Comerica Inc v. Department of Treasury

Michigan Supreme Court
Lansing, Michigan

Syllabus
Chief Justice: Justices:
Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch

This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Kathryn L. Loomis

COMERICA, INC v DEPARTMENT OF TREASURY

Docket No. 161661. Argued December 8, 2021 (Calendar No. 1). Decided June 7, 2022.

Comerica, Inc., sought review in the Tax Tribunal of a 2013 decision by the Department
of Treasury to deny tax credits for brownfield and historic-restoration activity that Comerica had
claimed under the since repealed Single Business Tax Act (SBTA), 1975 PA 228. In 2005, one of
Comerica’s subsidiaries—KWA I, LLC—had assigned these credits to another Comerica
subsidiary, a Michigan bank. In 2007, the Michigan bank merged with a third Comerica
subsidiary, a Texas bank. Around the same time, the Legislature repealed the SBTA, see 2006 PA
325, and enacted a successor, the Michigan Business Tax Act (MBTA), 2007 PA 36 (since
repealed by 2019 PA 90). Comerica filed returns under the MBTA for the tax years 2008–2011,
identifying the Texas bank, but not the Michigan bank, among its subsidiaries, and claiming
refunds based in part on the credits that had been assigned to the Michigan bank under the SBTA.
In 2013, the Department of Treasury audited Comerica’s returns and disallowed the claimed
credits on the basis of two SBTA provisions, former MCL 208.38g(18) and former MCL
208.39c(7), which barred assignees of credits from subsequently assigning those credits. Comerica
sought review before the Tax Tribunal, arguing that the credits had passed to the Texas bank not
as the result of a subsequent assignment but by operation of law, as a result of the merger with the
Michigan bank. The parties cross-moved for summary disposition under MCR 2.116(C)(10). The
Tax Tribunal, citing Kim v JPMorgan Chase Bank, NA, 493 Mich 98 (2012), granted partial
summary disposition to the Department of Treasury, ruling that the credits had not passed to the
Texas bank in the merger but rather had been extinguished. The Court of Appeals, BOONSTRA,
P.J., and RIORDAN and REDFORD, JJ., vacated in part, reversed in part, and remanded, noting that
although former MCL 208.38g(18) and former MCL 208.39c(7) prohibited any assignment of
credits beyond the initial assignment, those provisions were silent regarding transfers made by any
other mechanism, such as transfers made by operation of law pursuant to a merger of entities.
Accordingly, the Court of Appeals agreed with Comerica that the tax credits had been transferred
by operation of law and that those transfers thus were not barred by the SBTA’s single-assignment
provisions. The Court of Appeals also held, contrary to the Tax Tribunal’s conclusions, that the
rule of strict construction for tax exemptions does not apply to tax credits and that the tax credits
were property rather than privileges. 332 Mich App 155 (2020). The Supreme Court granted the
Department of Treasury’s application for leave to appeal. 507 Mich 888 (2021).
 In an opinion by Justice CLEMENT, joined by Justices ZAHRA, VIVIANO, and BERNSTEIN,
the Supreme Court held:

Tax credits that had been lawfully acquired by one Comerica subsidiary, a Michigan bank,
passed by operation of law under the Banking Code, MCL 487.11101 et seq., to another Comerica
subsidiary, a Texas bank, when the two banks merged. Accordingly, the provisions of the SBTA
that prohibited an assignee of credits from subsequently assigning those credits did not explicitly
or implicitly interfere with the Banking Code’s operation in this case. Therefore, the Department
of Treasury erred by not allowing Comerica to claim these credits on its returns for tax years 2008–
2011, and the Tax Tribunal erred by granting the department partial summary disposition. The
Court of Appeals’ judgment was affirmed.

1. Former MCL 208.38g and former MCL 208.39c provided, in relevant part, that a
qualified taxpayer could assign a credit to its partners, members, or shareholders, but that those
assignees could not subsequently assign those credits or any portion of those credits. In this case,
KWA was the qualified taxpayer, and it was undisputed that KWA could lawfully assign its credits
to the Michigan bank. Although the Department of Treasury argued that the SBTA barred the
Michigan bank, as an assignee, from becoming an assignor by subsequently assigning the credits
to the Texas bank, it offered no evidence that the Michigan bank assigned, or tried to assign, the
credits. Instead, as Comerica correctly argued, the credits passed to the Texas bank not by
assignment but by operation of law—specifically, the Banking Code, which governs
consolidations and mergers of banks. MCL 487.13703(1) provides in part that if a consolidation
agreement has been certified and approved, the corporate existence of each consolidating
organization is merged into and continued in the consolidated bank. To the extent authorized by
the Banking Code, the consolidated bank then possesses all the rights, interests, privileges, powers,
and franchises and is subject to all the restrictions, disabilities, liabilities, and duties of each of the
consolidating organizations. MCL 487.13703(1) further specifies that the title to all property is
transferred to the consolidated bank and may not revert or be impaired by reason of the act. While
the parties disagreed about whether the credits should be considered privileges or property, this
distinction made no difference to the outcome in this case because, under the Banking Code, the
consolidated bank acquires both the privileges and property of the consolidating organizations, by
operation of law, not by assignment or by any other act of the consolidating organizations. The
distinction between a voluntary act of assignment and a transfer by operation of law was described
in Miller v Clark, 56 Mich 337 (1885), and this distinction was relied on in Kim. Thus, regardless
of whether the SBTA credits are considered property or privileges, MCL 487.13703 operated to
transfer the credits from the Michigan bank to the Texas bank, and no assignment was needed.

