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A Better Partnership
December 01, 2014

In dispute over taxes, MSC holds inferior governmental units may not bind their superiors

In Sal-Mar Royal Village, LLC v. Macomb County Treasurer, No. 147384, the Michigan Supreme Court addressed whether a consent judgment entered into by a township may be validly enforced against the county in which it is located.  The Michigan Supreme Court reversed the decision of the Court of Appeals, ruling that the township and county lacked privity and therefore the judgment is unenforceable against the county.
Sal-Mar brought this action contesting liability for over $127,000 in property-tax interest allegedly owed to the Macomb County Treasurer.  Sal-Mar originally entered into a consent judgment with Macomb Township that included a provision waiving any penalties and interest due from either party if all taxes or refunds were paid.  Macomb County refused to honor the waiver-of-interest provision, claiming instead that it was not a party to the judgment.  Sal-Mar sought a writ of mandamus from the circuit court to order Macomb County to honor the consent judgment.  The circuit court granted summary disposition to Macomb County, and the Court of Appeals reversed.
The Michigan Supreme Court reversed the decision of the Court of Appeals and held that Macomb County and Macomb Township were not in privity with respect to waiving interest and fees and that a subordinate governmental unit cannot bind a superior unit unless the subordinate unit is authorized to represent the superior.  Here, there was no indication that the township was ever empowered to represent the county with respect to matters incidental to delinquent tax collection.  Additionally, the statutory tax regime contemplates that the county and township had different and potentially conflicting interests if the county was unable to collect delinquent taxes for which it had already reimbursed the township.

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