SCIENCE FICTION SOCIETY, INC. v. DEPT. OF ASSESSMENT

• Decision Date: 15 December 2004
• Docket Number: No. 49,49
• Citation: 384 Md. 402,863 A.2d 969
• Parties: BALTIMORE SCIENCE FICTION SOCIETY, INC. v. STATE DEPARTMENT OF ASSESSMENT AND TAXATION.
• Court: Maryland Court of Appeals

863 A.2d 969

384 Md. 402

BALTIMORE SCIENCE FICTION SOCIETY, INC. v. STATE DEPARTMENT OF ASSESSMENT AND TAXATION.

No. 49, September Term, 2004.

Court of Appeals of Maryland.

December 15, 2004.

Donald J. Arnold (Law Office of Donald J. Arnold, Bel Air, on brief), for appellant.

Jeffrey G. Comen, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief), for appellee. Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

WILNER, J.

The issue before us is whether the Maryland Tax Court (which, despite its name, is an administrative agency and not a court) erred in finding that appellant, Baltimore Science Fiction Society, Inc. (BSFS), is entitled to an exemption from property taxes on a building it owns in Baltimore City. The Circuit Court for Baltimore City believed that the agency did err by applying an incorrect standard to determine whether the structure was being used for an educational purpose and, on that ground, reversed the agency decision. Because we shall conclude that the agency did not apply the wrong standard and that its factual findings were supported by substantial evidence, we shall reverse the judgment of the Circuit Court.

BACKGROUND

Maryland Code, § 7-202(b) of the Tax-Property Article provides, in relevant part, that property is not subject to the State and local property tax if the property (1) "is necessary for and actually used exclusively for a charitable or educational purpose to promote the general welfare of the people of the State" and (2) is owned by "a nonprofit charitable, fraternal, educational, or literary organization." Although the statute, read literally, requires that the property be used "exclusively" for a charitable or educational purpose, we have held that the requirement of exclusive use may be satisfied "by a showing that the property is used `primarily' for exemption purposes, with only incidental or occasional use for other purposes." Friends School v. Supervisor, 314 Md. 194, 201, n. 3, 550 A.2d 657, 660, n. 3 (1988); Supervisor v. Trustees of Bosley Meth. Ch., 293 Md. 208, 215, n. 5, 443 A.2d 91, 95, n. 5 (1982); Lodge # 817 Trustees Benevolent & Protective Order of Elks v. Supervisor of Assessments of Wicomico County, 292 Md. 533, 541, 439 A.2d 591, 595 (1982).

BSFS owns a two-story building at 3310-12 East Baltimore Street. It purchased the property in 1991 and, for ten years, paid property taxes on it. In August, 2001, BSFS applied to the State Department of Assessments and Taxation (SDAT) for an exemption pursuant to § 7-202. When SDAT denied the exemption and the Property Tax Assessment Appeals Board for Baltimore City affirmed that denial, BSFS appealed to the Tax Court, which reversed.

There was no dispute before the Tax Court, and it is conceded here, that BSFS qualifies as a literary organization and therefore meets the second, or ownership, prong of the statutory requirement. The issue is whether the property was "necessary for and actually used [primarily] for ... an educational purpose." In that regard, the Tax Court found as fact that:

(1) BSFS is a not-for-profit corporation organized "to promote the cultural, literary, and educational advancement of science fiction and fantasy in the community at large and to promote public goodwill toward the science fiction community." In carrying out that mission, BSFS, among other things, participates in a regional Baltimore Science Fiction Fantasy Conference, organizes writing contests, provides writing workshops and seminars, raises funds, and maintains a lending library.

(2) The property is used for all of the BSFS activities. None of it is used for any other activity. About 20-25% of the building space is used for the storage of supplies and other items necessary for BSFS activities. The lending library takes up another 20-25% of the space. More than 30% is used for group functions, such as workshops and meetings. The building is open only on Saturday, Sunday, and Wednesday evenings, but during those times the public can visit the library or participate in other BSFS activities.

(3) The organization is run entirely by volunteers, who donate time and money. Members of BSFS pay annual dues. Non-members are allowed to use the library and attend all BSFS activities, but they do not usually visit the library or attend meetings.