2. The assignment provisions of the SBTA did not implicitly bar the credits from being
possessed by anyone but the initial assignee. The negative-implication canon of statutory
construction—expressio unius est exclusio alterius—means that the express mention of one thing
implies the exclusion of other similar things. However, this canon does not apply without a strong
enough association between the specified and unspecified items, according to common
understandings of the specified items and the context in which they are used. In this case, the
Department of Treasury offered no reason to think that the SBTA’s mention of “assign[ing]” and
not “subsequently assign[ing]” credits suggests that the Legislature meant to regulate all the ways
that credits could be transferred so that when the Legislature said only “assign” it was impliedly
prohibiting other forms of transfer. Because there was no apparent contextual or circumstantial
predicate for invoking the negative-implication canon, it was not applied.

3. Assuming that the canon of strict construction applies to statutes regulating the
possession of tax credits, it may be invoked only as a last resort. The directive to strictly construe
certain tax statutes in favor of the government reflects a judicial preference against tax exemptions.
However, that preference is not aimed at revealing the semantic content of a statute, and it sheds
no light on the statute’s meaning. Courts will only employ the canon of strict construction if the
statutory meaning fails to emerge after the ordinary rules of interpretation are applied. Because
the SBTA’s ordinary meaning was discernible by examining the text and context of its relevant
provisions, strict construction played no role in this case.

Affirmed.

Justice CAVANAGH, joined by Chief Justice MCCORMACK and Justice WELCH, concurring
in the result, explained that the certificated tax credits at issue in this case, which were earned
through brownfield and historic-restoration activity, flowed from the fulfillment of a contract-like
arrangement between the government and a taxpayer and required the taxpayer to expend a
significant amount of time, effort, and capital to earn them. She concurred with the majority that
regardless of whether the certificated credits were construed as rights, interests, privileges, powers,
or franchises such that Comerica-Texas simply possessed them or instead as “property” that was
transferred to Comerica-Texas, neither scenario constituted an “assignment” as contemplated by
the SBTA, whose single-assignment limitation did not affect how property was allocated between
merging banks under MCL 487.13703(1). Contrary to the Court of Appeals’ holding, she did not
view the expressio unius est exclusio alterius canon of statutory interpretation as particularly
applicable, explaining that the SBTA’s limitation on single assignments was not sufficient to
suggest an exclusive or exhaustive means of transfer. For these reasons, she agreed that the Court
of Appeals’ decision should be affirmed.

Justice WELCH, concurring in part and dissenting in part, stated that the Court of Appeals
decision reached the right result but went too far in declaring the tax credits at issue in this case to
be vested property rights. Under MCL 487.13703, Comerica-Texas, as the consolidated bank
following the merger, held all rights of property, franchises, and interests in the same manner and
to the same extent as those rights and interests were held by each consolidating organization at the
time of the consolidation, and was also subject to all the restrictions, disabilities, liabilities, and
duties of each of the consolidating organizations, effectively rendering Comerica-Texas and
Comerica-Michigan one and the same as a matter of law. She noted that not only was there no
statutory prohibition on Comerica-Texas claiming the disputed tax credits by the terms of the
merger, it would have been unjust and contrary to legislative intent to hold otherwise, given
Comerica’s efforts to redevelop brownfields and historic properties and the Legislature’s goal of
monetarily incentivizing these private-public redevelopment partnerships. She concluded that
allowing petitioner to claim the earned tax credits would hold the state to its side of the bargain,
and she saw nothing that would indicate a legislative intent to disallow petitioner from claiming
the earned tax credits in this situation.
 Michigan Supreme Court
Lansing, Michigan

OPINION
Chief Justice: Justices:
Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch

FILED June 7, 2022

STATE OF MICHIGAN

SUPREME COURT

COMERICA, INC.,

Plaintiff-Appellee,

v No. 161661

DEPARTMENT OF TREASURY,

Defendant-Appellant.

BEFORE THE ENTIRE BENCH

CLEMENT, J.
In this taxpayer protest, Comerica seeks to redeem certain tax credits over the

Department of Treasury’s objection. The credits were earned under the Single Business

Tax Act by a Comerica affiliate. That subsidiary assigned the credits to another subsidiary,

a Michigan bank. Later, Comerica created a third subsidiary, a Texas bank, and merged

the Michigan bank into the Texas bank. Comerica then claimed the tax credits, on behalf

of the Texas bank, in its Michigan tax filings. The Department of Treasury disallowed the
tax credits, concluding that the Texas bank did not receive the Michigan bank’s credits

through the merger because the Michigan bank lacked the legal authority to transfer the

credits. We hold that the tax credits could lawfully pass to the Texas bank.

I. BACKGROUND

Comerica, Inc. is a bank-holding corporation with many subsidiaries, of which three

are relevant here. The first is KWA I, LLC. Before 2005, KWA earned tax credits relating

to brownfield and historic-restoration activity. Those credits were governed in part by the

Single Business Tax Act, 1975 PA 228, which allowed the entity earning a credit to assign

it. In 2005, KWA assigned its credits to the second Comerica subsidiary, a Michigan bank.

In 2007, Comerica created the third subsidiary, a Texas bank. Soon afterward, the

Michigan and Texas banks entered into an “agreement and plan of merger.” As of

October 31, 2007, Comerica considered the Michigan bank to have “merged into” the

Texas bank. And Comerica understood the merger to have caused the Michigan bank’s

tax credits to pass to the Texas bank.

