Klooster v. City of Charlevoix

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Opinion Robert P. Young, Jr. Michael F. Cavanagh
Marilyn Kelly
Stephen J. Markman
Diane M. Hathaway
Mary Beth Kelly
Brian K. Zahra
FILED MARCH 10, 2011
STATE OF MICHIGAN
SUPREME COURT
NATHAN KLOOSTER,
Petitioner-Appellee,
v No. 140423
CITY OF CHARLEVOIX,
Respondent-Appellant.
BEFORE THE ENTIRE BENCH
CAVANAGH, J.
This case involves the General Property Tax Act (GPTA)1 and two particular
circumstances in which a conveyance of property may or may not permit a taxing
authority to “uncap” and reassess the value of that property. Specifically, we granted
leave to appeal to address whether a “conveyance” as that term is used in MCL
211.27a(3) must be by means of a written instrument and whether, under MCL
211.27a(7)(h), petitioner’s property was uncapped for purposes of property-tax
1
MCL 211.1 et seq.
reassessment by either the death of the other joint tenant in January 2005 or the creation
of a subsequent joint tenancy in September 2005. Klooster v Charlevoix, 486 Mich 932(2010). We hold first that a “conveyance” for purposes of MCL 211.27a does not require
a written instrument. Second, we hold that while the January 2005 termination of the
joint tenancy caused by the death of a cotenant was within the joint-tenancy exception
created by MCL 211.27a(7)(h) and was thus not a transfer of ownership that uncapped
the property, the September 2005 conveyance from petitioner to himself and his brother
as joint tenants did uncap the property, because the conveyance did not fall within the
joint-tenancy exception. Therefore, we reverse the judgment of the Court of Appeals and
hold that respondent, the city of Charlevoix, properly issued its 2006 notice of
reassessment and that the Tax Tribunal reached the correct result, albeit for the wrong
reason.
I. FACTS AND PROCEDURAL HISTORY
The facts are undisputed. In 1959, James and Dona Klooster acquired title to the
subject property in the city of Charlevoix and held it as tenants by the entirety. On
August 11, 2004, Dona quitclaimed her interest in the property to James, leaving James
as the sole owner. On that same day, James quitclaimed the property to himself and his
son, petitioner Nathan Klooster, as joint tenants with rights of survivorship. On
January 11, 2005, James died, leaving petitioner as the sole property owner by operation
of law. On September 10, 2005, petitioner quitclaimed the property to himself and his
brother, Charles Klooster, as joint tenants with rights of survivorship.
In 2006, the assessor for the city of Charlevoix issued to petitioner and Charles
2
Klooster a notice of assessment, taxable valuation, and property classification, indicating
that, because of a transfer of ownership, the property’s taxable value had been reassessed
using the true cash value of the property. The notice did not state whether the
termination of the joint tenancy caused by the death of petitioner’s father in January 2005
or the September 2005 creation of the joint tenancy between petitioner and his brother
constituted the transfer of ownership. As a result of the reassessment, the taxable value
of petitioner’s property increased from $37,802 to $72,300.
Petitioner appealed unsuccessfully to the city’s board of review. Petitioner then
appealed to the Tax Tribunal. The Tax Tribunal affirmed the reassessment, ruling that
the transfer of ownership to petitioner by virtue of his father’s death was a conveyance
for purposes of the GPTA. Additionally, the Tax Tribunal ruled that the joint-tenancy
exception from MCL 211.27a(7)(h) did not apply to the January 2005 transfer because
petitioner was not an original owner or an already existing joint tenant before the August
2004 joint tenancy was created. The Tax Tribunal did not rule on the September 2005
conveyance.
Petitioner appealed as of right in the Court of Appeals, claiming that the transfer
of ownership caused by his father’s death was not a conveyance, and that even if it had
been, petitioner would have qualified for the MCL 211.27a(7)(h) exception from
uncapping. The Court of Appeals reversed the tribunal, determining that a “conveyance”
requires a transfer of title by a written instrument, and thus James’s death and the
resulting transfer of fee title to petitioner by operation of law did not constitute a transfer
of ownership under the GPTA that would uncap the property. Klooster v Charlevoix, 286
Mich App 435, 441-443; 781 NW2d 120 (2009). We granted respondent’s application
3
for leave to appeal. Klooster, 486 Mich at 932-933.
