St. Paul's School v. City of Concord

Citation372 A.2d 269,117 N.H. 243
Decision Date31 March 1977
Docket NumberNo. 7562,7562
CourtSupreme Court of New Hampshire

Orr & Reno and William L. Chapman, Concord (Robert H. Reno, Concord, orally), for plaintiff.

Paul F. Cavanaugh, City Sol., and Upton, Sanders & Smith, Concord (Richard F. Upton, Concord, orally), for defendant.

LAMPRON, Justice.

This is a petition for abatement of taxes assessed against St. Paul's School by the city of Concord for the tax year commencing April 1, 1975. The school's application to the Concord board of assessors for abatement was denied, and the school paid the taxes assessed. A petition for abatement was timely filed in the superior court and the case was referred for hearing by a Special Master (Arthur H. Nighswander, Esq.).

At issue are the qualifications for tax exemption under RSA 72.23 of certain of the school's buildings and land. In advance of the hearing the parties filed an agreed statement of facts. The master recommended that certain questions of law be determined prior to consideration of the entire case. The following questions were therefore transferred to this court by the Trial Court (Keller, C.J.) and our answers are appended thereto:

'1. Is the School's interior campus exempt from taxation? Yes in part.

2. Are the separate faculty quarters in dormitory buildings, and the land appertaining thereto, exempt from taxation? Yes.

3. Are the School's other residential buildings occupied by faculty members, and the land appertaining thereto, exempt from taxation? Yes.

4. Are the School's parking lots exempt from taxation? Yes in part.

5. Are the School's garages exempt from taxation? Yes in part, remainder undertermined.

6. Is the School's land south of Interstate 89 exempt from taxation? No.

7. Is the Rectory, and land appertaining thereto, exempt from taxation? Yes in part.

8. Are the heating plant, transformer station, 'gasometer' building (School post office) and Tuck Shop building, and the land appertaining thereto, exempt from taxation? The post office and Tuck are wholly exempt. The remainder, Yes in part.

9. If any part of one of the foregoing categories of property is not exempt from taxation, to what extent is it taxable? ' The details are set out in the opinion.

10. Both parties also made offers of proof. The school offered to prove the city's past practices in exempting certain school property. The city offered to prove that for private, secondary schools, 'dormitory' has traditionally included the faculty quarters within the dormitory buildings. Each party objected to the other's offer of proof on the grounds of immateriality. The following question was therefore also transferred by the Trial Court (Keller, C.J.):

'Is the subject matter of any of the foregoing offers of proof material to the issues?' No.

St. Paul's School was incorporated in 1855 by special act of the legislature (Laws 1855, ch. 1757) for the purpose of establishing and maintaining in the city of Concord a school for the education of youth. The school has been operated continually since 1855 for that purpose. The school has no stockholders or members. It was not organized for and is not operated for profit. No trustee or other individual has any interest, direct or indirect, in the school's income from any source. None of the school's income is used or appropriated for purposes other than educational.

There are approximately 495 boys and girls enrolled at the school as students in grades nine through twelve. There are 77 full-time teachers, serveral part-time teachers, and about 160 other personnel.

The school grounds approximately 1,600 acres in size, are located about two miles from the business section of Concord. Of this land, approximately 160 acres constitute the 'interior campus' where a majority of the school buildings are located. Some buildings are also located on another 80 acres adjacent to the 'interior campus.' The remaining 1,360 acres are wetland, forest land, and forage crop land. All the land and buildings thereon are owned by the school.

By agreement dated October 21, 1970, and running continuously to the present, the school licensed the Audubon Society of New Hampshire to use a substantial portion of these 1,360 acres, located south of Interstate Route 89.

The school's claims that the buildings and lands in question are exempt from taxation are based on paragraphs IV and V of RSA 72.23, enacted in 1957 (Laws 1957, ch. 202). These two paragraphs provide, in pertinent part, that the following property is exempt from taxation:

'IV. The buildings and structures of schools . . . owned, used and occupied by them for the purposes for which they are established, including but not limited to the dormitories, dining rooms, kitchens, auditoriums, classrooms, infirmaries, administrative and utility rooms and buildings connected therewith, athletic fields and facilities and gymnasiums, boat houses and wharves belonging to them and used in connection therewith, and the land thereto appertaining but not including lands and buildings not used and occupied directly for the purposes for which they are organized or incorporated . . . provided further that if the value of the dormitories, dining rooms and kitchens shall exceed one hundred and fifty thousand dollars, the value thereof in excess of said sum shall be taxable.

