Claim of a Mutual Mistake of Fact Denied
In Estate of Sharon Walters v. Township of Lincoln, Michigan Court of Appeals, No. 305374, August 16, 2012, an estate was not entitled to recover local Michigan property taxes that it erroneously paid in 2007 for tax years 2002 through 2006 because the estate failed to timely challenge the uncapping of the property after the property was transferred to a owner's estate.
The estate mistakenly believed that the property was transferred to the new owner on August 7, 2001, the date the previous owner executed, but did not deliver, a quitclaim deed to the new owner. Accordingly, on May 25, 2007, the township uncapped the property from 2002 through 2007 and charged the estate an additional tax liability. The new owner paid the taxes sometime after October 8, 2007, and the estate initiated its action with the Michigan Tax Tribunal on August 27, 2010.
The estate claimed that it was entitled to recover the amount it paid in 2007 for tax years 2002 through 2006 because the payment was based on a mutual mistake of fact and because its appeal to the Michigan Tax Tribunal was timely. Although the estate commenced its suit with the Tax Tribunal within three years of the date of the overpayment, the Michigan Court of Appeals ruled that the Tax Tribunal correctly determined that it lacked authority to grant the estate's requested relief. The court noted that a specific statutory provision prevailed over any arguable inconsistency with a more general rule. Because the specific statutory provision in this case addressed how a party may adjust the taxable value of property following a mistaken, nonexistent transfer of ownership, the estate could not bypass this specific jurisdictional requirement by simply characterizing the overpayment as the result of a mutual mistake of fact under another provision. The specific provision only permitted the adjustment of tax rolls after an erroneous transfer of ownership for the current and immediately preceding three tax years. Therefore, the estate had nothing to recover from the township.