Around the same time, the Legislature repealed the Single Business Tax Act, see

2006 PA 325, and enacted a successor, the Michigan Business Tax Act, 2007 PA 36. 1

Comerica filed returns under the MBTA for the tax years 2008–2011, identifying the Texas

bank, but not the Michigan bank, among its subsidiaries. In each return, Comerica claimed

a refund, relying in part on the credits that had been assigned to the Michigan bank under

1
The Michigan Business Tax Act was itself repealed in 2019, see 2019 PA 90, although
that repeal does not take effect until tax years starting after December 31, 2031.

2
the SBTA. Although the SBTA had been repealed, the MBTA, MCL 208.1435 and

MCL 208.1437, recognized the credits’ continued existence.

In 2013, the Department of Treasury audited Comerica’s returns, disallowed the

claimed credits, and reduced Comerica’s refunds accordingly. Treasury pointed to two

SBTA provisions, MCL 208.38g(18) and MCL 208.39c(7), which governed assignment of

the credits. In particular, each provision allowed the entity earning the credit to assign it,

and so Treasury recognized as valid KWA’s assignment of the credits to the Michigan

bank. But those provisions didn’t let an assignee “subsequently assign a credit or any

portion of a credit assigned”—in other words, the provisions barred a second assignment.

From Treasury’s view, a second assignment was the only way the Texas bank could acquire

the Michigan bank’s credits through the merger. Treasury thus treated the credits as void

and reduced Comerica’s refunds. 2

Comerica unsuccessfully challenged Treasury’s decision in an informal conference

before a Treasury hearing referee. Comerica then sought review before the Tax Tribunal,

arguing that there had been no second assignment of the credits; rather, it argued, under

Texas corporation law and Michigan banking law, the credits passed to the Texas bank as

a result of the merger, “by operation of law.” Treasury argued that the credits were

governed by the SBTA alone—that Texas corporation law and Michigan banking law

didn’t bear on the credits’ status. The parties cross-moved for summary disposition under

MCR 2.116(C)(10).

2
Treasury further reduced Comerica’s refunds because of an issue related to calculation of
Comerica’s “net capital.” That issue is not presently before us.

3
 The Tax Tribunal, citing Kim v JPMorgan Chase Bank, NA, 493 Mich 98; 825

NW2d 329 (2012), acknowledged the possibility that credits could be transferred by

operation of law, but it believed that Kim required such a transfer to be “unintentional or

involuntary.” Any transfer here, the tribunal believed, was not “unintentional or

involuntary” since Comerica had chosen to merge the transferee and transferor banks. The

tribunal thus concluded that the credits had not passed to the Texas bank but rather had

been “extinguished” when the Michigan bank merged into the Texas bank. In so doing,

the tribunal rejected Comerica’s argument that the credits had passed to the Texas bank

under a merger provision in the Texas Business Organizations Code. That provision

allocates title to “property owned by each [merging] organization to . . . the surviving or

new organization[] . . . without . . . any transfer or assignment having occurred.” Tex Bus

Orgs Code Ann 10.008(a)(2)(C) (emphasis added). But the tribunal, citing federal law,

declared the credits to be not “property” but rather “privileges,” a term omitted from the

Texas law. Finally, the tribunal applied to tax credits the rule of “strict construction for tax

exemptions.” For all these reasons, the tribunal concluded that Treasury had appropriately

disallowed the tax credits and, accordingly, granted partial summary disposition to

Treasury.

Comerica challenged the Tax Tribunal’s ruling in the Court of Appeals, which

reversed in relevant part. See Comerica, Inc v Dep’t of Treasury, 332 Mich App 155; 955

NW2d 593 (2020). The Court of Appeals recognized that the SBTA, MCL 208.38g(18)

and MCL 208.39c(7), forbade an assignee to “subsequently assign a credit or any portion

of a credit assigned.” Id. at 167. But even though the provisions “prohibit[ed] any

assignment beyond the first initial assignment,” they “address[ed] only transfers made by

4
assignment and [were] silent regarding transfers made by any other mechanism, such as

transfers made by operation of law pursuant to a merger of entities.” Id.

Like the Tax Tribunal, the Court of Appeals recognized that, under Kim, “transfers

by assignment are distinct from transfers by operation of law.” Id. at 168. But while the

tribunal had read Kim to suggest that the credits could be transferred by operation of law

only if the merger was “unintentional or involuntary,” the Court of Appeals recognized that

a “voluntary act of merger” is different from an “automatic transfer of assets resulting from

that merger.” Id. at 172. Here, the Court concluded, “the voluntary act of

merging . . . automatically transferred the tax credits by operation of law and precluded

application of the SBTA’s single-assignment provisions.” Id. The Court of Appeals

disagreed with the tribunal on a couple of other points. First, it determined that the rule of

“strict construction for tax exemptions” doesn’t extend to tax credits. Id. at 169. Second,

it determined that the tax credits are “property” rather than “privileges.” Id. at 171. The

Court of Appeals thus reversed the tribunal’s grant to Treasury of partial summary

disposition.

Treasury applied for our leave to appeal, arguing that the credits were unlawfully

assigned when they passed from the Michigan bank to the Texas bank and that the credits

were not a “vested right” or a “property right.” We granted leave, Comerica, Inc v Dep’t

of Treasury, 507 Mich 888 (2021), and now, for the reasons below, we affirm.

