Richard B. Spaulding Et Ux. v. City of Rutland

• Decision Date: 03 January 1939
• Parties: RICHARD B. SPAULDING ET UX. v. CITY OF RUTLAND
• Court: Vermont Supreme Court

3 A.2d 556

110 Vt. 186

RICHARD B. SPAULDING ET UX. v. CITY OF RUTLAND

Supreme Court of Vermont

January 3, 1939

November Term, 1938.

Suit to Determine Rights of Property Owners under Tax Exemption Vote of City---1. Held Immaterial That Portion of Building Was Occupied by Nonexempt Business---2. Whole Property Exempt If Exempt Part Not Distinguishable---3. Tax Exemptions under P. L. 594 Governed by Law of Contracts---4. P. L. 594 Is Constitutional---5. Object of P. L. 594---6. Exemption of Building Purchased and Repaired Proper under P. L. 594---7. Tax Exemption Statute to Be Strictly Construed---8. Limits to Rule Requiring Strict Construction---9. Same Rules Applicable in Construing Tax Exemption Vote---10. Property, Not Owner, Exempted under P L. 594---11. Question Submitted to Voters as to Tax Exemption Construed---12. Admission of Evidence as to Repairs and as to Plaintiff's Understanding of Vote Held Harmless---13. Finding Building Included in Exemption Vote Held in Part Finding of Fact---14. Finding Held Proper as Finding of Fact and Conclusion of Law---15. Review of Finding of Fact by Supreme Court----16. Review of Conclusion of Law.

1. In suit in equity to determine rights of property owners under tax exemption vote of city, it was immaterial that portion of building was occupied by business not claimed to be entitled to exemption where part so occupied was not separated from part occupied by business which it was claimed met requirements for exemption.

2. Where tax is assessed upon property, part of which is exempt while part is not, and there is no way to distinguish the exempt from the taxable, the whole is exempt.

3. Tax exemptions granted under provisions of P. L. 594 permitting municipality by vote to grant such exemptions to certain types of property for limited period, are governed by law of contracts, the vote being the offer, which becomes a valid contract when accepted and acted upon, provided conditions and requirements are complied with.

4. P L. 594, permitting municipality by vote to exempt certain types of property from taxation for limited period, is constitutional.

5. P L. 594, permitting municipality by vote to exempt certain types of property from taxation for limited period, has for its principal object not to aid and benefit private persons for private ends, but to benefit public at large by ultimately increasing resources of State and its taxable property through establishment of new industries.

6. Tax exemption may be granted by vote of municipality under provisions of P. L. 594 in respect to building already in existence if it is purchased and repaired as well as in respect to new building.

7. Statute providing for exemption from taxation is to be strictly construed, and no claim for exemption can be sustained unless within express letter or necessary scope of exemption clause.

8. Rule requiring strict construction of tax exemption statute does not call for a strained construction adverse to real intention, but judicial interpretation should always be reasonable.

9. In construing vote of municipality under P. L. 594 permitting municipality by vote to grant tax exemption to certain types of property for limited period, same rules should be applied as are applied to construction of statute itself, since vote is merely part of legislative process delegated to municipality for purposes of determining whether statute should be applied.

10. Use of term "manufacturing establishments" in conjunction with "quarries" and "mines," indicates that it is property rather than owner which may be exempted from taxation under P. L. 594, permitting municipality by vote to grant such exemptions to such types of property for limited period.

11. Question "Shall any manufacturing establishment acquiring" specified property "be exempted from taxation for a period of five (5) years, provided that employment be maintained therein for not less than forty people," which received affirmative vote at city meeting, was to be construed as making exemption offer as broad as is permissible under provisions of P. L. 594, except for limitation to five years instead of ten and condition with respect to employment, so that purchasers of the property complied with offer and were entitled to exemption when they leased inseparable portion thereof at lower rental than was customary for such accommodations and lessees established manufacturing business and employed more than forty people.

12. In suit in equity to determine rights of property owners under tax exemption vote of city, admission of evidence tending to show that some repairs were made to building by plaintiffs for benefit of tenant, who established business which it was claimed entitled property to exemption, and of evidence tending to show details of negotiations between plaintiff and tenant, objected to on ground that plaintiff's understanding of exemption vote was immaterial, and findings based thereon, held harmless, if error, where other undisputed evidence clearly showed acceptance by plaintiffs of exemption offer and compliance with terms and conditions thereof.

