Family Bible Church of Muskegon v. City of Norton Shores
332942
| Mich. Ct. App. | Jul 6, 2017Background
- Family Bible Church of Muskegon (formerly Baptist Bible Temple, petitioner) claimed a parsonage tax exemption under MCL 211.7s for lakefront residence at 3289 Winnetaska Rd., occupied by its senior pastor, Jerry DePoy.
- Ownership history involved multiple non-arm’s-length conveyances: trust → DePoys (2003) → land contract sale to petitioner (Oct 2003); DePoys later used the property to secure several future-advance mortgages; petitioner reconveyed property to DePoys (Oct 15, 2015), who sold it days later.
- Board of Review denied the parsonage exemption for 2015; petitioner appealed to the Michigan Tax Tribunal (small claims division). Tribunal referee found petitioner owned the property under the land contract and used it as a parsonage and recommended exemption.
- Respondent (City of Norton Shores) sought transfer to the full tribunal and discovery to probe alleged sham conveyance and control by the DePoys; tribunal denied transfer (petitioner’s permission required for transfer from small claims) and denied relief because respondent had not sought discovery earlier.
- Tribunal and the Court of Appeals affirmed: petitioner proved by evidence the three statutory elements (parsonage; owned by a religious society; occupied as a parsonage); respondent failed to produce evidence showing the land contract was a sham.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the property qualifies for a parsonage exemption under MCL 211.7s | Petitioner: property was a parsonage, owned (via land contract) by religious society, and occupied by pastor — qualifies for exemption | City: land contract was a sham; DePoys retained dominion/control and thus property not "owned by a religious society" | Court: Affirmed tribunal — findings supported by competent, material, substantial evidence; exemption applies |
| Validity/enforceability of the land contract | Petitioner: land contract contained required material terms and was signed by vendor(s), satisfying statute of frauds | City: contract lacks material elements / is nominal and invalid | Court: Land contract contained necessary elements and was valid; City failed to rebut with evidence |
| Significance of future-advance mortgages and inference of retained control | Petitioner: mortgages do not conclusively show retained dominion; alternate reasonable inferences exist; no evidence of fraud/control by DePoys | City: future-advance mortgages show DePoys retained control, supporting sham transaction inference | Court: Mortgages ambiguous; absent evidence tying mortgages to sham, tribunal reasonably credited petitioner’s evidence |
| Whether tribunal abused discretion by denying transfer/discovery | Petitioner: small-claims procedures followed; no permission to transfer; respondent had opportunity to move for discovery/adjourn and did not | City: needed transfer/discovery to develop chain-of-title and expose sham transactions | Court: No abuse of discretion — rules permit discovery in small claims by leave; respondent failed to request discovery timely or seek adjournment |
Key Cases Cited
- Michigan Bell Tel Co. v. Dep’t of Treasury, 445 Mich 470 (agency factual findings binding if supported by substantial evidence)
- Dow Chem. Co. v. Dep’t of Treasury, 185 Mich App 458 (definition of "substantial evidence")
- Devonair Enterprises, LLC v. Dep’t of Treasury, 297 Mich App 90 (deference to agency statutory interpretation)
- Rose Hill Ctr., Inc. v. Holly Twp., 224 Mich App 28 (statutory elements for parsonage exemption)
- ProMed Healthcare v. City of Kalamazoo, 249 Mich App 490 (preponderance standard for proving exemption)
- Rathbun v. Herche, 323 Mich 160 (material elements required in a land contract)
- Zurcher v. Herveat, 238 Mich App 267 (contract elements and statute of frauds principles)
- Maldonado v. Ford Motor Co., 476 Mich 372 (abuse of discretion standard)
- Phillips v. Deihm, 213 Mich App 389 (review of tribunal discretionary decisions)