Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED MAY 29, 2002
DANSE CORPORATION,
Petitioner-Appellant,
v No. 119011
CITY OF MADISON HEIGHTS,
Respondent-Appellee.
________________________________
PER CURIAM
The Michigan Tax Tribunal entered a judgment, holding
that certain personal property belonging to petitioner did not
constitute “special tools” and was therefore subject to
taxation. On appeal, petitioner argued that guidelines
utilized by the Tax Tribunal were not determinative, since
they were not rules promulgated in accordance with the
Administrative Procedures Act.1 The Court of Appeals
affirmed.2 We reverse the judgments of the Tax Tribunal and
1
MCL 24.201 et seq.
2
Unpublished opinion per curiam, issued March 23, 2001
(Docket No. 215486).
Court of Appeals because the guidelines relied on to expand
the definition of “special tools” did not have the force of
law as they were not promulgated under the APA. We remand
this case to the Tax Tribunal for reconsideration in light of
this opinion.
I
Petitioner manufactures roof line ridge vents for
residential construction. In that process it uses plastic
injection molds and related components. It excluded the molds
from personal property statements and, as required, noted that
fact on the personal property statements it filed. A personal
property audit was performed, and respondent subsequently
notified the State Tax Commission that personal property
allegedly subject to taxation had not been included on
petitioner’s 1994 and 1995 personal property statements and
sought an increase in the assessment valuation. The State Tax
Commission held that the molds were not exempt “special tools”
within the meaning of MCL 211.9b and corrected increased
assessment valuations were approved. Petitioner filed an
appeal with the Michigan Tax Tribunal. After an evidentiary
hearing, the Tax Tribunal held that petitioner was not
entitled to a MCL 211.9b exemption for the molds. It found
that the Legislature intended to allow the State Tax
Commission to define what “special tools” meant.
2
The Court of Appeals, with one judge dissenting,
affirmed. Petitioner has applied for leave to appeal.3
II
Issues concerning the interpretation and application of
statutes are questions of law that this Court decides de novo.
Lincoln v General Motors Corp, 461 Mich 483, 489-490; 607 NW2d
73 (2000). In Michigan Bell Telephone Co v Treasury Dep’t,
445 Mich 470, 476; 518 NW2d 808 (1994), we noted that, in the
absence of fraud, review of a Tax Tribunal decision is
“limited to determining whether the tribunal erred in applying
the law or adopted a wrong principle[.]” “[F]actual findings
are conclusive if supported by competent, material, and
substantial evidence on the whole record.” Id.
III
MCL 211.9b provides:
(1) All special tools are exempt from
taxation.
(2) As used in this section, “special tools”
means those manufacturing requisites, such as dies,
jigs, fixtures, molds, patterns, gauges, or other
tools, as defined by the state tax commission, that
are held for use and not for sale in the ordinary
course of business.
(3) Special tools are not exempt from taxation
if the value of the special tools is included in
the valuation of inventory produced for sale.
[Emphasis added.]
3
The motion to file a brief amicus curiae is granted.
3
The State Tax Commission has adopted a rule defining
“special tools.”4 What is commonly referred to as rule 21
provides:
“Special tools” as used in section 9b of the
act, means those finished or unfinished devices,
such as dies, jigs, fixtures, molds, patterns, and
special gauges, used or being prepared for use in
the manufacturing function for which they are
designed or are acquired or made for the production
of products or models and are of such specialized
nature that their utility and amortization cease
with the discontinuance of such products or models.
Pursuant to MCL 211.10e, assessing officials are required
to use an assessor’s manual prepared by the State Tax
Commission “as a guide in preparing assessments.” The Tax
Tribunal utilized seven guidelines from the State Tax
Commission Assessor’s Manual in reaching the determination
that the plastic injection molds were not “special tools”5
4
1999 AC, R 209.21.
5
Chapter 15 of the Assessor’s Manual, entitled “Personal
Property” states at pp 15-6 and 15-7:
The following guidelines should be used by the
assessor when making the determination of whether a
particular device is a special tool.
1. Special tools include devices such as
dies, jigs, fixtures, molds, patterns and gauges.
Special tools do not include devices which differ
in nature from dies, jigs, fixtures, molds,
patterns, and gauges. Thus the press into which a
die is placed is not a special tool.
2. Special tools are specially designed to
produce a particular product and could not be used
to produce a different product.
4
and therefore were not exempt from personal property tax under
MCL 211.9b. In determining that the Assessor’s Manual
guidelines were applicable, the Tax Tribunal stated in part:
The State Tax Commission (STC) further
provided seven guidelines to determine whether a
“particular device is a special tool” based on that
tool’s purpose, “utility and amortization.”
Although these guidelines are clarifications of its
Rule 21 general definition and not promulgated
rules, this Tribunal must look at the Legislature’s
intent of allowing the State Tax Commission to not
only define what a special tool is, but to further
allow the STC to clarify how to recognize a special
tool when an assessor sees it and the “utility and
3. Special tools are used to produce models
or products which are expected to change. Thus, a
die used to produce a car fender is likely a
special tool because the fender will predictably
change, whereas a mold used in the manufacture of a
common wrench will not change for many years and is
not a special tool.
