Arnegard v. Cayko
| Decision Date | 11 May 2010 |
| Docket Number | No. 20090222.,20090222. |
| Citation | 2010 ND 83,782 N.W.2d 54 |
| Parties | Cameron ARNEGARD and Mary S. Arnegard, Plaintiffs and Appellantsv.Richard CAYKO, Chairman, Board of County Commissioners, Frances Olson, McKenzie County Auditor, and McKenzie County, Defendants and Appellees. |
| Court | North Dakota Supreme Court |
COPYRIGHT MATERIAL OMITTED
Cameron Arnegard (argued) and Mary S. Arnegard (appeared), self-represented, Arnegard, N.D., plaintiffs and appellants.
Dennis Edward Johnson, State's Attorney, Watford City, N.D., for defendants and appellees.
[¶ 1] Cameron and Mary Arnegard appealed from a summary judgment dismissing their lawsuit against Richard Cayko, Chairman of the Board of County Commissioners; Frances Olson, McKenzie County Auditor; and McKenzie County (“County”). The Arnegards argue they are entitled to a property tax exemption for the residence located on their farm. We affirm, concluding the Arnegards failed to present evidence establishing that they qualify for the tax exemption.
[¶ 2] The Arnegards own an agricultural operation in McKenzie County and reside in a house located on their farm. In 2006, the Arnegards applied for a property tax exemption for their residence under N.D.C.C. § 57-02-08(15). The exemption was approved.
[¶ 3] In 2007, the Arnegards were informed they were not eligible for the tax exemption and were required to pay property taxes on their home because they did not meet the requirements for the exemption. The Arnegards paid the amount assessed under protest and appealed the decision to the Board of County Commissioners. The Board denied the appeal, and the Arnegards filed an action in the district court requesting a judgment for the amount they paid in property taxes on the residence with interest, costs, and attorney fees. The County later rejected the Arnegards' 2008 tax exemption application, and the Arnegards amended their complaint to include their 2008 taxes.
[¶ 4] Both parties moved for summary judgment. The County argued the Arnegards do not meet the statutory requirements for the farm residence exemption because their nonfarm income exceeded $40,000 and the ratio of their nonfarm income to farm income made them ineligible. The district court granted the County's motion for summary judgment, concluding that there were no genuine issues of material fact and that the Arnegards do not qualify for the exemption under the plain language of the statute.
[¶ 5] Summary judgment is a procedural device for promptly resolving a controversy on its merits without a trial if there are no genuine issues of material fact or if the only issues to be resolved are questions of law. Schleuter v. Northern Plains Ins. Co., Inc., 2009 ND 171, ¶ 6, 772 N.W.2d 879. The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact, and if the moving party meets that burden the party opposing the motion must present competent admissible evidence to show the existence of a genuine issue of material fact. Davis v. Enget, 2010 ND 34, ¶ 6, 779 N.W.2d 126. The opposing party must demonstrate a genuine issue of material fact by presenting enough evidence to allow a reasonable jury to rule in their favor. Id.
[¶ 6] The standards for reviewing a court's decision whether to grant summary judgment are well-established:
In deciding whether the district court appropriately granted summary judgment, this Court views the evidence in the light most favorable to the party opposing the motion, and the opposing party will be given the benefit of all favorable inferences that can reasonably be drawn from the record. On appeal, we decide “whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law.”
Schleuter, 2009 ND 171, ¶ 6, 772 N.W.2d 879 (quoting Farmers Union Mut. Ins. Co. v. Associated Elec. & Gas Ins. Servs. Ltd., 2007 ND 135, ¶ 7, 737 N.W.2d 253 (citations omitted)). Whether a district court properly granted summary judgment is a question of law, which we will review de novo on the entire record. Schleuter, at ¶ 6.
