Value Inc v. Department of Treasury, 331581

Background

Michigan State Police, on behalf of the Michigan Department of Treasury, seized about $77,000 worth of “other tobacco product” (OTP) from Value, Inc., after finding the OTP lacked required markings.
The Department's hearings referee and hearings-division administrator concluded the seizure and proposed forfeiture were lawful under the Tobacco Products Tax Act (TPTA).
Value appealed to circuit court under MCL 205.429(4), arguing it had purchased the OTP lawfully from an out-of-state distributor (Basik), had invoices, and had paid the required taxes.
The circuit court concluded the presumption in MCL 205.426(6) was overcome by evidence of tax payment and ordered return of the OTP; later it awarded Value half the monetary value (due to alleged spoilage) and denied refund of taxes.
On cross-appeal the Department argued seizure and forfeiture were proper; Value challenged the partial-value award and denial of tax refund. The Court of Appeals reversed and remanded for an evidentiary hearing to decide whether Value can rebut the statutory presumption of violation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was seizure lawful under TPTA (MCL 205.426(6) & MCL 205.429)?	Value: it lawfully acquired OTP and could rely on "other markings" prescribed by Department; labels were removed by supplier.	Treasury: OTP lacked required markings (first-purchaser label or prescribed tax stamp); absence creates presumption of violation authorizing seizure.	Seizure lawful: absent markings, possession triggers statutory presumption of violation, so seizure was permitted.
Could Value rebut the statutory presumption and obtain return of OTP?	Value: invoices and tax-payment evidence rebut presumption.	Treasury: without shipping labels, invoices alone cannot prove the seized boxes correspond to taxed shipments; factual dispute exists.	There is a genuine factual dispute; summary disposition was improper. Remand for evidentiary hearing to decide rebuttal (lawful acquisition and tax payment).
Was forfeiture automatic after administrative hearing?	Value: administrative decision adverse, but it timely appealed to circuit court, so forfeiture should not have been final.	Treasury: administrative determination supported forfeiture.	Administrative decision does not automatically forfeit property if timely circuit-court appeal is taken; forfeiture requires resolution after procedures.
Are monetary recovery and tax refund appropriate (spoilage and taxes paid)?	Value: OTP spoiled in Department's custody, so entitled to monetary value and refund of taxes paid (~$24,000).	Treasury: circuit court lacks jurisdiction to order money beyond return of product; taxes were paid at purchase, not tied to seized inventory for refund.	Court did not decide these merits on appeal; because summary disposition was improper, remand needed. Prior partial-value and tax-refund rulings vacated for further proceedings.

Key Cases Cited

Moraccini v. Sterling Heights, 296 Mich. App. 387 (summary disposition standard) (discusses de novo review of summary disposition)
Snead v. John Carlo, Inc., 294 Mich. App. 343 (statutory-construction standard)
In re MCI Telecom Complaint, 460 Mich. 396 (legislative-intent/interpretation principles)
Veenstra v. Washtenaw Country Club, 466 Mich. 155 (affording words their common meaning in statutory interpretation)
DiBenedetto v. West Shore Hosp., 461 Mich. 394 (when statutory language is unambiguous, courts must apply it)
People v. Beydoun, 283 Mich. App. 314 (TPTA as revenue statute regulating tobacco sales and taxes)
People v. Nasir, 255 Mich. App. 38 (context on TPTA objectives)
Robinson v. City of Lansing, 486 Mich. 1 (avoid interpreting statutes so parts are surplusage)