Marist Bros. of N.H. v. Town of Effingham, 2017-0187

• Decision Date: 14 September 2018
• Docket Number: No. 2017-0187,2017-0187
• Citation: 195 A.3d 90,171 N.H. 305
• Parties: The MARIST BROTHERS OF NEW HAMPSHIRE v. TOWN OF EFFINGHAM
• Court: New Hampshire Supreme Court

171 N.H. 305

195 A.3d 90

The MARIST BROTHERS OF NEW HAMPSHIRE

v.TOWN OF EFFINGHAM

No. 2017-0187

Supreme Court of New Hampshire.

Argued: January 18, 2018

Opinion Issued: September 14, 2018

Pierce Atwood, LLP, of Portsmouth (Jonathan A. Block and Michele E. Kenney on the brief, and Mr. Block orally), for the plaintiff.

Drummond Woodsum & MacMahon, of Manchester (Matthew R. Serge and Demetrio F. Aspiras on the brief, and Mr. Serge orally), for the defendant.

HICKS, J.

The plaintiff, The Marist Brothers of New Hampshire (MBNH), appeals the following orders of the Superior Court (Ignatius, J.): (1) a decision, following a two-day bench trial, upholding the denial by the defendant, Town of Effingham (Town), of MBNH's request for a charitable tax exemption, for tax year 2015, for real property, see RSA 72:23, V (2012) (charitable tax exemption), :34-a (Supp. 2017) (appeal from refusal to grant exemption, deferral, or tax credit); and (2) an order granting the Town's motion in limine to exclude evidence of the tax treatment of New Hampshire youth camps other than the camp run by MBNH. We reverse.

The trial court found the following facts, as recited in its written order. MBNH is a New Hampshire non-profit corporation affiliated with The Marist Brothers of the Schools, "an international Catholic teaching Order." As such, MBNH is also affiliated with the Roman Catholic Church. The Marist Brothers of the Schools conducts its operations in the United States through its U.S. Province (U.S. Province). MBNH is tax exempt under section 501(c)(3) of the federal tax code. See 26 U.S.C. § 501(c)(3) (2012).

MBNH was established by U.S. Province "in connection with the acquisition, development and operation of Camp Marist," a religious, residential youth summer camp MBNH founded on 159 acres it acquired in the Town in 1949 (the Property). The Property sits on the shores of Ossipee Lake and "includes camper cabins, offices, a chapel, religious ‘mound,’ dining hall, and health facility, as well as a number of recreational facilities, including but not limited to, an activity pavilion, archery and rifle ranges, an arts and crafts building, horse stables and athletic fields." Also on the property is a "Log Cabin" or "Retreat Center" that can accommodate more than twenty people and is used "as lodging for Camp staff during the summer camp season and rent[ed] to third parties during the off season." (Quotation omitted.)

MBNH's Articles of Agreement, as amended in 1990, state:

The object for which this Corporation is established is to offer recreational and educational services to persons of whatever race, nationality, ethnic background, state or nation of residence. The corporation recognizes and affirms its traditional affiliation and faith in the Roman Catholic Church. In furtherance of the object, this corporation shall provide opportunities to meet primarily the spiritual, cultural and physical needs of youth.

(Quotation omitted.) In addition, its by-laws state:

The object for which this Corporation is established is to offer religious and educational and charitable services to persons of whatever race, nationality, ethnic background, state or nation of residence. The Corporation recognizes and affirms its traditional affiliation with a faith in the Roman Catholic Church. In furtherance of the object, this corporation shall provide opportunities to meet primarily the spiritual, cultural, and physical needs of youth.

(Quotation omitted.)

Camp Marist is staffed both by Marist Brothers, who receive room and board but no other compensation, and by "paid staff from the United States and around the world." Relatives of staff and of Marist Brothers are allowed to attend Camp Marist "for free without regard to financial need" and "[a]s many as fifty to sixty relatives attend the Camp for free each year."

Camp Marist is co-educational and attracts children from across the United States and the world. In 2015, 490 children attended Camp Marist, thirteen of whom hailed from New Hampshire. Camp Marist operates for seven weeks in the summer, broken down into two two-week sessions and a final three-week session. Campers may attend one or more sessions at a cost ranging, at 2016 rates, from $1,900 for the first two-week session to $5,900 for the full seven weeks. Campers must also pay a non-refundable $175 registration fee, which is not credited against tuition, as well as additional fees to participate in: (1) "many of the activities offered, such as archery, riflery, fishing, and horseback riding"; (2) "all of the academic programs offered ... [such as] digital photo and media, remedial math, and special tutoring"; and (3) various day trips, such as deep sea fishing, white water rafting, and indoor rock climbing. These additional fees range from $50 to $100 per session in the first two categories and up to $300 per activity in the third.