[¶ 7] Our decision in this case requires us to construe and apply the farm structure and improvement exemption. Under N.D.C.C. § 57-02-08(15), all farm structures and improvements located on agricultural lands are exempt from taxation. The statute specifically provides a tax exemption for a farm residence:
(2) “Farmer” means an individual who normally devotes the major portion of time to the activities of producing products of the soil, poultry, livestock, or dairy farming in such products' unmanufactured state and has received annual net income from farming activities which is fifty percent or more of annual net income, including net income of a spouse if married, during any of the three preceding calendar years.
....
(3) “Net income from farming activities” means taxable income from those activities as computed for income tax purposes pursuant to chapter 57-38 adjusted to include the following:
(a) The difference between gross sales price less expenses of sale and the amount reported for sales of agricultural products for which the farmer reported a capital gain.
(b) Interest expenses from farming activities which have been deducted in computing taxable income.
(c) Depreciation expenses from farming activities which have been deducted in computing taxable income.
....
(5) In addition to any of the provisions of this subsection or any other provision of law, a residence situated on agricultural land is not exempt for the year if it is occupied by an individual engaged in farming who had nonfarm income, including that of a spouse if married, of more than forty thousand dollars during each of the three preceding calendar years.
N.D.C.C. § 57-02-08(15). An individual who claims a tax exemption has the burden of establishing exempt status. Burlington Northern R.R. v. State, 500 N.W.2d 615, 617 (N.D.1993).
[¶ 8] The Arnegards argue the district court erred in deciding they do not meet the requirements for the property tax exemption under N.D.C.C. § 57-02-08(15). The Arnegards contend they are “farmers” under the statute and “nonfarm income” does not include “passive income.” The Arnegards claim most of their “nonfarm income” is “passive income” from investment activities and, therefore, should not be considered in determining whether they qualify for the exemption. The County argues an individual will qualify as a “farmer” and the individual's residence will qualify for the property tax exemption under N.D.C.C. § 57-02-08(15) only if the individual receives fifty percent or more of the individual's net annual income from farming activities for any one of the three years preceding the year for which the exemption is applied, and if the individual receives less than $40,000 in nonfarm income for three consecutive years prior to the year for which the exemption is applied. The County contends the Arnegards failed to show they meet the requirements for the property tax exemption.
[¶ 9] The district court denied the Arnegards' motion for summary judgment and granted the County's motion for summary judgment. The court found the Arnegards did not meet their burden of establishing their residence is tax exempt because they failed to show that passive income should not be included in determining nonfarm income under the statute, that their farm income was one-half of their total income, and that their nonfarm income was less than $40,000.
[¶ 10] The interpretation of a statute is a question of law, which is fully reviewable on appeal. Burlington Northern, 500 N.W.2d at 617. The rules of statutory interpretation are well-established:
The primary objective in interpreting a statute is to determine the intent of the legislature by first looking at the language of the statute. Words in a statute are given their plain, ordinary, and commonly understood meaning, unless defined in the code or unless the drafters clearly intended otherwise. N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-09.1. If the language of a statute is clear and unambiguous, “the letter of the statute cannot be disregarded under the pretext of purs[u]ing its spirit.” N.D.C.C. § 1-02-05. A statute is ambiguous if it is susceptible to different, rational meanings. If the language is ambiguous or doubtful in meaning, the court may consider extrinsic aids, such as legislative history, to determine legislative intent. N.D.C.C. § 1-02-39.
State ex rel. North Dakota Dept. of Labor v. Matrix Properties Corp., 2009 ND 137, ¶ 8, 770 N.W.2d 290 (quoting Sauby v. City of Fargo, 2008 ND 60, ¶ 8, 747 N.W.2d 65) (citations omitted).
[¶ 11] A residence must be situated on a farm and be occupied or used by a person who is a “farmer” to qualify for the property tax exemption under N.D.C.C. § 57-02-08(15). An individual is a “farmer” for purposes of the statute if fifty percent or more of the individual's annual net income was from farming activities during any of the three calendar years preceding the year the individual applied for the exemption. N.D.C.C. § 57-02-08(15)(b)(2). Under the plain language of the statute, an individual does not have to receive fifty percent or more of his income from farming activities in all three years, but only has to receive fifty percent of his...
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