Lincoln Street, Inc. v. Town of Springfield

• Decision Date: 04 September 1992
• Docket Number: No. 91-179,91-179
• Citation: 615 A.2d 1028,159 Vt. 181
• Parties: LINCOLN STREET, INC. v. TOWN OF SPRINGFIELD, Vermont, Bonnie Greer, Delinquent Tax Collector and John O'Brien, Finance Director.
• Court: Vermont Supreme Court

Page 1028

615 A.2d 1028

159 Vt. 181

LINCOLN STREET, INC. v. TOWN OF SPRINGFIELD, Vermont, Bonnie Greer, Delinquent Tax Collector and John O'Brien, Finance Director.

No. 91-179.

Supreme Court of Vermont.

Sept. 4, 1992.

Agnes S. Hughes and George W. Lamb of Lamb & Hughes, P.C., Springfield, for plaintiff-appellant.

Stephen S. Ankuda of Parker & Ankuda, P.C., Springfield, for defendants-appellees.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

JOHNSON, Justice.

Plaintiff, Lincoln Street, Inc., appeals a decision granting summary judgment in favor of the Town of Springfield. At issue is whether property owned by private individuals and leased to a nonprofit organization for public or charitable use is exempt from property tax pursuant to 32 V.S.A. § 3802(4). The trial court held that, because Lincoln Street leases the subject property from private owners, the property does not qualify for a public use tax exemption. We affirm.

The facts are not in dispute. Lincoln Street is a private, nonprofit Vermont corporation that serves mentally retarded persons in Windham and Windsor Counties by operating a number of group residential homes. Lincoln Street leases one such property from Stephen and Truddi Greene. The terms of the lease agreement obligate Lincoln Street to pay annual personal and real property taxes assessed against the Greenes' property by the Town of Springfield. Lincoln Street requested that Town exempt the property from such taxes, but the Town refused. Instead, the Town placed a $577,000 attachment on the property to insure the payment of back taxes. Lincoln Street subsequently sought a declaratory judgment regarding the tax exempt status of the leased property. The Town moved to dismiss or, in the alternative, for summary judgment. The trial court held that Lincoln Street's request for a property tax exemption was foreclosed by the definition of "public use" developed by this Court in American Museum of Fly Fishing, Inc. v. Town of Manchester, 151 Vt. 103, 110, 557 A.2d 900, 904 (1989), and granted summary judgment in favor of the Town.

To prevail on a motion for summary judgment, the moving party must show that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Kelly v. Town of Barnard, 155 Vt. 296, 299, 583 A.2d 614, 616 (1990).

At issue is the interpretation of the first clause of 32 V.S.A. § 3802(4), ^* which provides a tax exemption for "[r]eal and personal estate granted, sequestered or used for public, pious or charitable uses." The first clause of subsection (4), unlike subsequent clauses, contains no express requirement of ownership. Two years before Lincoln Street entered into its lease agreement, we considered at length the legislative and common law history of the statute and determined that, since at least 1886, three guiding principles were explicit or implicit in all decisions of this Court construing the legislative purpose of § 3802(4). American Museum of Fly Fishing, 151 Vt. at 110, 557 A.2d at 904. Consequently, we clarified the interpretation of § 3802(4) by establishing a three-part test for determining whether a use is "public":

(1) the property must be dedicated unconditionally to public use; (2) the primary use must directly benefit an indefinite class of persons who are part of the public, and must also confer a benefit on society as a result of the benefit conferred on the persons directly served; and (3) the property must be owned and operated on a not-for-profit basis.

Id.

Lincoln Street asks us to overrule American Museum of Fly Fishing and all other decisions that require a concurrence of ownership and operation as a qualification for a public or charitable use exemption. Lincoln Street argues that the plain meaning of the first clause, when read independently, establishes direct and immediate use of property as the sole criterion for property tax exemption. Secondly, Lincoln Street argues that case law before American Museum of Fly Fishing specifies use, not ownership, as the test. Lastly, Lincoln Street argues that the trend in other jurisdictions is away from requiring both use and ownership.

Lincoln Street relies on Town of Williston v. Pine Ridge School, Inc., 132 Vt. 439, 321 A.2d 24 (1974), to support its argument that the first clause of § 3802(4) should be read independently of the rest of the statute. There, we stated that the various clauses of § 3802(4) are disjunctive, id. at 444, 321 A.2d at 28, meaning that it is unnecessary to prove that property is exempt for more than one reason. It does not follow, however, that the meaning of each clause in the statute must be determined without considering those that precede or follow it.

In construing a statute, the primary objective is to give effect to the intent of the Legislature. Burlington Electric Dep't v. Vermont Dep't of Taxes, 154 Vt. 332, 335, 576 A.2d 450, 452 (1990). We gather legislative intent by considering, not just isolated sentences or phrases, but " 'the whole and every part of the statute, the subject matter, the effects and consequences, and the reason and spirit of the law.' " American Museum of Fly Fishing, 151 Vt. at 108, 557 A.2d at 903 (quoting Holbrook Grocery Co. v. Commissioner of Taxes, 115 Vt. 275, 278-79, 57 A.2d 118, 120 (1948)). A tax exemption statute must be strictly construed against the party claiming an exemption, but also reasonably construed so as not to defeat its purpose. Id.

Lincoln Street's argument fails because we must read the separate clauses of this statute together, as parts of a unified statutory system. Wolfe v. Yudichak, 153 Vt. 235, 240, 571 A.2d 592, 595 (1989). Doing that, we find that the concurrence of nonprofit ownership and use is necessary to make the statute as a whole effective. See McAllister v. AVEMCO Ins. Co., 148 Vt. 110, 112, 528 A.2d 758, 759 (1987) (plain meaning of statute will be expanded by implication when necessary to make statute effective).

This interpretation is also consistent with legislative intent. The Legislature enacted § 3802(4) to further "the general welfare by promoting the direct employment of property for services which would otherwise have to be offered by the state or which should be encouraged by the state for humanitarian purposes." Broughton v. Town of Charlotte, 134 Vt. 270, 275, 356 A.2d 520, 523 (1976). The purpose of § 3802(4) is to "benefit an indefinite class of persons who are part of the public." In re Abbey Church, 145 Vt. 227, 230, 485 A.2d 1263, 1265 (1984). At the same time, the public or charitable use must confer a benefit on the public generally. Trustees of Vermont Wild Land Foundation v. Town of Pittsford, 137 Vt. 439, 443, 407 A.2d 174, 177 (1979); English Language Center v. Town of Wallingford, 132 Vt. 327, 329-30, 318 A.2d 180, 182 (1974).

The purpose of § 3802(4), then, is to benefit the community as a whole by benefiting that indefinite part of the public served by public, pious, or charitable organizations. Where the benefit of...