4. Special tools frequently become obsolete
before they wear out and therefore have a short
useful life.
5. Models or products produced by special
tools are usually expected to change within 3
years.
6. A die, jig, etc., may have a short life
simply because it wears out fast rather than
because it is used to produce a model. In this
case the tool would not be exempt as a special
tool.
7. The term “amortization” used by the State
Tax Commission in its definition of special tools
refers to the writing off of an expenditure over a
certain period of time. This reference to
amortization in the definition of special tools is
more of a descriptive aid than a condition that
must be met.
5
amortization” of that special tool.
The Court of Appeals majority agreed that the factors
from the Assessor’s Manual were determinative. The Court
relied on MCL 211.10e, which provides:
All assessing officials, whose duty it is to
assess real or personal property on which real or
personal property taxes are levied by any taxing
unit of the state, shall use only the official
assessor’s manual or any manual approved by the
state tax commission, consistent with the official
assessor’s manual, with their latest supplements,
as prepared or approved by the state tax commission
as a guide in preparing assessments. Beginning
with the tax assessing year 1978, all assessing
officials shall maintain records relevant to the
assessments, including appraisal record cards,
personal property records, historical assessment
data, tax maps, and land value maps consistent with
standards set forth in the assessor’s manual
published by the state tax commission.
It also relied on OAG, 1981-1982, No. 5,909, p 207
(May 20, 1981). It further noted that exemption statutes are
to be strictly construed in favor of the taxing unit and that
a prior decision of that Court appeared to accept a definition
of “special tools” that included a factor from the guidelines.
The dissenting judge would have held that the Assessor’s
Manual did not have legal authority because it was not
promulgated as an administrative rule and thus could not
impose additional requirements to meet the definition of
“special tools” beyond that contained in rule 21. The
dissenting judge would have held that the plastic injection
molds were “special tools” as defined by rule 21 and that,
6
therefore, petitioner was entitled to the statutory exemption.
IV
In order for an agency regulation, statement, standard,
policy, ruling, or instruction of general applicability to
have the force of law, it must fall under the definition of a
properly promulgated rule. If it does not, it is merely
explanatory. Goins v Greenfield Jeep Eagle, 449 Mich 1, 7-10;
534 NW2d 467 (1995). As the Tax Tribunal noted, rule 21 was
properly promulgated under the APA, and therefore has the
force of law.
However, it is undisputed that the Assessor’s Manual was
not promulgated as an administrative rule. Therefore, the
manual may be used as a “guide,” but does not itself have the
force of law. The portion referred to can only be used to
explain rule 21; it cannot impose requirements not found in
rule 21 to meet the definition of “special tools.” Thus, for
petitioner to have a valid exemption under MCL 211.9b, the
molds at issue need only meet the requirements of rule 21.
MCL 221.10e does not exempt the Assessor’s Manual from
APA promulgation requirements. The rules governing
construction of a statute are well known. Giving effect to
the intent of the Legislature is a fundamental task. We are
required to examine the plain language of the involved
statutes. In re MCI Telecommunications, 460 Mich 396, 411;
7
596 NW2d 164 (1999). Where the statutory language is
unambiguous, the plain meaning reflects the Legislature’s
intent and the statute must be applied as written. Tryc v
Michigan Veterans’ Facility, 451 Mich 129, 135; 545 NW2d 642
(1996). No further construction is necessary or allowed to
expand what the Legislature clearly intended to cover. In re
MCI, supra at 411. The court must presume that every word has
some meaning and, if possible, effect should be given to each
provision. People v Borchard-Ruhland, 460 Mich 278, 285; 597
NW2d 1 (1999).
Following these principles of statutory construction, we
conclude that the plain language of MCL 211.10e demonstrates
a legislative intent that the Assessor’s Manual is to be used
“as a guide.” It cannot be concluded from a plain reading of
the statute that the Legislature intended that the State Tax
Commission was entitled to bypass the APA and promulgate the
Assessor’s Manual as a rule having the force of law. The
mandatory “shall” language in MCL 211.10e refers to the
requirement that assessors use the Assessor’s Manual as a
guide. The statute was apparently enacted in order to create
uniformity among appraisal techniques. See OAG, supra at
207.6
6
We note that this Opinion of the Attorney General was
cited by defendant as authority that the manual has the force
of law. However, a closer reading of the OAG reveals that the
8
Likewise, MCL 211.9b does not provide the authority for
a conclusion that the Legislature intended that the State Tax
Commission could bypass the promulgation requirements of the
APA. We quote that statute again:
(1) All special tools are exempt from
taxation.
(2) As used in this section, “special tools”
means those manufacturing requisites, such as dies,
jigs, fixtures, molds, patterns, gauges, or other
tools, as defined by the state tax commission, that
are held for use and not for sale in the ordinary
course of business.
(3) Special tools are not exempt from taxation
if the value of the special tools is included in
the valuation of inventory produced for sale.
