People v. Rodriguez

Michigan Supreme Court
Lansing, Michigan 48909
______________________________________________________________________________
______________
Chief Justice Justices
Elizabeth A. Weaver Micha el F. Cavana gh

Opinion
Marilyn Kelly
Cliffor d W. Taylor
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________
________________

FILED DECEMBER 27, 2000

PEOPLE OF THE STATE OF MICHIGAN,

Plaintiff-Appellee,

v No. 115939

RUDOLFO G. RODRIGUEZ, JR.,

Defendant-Appellant.

________________________________

PER CURIAM

The defendant has been convicted of tax evasion, for

failure to pay use tax on several motor vehicles. The Court

of Appeals affirmed. We reverse the judgments of the Court of

Appeals and the circuit court because the circuit court failed

to instruct the jury regarding a statutory exemption to the

tax.

The defendant lived in Hudson and owned carpeting stores

in Adrian and Hillsdale. He also bought and sold used

vehicles. He knew an automobile dealer in Texas who allowed

him to use some of that dealership’s temporary permits. While

there was no fixed pattern to his purchases and sales, the

defendant typically would buy a vehicle at auction in Ohio,

place the Texas permit on it, and bring it back to Michigan.

Here, he would repair the vehicle, and then sell it, again at

auction.

A tax investigation led to the present charges. The

defendant faced six felony counts of evading the use tax1 owed

on six vehicles. MCL 205.27(2); MSA 7.657(27)(2). They

included (a) a 1985 one-ton Ford cube van that was painted

with the name of the defendant’s carpet business, (b) a 1988

Pontiac Bonneville that was titled in the name of the

defendant’s wife and that she sometimes drove, (c) a 1988

Chevrolet van that police found hooked to a trailer that

contained carpeting for the defendant’s business, (d) a 1978

Jaguar, (e) a 1984 Mazda 626, and (f) a 1985 Chevrolet Blazer.

1
The Use Tax Act is MCL 205.91 et seq., MSA 7.555(1) et

seq. The use tax is designed to complement the sales tax. It

applies to certain personal property transactions in which the

seller does not collect a sales tax on behalf of the state.

The sale of a motor vehicle by one private individual to

another is one of the most common circumstances to which the

use tax applies. The purchaser must pay the tax-- --six

percent, the same the sales tax-- --in order to obtain a

certificate of title. The tax is imposed by MCL 205.93(1);

MSA 7.555(3)(1). Further, the Motor Vehicle Code requires

payment of the use tax as a condition of obtaining a vehicle

title. MCL 257.814; MSA 9.2514.

This case was tried in January 1997. The jury’s

conclusion was that the defendant was guilty of one felony

count, for evading the use tax on the Ford cube van. The

jurors also found him guilty of misdemeanor counts for evading

the tax on the Bonneville and the Chevy van. MCL 205.27(4);

MSA 7.657(27)(4). They acquitted him of the charges

pertaining to the other three vehicles.

The defendant was fined and placed on probation. He

appealed his convictions, but the Court of Appeals affirmed.

236 Mich App 568; 601 NW2d 134 (1999).2 Judge SMOLENSKI

dissented.

The defendant has filed a delayed application for leave

to appeal in this Court.

The defendant raises three issues in this Court. Two

have merit, and require that we remand this case to the

circuit court for a new trial.

The defendant’s theory of the case was that he acquired

the vehicles with the intent to hold them just long enough to

do necessary repairs and then to resell them. He therefore

believed himself to fall within MCL 205.94(c); MSA

7.555(4)(c), which exempts from the use tax “[p]roperty

Reh den, unpublished order entered October 7, 1999

(Docket No. 202538).

purchased for resale.”3

The defendant asked the circuit court to instruct the

jury regarding the exemption stated in MCL 205.94(c); MSA

7.555(4)(c).4 The court refused the request, agreeing with

the Attorney General5 that the “resale” exemption applied only

to persons who held Michigan dealer licenses. The court came

to this conclusion on the basis of the language in the first

3
MCL 205.94; MSA 7.555(4) provides that "[t]he tax

levied . . . does not apply" to several categories of

property. One is described in subsection (c):

Property purchased for resale, demonstration

purposes, or lending or leasing to a public or

parochial school offering a course in automobile

driving except that a vehicle purchased by the

school shall be certified for driving education and

shall not be reassigned for personal use by the

school's administrative personnel. For a dealer

selling a new car or truck, exemption for

demonstration purposes shall be determined by the

number of new cars and trucks sold during the

current calendar year or the immediately preceding

year without regard to specific make or style

according to the following schedule of 0 to 25, 2

units; 26 to 100, 7 units; 101 to 500, 20 units;

501 or more, 25 units; but not to exceed 25 cars

and trucks in 1 calendar year for demonstration

purposes. Property purchased for resale includes

promotional merchandise transferred pursuant to a

redemption offer to a person located outside this

state or any packaging material, other than

promotional merchandise, acquired for use in

fulfilling a redemption offer or rebate to a person

located outside this state.