II. STANDARD OF REVIEW AND RULES OF STATUTORY INTERPRETATION
“In the absence of fraud, review of a decision by the Tax Tribunal is limited to
determining whether the tribunal erred in applying the law or adopted a wrong principle;
its factual findings are conclusive if supported by competent, material, and substantial
evidence on the whole record.” Mich Bell Tel Co v Dep’t of Treasury, 445 Mich 470,
476; 518 NW2d 808 (1994).
Issues of statutory interpretation are questions of law that are reviewed de novo.
Brown v Detroit Mayor, 478 Mich 589, 593; 734 NW2d 514 (2007). The primary goal of
statutory interpretation is to give effect to the Legislature’s intent, focusing first on the
statute’s plain language. Sun Valley Foods Co v Ward, 460 Mich 230, 236; 596 NW2d
119 (1999). “The words of a statute provide ‘the most reliable evidence of its
intent . . . .’” Id., quoting United States v Turkette, 452 US 576, 593; 101 S Ct 2524; 69
L Ed 2d 246 (1981). When construing a statute, a court must read it as a whole. People v
Jackson, 487 Mich 783, 791; 790 NW2d 340 (2010).
III. STATUTORY BACKGROUND
Resolving this case requires that we examine the January 2005 and September
2005 changes in the ownership of petitioner’s property to determine whether respondent
properly reassessed the property under the GPTA. We begin our analysis by briefly
reviewing Proposal A and the GPTA before turning to the joint-tenancy exception and
the specific conveyances at issue.
4
A. PROPOSAL A AND THE GPTA
In 1994, voters passed Proposal A, amending article 9, § 3 of the Michigan
Constitution to limit the annual increase in property tax assessments and to authorize
enabling legislation. The purpose of Proposal A was to limit tax increases on property as
long as it remains owned by the same party, even though the actual market value of the
property may have risen at a greater rate. Toll Northville Ltd v Northville Twp, 480 Mich
6, 12; 743 NW2d 902 (2008). The Michigan Legislature was charged with determining
the specifics needed to give effect to Proposal A’s mandate. See Const 1963, art 9, § 3
(providing for the reassessment of a parcel’s value when ownership has been transferred
“as defined by law”) (emphasis added). The 1995 amendments of the GPTA2 fixed the
cap on assessment increases at the lesser amount of either 5 percent of the assessed value
of the property for the previous year or the increase in the rate of inflation from the
previous year. MCL 211.27a(2). After certain “transfer[s] of ownership” occur,
however, property becomes uncapped and thus subject to reassessment based on actual
property value. MCL 211.27a(3).3
The GPTA defines “transfer of ownership” as a “conveyance of title to or a
present interest in property, including the beneficial use of the property, the value of
2
1994 PA 415.
3
MCL 211.27a(3) provides: “Upon a transfer of ownership of property after 1994, the
property’s taxable value for the calendar year following the year of the transfer is the
property’s state equalized valuation for the calendar year following the transfer.”
(Emphasis added.)
5
which is substantially equal to the value of the fee interest.”4 MCL 211.27a(6) provides a
nonexhaustive list of examples of transfers of ownership, including conveyances by deed
or by land contract and conveyances to or distributions from trusts. See MCL
211.27a(6)(a) through (j). From the definition of “transfer of ownership,” however, MCL
211.27a(7) excludes 17 specific transfers and conveyances, including the one found in
MCL 211.27a(7)(h), regarding the creation and termination of certain joint tenancies.
B. THE JOINT-TENANCY EXCEPTION: MCL 211.27a(7)(h)
The joint-tenancy exception from the definition of “transfer of ownership”
provides that a transfer of ownership does not include
[a] transfer creating or terminating a joint tenancy between 2 or more
persons if at least 1 of the persons was an original owner of the property
before the joint tenancy was initially created and, if the property is held as a
joint tenancy at the time of conveyance, at least 1 of the persons was a joint
tenant when the joint tenancy was initially created and that person has
remained a joint tenant since the joint tenancy was initially created. A joint
owner at the time of the last transfer of ownership of the property is an
original owner of the property. For purposes of this subdivision, a person is
an original owner of property owned by that person’s spouse. [MCL
211.27a(7)(h).]
