Town of Ossipee v. Whittier Lifts Trust

• Decision Date: 08 July 2003
• Docket Number: No. 2002–470.,2002–470.
• Citation: 827 A.2d 989,149 N.H. 679
• Parties: TOWN OF OSSIPEE v. WHITTIER LIFTS TRUST & another.
• Court: New Hampshire Supreme Court

149 N.H. 679

827 A.2d 989

TOWN OF OSSIPEE

v.WHITTIER LIFTS TRUST & another.

No. 2002–470.

Supreme Court of New Hampshire.

Argued May 8, 2003.

Issued July 8, 2003.

Sager, Sager, Wunder & DePree, P.L.L.C., of Ossipee (Richard D. Sager on the brief and orally), for the plaintiff, Town of Ossipee.

Wiggin & Nourie, P.A., of Manchester (Donald C. Crandlemire on the brief and orally), for defendant Whittier Lifts Trust.

Arthur W. Hoover, of Alton, on the brief and orally, for defendant Whittier Communications, Inc.

Peter W. Heed, attorney general (Craig S. Donais, assistant attorney general, on the brief and orally), for the State.

DALIANIS, J.

The plaintiff, Town of Ossipee (town), appeals from an order of the Superior Court (O'Neill , J.) ruling that defendant Whittier Lifts Trust (Whittier Trust) is not liable for taxes levied against a State-owned communications tower (tower) on its property. In addition, the State appeals from a separate order of the Superior Court (T. Nadeau , J.) ruling that defendant Whittier Communications, Inc. (Whittier Communications) has a taxable interest in the tower under RSA 72:23 (Supp.2002) and that the State, pursuant to its agreement with Whittier Communications, must reimburse the latter for any taxes levied against it for the use of the tower. We affirm both decisions.

The record supports the following relevant facts. Whittier Trust owns a parcel of real property in Ossipee located on Mount Nickerson. On June 4, 1996, it leased a portion of its property to Whittier Communications. Whittier Communications then entered into a sub-lease and license agreement (sub-lease) with the State dated August 28, 1997, to allow the State to construct a 180–foot communications tower on the property.

Whittier Communications and the State also entered into a contemporaneous license agreement (license), which granted Whittier Communications the right to occupy a portion of the space on the tower and to sub-license space to entities providing telecommunications services. Whittier Communications has sub-licensed space on the tower to third party telecommunications providers for a rental fee, and it pays Whittier Trust a monthly rental based upon the rents generated from the sub-license agreements.

The town assessed the value of Whittier Trust's interest in the tower and the land beneath the tower for $224,943, of which $200,000 was attributable to the value added to the property by virtue of the tower. Whittier Trust sought a tax abatement from the town for the assessment on the tower, which was denied. Whittier Trust then filed an appeal with the board of tax and land appeals. The town filed a motion in superior court to challenge the validity of the sub-lease and license between the State and Whittier Communications, arguing that the agreements were invalid because they did not include language mandated by RSA 72:23 regarding the payment of taxes.

Following a hearing, the court ruled that the language required by RSA 72:23 was required to be inserted in the license, but was not required in the sub-lease. The court ordered the parties to amend the license to include the necessary language. This order was not appealed. By agreement of the parties, the abatement proceeding pending before the board of tax and land appeals was transferred to the superior court and incorporated into that case.

Subsequently, the superior court issued an order finding that Whittier Communications possessed a taxable interest in the tower through its licenses to third party providers and that the State, pursuant to the sub-lease, must reimburse Whittier Communications for any taxes levied against it. Finally, in a third order, the superior court ruled that Whittier Trust does not have a taxable interest in the tower. This appeal followed.

I. State's Appeal

The State argues on appeal that the trial court erred by ruling that: 1) Whittier Communications has a taxable interest in the tower; and 2) the State has a contractual obligation to reimburse Whittier Communications for any taxes arising out of its use of the tower. We first examine whether Whittier Communications has a taxable interest in the tower.

The assessment and collection of taxes must be based upon legislative authority. N.E. Tel. & Tel. Co. v. City of Rochester, 144 N.H. 118, 120, 740 A.2d 135 (1999).

This court, of course, is the final arbiter of the legislature's intent as expressed in the words of the statute considered as a whole.

We interpret legislative intent from the statute as written, and therefore, we will not consider what the legislature might have said or add words that the legislature did not include. Furthermore, we interpret statutes in the context of the overall statutory scheme and not in isolation.

