Rixford Manufacturing Co. v. Town of Highgate

• Decision Date: 06 February 1929
• Parties: RIXFORD MANUFACTURING CO. v. TOWN OF HIGHGATE ET AL
• Court: Vermont Supreme Court

144 A. 680

102 Vt. 1

RIXFORD MANUFACTURING CO. v. TOWN OF HIGHGATE ET AL

Supreme Court of Vermont

February 6, 1929

January Term, 1929.

Taxation---Exemptions---G. L. 689---Constitutionality of Exemption Statute---Accepted Exemption as a Contract---Rescission of Granted Exemption---Contracts---Consideration---Practical Construction of Contract by Parties---Construction of Exemption Statute---"Commencement of Business"---Injunction---Insufficiency of Allegations To Justify Injunctive Relief.

1. G L. 689, permitting a town to exempt manufacturing establishments and equipment and capital used in such business from taxation for a period not exceeding ten years from commencement of business, is constitutional.

2. An exemption of a manufacturing establishment from taxation by a town under G. L. 689, regularly granted and accepted, and supported by a consideration, is a binding contract.

3. Where town has granted exemption of a manufacturing establishment from taxation under G. L. 689, town cannot thereafter, within term of exemption, rescind resolution and withdraw exemption to prejudice of one who has accepted offer specifically made therein.

4. Where town acting under G. L. 689, voted to exempt manufacturing corporation, whose property had been severely injured by flood so that it contemplated abandonment of its plant and removal to another location, from local taxation for a period of five years in consideration that corporation should resume its business, and corporation accepted offer by rebuilding its factory and resuming its business, a consideration for contract was thus given.

5. Under such circumstances, action of town in noting such exemption upon tax rolls and books and warrant constituted a recognition and practical construction of contract by town.

6. A 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; but rule does not call for a strained construction, adverse to the real intention, but judicial interpretation of such a statute should always be reasonable.

7. Resumption of business, after an almost complete destruction of a factory and consequent entire stoppage of its operation is to be regarded as a "commencement of business" within meaning of term as used in G. L. 689, authorizing a town to exempt a manufacturing establishment, and equipment and capital used therein, from taxation "for a period not exceeding ten years from the commencement of business."

8. It is the general rule that a court of equity will not interfere in advance to enjoin the passage of a municipal ordinance or resolution, even though such ordinance or resolution is unauthorized or void upon its face, but when the mere passage of invalid ordinance will of itself work irreparable injury to complainant, or impair his property or contract rights court may in its discretion grant injunctive relief.

9. In suit to enjoin calling of a special town meeting to see whether town would vote to rescind its previous action in voting under G. L. 689 to exempt manufacturing corporation whose property had been severely injured by flood so that its business had ceased and it contemplated removal to another location, from local taxation for a period of five years, in consideration that corporation should resume business, after corporation had accepted offer by rebuilding its plant and resuming its business, held that, there being no allegation that action adverse to corporation is threatened at such town meeting, and no facts being set forth whereby it can be determined whether such an outcome is certain or even probable, petition was prematurely brought, and petitioner was not entitled to injunctive relief prayed for.

APPEAL IN CHANCERY. Bill to enjoin town of Highgate and selectmen thereof from calling a special town meeting to see whether town would vote to rescind its previous action in voting to exempt plaintiff, a manufacturing corporation, from local taxation for a period of five years. Heard on demurrer to bill after the April Term, 1928, Franklin County, Willcox, Chancellor, presiding. Demurrer sustained and bill dismissed. The plaintiff appealed. The opinion states the case. Affirmed and remanded.

Decree affirmed, and cause remanded.

Watson & McFeeters and D. W. Steele for the plaintiff.

Fred L. Webster and M. H. Alexander for the defendants.

Present: WATSON, C. J., POWERS, SLACK, MOULTON, and CHASE, JJ.

