Appalachian Mountain Club v. Meredith

• Decision Date: 04 October 1960
• Parties: APPALACHIAN MOUNTAIN CLUB v. MEREDITH.
• Court: New Hampshire Supreme Court

Page 808

163 A.2d 808

103 N.H. 5

APPALACHIAN MOUNTAIN CLUB v. MEREDITH.

Supreme Court of New Hampshire.

Argued June 7, 1960.

Decided June 30, 1960.

Reargued Sept. 7, 1960.

On Rehearing Oct. 4, 1960.

McLane, Carleton, Graf, Greene & Brown, and Jack B. Middleton, Manchester, for plaintiff.

John H. Ramsey, Meredith, Upton, Sanders & Upton, Richard F. Upton, Concord, for defendant.

DUNCAN, Justice.

By statute the personal property of religious, educational and charitable societies locally incorporated or organized, and their real estate owned and occupied (RSA 72:23), or owned, occupied and used (Laws of 1957, c. 202, § 2) by them for their charitable purposes were tax exempt for the tax years in question, provided none of the income or profits of their business was used or appropriated for other than the charities they administered. Since the 1957 amendment (Laws of 1957, supra) took effect on April 1, 1958, the petitions relating to the years 1956 and 1957 are governed by the statute before amendment, and the petition relating to the year 1958 by the amended statute.

It may be assumed that the plaintiff is neither a religious nor an educational society under either statute, and that it 'may be exempted from taxation only as it is shown to be a public charity of another character.' Young Women's Christian Ass'n v. Portsmouth, 89 N.H. 40, 41, 192 A. 617, 618. 'But its services in the fields of * * * education have evidentiary value to show its proper classification as a charitable organization within the act. They are indications of an enterprise not undertaken as a commercial venture, with a money-profit motive, or as a group devoted to its own social enjoyment'. Id. While the plaintiff's membership is subject to a reasonable measure of control designed to further accomplishment of its objects, the public is the beneficiary of the great preponderance of its activities, and for all practical purposes its membership is also open to the public. See Holt v. Antrim, 64 N.H. 284, 286, 9 A. 389; Chung Mee Restaurant Co. v. Healy, 86 N.H. 483, 484, 171 A. 263. As its brief points out, its activities fall generally into five broad categories: exploration, education, conservation, public safety and furtherance of outdoor life. The plaintiff's qualifications as a charitable organization within the meaning of the statute, both before and after amendment, are not open to serious question. Young Women's Christian Ass'n v. Portsmouth, supra; Portsmouth Historical Society v. Portsmouth, 89 N.H. 283, 197 A. 712; Greater Lowell Girl Scout Council v. Pelham, 100 N.H. 24, 117 A.2d 325. Cf. Society of Cincinnati v. Exeter, 92 N.H. 348, 356, 31 A.2d 52.

While the plaintiff's eligibility as a 'charitable society' or 'organization' is to be determined according to its activities within the state considered as a whole, its right that particular items of its real or personal property shall be exempt from taxation, must under the applicable statutes be determined on a 'town-by-town' basis according to the use made of them. See Phillips Exeter Academy v. Exeter, 90 N.H. 472, 506, 27 A.2d 569; 92 N.H. 473, 33 A.2d 665.

The defendant contends that because of the large proportion of the plaintiff's membership which resides in Massachusetts, in 'actual practice * * * the true purpose of the plaintiff * * * is primarily to enable selected residents of Massachusetts to enjoy the advantages of organized recreation in New Hampshire.'

The record appears to us not to support this statement. The question is of importance for the years 1956 and 1957 in particular because of statutory provisions effective during those years (but repealed by Laws of 1957, c. 202, § 3) that 'no such * * * corporations * * * shall be entitled to * * * exemption if organized or incorporated for the principal purpose of benefiting persons who are not residents of New Hampshire or if in fact conducted or operated principally for the benefit of' such persons. Laws 1955, c. 157, § 1.

As previously noted, the principal beneficiary of the plaintiff's activities is the public, and not the plaintiff's members. Its stated corporate purpose, and the manner in which it is in fact carried out, neither purport to be, nor in practice are designed primarily to benefit nonresident members of the public. The test to be applied is not whether nonresidents are in fact the principal beneficiaries, but whether the corporation is in fact 'operated principally for' their benefit. If in fact larger numbers of nonresidents than residents utilize the services and facilities afforded by the plaintiff's activities in general, this results from the circumstance that more interested nonresidents than residents frequent the areas which the plaintiff supervises, rather than from any purpose or course of conduct on its part calculated to benefit nonresidents in particular.

