                          STATE OF MICHIGAN

                           COURT OF APPEALS


                                                                   FOR PUBLICATION
ANN BREAKEY,                                                       June 7, 2018
                                                                   9:00 a.m.
               Petitioner-Appellant,

v                                                                  No. 339345
                                                                   Tax Tribunal
DEPARTMENT OF TREASURY,                                            LC No. 17-000218-TT

               Respondent-Appellee.


Before: MURRAY, C.J., and SERVITTO and BOONSTRA, JJ.

MURRAY, C.J.

        The question presented is whether petitioner Ann Breakey, as a result of an irrevocable
trust granting her the ability to remain in the marital home rent-free in order to maintain the
standard of living she enjoyed prior to her husband’s death, is an “owner” of the property for
purposes of MCL 211.7dd(a), the personal residence exemption (PRE) under the General
Property Tax Act (GPTA), MCL 211.1, et seq. The Tax Tribunal held that she was not an owner
as defined by the statute, and as a result, denied her the use of the PRE. We conclude that she is
an owner under MCL 211.7dd(a)(iii), reverse the decision of the tribunal, and remand for further
proceedings to determine whether she is entitled to the PRE.

                               I. FACTS AND PROCEEDINGS

        The subject property is a residential property located in the city of Bath, and was
originally owned by petitioner and her late husband, William Breakey. On November 11, 1994,
William Breakey created the “William E. Breakey Trust No. 1.” That same day, petitioner and
William conveyed by quit claim deed their ownership of the Bath home to the Trust. Years later
in February 2011, “[p]ursuant to the power to make amendments which [he] reserved in the
Trust,” William “completely restat[ed] the Trust” in the “First Restatement of the William E.
Breakey Trust No. 1,” naming himself and petitioner as co-trustees. The Trust was revocable by
William, who “reserve[d] the right to amend or revoke this [Trust] Agreement, wholly or partly,
by a writing signed by me or on my behalf and delivered to Trustee during my life,” and would
“become irrevocable at my death.”

       According to petitioner, she and William continued to reside in the Bath home until he
passed away in 2012. Upon William’s death, William’s son, Thomas W. Breakey, was
appointed successor trustee. The Trust also created a Marital Trust to provide for petitioner upon
William’s death. The Marital Trust clause directs the trustee to hold the Trust property for the

                                               -1-
benefit of petitioner and to use the Trust assets to “maintain the standard of living” that petitioner
enjoyed prior to William’s death. It also mandates that the trustee permit petitioner “to use any
real estate held in the Marital Trust rent free.” According to the Trust, petitioner has the right to
remove any successor trustee without cause.

        On October 15, 2015, petitioner received a letter from respondent, the Department of
Treasury, informing her that it was denying her the PRE for the Bath home for the years 2012,
2013, 2014, and 2015, because “[t]he parcel did not contain a dwelling owned and occupied by a
person(s) as his or her principal residence.” Petitioner challenged the denial and, after the
Department held an informal telephone conference, the referee recommended that the PRE
remain denied because petitioner “did not prove by a preponderance of the evidence that she
owned the parcel at issue and that the parcel at issue was her principal residence during the years
at issue.” The Department adopted this recommendation and upheld the denial.

        Petitioner appealed the Department’s decision to the Tax Tribunal’s Small Claims
Division. Before a hearing could be held, petitioner filed a motion for partial summary
disposition on the legal question of whether she qualified as an “owner” within the meaning of
MCL 211.7dd(a). In response, the Department maintained its position that petitioner was not an
“owner” as defined by statute, and asked that summary disposition be entered in its favor. On
July 3, 2017, the tribunal entered an order denying petitioner’s motion for partial summary
disposition and granting summary disposition in favor of the Department pursuant to MCR
2.116(I)(2) (opposing party entitled to judgment) because “Petitioner is not an owner or partial
owner of the subject property.”

                                           II. ANALYSIS

        This Court reviews the grant or denial of a motion for summary disposition de novo.
Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69, 75; 780 NW2d 753 (2010). However,
“[t]his Court’s authority to review a decision of the Tax Tribunal is very limited.” Inter Coop
Council v Dep’t of Treasury, 257 Mich App 219, 221; 668 NW2d 181 (2003) (quotation marks
and citation omitted). “In the absence of an allegation of fraud,” review is restricted “to
determining whether the tribunal committed an error of law or adopted a wrong legal principle.”
Stege v Dep’t of Treasury, 252 Mich App 183, 187-188; 651 NW2d 164 (2002) (quotation marks
and citations omitted).