'V. The real estate . . . owned by charitable organizations . . . and occupied and used by them for the purposes for which they are established . . ..'

We address first the argument advanced by the school that it is a charitable corporation and is therefore entitled to the exemptions provided under RSA 72:23 V as well as the exemptions for which it qualifies as a school under RSA 72:23 IV.

We reject this argument. Following the school's reasoning, most schools could claim to be charitable corporations, operated for charitable purposes, and therefore entitled to both categories of exemptions. This is inconsistent with the obvious intent of the legislature. By treating 'schools, seminaries of learning, colleges, academies and universities' under a separate paragraph from 'charitable organizations and societies,' the legislature manifested its view that these are distinct categories of taxpayers. If the legislature had considered schools to be charitable organizations for purposes of tax treatment, the separate paragraph covering schools would have been surplusage. Even though the school may be considered a charitable corporation for some purposes, such as a charitable trust (4 A. Scott, The Law of Trusts § 370 (3d ed. 1967)) it does not qualify for tax exemption treatment under RSA 72:23 V. See Rabun Gap-Nacoochee School v. Thomas, 228 Ga. 231, 242, 184 S.E.2d 824, 830-31 (1971).

The school's primary claim for tax exemption arises under the provisions of RSA 72:23 IV. The school argues that all of the property in question is 'used and occupied directly' for its educational purposes, and should therefore be exempt from taxation under this paragraph. This case presents us with our first opportunity to interpret this section in relation to an educational institution. Prior to 1957, the tax-exempt status of school property was determined by the 'seminaries of learning' or 'exclusive use' exemption contained in R.S. 1842, 39:2, and by the 'institutional exemption' contained by Laws 1913, 115:1. See Trustees, etc., Academy v. Exeter, 90 N.H. 472, 501, 27 A.2d 569, 589 (1940).

'Exclusive use' in this context was not rigidly confined to mean only those 'buildings, or parts of them, in which learning is taught and the process of actual education by instruction carried on.' Id. at 504, 27 A.2d at 591. Rather, the statute was given a 'reasonable construction' which took into account possible developments in seminary uses. Id. at 504-05, 27 A.2d at 591. Thus, athletic and recreational facilities, both land and buildings, as well as the infirmary, were considered exempt from taxation. Id. at 506, 27 A.2d 592. Dormitories for students and residences rented by members of the faculty were considered not to be within the 'seminaries of learning' exemption. Id.

The 'institutional exemption' provision was added in 1913, however, for the purpose of expanding the exemptions available under the 'seminaries of learning' provision. The test of occupancy rather than exclusive use was intended to cover additional property. St. Mary's School v. Concord, 80 N.H. 436, 438, 118 A. 608, 609 (1922); Trustees, etc., Academy v. Exeter, 90 N.H. 472, 503, 27 A.2d 569, 590 (1940). According to this standard, dormitories and faculty residences were entitled to tax exemption up to the value of one hundred and fifty thousand dollars. Id. at 506, 27 A.2d at 592.

The act 1957 did not simply restate the former exceptions, Appalachian Mountain Club v. Meredith, 103 N.H. 5, 13, 163 A.2d 808, 814 (1960). The provisions of RSA 72:23 IV were intended to embody in one section both the 'seminaries of learning' and the 'institutional' exceptions. This paragraph lists several examples of tax-exempt property, all of which were previously covered by either the 'seminaries of learning' exception or the 'institutional' exception. See Trustees, etc., Academy v. Exeter, 90 N.H. 472, 27 A.2d 569 (1940); Trustees, etc., Academy v. Exeter, 92 N.H. 473, 33 A.2d 665 (1943).

The city argues that the phrase 'used and occupied directly' in RSA 72:23 IV was intended to perpetuate the 'exclusive use' test contained in the previous 'seminaries of learning' statute. The school argues that the proper test of direct use is that of 'reasonable necessity.' In support of its position the city relies primarily on our decision in Appalachian Mountain Club v. Meredith, 103 N.H. 5, 163 A.2d 808 (1960) where we stated that the 1957 act did not repeal 'the old doctrine of 'direct use'.' Id. at 15, 163 A.2d at 815. However, that statement was made in a context quite different from that presented here. We were...

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