BURR AND BURTON v. Town of Manchester, 00-294.

• Decision Date: 24 August 2001
• Docket Number: No. 00-294.,00-294.
• Citation: 782 A.2d 1149
• Court: Vermont Supreme Court
• Parties: BURR AND BURTON SEMINARY v. TOWN OF MANCHESTER; Village of Manchester.

782 A.2d 1149

BURR AND BURTON SEMINARY v. TOWN OF MANCHESTER; Village of Manchester.

No. 00-294.

Supreme Court of Vermont.

August 24, 2001.

Orland Campbell, Jr., and Matthew C. Samuelson, Manchester Village, for Plaintiff-Appellant.

Steven F. Stitzel of Stitzel, Page & Fletcher, P.C., Burlington, for Defendant-Appellee.

Present: AMESTOY, C.J., DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

JOHNSON, J.

Appellant taxpayer Burr and Burton Seminary appeals from a decision of the Bennington Superior Court granting the Town of Manchester summary judgment on taxpayer's claim that two buildings it owns are exempt from property taxes under 32 V.S.A. § 3802(4). The court held that the buildings are not exempt because the buildings are not directly connected with the running of Burr and Burton Seminary. We affirm in part, and reverse in part.

Burr and Burton Seminary is a nonprofit corporation that operates a private high school in Manchester, Vermont known as the Burr and Burton Academy. Burr and Burton has traditionally supplied housing to the headmaster, as part of the compensation package, on a building on campus known as the Head House. In 1996, Burr and Burton acquired a small lot in Manchester two miles from the school's main campus and constructed a house on the land to be used as the Head House. The on campus house was converted to office space. The school's headmaster is required to live in the Head House and pay certain related expenses. During the 1998-1999 school year, the Head House was used for school purposes approximately eleven times for various events including meetings, dinners and parties for faculty, students, trustees and staff. In April 1997, the new Head House was added to the grand list of the Town and appraised at approximately $290,000.

Burr and Burton also owns a building on Williams Street in Manchester that the school used as dormitory space for students. At the end of the school year in 1994, Burr and Burton listed the Williams Street property for sale with a realtor. Pending a sale, Burr and Burton rented the property to various tenants. The building was sold in 1999. In April 1998, the Williams Street property was added to the grand list of the Town and appraised at approximately $177,000.

Burr and Burton grieved the appraisals to the board of listers and then to superior court on the grounds that the properties are tax exempt. The school argues that the properties fall within the exemption for "lands owned or leased by colleges, academies or other public schools" in § 3802(4) because both properties are owned by the school. The Town contends that this statute requires that the properties be used by the school for an educational purpose and that neither of the properties is used accordingly. On cross-motions for summary judgment, the court agreed with the Town and held that neither the Head House nor the Williams Street property is directly connected to the running of the school. Thus, the properties do not qualify for the exemption. This appeal followed.

In reviewing a motion for summary judgment we apply the same standard as the trial court. Summary judgment is appropriate when the record demonstrates that there is no genuine issue as to material fact, and the moving party is entitled to judgment as a matter of law. Guiel v. Allstate Ins. Co., 170 Vt. 464, 467, 756 A.2d 777, 780 (2000).

The statute at issue, 32 V.S.A. § 3802, states in relevant part:

The following property shall be exempt from taxation:

....

(4) Real and personal estate granted, sequestered or used for public, pious or charitable uses; real property owned by churches or church societies or conferences and used as parsonages and personal property therein ...; real and personal estate set apart for library uses and used by the public and private circulating libraries ...; lands leased by towns or town school districts for educational purposes; and lands owned or leased by colleges, academies or other public schools ...; and lands and buildings owned and used by towns for the support of the poor therein . . . . The exemption of lands owned or leased by colleges, academies or other public schools, shall not apply to lands or buildings rented for general commercial purposes . . .;

(Emphasis added.) This case concerns the exemption only for "lands owned or leased by colleges, academies or other public schools" (lands owned exemption). Any statutory exemption from property tax is to be strictly construed against the taxpayer. Stowe Preparatory School, Inc. v. Town of Stowe, 124 Vt. 392, 396, 205 A.2d 544, 546 (1964).