Other exemptions are stated in MCL 205.93(3); MSA 7.555(3)(3)

and MCL 205.94; MSA 7.555(4).

Each side submitted a set of proposed jury

instructions. The defendants’ included an instruction that

“the defendant is exempted from the use tax if the vehicle was

purchased for resale or for demonstration purposes.”

5
The Attorney General prosecuted this case.

sentence of a different subsection, MCL 205.93(2); MSA

7.555(3)(2).6 That sentence provides:

The tax imposed by this section for the

privilege of using, storing, or consuming a

vehicle, ORV, mobile home, aircraft, snowmobile, or

watercraft shall be collected before the transfer

of the vehicle, ORV, mobile home, aircraft,

snowmobile, or watercraft, except a transfer to a

licensed dealer or retailer for purposes of resale

that arises by reason of a transaction made by a

person who does not transfer vehicles, ORVs, mobile

homes, aircraft, snowmobiles, or watercraft in the

ordinary course of his or her business done in this

state.

The tax imposed by this section for the

privilege of using, storing, or consuming a

vehicle, ORV, mobile home, aircraft, snowmobile, or

watercraft shall be collected before the transfer

of the vehicle, ORV, mobile home, aircraft,

snowmobile, or watercraft, except a transfer to a

licensed dealer or retailer for purposes of resale

that arises by reason of a transaction made by a

person who does not transfer vehicles, ORVs, mobile

homes, aircraft, snowmobiles, or watercraft in the

ordinary course of his or her business done in this

state. The tax on a vehicle, ORV, snowmobile, and

watercraft shall be collected by the secretary of

state before the transfer of the vehicle, ORV,

snowmobile, or watercraft registration. The tax on

a mobile home shall be collected by department of

commerce, mobile home commission, or its agent

before the transfer of the certificate of title.

The tax on an aircraft shall be collected by the

department of treasury. Notwithstanding any

limitation contained in [MCL 205.92; MSA 7.555(2)],

the price tax base of any vehicle, ORV, mobile

home, aircraft, snowmobile, or watercraft subject

to taxation under this act shall be not less than

its retail dollar value at the time of acquisition

as fixed pursuant to rules promulgated by the

department.

This is the language of the statute as it read at the time of

these events. In 1999 PA 117, the Legislature changed the

third sentence, so that it names the Department of Consumer

and Industry Services rather than the Department of Commerce.

The court’s refusal to give the requested instruction

limited defense counsel to arguing that the defendant had not

intended to evade the use tax.

The Court of Appeals majority agreed with the circuit

court that the instruction need not be given. It said that

the exemption stated in MCL 205.94(c); MSA 7.555(4)(c) was

inapplicable to this case because MCL 205.93(2); MSA

7.555(3)(2) is more specific, and thus controls. 236 Mich App

572.

This analysis failed to persuade the dissenting judge in

the Court of Appeals, who wrote:

I disagree with the majority’s conclusion that

defendant could not take advantage of the resale

exemption in MCL 205.94(c); MSA 7.555(4)(c) . . .

because the more specific section for vehicle

transfers, MCL 205.93(2); MSA 7.555(3)(2) . . .

applied. On the contrary, I conclude that [MCL

205.94(c); MSA 7.555(4)(c)], which creates a

separate tax exemption for property purchased for

resale, specifically applies to defendant’s

transactions. I further conclude that the trial

court erred in failing to instruct the jury that

defendant was exempt from paying use tax if he

intended to resell the vehicles pursuant to the

specific exemption set forth in [MCL 205.94(c); MSA

7.555(4)(c)]. [236 Mich App 574.]

The meaning of these statutory provisions “is a question

of law that we decide de novo. People v Burgenmeyer, 461 Mich

431, 436, n 10; 606 NW2d 645 (2000); People v Morey, 461 Mich

325, 329-330; 603 NW2d 250 (1999).” In re Investigation of

1999 Riots, 463 Mich 378, 383; 617 NW2d 310 (2000).

We agree with the dissenting judge. In MCL 205.94(c);

MSA 7.555(4)(c), the Legislature provided in clear and

unambiguous language an exemption for property purchased for

resale. The reliance by the Court of Appeals majority on MCL

205.93(2); MSA 7.555(3)(2) was misplaced. The latter

provision spells out such details as the time of payment and

the identity of the payee.