5
 II. DISCUSSION

Treasury primarily contends that the tax credits at issue passed to Comerica’s Texas

bank in violation of sections 38g and 39c of the Single Business Tax Act, formerly codified

at MCL 208.38g and MCL 208.39c. Section 38g(18) stated, in relevant part:

[T]he qualified taxpayer may assign all or a portion of a credit . . . to its
partners, members, or shareholders . . . . A partner, member, or shareholder
that is an assignee shall not subsequently assign a credit or any portion of a
credit assigned under this subsection. [Emphasis added.]

Section 39c(7) similarly stated:

[T]he qualified taxpayer may assign all or any portion of a credit . . . to its
partners, members, or shareholders . . . . A partner, member, or shareholder
that is an assignee shall not subsequently assign a credit or any portion of a
credit assigned to the partner, member, or shareholder under this subsection.
[Emphasis added.]

Both provisions said essentially the same thing: The qualified taxpayer that earned the

credit “may assign” that credit, but the credit’s “assignee shall not subsequently assign a

credit or any portion of a credit assigned.” Put otherwise, the assignee cannot later become

an assignor.

In the present case, KWA was the “qualified taxpayer,” and Treasury recognizes

that KWA could and did lawfully assign its credits to the Michigan bank. But Treasury

insists that the SBTA barred the Michigan bank, as an assignee, from becoming an assignor

by “subsequently assign[ing]” the credits to the Texas bank. We agree—the statute plainly

forbids the credits’ assignee to later become the credits’ assignor. But Treasury has offered

nothing to suggest that the Michigan bank became an assignor, i.e., that it assigned the

credits. So while the statute plainly forbade the Michigan bank to assign the credits, there’s

no evidence that the Michigan bank assigned, or tried to assign, the credits.

6
 For its part, Comerica urges that the credits passed to the Texas bank not by

assignment but by “operation of law.” In other words, the Michigan bank did not need to

assign the credits to the Texas bank because the law operated to move the credits from one

to the other. Comerica identified as the operative law the Banking Code, 1999 PA 276,

which governs how “consolidating organizations” can merge into a “consolidated bank.” 3

Section 3703(1) of the Banking Code, MCL 487.13703(1), directs how the particulars of

each “consolidating organization” become the particulars of a “consolidated bank”:

If approval and certification of the consolidation agreement . . . have
been completed, the corporate existence of each consolidating organization
is merged into and continued in the consolidated bank. To the extent
authorized by this act, the consolidated bank possesses all the rights,
interests, privileges, powers, and franchises and is subject to all the
restrictions, disabilities, liabilities, and duties of each of the consolidating
organizations. The title to all property, real, personal, and mixed, is
transferred to the consolidated bank, and shall not revert or be in any way
impaired by reason of this act. [Emphasis added.]

Under this provision, the consolidated bank acquires each consolidating organization’s

“rights, interests, privileges, powers, and franchises” and becomes subject to each

consolidating organization’s “restrictions, disabilities, liabilities, and duties.” And “title to

all property . . . is transferred to the consolidated bank.” As this litigation has developed,

the parties have bickered about the nature of the credits, with Treasury persuading the Tax

Tribunal that they are “privileges,” and Comerica persuading the Court of Appeals that

3
Although Comerica suggested in the Tax Tribunal that Texas law has a role to play in this
case, we see no citation to Texas law in the briefing before this Court. While we ordinarily
might be reluctant to determine a Texas bank’s relationship to tax credits without
considering Texas law, we’re not reluctant here, where both the tax credits and their
assignee are creatures of Michigan law and where the parties have here addressed only
Michigan law.

7
they are “property.” Yet, as we will explain, it doesn’t matter whether they are privileges

or property since, under the Banking Code, the consolidated bank acquires the

consolidating organizations’ privileges and property “by operation of law,” not by

assignment or by any other act of the consolidating organizations.

When Comerica contends that the SBTA credits transfer by operation of law, we

take Comerica to mean that the credits are property since the Banking Code identifies only

title to “property” (and not “privileges”) as “transferred.” Notably, the act of transfer is

expressed passively, with neither the “consolidating organization” nor the “consolidated

bank” charged with acting to effect the transfer. It’s true that the consolidating

organizations here—the Michigan bank and the Texas bank—needed to act to effect the

merger. But the Court of Appeals put it well when it distinguished “the voluntary act of

merger” from “the automatic transfer of assets resulting from that merger.” Comerica, 332

Mich App at 172. Because the transfer is “automatic” under the Banking Code, it makes

sense to characterize the Banking Code itself, i.e., the “law,” as effecting the transfer—

hence, transfer “by operation of law.” 4

Our reasoning has ample and long-standing support in our caselaw. Well over a

century ago, in Miller v Clark, 56 Mich 337; 23 NW 35 (1885), we distinguished a

“voluntary act” of assignment from a transfer “by operation of law”:

The assignments which are required to be recorded are those which
are executed by the voluntary act of the party, and this does not apply to cases
where the title is transferred by operation of law[.] [Id. at 340-341.]

4
See, e.g., United States v Seattle–First Nat’l Bank, 321 US 583, 587-588; 64 S Ct 713;
88 L Ed 844 (1944) (explaining that if “the immediate mechanism by which the transfer is
made effective” is “entirely statutory,” then the transfer is “wholly by operation of law”).