While this is not the simplest provision to understand at first reading, a careful
deconstruction reveals its plain meaning. We begin by noting that MCL 211.27a(7)(h)
establishes the requirements for excluding three types of conveyances from the definition
of “transfer of ownership”: (A) the termination of a joint tenancy, (B) the creation of a
joint tenancy where the property was not previously held in a joint tenancy, and (C) the
4
MCL 211.27a(6).
6
creation of a successive joint tenancy.5
Before examining two requirements of the joint-tenancy exception, we must first
take particular care to properly construe the terms “transfer of ownership” and “original
owner.” Additionally, when applying the joint-tenancy exception it is essential to focus
on the particular conveyance that qualifies as the “conveyance at issue,” especially if—as
here—the parcel has been the subject of numerous conveyances, one or more of which
may qualify as a transfer of ownership that uncaps the property. We discuss each of
these terms in turn.
1. “TRANSFER OF OWNERSHIP”
For purposes of applying the joint-tenancy exception, the terms “transfer of
ownership” and “uncapping event” are largely synonymous. The GPTA provides that
“[u]pon a transfer of ownership of property . . . , the property’s taxable value for the
calendar year following the year of the transfer is the property’s state equalized valuation
for the calendar year following the transfer.” MCL 211.27a(3) (emphasis added).
Therefore, a transfer of ownership allows reassessment of the property based on its state
equalized value, lifting the cap on the rate of increase provided by MCL 211.27a(2). A
transfer of ownership thus uncaps the property. Conversely, any transaction listed in
MCL 211.27a(7) is not a transfer of ownership that uncaps the property.
5
See corresponding parts IV(A) through (C) of this opinion for discussions of these three
types of conveyances under MCL 211.27a(7)(h).
7
2. “ORIGINAL OWNER”
To determine who is an “original owner of the property” within the narrow context
of the joint-tenancy exception, one must first identify the most recent transfer of
ownership that uncapped the property and then determine who owned the property as a
result of that uncapping conveyance. The joint-tenancy exception provides that “[a] joint
owner at the time of the last transfer of ownership . . . is an original owner” and that
“[f]or purposes of this subdivision, a person is an original owner of property owned by
that person’s spouse.” MCL 211.27a(7)(h). There are thus three possibilities for who
may constitute an “original owner” under the joint-tenancy exception: (1) a sole owner at
the time of the last uncapping event,6 (2) a joint owner at the time of the last uncapping
event,7 and (3) the spouse of either a sole or joint owner of the property at the time of the
conveyance at issue (i.e., the conveyance that may uncap the property). See id.
3. CONVEYANCE AT ISSUE
The “conveyance at issue” is either the creation or the termination of a joint
6
While the statute does not specifically provide that a sole owner may be an original
owner, this obvious result must follow, otherwise only a joint owner or the spouse of an
owner could ever be considered an “original owner” for purposes of applying MCL
211.27a(7)(h).
7
In the instant case, for example, the most recent uncapping event before the two 2005
conveyances at issue would have been in 1959, when James and Dona Klooster acquired
title to the property, had Proposal A been in effect. Because James and Dona held the
property in a tenancy by the entirety, they were “joint owner[s] at the time of the last
[uncapping event]” and were thus “original owner[s] of the property.”
8
tenancy that may or may not uncap the property for reassessment purposes.8 The
conveyance at issue, therefore, is not the preceding uncapping event used to determine
who is an original owner of the property. If the conveyance at issue is the creation of a
joint tenancy, it is important to determine whether the property is being conveyed from a
previous joint tenancy or some other type of ownership estate when applying MCL
211.27a(7)(h). If the conveyance at issue is the termination of a joint tenancy, however,
whether the joint tenancy being terminated is a successive joint tenancy is irrelevant
under the MCL 211.27a(7)(h) analysis. At the termination of a joint tenancy, the identity
of ownership before the creation of the joint tenancy is only relevant under the original-
ownership requirement to ensure that the continuity of original ownership remains
uninterrupted.