       “Statutory interpretation is a question of law that is reviewed de novo.” Inter Coop
Council, 257 Mich App at 222. This Court’s primary goal in interpreting statutes is to determine
and give effect to the Legislature’s intent. Briggs Tax Serv, LLC, 485 Mich at 76. However, this
Court affords some deference to the Tax Tribunal’s interpretation of a tax statute. Inter Coop
Council, 257 Mich App at 222. “Although tax laws are construed against the government, tax-
exemption statutes are strictly construed in favor of the taxing unit.” Id.

        As noted at the outset of this opinion, the issue before this Court is whether petitioner’s
interest in a residential property held in an irrevocable trust for her lifetime benefit renders her an
“owner” for purposes of the PRE. We hold that petitioner qualifies as an “owner” under the
plain language of MCL 211.7dd(a).


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        Under the GPTA, all real property not expressly exempted is subject to taxation. MCL
211.1. One exemption under the GPTA is the PRE,1 which exempts qualifying property from
“the tax levied by a local school district for school operating purposes.” MCL 211.7cc(1). In
order to claim the PRE, a person must (1) own the property and (2) occupy it as his or her
principal residence. MCL 211.7cc(2). A principal residence is “the 1 place where an owner of
the property has his or her true, fixed, and permanent home to which, whenever absent, he or she
intends to return and that shall continue as a principal residence until another principal residence
is established.” MCL 211.7dd(c).2 MCL 211.7dd(a) provides, in relevant part, that for purposes
of the PRE,

               (a) “Owner” means any of the following:

                                              * * *

               (ii) A person who is a partial owner of property.

               (iii) A person who owns property as a result of being a beneficiary of a
       will or trust or as a result of intestate succession.

                                              * * *

               (vi) A grantor who has placed the property in a revocable trust or a
       qualified personal residence trust.

Petitioner argues that she is an “owner” under both MCL 211.7dd(a)(ii) and (iii).3

        We first turn our attention to MCL 211.7dd(a)(iii), since there is no dispute that petitioner
resides at the Bath house “as a result of being a beneficiary of a . . . trust.” To determine whether
petitioner “owns” the Bath house under this statutory provision, we look to Flowers v Bedford
Twp, 304 Mich App 661, 665; 849 NW2d 51 (2014), where this Court concluded that the
definition of the term “owner” contained within MCL 211.7dd(a)(ii) is circular because it uses




1
 This exemption is also commonly known as the “homestead exemption.” EldenBrady v Albion,
294 Mich App 251, 256; 816 NW2d 449 (2011).
2
  Importantly, petitioner acknowledges that this is an issue of fact that she must establish before
the tribunal; the only issue before the tribunal to date, and what is at issue here, is petitioner’s
status as an “owner” of the Bath home. Whether she occupies the house as her principal
residence must be decided on remand.
3
  Additionally, amicus curiae the Probate and Estate Planning Section of the State Bar asserts
that petitioner is an owner under MCL 211.7dd(a)(vi), as “[a] grantor who has placed the
property in a revocable trust.” Amicus, however, cannot raise issues not raised by the parties,
Ketchum Estate v Dep’t of Health & Human Servs, 314 Mich App 485, 498 n 8; 887 NW2d 226
(2016), and petitioner did not make that argument before this Court.

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the very term to be defined in the definition.4 Accordingly, the Flowers Court consulted a
dictionary to provide meaning to the terms “own” and “owner.” Flowers, 304 Mich App at 665.
Consulting Random House Webster’s College Dictionary (1997), the Court explained:

       “Owner” is the derived, undefined noun form of “own.” “Own” is defined, in
       part, as “something that belongs to oneself” or “to have or hold as one’s own;
       possess.” And “ownership” is defined as “the state of or fact of being an owner”
       or “legal right of possession; proprietorship.” [Flowers, 304 Mich App at 665
       (citations omitted).]

This Court continued, quoting from our Supreme Court’s opinion in Barnes v Detroit, 379 Mich
169; 150 NW2d 740 (1967):

              “This Court has many times held that a person does not have to own
       property in fee simple to claim a homestead. The word ‘owner’ as used in the law
       has generally been treated as including all parties who had a claim or interest in
       the property, although the same might be an undivided one or fall short of an
       absolute ownership, and possession alone has frequently been held, in reference to
       personal property, as prima facie evidence of ownership.” [Flowers, 304 Mich
       App at 665, quoting Barnes, 379 Mich at 177.]