8
We relied on Miller’s distinction relatively recently, in Kim v JPMorgan Chase Bank, NA,

493 Mich 98; 825 NW2d 329 (2012), explaining that Miller is consistent with Black’s Law

Dictionary and emphasizing the “automatic” nature of a transfer “by operation of law”:

Miller’s interpretation of when a transfer occurs by “operation of law”
is consistent with Black’s Law Dictionary’s definition of the expression.
Black’s defines “operation of law” as “[t]he means by which a right or a
liability is created for a party regardless of the party’s actual intent.”
Similarly, this Court has long understood the expression to indicate “the
manner in which a party acquires rights without any act of his own.”
Accordingly, there is ample authority for the proposition that a transfer that
takes place by operation of law occurs unintentionally, involuntarily, or
through no affirmative act of the transferee. [Id. at 110. 5]

We continue to agree with Kim’s and Miller’s distinction between an assignment effected

by a voluntary act and a transfer effected by an automatic, statutory process, i.e., “by

operation of law.” 6

As Kim and Miller show, the law itself can effect a transfer of title to property. It

thus is not necessarily true, as Treasury suggests, that a transfer of the credits from the

Michigan bank implies an assignment by the Michigan bank. As explained above, section

3703 of the Banking Code can trigger a transfer without an assignment. Here, if the SBTA

credits are property, section 3703 operated to transfer the credits from the Michigan bank

to the Texas bank. No assignment was needed.

5
Quoting Black’s Law Dictionary (9th ed); Merdzinski v Modderman, 263 Mich 173, 175;
248 NW 586 (1933) (citation and quotation marks omitted).
6
Treasury urges that we should decline to rely on Kim (and, by implication, on Miller)
because it involved transfers of mortgages, not tax credits. We take the point, that lessons
from a decision in one domain shouldn’t be naïvely applied in another domain. But
Treasury offers no reason to limit Kim and Miller’s teaching on automatic, statutory
transfers to mortgages, and we see none.

9
 What then if the tax credits are, as Treasury proposes, “privileges”? The answer is

the same. As noted above, under section 3703, “the consolidated bank possesses all

the . . . privileges . . . of each of the consolidating organizations.” The language is plain:

All privileges of a consolidating organization become possessed by the consolidated bank.

While the Banking Code characterizes as a “transfer” the conferring of title to property, it

doesn’t so characterize the conferring of attributes like privileges—instead, it simply

declares what attributes of the consolidating organization “the consolidated bank

possesses.” In any event, whether privileges are characterized as the subject of a transfer

or some other thing, they are not the subject of an assignment. 7

We cannot escape the statute’s plain meaning, i.e., that the Michigan bank’s

privileges were conferred on the Texas bank “by operation of” the Banking Code, not by

assignment. If the credits are privileges, no assignment was needed for them to pass to the

Texas bank.

——————————

Treasury offers an alternative perspective on the SBTA’s assignment provisions:

Even if the Michigan bank didn’t violate those provisions by becoming an assignor, the

7
The Michigan Bankers Association, as amicus curiae, urges us to conclude that there was
no transfer here. The Association points out that under section 3703(1), “the corporate
existence of each consolidating organization is merged into and continued in the
consolidated bank”—in other words, the Michigan bank’s existence is “continued in the”
Texas bank, and so the credits haven’t changed hands. As the Association acknowledges,
section 3703(1) also states that “title to all property . . . is transferred to the consolidated
bank.” Put otherwise, while the Association says there was no transfer, the Banking Code
expressly refers to title to property being “transferred.” Since the parties’ arguments are
adequate to resolve this case, we decline to engage further with the Association’s reading
of section 3703(1).

10
credits couldn’t pass to the Texas bank because those provisions implicitly barred the

credits from leaving the Michigan bank’s possession. In other words, Treasury argues that

the SBTA’s regulation of initial assignments bars the credits from afterward being

possessed by anyone but the initial assignee. Treasury thus relies on the negative-

implication canon, often called by its hoary epithet, expressio unius est exclusio alterius.

Under this canon of statutory construction, the express mention of one thing implies

the exclusion of other similar things. Detroit v Redford Twp, 253 Mich 453, 456; 235 NW

217 (1931). As we have recently explained, however, the canon “properly applies only

when the unius (or technically, unum, the thing specified) can reasonably be thought to be

an expression of all that shares in the grant or prohibition involved.” Bronner v Detroit,

507 Mich 158, 173; 968 NW2d 310 (2021), quoting Scalia & Garner, Reading Law (St.

Paul: Thomson/West, 2012), p 107. The canon thus does not apply without a strong

enough association between the specified and unspecified items. See Chevron USA Inc v

Echazabal, 536 US 73, 81; 122 S Ct 2045; 153 L Ed 2d 82 (2002). That association is

evaluated according to common understandings of the specified items and the context in

which they are used. See generally United States v Vonn, 535 US 55, 65; 122 S Ct 1043;

152 L Ed 2d 90 (2002); Reading Law, p 107.

Scalia and Garner illustrate this point with a couple of examples involving common

restaurant signs. The first example:

The sign outside a restaurant “No dogs allowed” cannot be thought to mean
that no other creatures are excluded—as if pet monkeys, potbellied pigs, and
baby elephants might be quite welcome. Dogs are specifically addressed
because they are the animals that customers are most likely to bring in;
nothing is implied about other animals. [Reading Law, p 107.]

11
The second example:

Consider the sign at the entrance to a beachfront restaurant: “No shoes, no
shirt, no service.” By listing some things that will cause a denial of service,
the sign implies that other things will not. One can be confident about not
being excluded on grounds of not wearing socks, for example, or of not
wearing a jacket and tie. But what about coming in without pants? That is
not included in the negative implication because the specified deficiencies in
attire noted by the sign are obviously those that are common at the beach.
Others common at the beach (no socks, no jacket, no tie) will implicitly not
result in denial of service; but there is no reasonable implication regarding
wardrobe absences not common at the beach. They go beyond the category
to which the negative implication pertains. [Id. at 108.]