The conveyances at issue here, therefore, are the January 2005 and September
2005 conveyances because these are the conveyances that may or may not have uncapped
the property.
4. THE ORIGINAL-OWNERSHIP AND CONTINUOUS-TENANCY
REQUIREMENTS OF MCL 211.27a(7)(h)
The first sentence of MCL 211.27a(7)(h) establishes two requirements for
satisfying the joint-tenancy exception, which we label to simplify analysis as the
“original-ownership requirement” and the “continuous-tenancy requirement.” The
original-ownership requirement excludes “transfer[s] creating or terminating a joint
8
See MCL 211.27a(7)(h) (referring to “[a] transfer creating or terminating a joint
tenancy”). The term “conveyance at issue” is not used in the statute, but we employ it
here to assist in remaining focused on the pertinent conveyance when, as here, property
has been conveyed multiple times.
9
tenancy between 2 or more persons if at least 1 of the persons was an original owner . . .
before the joint tenancy was initially created” from being considered a “transfer of
ownership.” MCL 211.27a(7)(h). This requirement examines ownership of the property
both before and after the conveyance at issue to ensure that continuity of original
ownership bridges the transfer.
The continuous-tenancy requirement provides that “if the property is held as a
joint tenancy at the time of conveyance, at least 1 of the persons was a joint tenant when
the joint tenancy was initially created and that person has remained a joint tenant since
the joint tenancy was initially created.” Id. Because of the conditional language “if the
property is held as a joint tenancy at the time of conveyance,” this requirement applies
only to conveyances terminating a joint tenancy and conveyances creating a successive
joint tenancy.9 Because it pertains to the continuous tenancy of at least one of the joint
tenants from the time a particular joint tenancy was created until the time of its
termination, the continuous-tenancy requirement is entirely retrospective.
IV. APPLYING THE JOINT-TENANCY EXCEPTION
All parties agree that the August 2004 conveyance from the father, James
Klooster, to himself and petitioner as joint tenants with rights of survivorship was not an
uncapping event because MCL 211.27a(7)(h) excludes such conveyances from the
definition of “transfer of ownership.” Because James did not hold the property in a joint
tenancy before creating the joint tenancy with petitioner, the continuous-tenancy
9
By using the term “successive joint tenancy,” we refer only to transfers conveying
property from one joint tenancy directly into another joint tenancy.
10
requirement of MCL 211.27a(7)(h) was inapplicable. Under the original-ownership
requirement of MCL 211.27a(7)(h), James Klooster “was an original owner of the
property before the [August 2004] joint tenancy was initially created.” James acquired
the status of an original owner as a result of the 1959 conveyance to James and Dona
because the 1959 conveyance was the most recent “transfer of ownership” that uncapped
the property.10 Put simply, under the joint-tenancy exception, an original owner may
convey property into a joint tenancy without uncapping the property, provided the
original owner is also a cotenant in the resulting joint tenancy.
We turn now to conveyances under the GPTA.
A. TERMINATIONS OF JOINT TENANCIES
When petitioner’s father died in January 2005, the joint tenancy terminated by
operation of law, vesting petitioner with sole ownership. We first examine whether the
change in the nature of the ownership of the property occasioned by the death of the only
other joint tenant is even a conveyance, as that term is used in the GPTA.
1. CONVEYANCES UNDER THE GPTA
The Court of Appeals held that the vesting of sole ownership was not a
conveyance because there was no written instrument. Klooster, 286 Mich App at 442.
This was error. As we will explain, the termination of a joint tenancy occasioned by the
10
We of course recognize that Proposal A was not enacted until 1994, well after the 1959
conveyance. Under Proposal A, however, the 1959 conveyance would have qualified as
a transfer of ownership because, as the deed indicates, neither James nor Dona owned the
property before purchasing it from Althea Ward.