13. In such suit, finding "that said factory building * * * * comes within the said tax exemption vote" was, in part at least, finding of fact, where other property was conveyed to plaintiffs by same company and it was necessary to identify exact property held to be within exemption.

14. In such suit, finding "that said factory building * * * * comes within the said tax exemption vote" held supported in its fac-

tual aspect by testimony and by concessions of parties, and without error and supported by findings of fact so far as it constituted conclusion of law.

15. On appeal in suit in equity, inquiry of Supreme Court in regard to finding of fact to which exception is taken is limited to ascertaining whether it is supported by testimony and by concessions of parties.

16. On appeal in suit in equity, it is within province of Supreme Court to inquire, with respect to statement in findings which is conclusion of law rather than finding of fact, whether law applied is sound and also whether there are findings of fact which support conclusion reached.

APPEAL IN CHANCERY. Petition for declaratory judgment to determine rights of plaintiffs as owners of certain property under tax exemption vote of defendant city. Heard on the pleadings, evidence and concessions of the parties at the September Term, 1937, Rutland County, Jeffords Chancellor. Decree allowing plaintiffs the exemption prayed for. The defendant appealed and filed a bill of exceptions. The opinion states the case.

Decree affirmed.

Vernon J. Loveland, City Attorney, for the defendant.

Jones & Jones for the plaintiff.

Present: MOULTON, C. J., SHERBURNE, BUTTLES and STURTEVANT, JJ.

OPINION

BUTTLES

The plaintiffs in this suit in chancery seek a declaratory decree determinative of their rights, if any they have, under a certain tax exemption vote of the City of Rutland. At the annual city meeting held March 3, 1936, this question was regularly submitted to the voters for decision: "Shall any manufacturing establishment or establishments acquiring the property of the Yorke Shirt Company, situated on Cleveland Avenue in this city, and the machinery, capital and personal property used in such business, be exempted from taxation for a period of five (5) years, provided that employment be maintained therein for not less than forty people?" This question was answered by the voters in the affirmative. Thereafter, on April 20, 1936, these plaintiffs purchased the property of the Yorke Shirt Company on Cleveland Avenue, which consisted of a large factory building assessed at $ 14,500, land assessed at $ 2,000, machinery assessed at $ 1,500, and a house assessed at $ 1,000. Some months later the plaintiff rented the upper floor and attic of the factory building to the Marvel Underwear Company, who came to Rutland and began operating a manufacturing business therein. This company had the premises rent free from August, 1936, till January, 1937, and thereafter paid rent at the rate of one hundred dollars per month, which was a low rate in that section for the accommodation furnished. The lower floor and basement of the building were and still are leased to W. C. Landon Company Inc., for a business which is not claimed to be a manufacturing enterprise.

That a portion of the building was occupied and used by a business which is not claimed to be entitled to exemption is immaterial to our inquiry here, since the part so occupied was not separated from the part claimed to be entitled to exemption. Where a tax is assessed upon property, a part of which is exempt and a part is not, and there is no way to distinguish the exempt from the taxable, the whole is exempt. Town of Orange v. City of Barre, 95 Vt. 267, 272, 115 A. 238; Scott v. St. Johnsbury Academy, 86 Vt. 172, 174, 84 A. 567; Johnson v. Jones, 86 Vt. 167, 171, 83 A. 1085.

The Marvel Underwear Company continued to operate a manufacturing enterprise in the building and after Jan. 1, 1937, they continuously employed therein considerably more than forty people. The city now refuses to allow the tax exemption voted in March, 1936, as to any of the real estate so purchased by the plaintiffs from the Yorke Shirt Company, and the question here at issue is whether these plaintiffs are entitled to such exemption on any or all of said property. The decree below allowed them the exemption as to the factory building and on exceptions thereto and to certain evidence admitted during the hearing before the chancellor and to one finding of fact the defendant comes to this Court.

It is not questioned but that tax exemptions of this class are governed by the law of contracts....