In each example, the negative implication is restrained by the expression of prohibitions

(dogs or going shirtless or shoeless), the circumstances to which the prohibitions apply

(restaurant or beachfront restaurant), and common understandings (about people’s

behavior with pets or at the beach). We thus understand that a restaurant with both signs

would welcome neither a pantsless man nor the horse he rode in on.

Here, the question is whether the SBTA’s mention of “assign[ing]” and not

“subsequently assign[ing]” credits suggests anything about how credits otherwise pass

between entities. Treasury offers no reason to think that the Legislature meant to regulate

all the ways that credits could be transferred so that when the Legislature said only “assign”

it was impliedly prohibiting other forms of transfer. For instance, by analogy to the “no

dogs allowed” example, Treasury might have asserted that “assigning” is singled out in the

statute because it is “the action that tax-credit holders are most likely to perform.” To be

clear, that reasoning sounds dubious to us, but the point is that Treasury hasn’t explained

how expressly regulating credit assignments implies anything about how credits can

otherwise change hands; nor has it pointed to any language in the SBTA suggesting an

12
intention to regulate all transfers of tax credits. 8 Unlike restaurant signs’ expression of

“dogs” or of seaside sartorial omissions, the SBTA’s expression about “assigning” implies

very little, in our “[c]ommon sense.” Bronner, 507 Mich at 173, quoting Reading Law,

p 107. 9

In short, we see no contextual or circumstantial predicate for invoking the negative-

implication canon, and so we decline to apply it here.

——————————

Treasury has urged us to “strictly construe” the SBTA’s tax-credit provisions

against Comerica. We initially question whether the canon of strict construction applies to

statutes governing tax credits. This case doesn’t ask us to determine whether those tax

credits were appropriately awarded in the first place—Treasury hasn’t disputed that KWA

earned them fair and square. We’re instead looking at provisions governing how those

credits can pass between a corporation’s subsidiaries. It is not obvious that provisions like

that should be “strictly construed.”

But even if the “canon of strict construction” applies to statutes regulating the

possession of tax credits, it may be invoked only as a “last resort.” TOMRA of North

America, Inc v Dep’t of Treasury, 505 Mich 333, 343; 952 NW2d 384 (2020). As we

8
By contrast, the Banking Code, MCL 450.13703(1), mandates that the consolidated bank
acquires all the consolidating organizations’ privileges and property—a strong clue that the
Legislature favors free flow of privileges and property in a merger.
9
Incidentally, our common sense today is consistent with our thinking in Miller in 1885.
The statute there mentioned “assignment” but not other transfers, and yet we inferred the
possibility of transfer by operation of law. Miller, 56 Mich at 340-341; see also Kim, 493
Mich at 109-110.

13
recently explained, the directive to strictly construe certain tax statutes in favor of the

government reflects a judicial “preference against tax exemptions.” Id. at 340. That

preference, whatever its merit, isn’t aimed at “reveal[ing] the semantic content of a statute,”

id. at 343—that is, it doesn’t “shed any light” on the statute’s meaning, id. at 342. Only if

that meaning fails to emerge after we apply “the ordinary rules of interpretation” may we

put our thumb on the scales and construe a statute against the taxpayer. Id. at 343. Here,

as indicated above, the SBTA’s “ordinary meaning is discernible” by examining the text

and context of its relevant provisions, id.; “strict construction” thus plays no role here.

III. CONCLUSION

This appeal asked us to decide whether tax credits lawfully acquired by one

Comerica subsidiary, a Michigan bank, could lawfully pass to another Comerica

subsidiary, a Texas bank, when the two banks merged. As explained above, the Single

Business Tax Act barred the Michigan bank from assigning the credits, but no such

assignment was attempted here. Rather, the Banking Code let the Texas bank acquire the

credits “by operation of law.” The SBTA did not explicitly or implicitly interfere with the

Banking Code’s operation.

For these reasons, we conclude that the credits could lawfully pass to the Texas

bank. We, therefore, affirm the Court of Appeals’ judgment.

Elizabeth T. Clement
Brian K. Zahra
David F. Viviano
Richard H. Bernstein

14
 STATE OF MICHIGAN

SUPREME COURT

COMERICA, INC.,

Plaintiff-Appellee,

v No. 161661

DEPARTMENT OF TREASURY,

Defendant-Appellant.

CAVANAGH, J. (concurring in the result).
This case involves a dispute over certificated tax credits issued under the now long-

repealed Single Business Tax Act (SBTA), former MCL 208.1 et seq. Unlike a tax credit

for overpayment or a credit intended to offset tax liability, certificated credits flow from

the fulfillment of a contract-like arrangement between the government and a taxpayer. The

two types of certificated credits at issue are earned through brownfield and historic-

restoration activity. To summarize, in order to promote the redevelopment of brownfield

property, 1 the Michigan Legislature enacted the Brownfield Redevelopment Financing Act

(BRFA), MCL 125.2651 et seq. In addition to financing available under the BRFA, the

Legislature also provided for tax credits for property owners who undertook brownfield

projects. To become eligible for the brownfield tax credits, the property owner was

1
A “brownfield” is generally regarded as real property that has the presence or potential
presence of hazardous substances, pollutants, or contaminants that hinder expansion,
redevelopment, or reuse. See 42 USC 9601(39). In Michigan, a brownfield also broadly
includes certain noncontaminated properties such as “blighted” or “functionally obsolete”
properties. MCL 125.2652.
required to submit an application to the Michigan Economic Growth Authority (MEGA)

demonstrating that the project met requirements for job creation and retention,

construction, rehabilitation, and development. See MCL 207.808. If MEGA approved the

application, it would enter into an agreement with the taxpayer for the brownfield tax

credits under the SBTA that would become available once the project was complete. The

credit was worth 10% of the taxpayer’s eligible investments, up to $1 million, and the

taxpayer could carry the credit forward for 10 years to offset any subsequent tax liability

under the SBTA.