11
death of the only other joint tenant is a conveyance under the GPTA and does not require
a written instrument beyond that which initially created the joint tenancy.11
When one of only two joint tenants dies, an estate in land passes by operation of
law to the survivor. This Court has described a joint tenancy with rights of survivorship
as a joint life estate with a dual contingent remainder that vests the fee simple in
whichever cotenant outlives the others. Albro v Allen, 434 Mich 271, 274-275; 454
NW2d 85 (1990). A contingent remainder is “[a] remainder that is either given to an
unascertained person or made subject to a condition precedent.” Black’s Law Dictionary
(9th ed), p 1405. The contingent remainder is thus created simultaneously with the
creation of the joint tenancy with rights of survivorship and “‘waits patiently’ for
possession.” Id., quoting Bergin & Haskell, Preface to Estates in Land and Future
Interests (2d ed), p 73. In the case of a joint tenancy with rights of survivorship, the
contingency is surviving the cotenants, and at the moment of death, the decedent’s
interest in the property passes to the survivor or survivors. Albro, 434 Mich at 274-275.
When there is only one remaining joint tenant, the contingent remainder vests in the
survivor a fee simple in the property. See id.The interest that passes to the last survivor in a joint tenancy is likewise a
conveyance under the GPTA. The GPTA defines “transfer of ownership” as a
“conveyance of title to or a present interest in property, including the beneficial use of the
property, the value of which is substantially equal to the value of the fee interest.” MCL
11
As we will discuss, however, a conveyance will not constitute a transfer of ownership
under the GPTA if excluded under MCL 211.27a(7)(a) through (q).
12
211.27a(6) (emphasis added). While the statute uses the word “conveyance,” it does not
define it, and we may therefore consult a dictionary. Oakland Co Bd of Co Rd Comm’rs
v Mich Prop & Cas Guaranty Ass’n, 456 Mich 590, 604; 575 NW2d 751 (1998). The
relevant dictionary definitions of “conveyance” include (1) “[a] voluntary transfer of a
right or of property” and (2) “[t]he transfer of a property right that does not pass by
delivery of a thing or merely by agreement.” Black’s Law Dictionary (8th ed).12 Under
the first definition, in the case of a joint tenancy with rights of survivorship, the
“voluntary transfer of a right or of property” occurs when the joint tenancy is voluntarily
created, transferring to the cotenants a joint life estate that gives the immediate right to
possess and use the property as well as the last survivor’s right to be vested with a fee
simple. See Albro, 434 Mich at 274-275. The conveyance occasioned by the death of the
only other cotenant fits the second definition as well, because the vesting of a fee simple
at the moment of death in the last surviving cotenant is a “transfer of a property right that
does not pass by delivery of a thing . . . .” Therefore, the interest that passes to the last
survivor in a joint tenancy is a conveyance under the GPTA.
In holding that there was no conveyance absent a writing, the Court of Appeals
erred by relying on the act-specific definitions of a “conveyance” in MCL 565.3513 and in
12
We recognize that the definitions of “conveyance” include the document itself. See
definition 4 in Black’s Law Dictionary (9th ed). However, we believe that a document
such as a deed is a memorialization of the property interest being conveyed, not the
conveyance itself, under the GPTA.
13
MCL 565.35 provides, in relevant part. “The term “conveyance,” as used in this
chapter, shall be construed to embrace every instrument in writing, by which any estate or
interest in real estate is created, aliened, mortgaged or assigned . . . .”
13
McMurtry v Smith, 320 Mich 304, 307; 30 NW2d 880 (1948). Klooster, 286 Mich App
at 441-442. First, the definition of “conveyance” in MCL 565.35 is limited by the
language “as used in this chapter,” and MCL 211.27a is not in chapter 565 of the
Michigan Compiled Laws.14 Second, McMurtry involved the recording of a supplement
to a plat, and it was thus appropriate for the McMurtry Court to rely on the definition of
“conveyance” in the statutory predecessor of MCL 565.35 because from its inception and
regardless of where in the statutes it has been compiled, the chapter at issue has embraced
the recording statutes, and the recording of interests in real property necessarily includes
the use of some written instrument.15 Neither of these definitions of “conveyance,”
however, mandates the conclusion that there can be no conveyance without a writing
under the GPTA.