The Attorney General argues that the MCL 205.94(c); MSA

7.555(4)(c) and MCL 205.93(2); MSA 7.555(3)(2) “are

complements of one another and are intended to provide the

same exemption for licenced dealers who purchase vehicles for

the purpose of resale.” Otherwise, “a person could buy

vehicles out of the state, tax-free, and bring them into

Michigan and never pay taxes on the vehicles in Michigan,

arguing that he intended to resell it eventually, perhaps

50,000 or 100,000 miles later.” Two responses are apparent.

First, in enacting the language of MCL 205.94(c); MSA

7.555(4)(c), the Legislature did not restrict the “purchased

for resale” exemption to dealers. Second, the plain meaning

of the phrase “purchased for resale” conveys a legislative

intent inconsistent with purchase for another purpose.

With regard to transactions exempt from the use tax,

Judge SMOLENSKI is correct that MCL 205.94(c); MSA 7.555(4)(c)

provides the specific and controlling language. Under that

provision, the defendant was--if a properly instructed jury

were to believe his version of the facts--exempt from the tax.

The Legislature has mandated that a trial court “instruct

the jury as to the law applicable to the case.” MCL 768.29;

MSA 28.1052. The court’s obligation to instruct on a proposed

defense was described in People v Mills, 450 Mich 61, 80-81;

537 NW2d 909 (1995):7

A criminal defendant has the right to have a

properly instructed jury consider the evidence

against him. People v Vaughn, 447 Mich 217; 524

NW2d 217 (1994); People v Lewis, 91 Mich App 542;

283 NW2d 790 (1979). However, a trial court is not

required to present an instruction of the

defendant's theory to the jury unless the defendant

makes such a request. People v Wilson, 122 Mich App

1, 3; 329 NW2d 513 (1982). Further, when a jury

instruction is requested on any theories or

defenses and is supported by evidence, it must be

given to the jury by the trial judge. People v

Rone (On Remand), 101 Mich App 811; 300 NW2d 705

(1980). A trial court is required to give a

requested instruction, except where the theory is

not supported by evidence. People v Stubbs, 99

Mich App 643; 298 NW2d 612 (1980); People v Staph,

155 Mich App 491; 400 NW2d 656 (1986).

In the present case, the statutory exemption would apply

if the evidence introduced by the defendant were believed by

the jury, and thus the circuit court erred in failing to give

the requested instruction. There remains, however, the

question whether this error was harmless.

A chart outlining the principles governing an inquiry

into harmless error is set forth in People v Carines, 460 Mich

750, 774; 597 NW2d 130 (1999). As one can readily see from

that page of Carines, nonconstitutional preserved error is

evaluated under the standard set forth in People v Lukity, 460

7
Judgment order modified 450 Mich 1212 (1995).

Mich 484; 596 NW2d 607 (1999). In Lukity, we quoted our

statement in People v Mateo, 453 Mich 203, 211; 551 NW2d 891

(1996), that MCL 769.26; MSA 28.1096 “should be viewed as a

legislative directive to presume the validity of verdicts.”

In light of that presumption, we said in Lukity:

[MCL 769.26; MSA 28.1096], with its rebuttable

presumption, clearly places the burden on the

defendant to demonstrate that a preserved,

nonconstitutional error resulted in a miscarriage

of justice. [460 Mich 493-494.]

and

[T]he bottom line is that [MCL 769.26; MSA

28.1096] presumes that a preserved,

nonconstitutional error is not a ground for

reversal unless “after an examination of the entire

cause, it shall affirmatively appear” that it is

more probable than not that the error was outcome

determinative. [460 Mich 495-496.]

These principles were further refined in People v Snyder,

462 Mich 38, 45; 605 NW2d 831 (2000), and People v Elston, 462

Mich 751-766; 614 NW2d 595 (2000). As we explained in Elston:

In order to overcome the presumption that a

preserved nonconstitutional error is harmless, a

defendant must persuade the reviewing court that it

is more probable than not that the error in

question was outcome determinative. People v

Lukity, 460 Mich 484, 495-496; 596 NW2d 607 (1999).

An error is deemed to have been “outcome

determinative” if it undermined the reliability of

the verdict. See People v Snyder, 462 Mich 38, 45;

605 NW2d 831 (2000), citing Lukity, supra at 495
496. In making this determination, the reviewing

court should focus on the nature of the error in

light of the weight and strength of the untainted

evidence. See Lukity, supra at 495; People v

Mateo, 453 Mich 203, 215; 551 NW2d 891 (1996).

[462 Mich 766.]

Under the standard set forth in Lukity and Elston, the

error in this case was not harmless. The jury received no

instruction on an exception to the use tax statute that was

crucial to the defendant’s defense and was clearly supported

by the evidence. There is no question that the error

undermined the reliability of the verdict, and thus was

“outcome-determinative” under Lukity and Elston.