Similarly, under the SBTA, property owners were incentivized to rehabilitate and

preserve historic properties in exchange for tax credits. To obtain a historic-restoration

credit, the taxpayer would apply for certification from the State Historic Preservation

Office or the National Parks Service, submit a rehabilitation plan, and, upon completion of

the project, seek a certificate of completed rehabilitation. If the rehabilitation was in

conformity with the plan approved, a certificate of completion was issued, making the

taxpayer eligible for a 25% credit for qualified expenditures. Like the brownfield credits

discussed earlier, the historic-restoration credit was also able to be carried forward for 10

years. In sum, to earn the certificated tax credits at issue, the taxpayer was required to

expend a significant amount of time, effort, and capital. 2

The credits at issue were earned by a Comerica, Inc., affiliate and subsequently

assigned to a Comerica subsidiary (Comerica-Michigan). Comerica-Michigan later

2
With this in mind, I find the Department’s suggestion that we “strictly construe” the
SBTA’s tax credit provision against Comerica unpersuasive. See Canterbury Health Care
v Dep’t of Treasury, 220 Mich App 23, 313; 558 NW2d 444 (1996) (holding that tax
exemptions are strictly construed in favor of the taxing authority).

2
merged with another Comerica subsidiary (Comerica-Texas). Because the SBTA

prohibited a subsequent assignment of the certificated tax credits, former MCL

208.38g(18) and former MCL 208.39c(7), the question before the Court is whether the

credits are properly held by Comerica-Texas as a result of the merger—or, as the

Department argues, whether Comerica-Texas’s acquisition of the credits via a merger

constitutes an improper second assignment of the certificated tax credits.

I concur with the majority that, whether the certificated credits are construed as

either “rights, interests, privileges, powers, [or] franchises” such that Comerica-Texas

simply “possesses” them or as “property” such that it was “transferred” to Comerica-Texas,

neither scenario constitutes an “assignment” as contemplated by the SBTA. The SBTA’s

single-assignment prohibition does not affect how property is allocated between merging

banks under MCL 487.13703(1), a provision of the Banking Code, MCL 487.11101 et

seq. 3 The SBTA spoke only to limiting assignments; it did not mention what would happen

to certificated credits in a bank merger. “Michigan courts determine the Legislature’s

intent from its words, not from its silence.” Donajkowski v Alpena Power Co, 460 Mich

243, 261; 596 NW2d 574 (1999). Contrary to the Court of Appeals’ holding, I do not see

3
MCL 487.13703(1) provides:

If approval and certification of the consolidation agreement as
required by [MCL 487.13701] have been completed, the corporate existence
of each consolidating organization is merged into and continued in the
consolidated bank. To the extent authorized by this act, the consolidated
bank possesses all the rights, interests, privileges, powers, and franchises and
is subject to all the restrictions, disabilities, liabilities, and duties of each of
the consolidating organizations. The title to all property, real, personal, and
mixed, is transferred to the consolidated bank, and shall not revert or be in
any way impaired by reason of this act.

3
the expressio unius est exclusio alterius canon of statutory interpretation as particularly

applicable in this case. As the majority explains, this canon is animated by context and

reasonability. See Bronner v Detroit, 507 Mich 158, 173; 968 NW2d 310 (2021). The

SBTA’s limitation on single assignments is simply not sufficient to suggest an exclusive

or exhaustive means of transfer.

For these reasons, I agree that the Court of Appeals’ decision should be affirmed,

and I concur in the result reached by the Court majority.

Megan K. Cavanagh
Bridget M. McCormack
Elizabeth M. Welch

4
 STATE OF MICHIGAN

SUPREME COURT

COMERICA, INC.,

Petitioner-Appellee,

v No. 161661

DEPARTMENT OF TREASURY,

Respondent-Appellant.

WELCH, J. (concurring in part and dissenting in part).
I join Justice CAVANAGH’s concurring opinion. We can resolve this case by

focusing less on legal abstractions and instead returning to first principles of how this Court

has historically interpreted tax-related statutes. This Court has long recognized “that taxing

is a practical matter and that the taxing statutes must receive a practical construction.” In

re Brackett’s Estate, 342 Mich 195, 205; 69 NW2d 164 (1955). Substance governs over

form. See 23 Michigan Civil Jurisprudence, Taxes, § 37, p 222 (“A court, in reading

taxation statutes, should disregard form for substance and place an emphasis on economic

reality.”). It is a “black-letter principle that ‘tax law deals in economic realities, not legal

abstractions.’ ” PPL Corp v Comm’r of Internal Revenue, 569 US 329, 340; 133 S Ct

1897; 185 L Ed 2d 972 (2013), quoting Comm’r v Southwest Exploration Co, 350 US 308,

315; 76 S Ct 395; 100 L Ed 347 (1956). Applying this lens, this case is easily resolved.

The parties agree on the basic facts. Petitioner’s subsidiary earned brownfield-

restoration and historic-preservation tax credits by completing certain approved projects.