Other examples of transfers of ownership in MCL 211.27a illustrate that the
definition of “conveyance” in MCL 565.35 is inconsistent with the meaning of
“conveyance” in the GPTA. Conveyances to a trust, distributions from a trust, and
conveyances by intestate succession do not require any written instrument at the time of
the transfer, yet all are transfers of ownership that will uncap property. See MCL
14
In the statute’s first incarnation, “this chapter” referred to chapter 65 of the Revised
Statutes of 1846. The provision remained the same through numerous compilations and
eventually was compiled in the first part of chapter 565 of the Michigan Compiled Laws,
specifically MCL 565.1 through 565.49. It is not completely clear whether “this chapter”
now refers to all of chapter 565 or only that portion corresponding to chapter 65 of the
Revised Statutes of 1846.
15
See 1929 CL 13309, designated in the 1948 Compiled Laws and subsequent
compilations as MCL 565.35.
14
211.27a(6)(c), (d) and (f). Therefore, the plain text of MCL 211.27a indicates that the
Legislature did not intend that conveyances must be effected by means of a written
instrument for purposes of the GPTA.
In sum, therefore, we conclude that the vesting of a fee simple in the last surviving
cotenant of a joint tenancy with rights of survivorship is a “conveyance” for purposes of
the GPTA and requires no additional writing beyond that which created the joint tenancy.
Whether this conveyance is a transfer of ownership that uncaps the property is a separate
issue.
2. THE JANUARY 2005 CONVEYANCE
The GPTA defines “transfer of ownership” as a “conveyance of title to or a
present interest in property, including the beneficial use of the property, the value of
which is substantially equal to the value of the fee interest.” MCL 211.27a(6). Unless an
applicable exception exists, the interest that vests in the last survivor in a joint tenancy
with rights of survivorship would constitute a transfer of ownership because the fee
simple that vests in the survivor is a “conveyance of title . . . , the value of which is
substantially equal to the value of the fee interest.” Id.
With regard to terminations of joint tenancies, MCL 211.27a(7) provides that a
transfer of ownership does not include
[a] transfer . . . terminating a joint tenancy between 2 or more persons if at
least 1 of the persons was an original owner of the property before the joint
tenancy was initially created and, if the property is held as a joint tenancy at
the time of conveyance, at least 1 of the persons was a joint tenant when the
joint tenancy was initially created and that person has remained a joint
tenant since the joint tenancy was initially created.
15
In this context, the conveyance at issue is the termination of the joint tenancy because
that is the event that may or may not uncap the property. In order for the termination of a
joint tenancy to be exempted from uncapping, the original-ownership requirement
mandates that at least one of the joint tenants in the joint tenancy being terminated was an
original owner of the property before the joint tenancy was initially created. And, under
the continuous-tenancy requirement, at least one of the persons in the joint tenancy being
terminated must have been “a joint tenant when the joint tenancy was initially created,”
and that person must have “remained a joint tenant since the joint tenancy was initially
created.” Id. (emphasis added).
Here lies the critical point of contention in this case. Petitioner argues that “when”
refers to that point in time at which the joint tenancy was created—not before—and that
because petitioner was a joint tenant as a result of the creation of the joint tenancy at that
point in time, he satisfies the requirement. Respondent argues that this use of “when”
means that at least one of the persons in the joint tenancy must have also been a joint
tenant in an immediately preceding joint tenancy. Because the father held the property in
sole ownership, respondent argues, neither petitioner nor his father were joint tenants
“when the joint tenancy was initially created.” Essentially, respondent argues that the
joint-tenancy exception applies only to successive joint tenancies.16 Respondent thus
reads “when” to mean “before.” We disagree.
