English Language Center, Inc. v. Town of Wallingford, 139-73

• Decision Date: 02 April 1974
• Docket Number: No. 139-73,139-73
• Citation: 318 A.2d 180,132 Vt. 327
• Parties: ENGLISH LANGUAGE CENTER, INC. v. TOWN OF WALLINGFORD.
• Court: Vermont Supreme Court

Page 180

318 A.2d 180

132 Vt. 327

ENGLISH LANGUAGE CENTER, INC. v. TOWN OF WALLINGFORD.

No. 139-73.

Supreme Court of Vermont.

April 2, 1974.

Joseph H. Badgewick, of Ryan, Smith & Carbine, Rutland, for plaintiff.

Bishop & Crowley, Rutland, for defendant.

Before SHANGRAW, C. J., and BARNEY, SMITH, KEYSER and DALEY, JJ.

SHANGRAW, Chief Justice.

This is an appeal from a judgment of the Rutland County Court declaring the real and personal property of the appellee, English Language Center, Inc., to be exempt from property taxation.

The appellee is a non-profit Vermont corporation organized for the purpose of operating a training school for the teaching of English to persons whose native language is other than English. The corporation has no capital stock and in the event of dissolution, any excess monies are dedicated to the appellant Town of Wallingford. The appellee's operations are financed exclusively through tuition, fees, and other payments received from students. These amount to six hundred and seventy dollars per student each eight week period.

During the period of its existence, the appellee has trained approximately five hundred and fifty non-English speaking persons in the English language. The students are almost exclusively citizens of foreign countries seeking to learn English so that they may travel, study, or do business in English speaking countries. They are recruited through advertising in foreign countries and distribution of literature to embassies and consulates of foreign governments located in the United States.

The real and personal property owned by the appellee corporation has been listed in Wallingford Grand List for the years 1970, 1971, and 1972, but the appellee has refused to pay any of the property taxes assessed thereon. On September 13, 1971, the appellee brought an action for declaratory judgment in the Rutland County Court, asking that it be declared exempt from property taxes under 32 V.S.A. § 3802(4). A hearing was held on February 21, 1973, and on March 26, 1973, the court issued its findings of fact, conclusions of law, and order. The court found that the appellee's property was exempt under the terms of 32 V.S.A. § 3802(4) as being used primarily for public or charitable purposes.

Appellant contends that such a conclusion is not supported by the findings of fact, and that appellee's property is not exempt from taxation under Vermont law. Specifically, appellant argues that the facts as found by the court establish that the principal and primary use of appellee's property confers no benefit to any person who has not paid full value therefor; provides no direct or immediate benefit to any part of the public within the intendment of the exemption statute; and is not legally recognized as a public or charitable use, since it involves no lessening of any of the burdens of government.

32 V.S.A. § 3802(4) provides that the following property shall be exempt from taxation:

(4) Real and personal estate granted, sequestered or used for public, pious, or charitable uses; . . ..

It is well settled that exemptions from taxation are to be strictly construed, and that no claim of exemption can be sustained unless within the express letter or necessary scope of the exempting clause. In re Hickok's Estate, 78 Vt. 259, 263, 62 A. 724 (1904). Appellee seeks an exemption for a public use, and although it is sometimes said that tax exemptions in favor of charitable, educational, or public uses are not to be construed with the same degree of strictness that exemptions in favor of property used for gain or profit are to be construed, it may nevertheless be stated as the general rule that exemptions for charitable, educational, or public uses are to be strictly construed against those who claim the exemption. 71 Am.Jur.2d State and Local Taxation § 362; University of Vermont v. Town of Essex, 129 Vt. 607, 285 A.2d 728, 55 A.L.R.3d 477 (1971).

The fact that the appellee has stated in its articles of association that it shall not be organized for profit has no applicability to its claim that its real and personal property in Wallingford is tax exempt as 'used for public or charitable uses.' What is determinative of such claim is the direct and immediate use of the property itself. The test is not the ownership, but the use. Experiment in International Living v. Brattleboro, 127 Vt. 41, 47, 238 A.2d 782 (1967).

In order to qualify on its claim for exemption under § 3802(4), the property of the appellee must be used for public use and its use confer a benefit upon an indefinite class of persons who are a part of the public. New York Institute for Education of Blind v. Wolcott, 128 Vt. 280, 285, 262 A.2d 451 (1970). The exemption from taxation for public uses involves an exercise of the state's governmental power with respect to its internal economy. Exemptions are granted for the...