With respect to scholarships, the trial court found, in part:

In 2015, the Camp granted 47 full or partial scholarships to campers, totaling $108,739.00. Thus, out of the 490 campers who attended the Camp in 2015, fewer than 10% received scholarships. The vast majority of campers, therefore, pay to attend. Moreover, the Camp is not obligated under its by-laws to provide scholarships, and does not advertise the availability of scholarships in its brochure, although scholarship information is available on its website.

(Citations omitted.) In addition, scholarships are available only for the first camp session.

When Camp Marist is not in session, MBNH rents the Property. No restrictions are placed on who is eligible to rent, or how renters use, the Property. Rental proceeds are allocated to either the "regular Camp fund, the running of the Camp, or ... to some of [MBNH's] scholarships." (Quotation and brackets omitted.)

MBNH's revenues in 2015 totaled $1,363,200, of which $1,239,565 was earned from tuition and fees, and $92,854 from rental of the Property. Total expenses that year were $1,255,313, resulting in net income of $107,907. According to its bylaws, MBNH is required to pay U.S. Province a yearly assessment "to provide support to the religious works and health and well-being of the Marist Brothers." (Quotation omitted.) The assessment was $100,000 in 2013 and has increased by $3,000 each year thereafter. Thus, in 2015, MBNH paid U.S. Province $106,000.

MBNH appeals the trial court's affirmance of the Town's denial of a charitable tax exemption. Our standard of review is as follows.

[W]e uphold the trial court's factual findings and rulings unless they lack evidentiary support or are legally erroneous. We do not decide whether we would have ruled differently than the trial court, but rather, whether a reasonable person could have reached the same decision as the trial court based upon the same evidence. Thus, we defer to the trial court's judgment on such issues as resolving conflicts in the testimony, measuring the credibility of witnesses, and determining the weight to be given evidence. Nevertheless, we review the trial court's application of the law to the facts de novo.

Jesurum v. WBTSCC Ltd. P'ship, 169 N.H. 469, 476, 151 A.3d 949 (2016) (quotation and citations omitted). Resolution of this appeal requires us to interpret and apply RSA 72:23, V and RSA 72:23-l (2012), which are questions of law that we review de novo. See ElderTrust of Fla. v. Town of Epsom, 154 N.H. 693, 696, 919 A.2d 776 (2007).

In matters of statutory interpretation, we are the final arbiter of legislative intent as expressed in the words of the statute considered as a whole. Accordingly, we will overturn the trial court's decision if we find that the court misapprehended or misapplied the law. We note that the legislative purpose to encourage charitable institutions is not to be thwarted by a strained, over-technical and unnecessary construction.

Town of Peterborough v. MacDowell Colony, 157 N.H. 1, 5, 943 A.2d 768 (2008) (quotations, citations, and brackets omitted).

We first recite the applicable statutory language. RSA 72:23, V exempts from taxation:

[t]he buildings, lands and personal property of charitable organizations and societies organized, incorporated, or legally doing business in this state, owned, used and occupied by them directly for the purposes for which they are established, provided that none of the income or profits thereof is used for any other purpose than the purpose for which they are established.

In turn, "[t]he term ‘charitable’ as used to describe a corporation, society or other organization within the scope of ... RSA 72:23," is defined in RSA 72:23-l to mean, in relevant part:

a corporation, society or organization established and administered for the purpose of performing, and obligated, by its charter or otherwise, to perform some service of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public that includes residents of the state of New Hampshire, with no pecuniary profit or benefit to its officers or members, or any restrictions which confine its benefits or services to such officers or members, or those of any related organization.

In evaluating whether an institution should be granted an exemption under RSA 72:23, V, we apply the four-factor test we articulated in ElderTrust:

[T]he plain language of RSA 72:23, V and RSA 72:23-l requires the institution to satisfy each of the following four factors, namely, whether: (1) the institution or organization was established and is administered for a charitable purpose; (2) an obligation exists to perform the organization's stated purpose to the public rather than simply to members of the organization; (3) the land, in addition to being owned by the organization, is occupied by it and used directly for the stated charitable purposes; and (4) any of the organization's income or profits are used for any purpose other than the purpose for which

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