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NACG Leasing v. Dep't of Treasury

Supreme Court of Michigan

February 6, 2014

NACG LEASING f/k/a CELTIC LEASING, LLC, Petitioner-Appellee,
v.
DEPARTMENT OF TREASURY, Respondent-Appellant

Argued November 7, 2013

For NACG LEASING, Plaintiff-Appellant: THOMAS S NOWINSKI, DETROIT, MI.

For DEPARTMENT OF TREASURY, Respondent-Appellee: JACK M PANITCH, LANSING, MI.

Chief Justice: Robert P. Young, Jr. Justices: Michael F. Cavanagh, Stephen J. Markman, Mary Beth Kelly, Brian K. Zahra, Bridget M. McCormack, David F. Viviano.

OPINION

[495 Mich. 27] BEFORE THE ENTIRE BENCH

Viviano, J.

The issue in this case is whether the execution of a lease of tangible personal property in Michigan constitutes " use" for purposes of the Use Tax Act (UTA).[1] Petitioner, a Michigan corporation, purchased an aircraft from one company and immediately executed a five-year lease to another company that already had possession of the aircraft. The Department of Treasury assessed a use tax against petitioner based on the lease transaction, and the Michigan Tax Tribunal ultimately upheld the assessment. The Court of Appeals reversed, holding that petitioner did not " use" the aircraft because it ceded total control of the aircraft to the lessee by virtue of the lease and the lessee had uninterrupted

Page 892

possession of the aircraft before and during the lease.[2] We granted leave, directing the [495 Mich. 28] parties to " address the applicability of the use tax to a transaction where tangible personal property is purchased by one party and leased to another party when the purchaser/lessor does not obtain actual possession of the property." [3] We reverse and remand.

This case requires us to interpret and apply the pertinent statutory provisions of the UTA. When interpreting a statute, this Court's primary goal " is to give effect to the Legislature's intent, focusing first on the statute's plain language." [4] When the words of a statute are unambiguous, we must enforce them as written and no further judicial construction is permitted.[5]

Under the UTA, a 6% tax is levied " for the privilege of using, storing, or consuming tangible personal property in this state . . . ." [6] The UTA defines " use," in pertinent part, as:

[T]he exercise of a right or power over tangible personal property incident to the ownership of that property including transfer of the property in a transaction where possession is given.[7]

In light of this statutory definition, we must determine whether petitioner exercised a right or power incident to ownership in Michigan when it executed a lease of the aircraft in question.

It is a basic precept of property law that a property owner has the right to the use and enjoyment of his or [495 Mich. 29] her personalty.[8] A corollary to this right is the property owner's right to allow others to use his or her property in exchange for consideration.[9] One way in which a property owner exercises this right is by executing a lease.[10] Therefore, because the right to allow others to use one's personal property is a right incident to ownership, and a lease is an instrument by which an owner exercises that right, it ...


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