16
Holding that the MCL 211.27a(7)(h) exception in the context of terminations applies
only to successive joint tenancies would read an additional requirement into the statute
and establish a pointless procedural mandate. In the instant case, for example, under the
erroneous successive-joint-tenancy interpretation, had James and Dona Klooster
transferred the property from a tenancy by the entirety into a joint tenancy before creating
16
The adverb “when” refers to a distinct point in or period of time. See The
American Heritage Dictionary, Second College Edition (1982) (defining “when” as “[a]t
the time that” and “during the time at which”). “When” is not complete in itself,
however, and requires some contextual referent to the event or period of time to which it
applies. As “when” is used in the joint-tenancy exception, it is not durational; it refers to
the moment in time “when the joint tenancy was initially created . . . .” MCL
211.27a(7)(h). At that moment, each cotenant acquired the status of a joint tenant by
virtue of the instrument creating the joint tenancy. Had the Legislature meant to say
“before,” it would have done so, as it did earlier in the joint-tenancy exception (i.e., “if at
least 1 of the persons was an original owner of the property before the joint tenancy was
initially created”). Id. (emphasis added).
We hold, therefore, that as applied to terminations of joint tenancies, the plain text
of MCL 211.27a(7)(h) does not apply only to successive joint tenancies. For purposes of
applying the continuous-tenancy requirement of the joint-tenancy exception, a person
who becomes a joint tenant as a result of a conveyance is “a joint tenant when the joint
tenancy was initially created.” We can now apply the joint-tenancy exception to the
January 2005 conveyance.
The vesting of the fee simple in petitioner that occurred as a result of the death of
James Klooster met the original-ownership requirement of MCL 211.27a(7)(h) because
James Klooster was a cotenant and “was an original owner of the property before the
a successive joint tenancy between James and petitioner, the property would not have
been uncapped by the death of James. There is no indication that the Legislature
intended to benefit only those taking such elaborate steps.
17
joint tenancy was initially created.” Because the property was held as a joint tenancy at
the time of the conveyance, we must also apply the continuous-tenancy requirement that
“at least 1 of the persons was a joint tenant when the joint tenancy was initially created
and that person has remained a joint tenant since the joint tenancy was initially created.”
As explained, because petitioner was a joint tenant “when” James initially created the
joint tenancy in August 2004 and “remained a joint tenant since the joint tenancy was
initially created”—until the joint tenancy terminated—the January 2005 conveyance was
not a transfer of ownership under MCL 211.27a(7)(h).
We therefore hold that the January 2005 conveyance did not uncap the property.
As we will explain, however, the September 2005 conveyance was a transfer of
ownership that did uncap the property.
B. CREATION OF A NONSUCCESSIVE JOINT TENANCY
When petitioner conveyed the property to himself and his brother in September
2005, the property went from a state of sole ownership into a new joint tenancy. Before
applying the joint-tenancy exemption to the September 2005 conveyance, however, we
first address preservation of the issue.
1. PRESERVATION
Our order granting leave to appeal asked the parties to address preservation of the
September 2005 conveyance as a possible uncapping event. See MCR 7.302(H)(4)(a)
(limiting appeals to issues raised in an application “[u]nless otherwise ordered”); MCR
7.316(A)(3) (allowing this Court to “permit the reasons or grounds of appeal to be
amended or new grounds to be added”).
18
We note first that the fact of the September 2005 conveyance has always been part
of the record on which this case was decided below and that the notice of reassessment in
evidence was addressed to both petitioner and Charles Klooster. That the Tax Tribunal
and Court of Appeals chose to focus only on the January 2005 conveyance occasioned by
the death of James Klooster does not remove these facts from evidence. In addition, the
preservation requirement is not an inflexible rule; it yields to the necessity of considering
additional issues when “‘necessary to a proper determination of a case . . . .’” Prudential
Ins Co of America v Cusick, 369 Mich 269, 290; 120 NW2d 1 (1963), quoting Dation v
Ford Motor Co, 314 Mich 152, 160-161; 22 NW2d 252 (1946). Although this issue was
not decided below, a party “should not be punished for the omission of the trial court.”
Peterman v Dep’t of Natural Resources, 446 Mich 177, 183; 521 NW2d 499 (1994).
Lastly, an appellate court may uphold a lower tribunal’s decision that reached the correct
result, even if for an incorrect reason. See Mulholland v DEC Int’l Corp, 432 Mich 395,
411 n 10; 443 NW2d 340 (1989); Peninsular Constr Co v Murray, 365 Mich 694, 699;
114 NW2d 202 (1962).
We therefore find it appropriate to consider the September 2005 conveyance as a
possible uncapping event because the facts are properly before us, the parties briefed and
argued the issue in this Court, and doing so is necessary to a proper determination of this
case.