Appeal of Brady, 145 N.H. 308, 310, 761 A.2d 1072 (2000) (quotations and brackets omitted). We do not look to the legislative history of a tax exemption statute unless its language is ambiguous or more than one reasonable interpretation exists. Pennelli v. Town of Pelham, 148 N.H. 365, 368, 807 A.2d 1256 (2002).

RSA 72:6 (1991) provides that "[a]ll real estate, whether improved or unimproved, shall be taxed except as otherwise provided." "Real and personal property shall be taxed to the person claiming the same, or to the person who is in the possession and actual occupancy thereof, if such person will consent to be taxed." RSA 73:10 (1991). While characterized as personal property at the time of the sub-lease, telecommunications towers are now taxed as real estate in the town in which the property is situated. RSA 72:8–a (Supp.2002). RSA 72:23, Real Estate and Personal Property Tax Exemption, in pertinent part, provides as follows:

The following real estate and personal property shall, unless otherwise provided by statute, be exempt from taxation:

I. (a) Lands and the buildings and structures thereon and therein and the personal property owned by the state, ... unless said real or personal property is used or occupied by other than the state ... under a lease or other agreement the terms of which provide for the payment of properly assessed real and personal property taxes by the party using or occupying said property....

(b) All leases and other agreements, the terms of which provide for the use or occupation by others of real or personal property owned by the state ..., entered into after July 1, 1979, shall provide for the payment of properly assessed real and personal property taxes by the party using or occupying said property no later than the due date.... All such leases and agreements shall include a provision that ‘failure of the lessee to pay the duly assessed personal and real estate taxes when due shall be cause to terminate said lease or agreement by the lessor.’ All such leases and agreements entered into on or after January 1, 1994, shall clearly state the lessee's obligations regarding the payment of both current and potential real and personal property taxes, and shall also state whether the lessee has an obligation to pay real and personal property taxes on structures or improvements added by the lessee.

The superior court found that the license was the controlling agreement for purposes of RSA 72:23, I, and that Whittier Communications' act of renting space on the tower through sub-license agreements with third parties constitutes "use or occupation" of the tower for purposes of RSA 72:23. On appeal, the State asserts that Whittier Communications is not taxable because it must actually use or occupy property in order to have a taxable interest in the tower under RSA 72:23, I, and because it is not subject to an agreement within the meaning of the statute. It argues that Whittier Communications cannot be taxed for its use of the tower under RSA 72:23 because: 1) it does not actually use or occupy the tower; and 2) the trial court ruled that the sub-lease was not an agreement covered by the statute.

We note at the outset that it is arguable whether the tower is a tax exempt structure under RSA 72:23. The statute provides that exempt property includes "[l]ands and the buildings and structures thereon and therein and the personal property owned by the state." RSA 72:23, I(a) (emphasis added). Because the State does not own the land upon which the tower rests, it is arguable that the tower is not tax exempt. The town, however, does not develop this argument in its brief, but rather states in a footnote that the exemption status of the tower "may be subject to challenge." In addition, the town relied upon RSA 72:23 in support of its oral argument. Thus, we will treat the tower as tax exempt under RSA 72:23.

In both its brief and at oral argument, the State cites Town of Franconia v. Granite State Concessions, 122 N.H. 684, 449 A.2d 1202 (1982), in support of its position that actual use or occupation is necessary for tax purposes. Contrary to the State's argument, however, we did not address the meaning of use or occupation in that case, but rather whether the agreement between the parties was an agreement contemplated by RSA 72:23. Id. at 686, 449 A.2d 1202. While we have not addressed what constitutes use or occupation for purposes of RSA 72:23, I, we have addressed the issue in the context of charitable exemption cases under RSA 72:23, V. In such cases, we have held that the leasing of property to another individual or entity for charitable purposes constitutes a use of property on behalf of the lessor for purposes of RSA 72:23, V. See, e.g. , Appeal of Kiwanis Club of Hudson, 140 N.H. 92, 95, 663 A.2d 90 (1995) ; Senior Citizens Housing Dev. Corp. v. City of Claremont,

122 N.H. 1104, 1107–08, 453 A.2d 1307 (1982).

For example, in Appeal of Kiwanis Club of Hudson , the taxpayer, Kiwanis Club, sought a full charitable tax exemption under RSA 72:23, V for its use of a function hall. Appeal of Kiwanis Club of Hudson, 140 N.H. at 93, 663 A.2d 90. Specifically, the club used the function hall one night a week for its own fundraising activities...