quoting 2 Cooley on Taxation (4th ed), 672, pp 1403-1404 (emphasis added).]
From the above language, we might draw the conclusion that a petitioner must prove its entitlement to a claimed tax exemption beyond a reasonable doubt. However, we note that the Ladies Club decision did not directly consider the appropriate burden of proof in tax exemption cases, and merely included the above quotation during its general explanation of tax exemption principles.
Several decisions of this Court have more directly addressed the appropriate burden of proof in tax exemption cases. First, in Retirement Homes of the Detroit Annual Conference of the United Methodist Church, Inc v Sylvan Twp, 92 Mich App 560, 563; 285 NW2d 375 (1979), rev'd on other grounds 416 Mich 340 (1982), this Court held that the standard of proof depends on the type of claim that the petitioner advances before the Tax Tribunal. This Court ruled that the beyond a reasonable doubt standard applies when the petitioner attempts to establish that an entire class of exemptions was intended by Legislature. Id. However, the preponderance of the evidence standard applies when the petitioner attempts to establish that it is a member of an already exempt class. Id.1
Four years later, in Michigan United Conservation Clubs v Lansing Twp, 129 Mich App 1, 11; 342 NW2d 290 (1983), mod on other grounds 423 Mich 661 (1985), this Court held that a petitioner before the Tax Tribunal must establish its entitlement to a tax exemption beyond a reasonable doubt. The decision did not discuss the Retirement Homes ruling and did not indicate that the applicable burden of proof differed, depending on the type of claim advanced by the petitioner. Rather, the decision relied on Justice Cooley's remarks as quoted in Ladies Club, supra.
Finally, in Holland Home v City of Grand Rapids, 219 Mich App 384, 393-394; 557 NW2d 118 (1996), this Court returned to the holding of Retirement Homes, recognizing a distinction between a petitioner's attempt to establish a class of exemptions and an attempt to establish membership in an already exempt class. Because the petitioner in that case was attempting to prove the latter, this Court held that the preponderance of the evidence standard applied, and that the Tax Tribunal committed error requiring reversal when it applied the beyond a reasonable doubt standard to the petitioner's claim. Id. at 394-395.
Because our Supreme Court did not directly address the proper burden of proof in the Ladies Club decision, and because this Court is required to follow the Holland Home ruling under MCR 7.215(I)(1), we conclude that the beyond a reasonable doubt standard only applies when a petitioner before the Tax Tribunal attempts to establish a class of exemptions; the preponderance of the evidence standard applies to a petitioner's attempts to establish membership in an already exempt class.2 In the present case, there is no question that the public health exemption and the charitable purpose exemption are acceptable classes of exemptions. MCL 211.7o; MCL 211.7r. The issue presented here is whether ProMed properly established membership in either one of those exempt classes. Accordingly, we conclude that the Tax Tribunal properly recognized that ProMed was only required to establish its entitlement to exemption by a preponderance of the evidence.
ProMed next argues that the Tax Tribunal's decision should be reversed because the tribunal applied the incorrect burden of proof below. We note that the Tax Tribunal explicitly stated that it had applied the preponderance of the evidence standard, and found ProMed's claim wanting. Nevertheless, ProMed argues that the tribunal's decision erected so many "irrational or unlawful barrier[s]" to ProMed's tax-exempt status that the tribunal must have applied the beyond a reasonable doubt standard. We disagree. ProMed has simply failed to prove its entitlement to either of the claimed exemptions by a preponderance of the evidence.
ProMed argues that it is entitled to an exemption from ad valorem taxation on its personal property under MCL 211.7r, the "public health exemption." The statute provides, in pertinent part:
The real estate with the buildings and other property located on the real estate on that acreage, owned and occupied by a nonprofit trust and used for hospital or public health purposes is exempt from taxation under this act, but not including excess acreage not actively utilized for hospital or public health purposes and real estate and dwellings located on that acreage used for dwelling purposes for resident physicians and their families. [MCL 211.7r]
The Tax Tribunal ruled that a petitioner seeking an exemption under MCL 211.7r is required to prove that it owns the real property on which the personal property subject to the tax is located. Because ProMed failed to prove that it owned the real property, the Tax Tribunal concluded that it was not entitled to exemption under MCL 211.7r.3 On appeal, ProMed does not contend that it owned the real property during the relevant time period. Rather, ProMed argues that the statute does not require ownership of the real estate upon which the personal property is located, but requires only that the petitioner own the personal property in question.
In Rose Hill, supra at 32, this Court set forth the applicable principles of statutory construction:
Statutory interpretation is a question of law subject to review de novo on appeal. The primary goal of statutory interpretation is to ascertain and give effect to the intent of the Legislature in enacting a provision. Statutory language should be construed reasonably, keeping in mind the purpose of the statute. The first criterion in determining intent is the specific language of the statute. If the statutory language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. However, if reasonable minds can differ regarding the meaning of a statute, judicial construction is appropriate. [Citations omitted.]
On appeal, we will defer to the Tax Tribunal's interpretation of a statute that it is delegated to administer. Id. at 31. Furthermore, we must strictly construe tax exemption statutes in favor of the taxing unit. Ladies Club, supra at 753.
[Id. at 754, quoting 2 Cooley on Taxation (4th ed), 672, pp 1403-1404.]
When we...
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