2. THE SEPTEMBER 2005 CONVEYANCE
In September 2005, petitioner—who held the property in sole ownership as a
result of the January 2005 vesting of the fee simple—conveyed the property to himself
19
and his brother as joint tenants. In the context of the creation of a nonsuccessive joint
tenancy, we need only consider the original-ownership requirement of MCL
211.27a(7)(h) because, as previously discussed, the continuous-tenancy requirement
applies only if the property was held in a joint tenancy at the time of the conveyance. As
applied to the creation of a nonsuccessive joint tenancy, the joint-tenancy exception
provides that “[t]ransfer of ownership does not include . . . [a] transfer creating . . . a joint
tenancy between 2 or more persons if at least 1 of the persons was an original owner of
the property before the joint tenancy was initially created . . . .”
The September 2005 conveyance was not excluded from the definition of “transfer
of ownership” in MCL 211.27a(6) because, under the original-ownership requirement,
petitioner was not an “original owner of the property before the joint tenancy was initially
created.” MCL 211.27a(7)(h). As explained, the most recent event that would have been
an uncapping event was the 1959 conveyance to petitioner’s parents, James and Dona
Klooster. Only James or Dona Klooster could qualify as an original owner until the time
of the next uncapping event. Because the August 2004 and January 2005 conveyances
were excluded by MCL 211.27a(7)(h) from the definition of “transfer of ownership,”
neither conveyance constituted an uncapping event and petitioner did not acquire the
status of an original owner of the property. See MCL 211.27a(6). Because petitioner
was not an original owner of the property before he initially created the joint tenancy
with his brother, the September 2005 conveyance did not satisfy the joint-tenancy
20
exception of MCL 211.27a(7)(h).17 The September 2005 conveyance was therefore a
transfer of ownership that uncapped the subject property.
Therefore, respondent properly issued the notice of assessment, taxable valuation,
and property classification in 2006 because of a transfer of ownership in 2005, and the
Tax Tribunal reached the correct result, albeit for the wrong reason.
C. CREATION OF SUCCESSIVE JOINT TENANCIES
Although not essential to resolving this case, we hope to provide some limited
guidance by specifically addressing how MCL 211.27a(7)(h) would apply to the creation
of a successive joint tenancy. If the property was held in joint tenancy before the
conveyance creating a successive joint tenancy, the original-ownership requirement
mandates that there must have been an “original owner of the property” before the joint
tenancy was initially created who is also a joint tenant in the successive joint tenancy.
The continuous-tenancy requirement pertains to the immediately preceding joint tenancy
and requires that at least one of the persons in the previous joint tenancy must have been
“a joint tenant when the [previous] joint tenancy was initially created,” and that same
person must have “remained a joint tenant since the [previous] joint tenancy was initially
created.”
17
We note, however, that both petitioner and Charles Klooster now qualify as original
owners of the property for purposes of MCL 211.27a(7)(h) because each is a joint owner
and “[a] joint owner at the time of the last transfer of ownership of the property is an
original owner of the property.” Because it uncapped the property, the September 2005
conveyance was a “transfer of ownership” under MCL 211.27a(6).
21
V. CONCLUSION
We reverse the judgment of the Court of Appeals and hold first that a
“conveyance” for purposes of MCL 211.27a need not be by means of a written
instrument. We hold also that while the January 2005 conveyance to petitioner of a fee
simple was excluded by MCL 211.27a(7)(h) from the GPTA’s definition of “transfer of
ownership,” the September 2005 conveyance from petitioner to himself and his brother in
joint tenancy was not exempted from uncapping, and therefore respondent city of
Charlevoix properly issued the notice of assessment, taxable valuation, and property
classification in 2006. Therefore, we reinstate the decision of the Tax Tribunal because it
reached the correct result, albeit for an incorrect reason.
Michael F. Cavanagh
Robert P. Young, Jr.
Marilyn Kelly
Stephen J. Markman
Diane M. Hathaway
Mary Beth Kelly
Brian K. Zahra
22