At issue in this case is the status of the properties for the purpose of property tax assessments. The parties are in agreement that Burr and Burton owns the properties and puts the properties to some use. The dispute focuses on whether there is, in fact, a use requirement in the statute and whether to qualify for the exemption the use of the property must serve an educational purpose. If § 3802(4) requires only ownership, then both properties qualify for the exemption. If, however, the lands owned exemption also requires that the qualified owner use the land for an educational purpose, then we must analyze whether the Head House and Williams Street property comply with this requirement.

Our paramount goal in statutory construction is to give effect to the Legislature's intent. See Burlington Elec. Dep't v. Vermont Dep't of Taxes, 154 Vt. 332, 335, 576 A.2d 450, 452 (1990). The school correctly notes that the plain language of this exemption makes no mention of use. The statute says that an exemption shall be granted to "lands owned or leased by colleges, academies or other public schools." 32 V.S.A. § 3802(4). We recognize, however, that in some circumstances the literal meaning of the words employed cannot prevail. See In re Hatch, 130 Vt. 248, 251, 290 A.2d 180, 182 (1972). Therefore, when the plain meaning of the statute contradicts the intent of the Legislature, we are not confined to a literal interpretation of the statutory language. In re C.S., 158 Vt. 339, 343, 609 A.2d 641, 643 (1992). In construing tax exemptions, we must ascertain the legislative intent from a consideration of the entire exemption statute and with regard to both the subject matter of legislation and its ramifications. Governor Clinton Council, Inc. v. Koslowski, 137 Vt. 240, 247, 403 A.2d 689, 694 (1979).

The school's proposed construction conflicts with the basic purpose of the exemption statute. The institutions that may claim an exemption under the clauses of § 3802(4) include churches and other religious organizations, libraries, all manner of charities, and at issue here, colleges, academies and other public schools. 32 V.S.A. § 3802(4). It is fair to conclude, therefore, that the purpose of the statute is to free from taxation land that is being used to serve some public purpose. We have stated that our policy is to avoid construing a statute in a manner that would render the statute ineffective, or lead to irrational consequences. Addison County Cmty. Action v. City of Vergennes, 152 Vt. 161, 165-66, 565 A.2d 233, 235 (1989). We would violate this principle of construction were we to extend this exemption to any land in which title is merely held by a public school. If there is no educational use to the land, there is no benefit to the state, and, consequently, no reason why the Legislature would forgo the benefit of taxation for this land. We cannot assume that the Legislature intended to "allow[] an exemption whenever property benefits a qualifying organization in a purely incidental manner." Koslowski, 137 Vt. at 247, 403 A.2d at 694.

Over one hundred years ago we recognized that the Legislature's purpose in enacting the statute was to exempt property used for educational purposes. In Willard v. Pike, 59 Vt. 202, 9 A. 907 (1886), the exemption was challenged for several buildings owned by St. Johnsbury Academy that were currently used for a boarding house, a club house for students, and a future residence for the principal on the grounds that the buildings were not being used as required by the exemption. The Court initially admitted that "[o]ur statute stands on the ground of ownership alone. There is no mention of use." Id. at 217, 9 A. at 915. Despite this statement, the Court concluded:

Although ... ownership is all that is expressly required, it is probable that the legislature did not intend to exempt property simply because owned by an academy. In construing statutes of exemption from taxation, regard must be had to the settled rule that they are to be construed most strongly against those who claim their benefit. The ownership must undoubtedly be, not for speculative purposes, but for the appropriate use and benefit of the institution as an academy or a college in carrying out the purposes of its incorporation.

Id. at 218, 9 A. at 916 (emphasis added). The Court allowed the exemption because what matters for the purposes of the statute is not only whether the property is owned by an educational entity, but also whether the property is used for an educational purpose.

The Court incorporated this recognized purpose into later holdings. In Broughton v. Town of...