Reid, In re

• Decision Date: 29 December 1998
• Docket Number: No. 96-595,96-595
• Citation: 143 N.H. 246,722 A.2d 489
• Parties: Appeal of Beatrice REID and another (New Hampshire Board of Tax and Land Appeals).
• Court: New Hampshire Supreme Court

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722 A.2d 489 Appeal of Beatrice REID and another (New Hampshire Board of Tax and Land Appeals). No. 96-595. Supreme Court of New Hampshire. Dec. 29, 1998.

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Gottesman and Hollis P.A., of Nashua (Morgan A. Hollis, on the brief and orally), for the petitioners.

Drescher & Dokmo, P.A., of Milford (William R. Drescher, on the brief and orally), for the respondent, Town of Brookline.

JOHNSON, J.

The petitioners, a group of twenty-nine lessees of tracts of land surrounding Melendy Pond in Brookline, appeal the decision of the New Hampshire Board of Tax and Land Appeals (board) granting only a partial abatement of their 1993 property taxes. We vacate and remand.

The following facts were adduced at a hearing before the board and through documents provided to the board. The petitioners lease small tracts of land from the Melendy Pond Authority (authority) on which they have constructed small seasonal residential dwellings. The land was formerly owned by

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the Town of Brookline (town), which deeded the land to the authority in 1970. The town created the authority in 1951 "to plan and lease ... property in the Melendy Pond Tract" and collect rents that would be used to maintain the development. The petitioners executed form leases, the terms of which vary only with respect to the length of the lease term and renewal option and the amount of rent. The leases grant the lessees the right to construct "camps and similar structures" on the land, subject to the approval of the authority. The leases provide that the buildings constructed are "for recreational use only" and cannot be used as permanent residences. The leases further provide that "no person shall acquire a settlement for welfare purposes, educational purposes, or other rights and entitlements within the Town of Brookline." As of March 1996, the length of the individual leases ranged from six to twenty years, and the majority of the leases provided that each lessee had a right to renew for an additional twenty-year term. No renewal term exceeded twenty years.

Until 1993, the town taxed the petitioners for the assessed value of the buildings only. That year, however, the town added $40,000 to the total assessed value of each property to represent the benefit of leasing land in close proximity to Melendy Pond (the amenity value). The petitioners unsuccessfully applied to the town for an abatement and subsequently appealed that decision to the board. See RSA 76:16-a, I (1991) (amended 1994, 1995). The town eventually granted a partial abatement in 1995, reducing the amenity value attributed to each lease to $20,000. The petitioners, however, continued to object to the additional assessment.

The petitioners moved for a directed verdict, arguing in part that because

the leased premises constitute property exempt from taxation ..., is property not owned by the lessees, and is property for which the petitioners have not consented to be taxed, the value of any portion of such property imputed to the appraised value of the petitioners' personal property for tax purposes is improper.

The board held that the leasehold interests are taxable, but granted partial abatements based on recommendations made by Gary Roberge, an assessment consultant to the town. This appeal followed.

On appeal, the petitioners contend that the board erred in finding that their leasehold interests were taxable, or, in the alternative, in applying the adjusted assessments recommended by the town's consultant. "Our standard of review for appeals from the board provides that the petitioner has the burden of showing that the board's decision is clearly unreasonable or unlawful, and all findings of the board upon all questions of fact shall be deemed to be prima facie lawful and reasonable." Appeal of Kiwanis Club of Hudson, 140 N.H. 92, 93, 663 A.2d 90, 91 (1995) (quotation, brackets, and ellipses omitted); see RSA 541:13 (1997); RSA 71-B:12 (1991). Further, we will set aside an order of the board if we find that it misapprehended or misapplied the law. Kiwanis Club of Hudson, 140 N.H. at 94, 663 A.2d at 91.

The petitioners maintain that their leasehold interests are not taxable because the terms of the leases are not sufficient to create a taxable property interest. Pursuant to RSA 73:10 (1991), "[r]eal and personal property shall be taxed to the person claiming the same, or to the person who is in the possession and actual occupancy thereof, if such person will consent to be taxed." Accordingly, the statute allows a person to be taxed even if the person does not possess actual title to the property provided that such person consents to the taxation. See Quimby v. Quimby, 118 N.H. 907, 910, 395 A.2d 1247, 1249 (1978). "[I]t is immaterial who is the ultimate owner of the fee. Title is not the test of taxability." Lin-Wood Dev. Corp. v. Town of Lincoln, 117 N.H. 709, 711, 378 A.2d 741, 742 (1977) (quotation omitted). However,

in situations involving a lease for a term of years, real property taxes are assessed on the fee and not on the separate leasehold and reversionary interests.... [A]bsent an agreement between the lessor and lessee to the contrary, the lessor as owner of the fee interest in the property pays taxes

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on the full value of the land as if the leasehold interest did not exist.

Hampton Beach Casino v. Town of Hampton, 140 N.H. 785, 788, 674 A.2d 979, 981 (1996). Perpetual leases, on the other hand, are taxable to the lessee because the lessee "enjoys all benefits of ownership, [and therefore] ... should bear an owner's share of the public expense." Piper v. Meredith, 83 N.H. 107, 110, 139 A. 294, 296 (1927).

Accordingly, the leasehold interests in this case are taxable if the leases are either perpetual, see Indian Head Nat'l Bank v. City of Portsmouth, 117 N.H. 954, 955, 379 A.2d 1270, 1272 (1977), or "renewable indefinitely," Hampton Beach Casino, 140 N.H. at 790, 674 A.2d at 982, or if the petitioners agreed to pay taxes on the value of the land, see id. at 788, 674 A.2d at 981.

The petitioners contend that the lease terms do not create virtual ownership in the lessees. Because leases are a type of contract, we review their meaning in accordance with well established rules of contract interpretation. See id. "[T]he interpretation of a contract, including whether a contract term is ambiguous, is ultimately a question of law for this court to decide." Holden Eng'g and Surveying v. Pembroke Rd. Realty Trust, 137 N.H. 393, 395, 628 A.2d 260, 262 (1993). "[A]bsent fraud, duress, mutual mistake, or ambiguity, we must restrict our search for the parties' intent to the words of the contract." Parkhurst v. Gibson (Parkhurst), 133 N.H. 57, 62, 573 A.2d 454, 457 (1990). Accordingly, we will reverse the determination of the fact finder where, although the terms of the agreement are unambiguous, the fact finder has improperly relied on extrinsic evidence in reaching a determination contrary to the unambiguous language of the agreement. See Holden Eng'g and Surveying, 137 N.H. at 395-96, 628 A.2d at 262; Logic Assoc's, Inc. v. Time Share Corp., 124 N.H. 565, 572, 474 A.2d 1006, 1010 (1984). Here, the board apparently relied solely on extrinsic evidence in determining that "[t]he evidence was clear that since the [1951] creation of the Melendy Pond Authority, leases have been renewed for lengthy periods and would continue to be renewed indefinitely."

The lease term itself, however, is unambiguous, and grants the lessee the right to renew for one additional term of years. The form lease provides:

RENEWAL: The Lessee shall have a right to renew the within lease for an additional term of _____ years at such rental as the parties may agree upon at the time of said renewal, said rent to be based upon the then existing rent, and the then existing cost of labor, insurance and maintenance incurred by the Lessor in maintaining the area.

While the length of the renewal term varies from lease to lease, as of March 1996, no renewal term exceeded twenty years. The leases neither provide for additional renewal terms, nor guarantee that the lessee will have the option to renew the lease beyond the finite period set forth in the renewal clause. Accordingly, we find that by its terms, each lease is not renewable indefinitely, but...