These findings were based on substantial evidence, which explained in some greater detail the functions of BSFS. Testimony was presented that, in addition to bi-monthly meetings, BSFS sponsors a three-to-four day annual conference promoting science fiction literacy, a conference that attracts up to 2,500 people, including hard scientists from the Pentagon, from Johns Hopkins University, and from the agency that operates the Hubble Space Telescope. As part of that conference, BSFS sponsors the Compton Crook Award, given to an author for the best first novel in the science fiction, fantasy or horror genre.¹ BSFS also sponsors an annual Young Writer's Contest open to high school students, writing workshops, and readings and presentations by authors. The Young Writer's Contest produces 60 to 75 short stories from high school students around the State. The library contains about 6,000 books, but slightly less than half have been catalogued and are available for borrowing. The writer's workshops are held both at the property and wherever the Annual Conference is held, which is usually elsewhere. Book discussions are held at the property on Sunday afternoons. In addition to these events, BSFS participates in the annual city-wide Book Fair and Artscape events. Evidence was presented that the equipment and materials necessary for these various events are stored at the property, even for those events held elsewhere.

SDAT argued that the property did not qualify for the tax exemption because it was used primarily as a social or hobby club — that the building is open only on Saturday, Sunday, and Wednesday evening, that some of the organization's major activities are held off-site or occur only infrequently, that the library is mostly for the members, that the "function" space is for business and social meetings, and that the existence of BSFS and its activities are not well-known to the public. Its witness contended that, because the property was not being used for "systematic instruction," it was not being used for an educational purpose. In that regard, SDAT relied on its interpretation of this Court's decision in Comptroller v. Maryland State Bar, 314 Md. 655, 552 A.2d 1268 (1989), a case we shall discuss later.

The Tax Court regarded that criterion for defining "educational purpose" as too limited and confining and essentially "unworkable," and it adopted, instead, the view of the dissenting judges in Ladies Literary Club v. City of Grand Rapids, 409 Mich. 748, 298 N.W.2d 422, 427-30 (1980) that a more standard dictionary definition of "educational" was appropriate, a definition that encompassed cultural activities, such as museum trips and lectures. The Tax Court also noted that, although the statute requires that the property be primarily used for an exempt activity, it did not require that the property be frequently used for that activity. It found that, although the building is closed most of the week, "the property, when open, is exclusively used to promote BSFS's educational purpose." It distinguished the situation of property being used for an exempt purpose part of the time and rented out for non-exempt uses at other times, noting that no part of the BSFS building was used at any time for a non-exempt purpose. The storage area, it concluded, furthered the educational purposes. Despite its modest level of recognition in the community, BSFS had, the Tax Court found, contributed to improving the general welfare of Marylanders by promoting literacy and attracting both new readers and new writers. Though recognizing that property tax exemptions are to be strictly construed (see Tax-Property Article, § 7-101), the Tax Court held that the plain meaning of the statute must control.

Aggrieved, SDAT sought judicial review in the Circuit Court for Baltimore City. That court took considerable umbrage at the Tax Court's rejection of a standard for defining "educational purpose" that it, too, believed was adopted by this Court in Comptroller v. Maryland State Bar. The Circuit Court offered its own view that "promoting science fiction is [not] what is deemed to be the operations of an educational institution" and, accordingly, reversed the Tax Court decision. BSFS appealed, and, because a major aspect of the case has significance beyond its particular facts, namely, determining the standard to be applied in defining what constitutes an "educational purpose" when considering the use to which a literary organization puts its property, we granted certiorari on our own initiative, before the appeal was concluded in the Court of Special Appeals.

SDAT insists that the governing standard is that which it regards as having been stated in Maryland State Bar and urges that, under that standard, property is not used for an "educational purpose" unless it is used for "systematic instruction" in a "branch of learning." SDAT contends that the Tax Court decision was properly reversed because (1) the agency refused to apply that standard, and (2) had it applied that standard, it would have been compelled to conclude that the BSFS property was not being used primarily for an educational purpose. BSFS notes that, in Maryland State Bar, we took that concept of "systematic instruction" from Black's Law Dictionary and points out that there are other dictionary definitions of "educational purpose" that are broader and more appropriate to use.

DISCUSSION

As noted, § 7-202(b) contains two requirements for an exemption-a use requirement and an ownership requirement. The property must be necessary for and actually used primarily for a "charitable or educational purpose...