III

The Assistant Attorney General objected during defense

counsel's closing argument. In the course of ruling on the

objection, the circuit court (referring to the defendant) told

the jury, "he's subject to the tax." That statement was made

during the following discussion by the attorneys and the

court:

[Defense Counsel]: . . . The unrefuted

testimony is that every single one of these other

vehicles at some point--nobody knows for sure when

-
or where--were sold at auction, either in this

-
State or in another state, and as long as it is a

dealer-to-dealer transaction, the sales use [sic]

tax doesn’t apply. That’s the purpose of being a

dealership, and, therefore, it’s when the ultimate

consumer--that’s what a sales tax is all about.

-
It's when the ultimate consumer gets it, and that's

why it's on the cash register tape if there's a

sales tax on it. When it goes from wholesale to

retail, that’s the point at which the duty to pay

taxes applies.

[Assistant Attorney General]: Objection, Your

Honor. It's--that part I'm not going to say that's

-
part [sic] a misstatement of the law. It’s not the

statement of law that’s applicable here because of

the Defendant’s lack of being a dealer, and, so,

therefore, it . . .

[Defense Counsel]: That’s his argument,

Judge.

[Assistant Attorney General]: . . . it

shouldn’t go to this jury.

The Court: No, that--that’s true.
- That’s

not applicable to a nondealer, and Defendant is a

nondealer.

[Defense Counsel]: I understand, Judge, but

I have a--I have argued, and there is no
- proof from

any witness for the Prosecution that his

dealer--that his Texas dealer tags were
- invalid in

Michigan. Nobody testified . . .

The Court: He’s not a Michigan dealer.

[Defense Counsel]: I understand he's . . .

The Court: Counsel, I've ruled.

[Defense Counsel]: I understand he’s not a

Michigan dealer.

The Court: He’s not a Michigan dealer, and

that means he’s subject to the tax.

[Defense Counsel]: Judge, that . . .

The Court: Counsel, I have ruled.

[Defense Counsel]: Your Honor, I believe that

that is wrong.

The Court: You may believe it’s wrong all you

want, but it is the law of this State, and you’re

to follow it in your argument. [Emphasis

supplied.]

At the next recess, defense counsel moved for a mistrial.

One of his several grounds was that the court's statement that

the defendant was subject to the tax "is a direct violation of

the province of the Court and the jury and is, in effect,

directing a verdict of guilt." The court denied the motion.

The Court of Appeals majority likewise denied relief,

interpeting the circuit court's statement as an instruction

regarding the proper application of MCL 205.93(2); MSA

7.555(3)(2). 236 Mich App 573. The majority added, "we do

not find that the trial court’s instruction to the jury that

the exemption did not apply amounted to a directed verdict of

guilt.” 236 Mich App 574.

Again, we find the dissent to be more persuasive. Judge

SMOLENSKI wrote:

I also disagree with the majority's

interpretation of the trial court's statement in

the presence of the jury that defendant was "not a

Michigan dealer, and that means he's subject to the

tax," as an instruction to the jury that the

exception set forth in [MCL 205.93(2); MSA

7.555(3)(2)] did not apply because defendant was

not a Michigan dealer. "There is a difference

between commenting on the evidence and making a

finding of fact for the jury." People v Reed, 393

Mich 342, 351; 224 NW2d 867 (1975). When the court

made this statement, it invaded the province of the

jury. Id. at 351. Furthermore, if the trial

court's statement is construed to be an

instruction, then the court committed an error

requiring reversal because it instructed the jury

that an essential element of the criminal offense

exists as a matter of law. Id. at 349-351; People

v Tice, 220 Mich App 47, 54; 558 NW2d 245 (1996).

[236 Mich App 574-575.]

Because the instructional error discussed in part II of

this opinion compels us to reverse the defendant's convictions

and remand this case for a new trial, we will not extend our

discussion of this second issue. For the reasons stated by

the dissenting judge in the Court of Appeals, however, the

proceedings on remand must be free of a judicial statement to

the jury resolving the central question of the defendant's

obligation to pay the disputed tax.

For the reasons stated in part II of this opinion, we

reverse the judgments of the Court of Appeals and the circuit

court, and we remand this case to the circuit court for a new

trial. MCR 7.302(F)(1).

WEAVER, C.J., and TAYLOR , CORRIGAN , YOUNG , and MARKMAN , JJ.,

concurred.

CAVANAGH and KELLY , JJ., concurred in the result only.

People v Rodriguez

Jennifer M. Granholm, Attorney General, Thomas L. Casey,

Solicitor General, John D. O’Hair, Prosecuting Attorney, and

K. Naomi Lim, Assistant Attorney General [1200 Sixth Street,

Suite 1500, Detroit, MI 48226] [(313) 256-2352], for the

people.

Hugh M. Davis, Jr. [719 Griswold, Suite 1630, Detroit, MI

48226] [(313) 961-2255], for the defendant.