Town of Peterborough v. MacDowell Colony, Inc.

• Decision Date: 14 March 2008
• Docket Number: No. 2007–230.,2007–230.
• Citation: 157 N.H. 1,943 A.2d 768
• Court: New Hampshire Supreme Court
• Parties: TOWN OF PETERBOROUGH v. The MACDOWELL COLONY, INC.

157 N.H. 1

943 A.2d 768

TOWN OF PETERBOROUGH

v.The MACDOWELL COLONY, INC.

No. 2007–230.

Supreme Court of New Hampshire.

Argued: Jan. 16, 2008.

Opinion Issued: March 14, 2008.

Donahue, Tucker & Ciandella, P.L.L.C., of Exeter (Robert M. Derosier, on the brief and orally), for the petitioner.

Orr & Reno, P.A., of Concord (William L. Chapman, on the brief and orally), for the respondent.

HICKS, J.

The petitioner, Town of Peterborough (town), appeals an order of the Superior Court (Abramson, J.) ruling that the respondent, The MacDowell Colony, Inc. (MacDowell), is entitled to a tax exemption under RSA 72:23, V (2003) for the 2005 tax year. We affirm.

The following facts were either recited in the trial court's order or appear in the record. MacDowell is a nonprofit corporation founded in 1907 by Edward and Marian MacDowell. Edward was an internationally-recognized composer, photographer, poet and journeyman architect. MacDowell's 1986 Restated Certificate of Incorporation states its purpose, in language unchanged from the original 1907 Certificate of Incorporation, as follows:

To promote the arts of music, literature and the drama, architecture, painting and sculpture, and the other fine arts; to encourage study, research and production of all branches of art; to develop a sympathetic understanding of their correlation and appreciation of their value; and to broaden their influence; and thus carry forward the life purpose of Edward MacDowell;

To acquire by gift and to develop, in furtherance of such purpose, the home of Edward MacDowell and his wife in Peterborough, in the State of New Hampshire, proposed by them to be made a place for work and companionship of students in all the arts, and to maintain the same as their home meanwhile, and to apply any funds of the corporation for their benefit during their respective lives, as well as for the other objects of the corporation, and to acquire by gift or purchase such other property in that State and elsewhere as shall be deemed desirable in accomplishing the objects of the corporation.

MacDowell owns approximately 450 acres of land in Peterborough on which are located thirty-two art studios and various common buildings (collectively, the Colony). MacDowell operates an artist-in-residence program on the property. Each artist admitted to the program (a "Colony Fellow") may spend up to eight weeks at the Colony, where he or she is provided a studio in which to create art. The studios are isolated from one another and from the common buildings and provide, in the trial court's words, "a secluded, natural environment in which to work."

Eight studios are equipped with beds and full bathrooms, enabling the artists assigned to those studios to reside in them during their stay. The artists assigned to the remaining studios are housed in three on-site dormitory buildings. Other common buildings include Colony Hall, which contains dining, laundry and communication facilities as well as a hall in which artists may socialize and informally present their work; Savidge Library, which provides twenty-four-hour research facilities and an additional venue for the artists to present their work; and Hillcrest, which is Edward and Marian MacDowell's former home and is now used for visitors, guests, meetings and special events.

MacDowell's artist-in-residence program operates throughout the year, in three separate four-month-long sessions. The program is open to both professional and emerging artists. Selection for admission is based primarily upon talent. Applicants must submit a two-page application form, a project description, two references and a $20.00 application fee, which may be waived. Applications are reviewed by separate admission panels for each of the artistic disciplines involved. The trial court noted that the admission panels "are comprised of a revolving group of distinguished professionals in each artistic discipline." (Quotation omitted.) In 2005, the panels represented the following disciplines: "literature (poets, playwrights, fiction and non-fiction writers, and translators); music composition; visual arts; film/video; interdisciplinary arts; and architecture."

The admission panels rank applications by degree of talent or excellence, using a shared rating scale. No consideration is given to the applicants' financial status, although travel grants are available for artists in financial need. Between two applicants of equal rank and with similar space requirements, preference is given to an applicant who has not previously been a Colony Fellow. In 2005, 246 artists, including one New Hampshire resident, were selected from 1765 applicants to receive fellowships.