In accordance with the applicable statutory scheme—the since repealed Single Business
Tax Act (SBTA), former MCL 208.1 et seq.—in 2005 the subsidiary properly assigned

these credits to Comerica Bank, a Michigan banking corporation (Comerica-Michigan).

Under the SBTA, such credits could only be assigned once. Former MCL 208.38g(18);

former MCL 208.39c(7). Comerica-Michigan later merged with Comerica Bank, a Texas

banking association (Comerica-Texas). Following the merger, Comerica-Michigan ceased

to exist as a separate entity. The parties now disagree on whether petitioner can lawfully

claim Comerica-Michigan’s earned, but never used, and already once-assigned tax credits.

I think the Court of Appeals decision reached the right result but went too far in

declaring the tax credits at issue in this case “vested” property rights. This Court has never

understood tax credits in this manner, and it was unnecessary for the Court of Appeals to

do so here. Viewing tax credits as vested property rights has the potential to greatly disturb

our state government’s system of taxation. Unsurprisingly, our Court of Appeals in an

earlier decision held that “because any ‘rights’ that arise under a tax statute are purely a

result of legislative ‘grace,’ the Legislature is free to take such a ‘right’ away at any

time . . . .” Ludka v Dep’t of Treasury, 155 Mich App 250, 259-260; 399 NW2d 490 (1986)

(finding “no vested right in a foreign tax credit” or “in a tax statute or in the continuance

of any tax law”). Similarly, although never speaking in such absolute terms, this Court has

held that the Legislature, within the limits of the Constitution, has broad discretion over

taxation. Hudson Motor Car Co v Detroit, 282 Mich 69, 79; 275 NW 770 (1937). This

Court emphasized, however, that broad discretion is not limitless discretion. Id. For

instance, “[t]he control of the state in regard to taxation . . . can not be exercised in an

arbitrary manner, nor without regard to those principles of justice and equality on which it

is based.” Ryerson v Utley, 16 Mich 269, 276 (1868).

2
 In order to resolve the statutory question presented in this case, we should only have to

look at the economic realities. The Legislature has chosen to create incentives for brownfield

restoration and historic preservation. Rather than supporting such efforts directly, the

Legislature subsidizes that pursuit through tax policy. Cf. United States v Hoffman, 901 F3d

523, 537 (CA 5, 2018) (“Tax credits are the functional equivalent of government spending

programs.”). The Legislature has imposed specific controls on how the credit is earned and

how it can be claimed. As relevant here—and as the parties agree—the Legislature allows

only a single assignment to a qualifying partner, member, or shareholder. The parties also

agree—and it is abundantly clear—that there was never a prohibited successive assignment

between Comerica-Michigan and Comerica-Texas. Instead, Comerica-Texas claims the credit

by reason of its merger with Comerica-Michigan.

As our Court of Appeals has recognized, “the effect of a merger or consolidation on

the existing constituent corporations depends upon the terms of the statute under which the

merger or consolidation is accomplished.” Handley v Wyandotte Chems Corp, 118 Mich

App 423, 425; 325 NW2d 447 (1982). In this case, the merger proceeded under MCL

487.13703, which governs bank mergers. The bank-merger statute provides that

Comerica-Texas, as the consolidated bank following the merger, “holds and enjoys the

same and all rights of property, franchises, and interests . . . in the same manner and to the

same extent as those rights and interests were held or enjoyed by each consolidating

organization at the time of the consolidation.” MCL 487.13703(2). Comerica-Texas also

“is subject to all the restrictions, disabilities, liabilities, and duties of each of the

consolidating organizations.” MCL 487.13703(1). As a matter of law, Comerica-Texas

and Comerica-Michigan are one and the same, because Comerica-Michigan’s corporate

3
existence continues in Comerica-Texas even though it is no longer a separate entity. See

MCL 487.13703(1). 1

As a practical matter, not only is there no statutory prohibition on Comerica-Texas

claiming the disputed tax credits by the terms of the merger, it would be grossly unjust and

contrary to legislative intent to hold otherwise. It would make little sense to find Comerica-

Texas subject to Comerica-Michigan’s tax liabilities as the result of the merger but not its

earned tax credits resulting from Comerica-Michigan’s real-life efforts to redevelop

brownfields and historic properties. The cascading effect of disallowing these credits would

be that future businesses will decide against redeveloping properties that earn the credits,

which would damage the Legislature’s goal of monetarily incentivizing these private-public

redevelopment partnerships. The state must be held to its side of the bargain, and I see no

reason to think that there was ever any intention on the part of the state to disallow petitioner

from claiming the earned tax credits in this situation. 2

For these reasons, I concur in part and dissent in part.

Elizabeth M. Welch
1
This is also a general statement of Michigan corporation law. Although the Business
Corporation Act, MCL 359.1101 et seq., does not apply to banking corporations, MCL
450.1123(2), it similarly provides that following a merger the surviving corporation
receives all rights and title to property “without reversion or impairment,” MCL
450.1724(1)(b), as well as “all liabilities,” MCL 450.1724(1)(d).
2
I also question the majority opinion’s reference to TOMRA of North America, Inc v Dep’t
of Treasury, 505 Mich 333, 343; 952 NW2d 384 (2020). Discarding 166 years of legal
precedent, TOMRA held for the first time that “the canon requiring strict construction of
tax exemptions . . . is a canon of last resort” and instead chose a malleable standard for
statutory interpretation. See TOMRA, 505 Mich at 340-343. Regardless of any differences
in judicial philosophies about how to go about statutory interpretation, TOMRA concerned
tax exemptions, i.e., the absence of tax in a given situation. It did not concern tax credits.
It has no application here.

4