Spaulding v. City of Rutland

• Decision Date: 03 January 1939
• Docket Number: No. 1041.,1041.
• Citation: 3 A.2d 556
• Parties: SPAULDING et al. v. CITY OF RUTLAND.
• Court: Vermont Supreme Court

3 A.2d 556

SPAULDING et al.

v. CITY OF RUTLAND.

No. 1041.

Supreme Court of Vermont. Rutland.

Jan. 3, 1939.

Appeal in Chancery, Rutland County; Olin M. Jeffords, Chancellor.

Suit in chancery by Richard B. Spaulding and Louise M. Spaulding against the City of Rutland for a declaratory decree determinative of plaintiffs' rights under a certain tax exemption vote of the city of Rutland. From the decree, the defendant appeals.

Affirmed.

Argued before MOULTON, C. J., and SHERBURNE, BUTTLES, and STURTEVANT, JJ.

Jones & Jones, of Rutland, for plaintiffs.

Vernon J. Loveland, City Atty., of Rutland, for defendant.

BUTTLES, Justice.

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. The vote of the city was the offer and if and when regularly accepted and acted upon it became a valid contract, provided the conditions and requirements were complied with. Caverly-Gould Co. v. Springfield and Alexander, 83 Vt. 396, 399, 76 A. 39; Rixford Mfg. Co. v. Town of Highgate, 102 Vt. 1, 4, 144 A. 680. No claim is made that in voting the exemption previously noted the city exceeded the authority given to it by P.L. 594. The constitutionality of this section has several times been sustained. Rixford Mfg. Co. v. Town of Highgate, supra; Colton and More v. City of Montpelier, 71 Vt. 413, 414, 415, 45 A. 1039; Caverly-Gould Co. v. Springfield and Alexander, supra, at page 403, 76 A. 39. The defendant excepts to the decree because, it says in effect, the defendant's offer of tax exemption was open only to people who should acquire the property and should also themselves operate a manufacturing establishment therein. It is not claimed that the plaintiffs engaged personally in the manufacturing business.

In Colton and More v. City of Montpelier, supra, a tax exemption was voted by the defendant to property of the plaintiffs. The building and machinery claimed to be exempt by reason of such vote had never been used and operated by the plaintiffs for manufacturing purposes, but they erected the building and furnished the machinery for the purpose of having it so used by others, and the same was so used by their tenants during the time in question. The defendant contended that the building and machinery were not within the provisions of V.S. 365, now P.L. 594, because they had not been used by the plaintiffs themselves for manufacturing. But this Court held otherwise, saying in part [page 1040]: "There is nothing in the expressed terms of section 365 which limits the power to exempt manufacturing establishments, machinery, appliances, and buildings necessary for the prosecution of the business to such property as is actually used and operated by the owner thereof for manufacturing during the time of the specified exemption. The primary object of this statute is, not to aid and benefit private persons for private ends, but its purpose is to benefit the public at large by increasing, in the end, the resources of the state and its taxable property through the establishment of new industries. This end is as effectually attained by the erection of such establishments and buildings and the furnishing of such machinery and appliances, to be used and operated by tenants, as would be the case were the same used and operated for a like purpose by the owner thereof. * * * The object the legislature sought to promote by this statute was the development of new industries of the character specified in section 365, by exempting the property therein specified. This purpose will be effectuated by so construing it as to include property of the character of the property in question. To hold otherwise would defeat the clearly expressed intent and purpose of the legislature." And in Caverly-Gould Co. v. Springfield and Alexander, 83 Vt. 396, 400, 401, 402, 76 A. 39, this court held that the statute in question did not bar the orator from continuing to enjoy the exemption which had been voted, even though it had ceased to do business and had rented its plant to another existing corporation which carried on a different manufacturing business therein, and was not itself entitled to exemption.

The situation of the plaintiffs in the present case is very similar to that of the plaintiffs in Colton and More v. Montpelier, supra, except that here instead of erecting a new building the plaintiffs purchased and repaired one already in existence. To be sure the question here is the scope of the exemption vote rather than of the enabling statute, but the reasoning in the Colton and More Case is quite applicable here. In the one case as in the other the statute is broad enough to include the...