Applying these definitions, the Flowers Court held that the petitioner was an “owner” for
purposes of MCL 211.7dd(a)(iii), and a partial owner under MCL 211.7dd(a)(ii), because her
deceased husband’s will granted her a life estate in the property. Id. at 665-666. And a life
estate allowed the petitioner to come within the definition of “owner” because, as the Court
recognized, it gave the petitioner “the right to possess, control, and enjoy the property during the
[petitioner]’s lifetime.” Id. at 665.

        Utilizing these same definitions, we conclude that petitioner is an “owner” under MCL
211.7dd(a) because she holds as her own the Bath property as a result of being a beneficiary of
the Marital Trust. MCL 211.7dd(a)(iii). There is no dispute that petitioner currently possesses
the property. She resides on the property, makes use of it as she sees fit, and has done so for
many years. Although the Trust owns the Bath home property, it holds it for petitioner’s benefit.
Petitioner is granted the use “rent-free” so that it will not be cost prohibitive for her to continue
living the lifestyle she lived when her husband was alive, and there are no restrictions preventing
her from exclusively using the property for the remainder of her life. Indeed, as petitioner
argues, she has the unfettered right to remove the successor trustee, ensuring that if that trustee
were to seek her removal (or, for example, to sell the house without her permission), she could
remove him for taking action inconsistent with the Trust and her wishes. Therefore, though the
Trust is the legal owner of the Bath home, petitioner holds the equitable interest. See Equitable
Trust Co v Milton Realty Co, 261 Mich 571, 577; 246 NW 500 (1933) (holding that “[t]o create a
trust, there must be an assignment of designated property to a trustee with the intention of


4
  This is similarly true of MCL 211.7dd(a)(iii), defining “owner” as “[a] person who owns
property as a result of being a beneficiary of a will or trust . . . .” (Emphasis added.)

                                                -4-
passing title thereto, to hold for the benefit of others”); MCL 555.16. Under these undisputed
facts, petitioner held the Bath house as her own, and she qualifies as an owner under MCL
211.7dd(a)(iii).

        Petitioner cites Barnes to support her claim that “possession alone” is the most relevant
consideration in determining whether a person is an “owner.” But Barnes is not particularly
helpful to petitioner. In that case, Mr. Barnes was attempting to claim a veteran’s homestead
exemption, which contained language similar to that for the PRE.5 Barnes, 379 Mich at 172.
However, Mr. Barnes had a two-fifths undivided interest in common in a residential property,
which in conjunction with his possession of the property, made him an “owner.” Id. at 177.
Petitioner’s selective extraction of the phrase “possession alone” from the Barnes Court’s
analysis ignores that the plaintiff had a two-fifths “claim or interest in the property.” Id.6
Further, although Barnes noted that control was not an element of the homestead exemption
statute at issue, the discussion of control that did occur in Barnes was focused on the rights of
owners who hold property as part of a tenancy in common. Id. at 176. Barnes is helpful because
“possess” is part of what “own” means, but it is not as dispositive as petitioner thinks.

         In relation to the tribunal’s reference to the control one must maintain over the property
to be an owner, we note that the Flowers Court did not utilize “control” in its definition of
“owner” or “own.” Flowers, 304 Mich App at 665. Yet, in granting summary disposition in
favor of the Department, the tribunal relied on one of its prior unpublished opinions, Johnson v
Dep’t of Treasury, unpublished opinion of the Michigan Tax Tribunal, issued October 13, 2015
(Docket No. 12-007849), which expanded upon the Flowers definition by including the element
of control. In Johnson, a trust held property for the petitioner that expressly allowed her to
“occupy” and reside at the property “rent-free.” Johnson, unpub op at 3. An administrative law
judge found that the petitioner was a partial owner of the property because of her legal right of
possession. Id. The tribunal disagreed, explaining that the ALJ’s interpretation erroneously
encompassed only occupation, but that the definition of “possession” also includes “ ‘[t]o have in
one’s actual control,’ ” and that control meant “[t]o exercise power or influence over.” Id.,
quoting Black’s Law Dictionary (10th ed) (alterations in original). Finding that the petitioner’s
rent-free occupancy did not amount to “actual control” over the property, the tribunal concluded
that she was not an “owner.” Johnson, unpub op at 3.

      Although it was understandable for the tribunal to have relied upon the analogous
Johnson decision, the definition of “owner” adopted in Johnson—and applied to petitioner
here—is erroneous because it improperly alters the definition provided to “owner” and “own” in
Flowers.