MacDowell sought a charitable tax exemption in 2005 for 420 acres of its land and forty of its buildings (the remaining thirty acres and one building were apparently not used directly for MacDowell's charitable mission). See RSA 72:23, V. Although the town previously had treated MacDowell's property as tax exempt, it denied the application, concluding, as averred by a town selectman, that MacDowell was not a public charity meeting the requirements of RSA 72:23, V and RSA 72:23–l (2003). The parties agreed to resolve their dispute through a declaratory judgment action, and, in summary judgment rulings, the trial court determined that MacDowell was entitled to the tax exemption.

On appeal, the town argues that MacDowell is not a public charity entitled to a tax exemption under RSA 72:23, V because: (1) it provides benefits only to "a very limited and insubstantial group"; (2) "it has complete discretion over who will receive its benefits"; and (3) it has "failed to meet the statutory requirement that residents of New Hampshire [be] admitted to a charity's benefits."

In an appeal from an order on motions for summary judgment, we apply the following standard of review:

When reviewing a trial court's grant of summary judgment, we consider the affidavits and other evidence, and all inferences properly drawn from them, in the light most favorable to the nonmoving party. If our review of the evidence does not reveal a genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, we will affirm the trial court's decision. We review the trial court's application of the law to the facts de novo.

Lacasse v. Spaulding Youth Ctr., 154 N.H. 246, 248, 910 A.2d 1262 (2006) (quotation omitted).

"It is elemental that determination of the rights of [MacDowell] to an exemption from taxation is statutory. The existence and extent of exemptions depends on legislative edict." E. Coast Conf. of the Evangelical Covenant Church of America v. Town of Swanzey, 146 N.H. 658, 661, 786 A.2d 88 (2001) (quotation omitted). "In matters of statutory interpretation, we are the final arbiter of legislative intent as expressed in the words of the statute considered as a whole." Lacasse, 154 N.H. at 250, 910 A.2d 1262 (quotation omitted). Accordingly, we will overturn the trial court's decision "if we find that the [court] misapprehended or misapplied the law." E. Coast Conf., 146 N.H. at 661, 786 A.2d 88 (quotation omitted). We note that "[t]he legislative purpose to encourage charitable institutions is not to be thwarted by a strained, over-technical and unnecessary construction." Young Women's Christian Ass'n v. Portsmouth, 89 N.H. 40, 42, 192 A. 617 (1937) (quotation omitted).

We begin by examining the language of the relevant statutes. See Lacasse, 154 N.H. at 250, 910 A.2d 1262. RSA 72:23, V provides an exemption from taxation for:

The buildings, lands and personal property of charitable organizations and societies organized, incorporated, or legally doing business in this state, owned, used and occupied by them directly for the purposes for which they are established, provided that none of the income or profits thereof is used for any other purpose than the purpose for which they are established.

In turn, RSA 72:23–l defines charitable as follows:

The term "charitable" as used to describe a corporation, society or other organization within the scope of this chapter, including RSA 72:23 ..., shall mean a corporation, society or organization established and administered for the purpose of performing, and obligated, by its charter or otherwise, to perform some service of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public that includes residents of the state of New Hampshire, with no pecuniary profit or benefit to its officers or members, or any restrictions which confine its benefits or services to such officers or members, or those of any related organization. The fact that an organization's activities are not conducted for profit shall not in itself be sufficient to render the organization " charitable" for purposes of this chapter....

In ElderTrust of Florida, Inc. v. Town of Epsom, 154 N.H. 693, 919 A.2d 776 (2007), we set forth four factors for determining whether an organization qualifies for a charitable tax exemption under RSA 72:23, V and RSA 72:23–l ; namely, whether:

(1) the institution or organization was established and is administered for a charitable purpose; (2) an obligation exists to perform the organization's stated purpose to the public rather than simply to members of the organization; (3) the land, in addition to being owned by the organization, is occupied by it and used directly for the stated charitable purposes; and (4) any of the organization's income or profits are used for any purpose other than the purpose for which the organization was established. Under the fourth factor, the organization's officers or members may not derive any pecuniary profit or benefit.

ElderTrust, 154 N.H. at 697–98, 919 A.2d 776.

The town first contends that "MacDowell is not a public charity because the creative artists who gained access to the Peterborough property in 2005 were...