[Emphasis added.][7]
Attorney General concluded that the manual is not subject to
the promulgation rules of the APA because they are not rules.
As a result, local assessors could be forced to use the manual
as a guide. Contrary to defendant’s assertion, this does not
mean that the Attorney General opined that the manual has the
force of law. In any event, opinions of the Attorney General
are not binding on courts as precedent. Frey v Dep't of
Management & Budget, 429 Mich 315, 338; 414 NW2d 873 (1987).
Indeed, the extent to which a governmental agency is even
bound by an opinion of the Attorney General is open to
question. Compare East Grand Rapids Sch Dist v Kent Co, 415
Mich 381, 394; 330 NW2d 7 (1982) (a state agency is not bound
by an Attorney General opinion that a statute is
unconstitutional), and Traverse City Sch Dist v Attorney
General, 384 Mich 390, 410, n 2; 185 NW2d 9 (1971) (an opinion
of the Attorney General commands allegiance of state
agencies).
7
While the rule-making authority of the State Tax
Commission may more precisely be characterized as an
administrative or executive branch function, it is clear
nonetheless that the resemblance of this authority to
traditional “law-making” has prompted the Legislature’s
requirement that such authority be exercised only in
9
The phrase “as defined by the state tax commission” does
not, by itself, allow the State Tax Commission to define
“special tools” without complying with the APA. The
Legislature has prescribed an elaborate procedure for rule
promulgation in order to “ensure that none of the essential
functions of the legislative process are lost in the course of
the performance by agencies of many law-making functions once
performed by [the Legislature].” Coalition for Human Rights
v DSS, 431 Mich 172, 177-178; 428 NW2d 335 (1988). “[T]he
adoption of a rule by an agency has the force and effect of
law and may have serious consequences . . . for many people.”
Id. at 177.
There is no indication the Legislature authorized the
State Tax Commission to adopt a rule-like definition using a
procedure other than that required by the APA. We will not
attribute such an intent to the Legislature absent a clear
statement from the Legislature. Therefore, without a clear
legislative intent to waive the requirements of the APA, we
will not sanction state agency “law-making” in the absence of
the legislatively designed protections of the APA.
Accordingly, MCL 211.10e cannot be said to have created an
exemption from the requirements of the APA for the Assessor’s
Manual.
conformity with the APA.
10
Having concluded that rule 21 governs, we now apply to it
the same rules of statutory construction. As with a statute,
we are governed by its plain language. We agree with the
Court of Appeals dissenting judge’s reading of rule 21 as
establishing two requirements for qualification for the
special tools exemption. First, the special tool must be
“used” or be “being prepared for use” in a manufacturing
function. It is undisputed that the molds here meet this
requirement. Second, the special tools must be of “such a
specialized nature that their utility and amortization cease
with the discontinuance of such products or models.” The Tax
Tribunal and Court of Appeals opined that there also is a
short useful life requirement. The Assessor’s Manual
guidelines contain such a requirement, but the plain language
of rule 21 does not allow that construction. There is nothing
in rule 21 suggesting that a proposed special tool have a
short useful life. As the dissenting judge in the Court of
Appeals noted, rule 21 only addresses whether the tool will
have usefulness after the product or model is discontinued.
In the words of rule 21, the question is whether the molds’
“utility and amortization cease with the discontinuance of
such products or models.” There is no other time condition.8
8
Univ Microfilms v Scio Twp, 76 Mich App 616; 257 NW2d
265 (1977), is not persuasive. As pointed out by the
dissenting judge in the Court of Appeals, it is not clear what
11
Accordingly, we reverse the judgments of the Tax Tribunal
and Court of Appeals and remand this matter to the Tax
Tribunal for reconsideration in light of this opinion. MCR
7.302(F)(1).
CORRIGAN , C.J., and WEAVER , TAYLOR , YOUNG , and MARKMAN , JJ.,
concurred.
the Court’s holding was founded on. The Court may or may not
have relied on the life-expectancy issue. If it did, the
holding would lack any basis in the plain language of rule 21.
12
S T A T E O F M I C H I G A N
SUPREME COURT
DANSE CORPORATION,
Petitioner-Appellant,
v No. 119011
CITY OF MADISON HEIGHTS,
Respondent-Appellee.
________________________________
KELLY, J. (dissenting).
A per curiam opinion is an inappropriate mechanism for
resolving this dispute. The issue is one of statutory
interpretation concerning the phrase "special tools" found in
MCL 211.9b. Resolution of the issue requires consideration of
more than just the language found in that particular statute.
It also implicates the language of MCL 211.10e, mandating the
use of the assessor's manual. Considering the statutes
together, it is questionable whether a plain language analysis
of MCL 211.9b adequately resolves the matter.
This Court should not, therefore, decide the dispute in
a per curiam decision. Instead, it should allow full briefing
and oral argument. I would grant leave to fully consider the
effect of MCL 211.10e on MCL 211.9b.
CAVANAGH , J., concurred with KELLY , J.