5
 That exemption required that a property be “used and owned as a homestead” by a veteran.
Barnes, 379 Mich at 176 (emphasis omitted).
6
  Furthermore, if “possession alone” is what “the definition of ‘owner’ revolves around” as
petitioner argues, then a renter who has no other discernable interest in the land would be an
owner, but a renter is undoubtedly different under the law than an “owner.”

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        The words used by the Legislature are “the most reliable evidence of the Legislature’s
intent.” Gillie v Genesee Co Treasurer, 277 Mich App 333, 345; 745 NW2d 137 (2007). As
determined by Flowers, MCL 211.7dd(a) and its circular definition of the term “owner” does not
include the term “control.” After properly consulting a lay dictionary to ascertain the meaning of
“owner,” this Court provided a definition that did not include the term “control.” Flowers, 304
Mich App at 665.7 Although the Johnson tribunal consulted a legal dictionary, this Court had
determined that, for purposes of defining “owner” for the PRE, it was appropriate to consult a lay
dictionary. Flowers, 304 Mich App at 665. Utilizing a legal definition was contrary to Flowers,
and to settled precedent. See Robinson v Detroit, 462 Mich 439, 456 n 13; 613 NW2d 307
(2000) (recognizing that “[i]t is appropriate to consult a lay dictionary when defining common
words or phrases that have not acquired a unique meaning at law because ‘the common and
approved usage of a nonlegal term is most likely to be found in a standard dictionary and not a
legal dictionary’ ”) (citation omitted). By using the legal definition of “possession,” the tribunal
erroneously concluded that control8 was a necessary element of ownership.

       We also cannot help but recognize that application of the Department’s own published
guidelines confirms petitioner’s status as an owner. The Department provides the following
published guidance to the public:

       3. As the beneficiary of a trust, when are you considered eligible for a principal
       residence exemption?

       Upon the death of the grantor of the trust, provided you occupy the property as
       your principal residence.



7
  As noted, the term “control” was brought up in relation to the Court’s explanation of the
general rights of a life estate holder—“to possess, control, and enjoy the property during the
holder’s lifetime.” Flowers, 304 Mich App at 665 (emphasis added). The Flowers Court never
discussed or relied upon any control that the petitioner exerted over the property in that case.
8
  In the legal sense, to “own” is “[t]o rightfully have or possess as property; to have legal title
to.” Black’s Law Dictionary (10th ed). To “possess” is “[t]o have in one’s actual control; to
have possession of.” Id. To “control” is “[t]o exercise power or influence over . . . .” Id.
Hence, even if control was a dispositive factor, the terms of the Trust direct the trustee to hold
the residue of the Trust, including the Bath home, for the benefit of petitioner only. We agree
with petitioner and amicus curiae that petitioner has “control” over the Bath home because she
has the “right to exclude others” for the entirety of her life and because she has power over the
Trust administration. It can be inferred, because petitioner is the only beneficiary of the Trust
property, including the Bath home, that she is the only person permitted to use it. The trustee is
not afforded any power to convey or grant ownership of the real estate. Finally, petitioner is
solely afforded the right to remove any trustee without cause. In essence, because the Trust
owns the property and because only petitioner may determine who the trustee is and how the
Trust operates, she has “control” over the Bath home.



                                                -6-
                                              * * *

       6. The owner of the principal residence died. Before his/her death, the owner
       placed the property in a revocable trust that specified that the surviving spouse
       was a life beneficiary. The surviving spouse occupies the home as a principal
       residence. Can he/she claim the exemption?

       Yes. Upon the death of the grantor of the trust, the life beneficiary is considered
       the owner of the home and may claim a principal residence exemption on the
       property. 9

The tribunal ignored these guidelines because agency interpretations do not have the force of
law. That is certainly a true statement, but this Court still affords an agency’s construction of a
statute “ ‘respectful consideration,’ ” In re Rovas Complaint, 482 Mich 90, 103; 754 NW2d 259
(2008), as an agency’s interpretation can be “helpful in ascertaining the legislative intent,” Id. at
118. Although lacking the force of law, the Department’s own interpretation of the statute to
include trust beneficiaries as “owners” is consistent with Flowers and our resolution of this case.

        For these reasons, we reverse the tribunal’s order and remand for further proceedings on
petitioner’s claim of entitlement to a PRE. We do not retain jurisdiction.



                                                              /s/ Christopher M. Murray
                                                              /s/ Deborah A. Servitto
                                                              /s/ Mark T. Boonstra




9
 Michigan Department of Treasury, Guidelines for the Michigan Principal Residence Exemption
Program, p 9, available at <https://www.michigan.gov/documents/taxes/2856_PRE_guidelines
_607370_7.pdf> (accessed March 11, 2018).

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