Opinion #6810

The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)

STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6810

July 6, 1994

TAXATION:

Taxation of privately owned lands that were initially conveyed by patent from the United States Government

The State of Michigan may assess and tax privately owned lands in the State of Michigan that were initially conveyed by patent from the United States Government.

Honorable Mat J. Dunaskiss

State Senator

The Capitol

Lansing, Michigan

Honorable Gilbert J. DiNello

State Senator

The Capitol

Lansing, Michigan

You have asked if the State of Michigan may assess and tax privately owned lands in the State of Michigan that were initially conveyed by patent from the United States Government.

Const 1963, art 9, Sec. 3, provides, concerning the taxation of property by the state, in part:

The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law.

Section 1 of 1893 PA 206, the General Property Tax Act, MCL 211.1 et seq; MSA 7.1 et seq, provides:

That all property, real and personal, within the jurisdiction of this state, not expressly exempted, shall be subject to taxation.

The only exemption even arguably applicable to the situation posed in your request is that set forth in section 7 of the General Property Tax Act, which provides:

Public property belonging to the United States is exempt from taxation under this act. This exemption shall not apply if taxation of the property is specifically authorized by federal legislative action or federal administrative rule, regulation, or lease.

The foregoing provision recognizes the primacy of the United States Government, under US Const, art IV, Sec. 3, cl 2, over property to which it has title. However, nothing in that provision governs the regulation or taxation of property after it no longer belongs to the United States - i.e., after its conveyance to others.

That conveyance by patent divests title from the United States is well established. In Brewer v Kidd, 23 Mich 439 (1871), the Michigan Supreme Court considered when title to land belonging to the United States became divested in a suit to enjoin the public sale of land claimed to have already been purchased by the plaintiff. The Court noted that inasmuch as no patent had yet issued, jurisdiction over the property was solely that of the United States Government under US Const, art IV, Sec. 3, cl 2, but that once transferred by patent, jurisdiction became vested in the state:

Under these provisions, the power of sale and disposition of the public lands, and of prescribing the rules, regulations, officers, agencies and the whole course of proceedings, for effecting such sales is vested exclusively in the federal government, until the sale is consummated by the issuing of a patent to the purchaser, which alone (in ordinary cases like the present, at least) divests the title of the United States and vests it in the purchaser, when, for the first time, it becomes in all respects subject to the local laws of the state, like the great mass of other property within its limits. [Emphasis added.]

23 Mich 443-444.

The foregoing conclusion accords with that of the United States Supreme Court in Stryker v Goodnow, 123 US 527; 8 S Ct 203; 31 L Ed 194 (1887). There, the Court addressed and rejected assertions by certain parties that lands sold by the United States were not taxable by the State of Iowa within a year after title passed from the United States. As the Stryker Court noted:

Whether the lands were taxable within a year after the title passed out of the United States is not a Federal question. There was nothing in the act of Congress admitting Iowa into the Union, or in any other act of Congress to which our attention has been directed, which in any manner interfered with the power of the State to tax lands as soon as they ceased to be the property of the United States. The only prohibition was against taxation whilst the United States were the owners. [Emphasis added.]

123 US 535-536.

It is my opinion, therefore, that the State of Michigan may assess and tax privately owned lands in the State of Michigan that were initially conveyed by patent from the United States Government.

Frank J. Kelley

Attorney General