OPINION

MOULTON

This is a proceeding in equity. The plaintiff has alleged in the bill that it is a corporation engaged in the manufacture of scythes, axes, and farm implements, with its place of business in the Town of Highgate; that its plant was severely injured during the flood of November, 1927, and its business stopped so that it contemplated the abandonment of its plant and the removal to another location; that a duly warned meeting of the legal voters of the town was held, at which a motion to exempt the plaintiff from taxation for a period of 10 years was defeated, but later another duly warned meeting was held, at which the former vote was rescinded, and a motion carried to exempt the property of the plaintiff from taxation for the period of 5 years from January 1, 1928, in consideration that the plaintiff would resume its business to its usual capacity; that thereupon the plaintiff rehabilitated and renewed its plant and operated it, and has since complied with the terms imposed by the vote of the town; that the listers of the town observed the mandate of the vote and entered the exemptions on the tax rolls and books of the town, and the exemption was noted upon the tax books made up by the selectmen for the year 1928, and also upon the tax warrant delivered to the tax collector; that after these things had taken place six or more legal voters of the town of Highgate presented to the selectmen a petition requesting them to call a special meeting of the legal voters of the town to act upon the following:

"To see if the town will vote to rescind the vote of said town taken at a special meeting held on the 17th day of December, 1927, adopting a resolution exempting the property of the Rixford Manufacturing Company from taxation for the term of five years from January 1, 1928."

The bill further alleges that the selectmen are threatening to call the meeting for the purpose indicated; that, if the meeting should be called and the prior vote rescinded, the plaintiff will suffer irreparable damage; and that the plaintiff claims a vested right in the exemption. The prayer is for an injunction against the Town of Highgate and the selectmen, restraining the calling of the special town meeting.

Hearing was had below on a demurrer to the bill, which was sustained and the bill adjudged insufficient, and dismissed. The plaintiff has appealed.

The constitutionality of the statute which is now section 689, G. L., empowering a town to vote certain exemptions from taxation, is well established. Colton & More v. City of Montpelier, 71 Vt. 413, 414, 415, 45 A. 1039; Caverly-Gould Co. v. Springfield et al., 83 Vt. 396, 403, 76 A. 39. An exemption of this class, regularly granted and accepted, and supported by a consideration, is a binding contract. Caverly-Gould Co. v. Springfield et al., supra, at page 399 of 83 Vt. (76 A. 39); Cox v. Mount Tabor, 41 Vt. 28, 31. It is not within the power of the town thereafter, and within the term of the exemption, to rescind the resolution and withdraw the exemption to the prejudice of one who has accepted the offer specifically made therein. Bixby v. Roscoe, 85 Vt. 105, 110, 81 A. 255; Cox v. Mount Tabor, supra; Caverly-Gould Co. v. Springfield et al., supra, at page 402 of 83 Vt. (76 A. 39). The resolution by which the exemption was voted stated that, "in consideration that the said Rixford Manufacturing Company will resume its business," its property at East Highgate should be exempted from local taxation for a period of five years from January 1, 1928. This offer was accepted by the plaintiff by rebuilding its factory and resuming its business. A consideration for the contract was thus given. A recognition and practical construction of the contract was given by the town by its action in noting the exemption upon the tax rolls and books, and warrant.

The defendants argue that G. L. 689 permits an exemption only for ten years from the commencement of business, and that it appears from the bill of complaint that the flood caused a temporary suspension of the business only. But we think otherwise. It is alleged that the damage by the flood was such that the plant was nearly totally destroyed, and the business stopped, "so much so that plaintiff contemplated the abandonment of its plant and business in Highgate and its removal out of the town of Highgate to another location."

A statute providing for exemption from taxation is to be strictly construed, and no claim for exemption can be sustained unless within the express letter or the necessary scope of the exemption clause. Frazier v. Slack & Bro., 85 Vt. 160, 162, 81 A. 161; Town of Sheldon v. Sheldon Poor House Ass'n, 100 Vt. 122, 130, 135 A. 492; In re Hickok's Estate 78 Vt. 259, 262, 62 A. 724, 6 Ann. Cas. 578; Ford v. Delta & Pine Land Co., 164 U.S. 662, 666, 41 L.Ed. 590, 592, 17 S.Ct. 230; Knox College v. Board of Review, 308 Ill. 160, 139 N.E. 56, 35 A.L.R. 1041, 1044. But, as is said in Y. M. C. A. of Lincoln v. Lancaster County, 106 Neb. 105,...