Moreover members of the public other than those who directly utilize the facilities provided by the plaintiff benefit from its activities. See Greater Lowell Girl Scout Council v. Pelham, 100 N.H. 24, 117 A.2d 325, supra. To the extent that those activities relate to the mountains and recreational areas of New Hampshire, the residents of New Hampshire are beneficiaries even though neither members of the club nor active participants in the activities which it sponsors. The plaintiff was not disqualified from exemption by reason of the proviso added to the statute by Laws 1955, c. 157, § 1.

The defendant further suggests that because of the provisions of RSA 72:27, effective since 1931, the tax exemption which the plaintiff seeks to establish can extend only to improvements made to its Meredith property after it qualified for the exemption by incorporation here in 1935. Laws 1935, c. 273. See Franciscan Fathers v. Pittsfield, 97 N.H. 396, 399, 89 A.2d 752. The plaintiff was first 'incorporated or organized' in New Hampshire in 1935. By special act in 1935, the Massachusetts corporation was 'constituted a corporation within this state.' Laws 1935, c. 273, supra. A foreign corporation was thus 'domesticated' here. 17 Fletcher Cyc. of Corporations, § 8302, p. 38. See Proprietors of Cornish Bridge v. Fitts, 79 N.H. 253, 107 A. 626; Horne v. Boston & M. Railroad, 62 N.H. 454. The corporation thus incorporated 'within this state' had owned Three Mile Island in Meredith long before 1931. Hence the real estate in question was not 'real estate hereafter acquired' by a domestic corporation within the meaning of Laws 1931, c. 148, § 1 (RSA 72:27, supra).

The answer to the first question transferred is in the affirmative: the plaintiff is a charitable society or organization within the meaning of RSA 72:23 as amended, for each of the three years in question.

Because of differences in the requirements imposed by the statute before and after the 1957 amendment, in answering the second question (whether the plaintiff is entitled to exemption from taxes assessed against it by the town of Meredith for the years in question), it is desirable to first consider the status of the plaintiff's tax liability for the years 1956 and 1957. No reliance is placed upon the special act of 1903 (Laws 1903, c. 248) presumably because it was repealed by the general act of 1913. See Phillips Exeter Academy v. Exeter, 90 N.H. 472, 27 A.2d 569. In order that property should qualify for exemption, the effective statute for 1956 and 1957 required among other things that any real estate should be 'owned and occupied by [the plaintiff or its] officers * * * for the purpose for which [it is] established'; and that none of the income from its business should be used for other purposes. RSA 72:23, as amended by Laws 1955, c. 157; Greater Lowell Girl Scout Council v. Pelham, 100 N.H. 24, 117 A.2d 325.

It is agreed that the income from Three Mile Island is utilized for the operation and maintenance of the property, and the profit 'to carry out the stated objectives for which the Club was formed.' The question then becomes one of whether during the years in question the property was 'occupied' by the plaintiff for its charitable purposes. It is not disputed that occupation of the island and its structures during all of the years in question was by the plaintiff, in the person of its members. Under the terms upon which these accommodations were made available, only members, and guests of members in the latter's right, were permitted to use them.

While it is agreed that the camp provides facilities for study of natural and other sciences and that it 'is used' for these purposes by teachers and others, the extent to which advantage was taken of these opportunities by members and their guests in 1956 and 1957 does not appear. A brochure relating to the island published by the plaintiff emphasizes its recreational facilities almost exclusively. The defendant argues that it is used 'primarily as a summer camp to provide low cost vacations for members and their private guests.' Whatever the opportunities afforded for activities in fulfillment of the plaintiff's charitable purposes, the agreed statement fails to sustain the plaintiff's burden of demonstrating that the island has been 'occupied' in these years for such purposes and with the benefit to the public therein implied, unless by reason of the fact that the profits derived from operations there have been devoted to those charitable purposes.

Under the statute in the form which it took in 1956 and 1957 however, such use of the proceeds was sufficient to qualify the property for exemption, even though the direct and immediate use made was not a charitable one. As the statutory language was interpreted in Hedding Camp Meeting Association v. Epping, 88 N.H. 321, 323, 189 A. 347, 349, it exempts 'property occupied by an institution but not directly used in the course and conduct of its ultimate objects'. 'If 'the income or profits of the business' of the institution are 'used or appropriated' for those objects ...