Case Title: Mountain View Community School, Inc. v. City of Rutland

Citation: 

Docket Number: 2010-086

State: vermont

Court: Vermont Supreme Court

Date: 2011-06-23T00:00:00Z

Document:
2011 VT 65













Mountain View Community School,
Inc. v. City of Rutland (2010-086)
 
2011 VT 65
 
[Filed 23-Jun-2011]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions, Vermont Supreme Court, 109
State Street, Montpelier, Vermont 05609-0801 of any errors in order that
corrections may be made before this opinion goes to press.
 
 
2011 VT 65 
 
No. 2010-086
 
Mountain View Community School,
  Inc.
Supreme Court
 
 
 
On Appeal from
     v.
Rutland Superior Court
 
 
 
 
City of Rutland
January Term, 2011
 
 
 
 
William
  D. Cohen, J.
 
Theodore F. Robare
of Theodore F. Robare, P.C., Rutland, for
Plaintiff-Appellant.
 
Andrew Costello, Office of the City Attorney, Rutland, for
Defendant-Appellee.
 
PRESENT:  Reiber, C.J.,
Dooley, Johnson, Skoglund and Burgess, JJ.
 
 
¶ 1.            
BURGESS, J.   Mountain View Community School, Inc.
appeals from a trial  court order rejecting its request for a property tax
exemption for "lands owned or leased by colleges, academies or other public
schools" under 32 V.S.A. § 3802(4).  Mountain View contends the court
misinterpreted the law in denying the requested exemption.  We agree and
reverse.
¶ 2.            
The undisputed facts may be summarized as follows.  Mountain View
is a Vermont nonprofit corporation organized for educational purposes, as well
as a § 501(c)(3) nonprofit corporation under the
Internal Revenue Code.  It is licensed as an independent school by the
Vermont Department of Education, under 16 V.S.A. § 166, to provide elementary
education.  For a number of years, Mountain View operated a private
nonsectarian school for students from preschool through eighth grade at two
separate locations in the City of Rutland.  Mountain View's only use of
the properties was as a school.    
¶ 3.            
While maintaining that it was statutorily exempt from the payment of
property taxes, Mountain View nevertheless paid themalbeit under protestfrom
its inception in 1994 through 2007.  When the school's assessed value
increased dramatically in 2006 and 2007, however, it sought an exemption as a
"college, academy, or other public school" under 32 V.S.A. § 3802(4).[1]  The City declined to grant the
exemption, and Mountain View, in response, filed suit for declaratory relief
and an injunction to prevent a threatened tax sale.    
¶ 4.            
The motion for preliminary injunction was heard in October 2008. 
Mountain View presented the testimony of one witness, a member of the school's
board of trustees, who described the school's history, mission, and admissions
process.  She explained that the school provided individualized
instruction which "cater[ed]
to children who need a different learning environment."  While it sought
children who would be a good "fit" for the school, she denied that it would
refuse admittance to any member of the public.  She acknowledged that the
school charged tuition, but also observed that it offered scholarships to needy
students, and noted that in past years a number of towns in Rutland County had tuitioned public-school students to Mountain View. 
Following the hearing, the court issued a brief order, finding that Mountain
View had presented "a colorable case" for a  tax
exemption and would suffer irreparable harm if the tax sale went forward. 
Accordingly, the court granted the motion for preliminary injunction and stayed
the sale pending completion of the action. 
¶ 5.            
A one-day bench trial before a different judge was held in October
2009.  Mountain View presented no testimony and only limited additional
evidence, including the school's 2007-2008 "Handbook," and referred the court
to the evidence adduced at the earlier hearing in support of the motion for
preliminary injunction.  Mountain View argued that it qualified as a
"public school" under the provision in 32 V.S.A. § 3802(4) exempting "lands
owned or leased by colleges, academies and other public schools."  The
City opposed the claim, asserting that Mountain View failed to meet the test
for determining whether property is dedicated to a "public use" under the
separate provision of § 3802(4) exempting real estate "sequestered or used for
public, pious or charitable uses."  
¶ 6.            
That test, as this Court recently explained in Vermont Studio Center,
Inc. v. Town of Johnson, requires the taxpayer to show that the property is
dedicated to a public use, that it directly benefits "an indefinite class of
persons who are part of the public," and that it "confer[s] a benefit on
society as a result of the benefit conferred on the persons directly served."
2010 VT 59, ¶ 3, ___ Vt. ___, 5 A.3d 904 (quotations omitted). 
Elaborating on the "indefinite class" criterion, we have held that it is "the
character and quality of an organization's choice,' selection,' or judgment'
criteria used to determine its beneficiaries that informs the question of
whether or not the organization's use of its property benefits an indefinite
class that is part of the public, and, thus, confers a benefit on
society."  Sigler Foundation v. Town of Norwich,
174 Vt. 129, 134, 807 A.2d 442, 447 (2002).  
¶ 7.            
The trial court issued a written ruling in January 2010, denying the
exemption.   The court agreed with the City's analysis and concluded
that Mountain View had failed to show that it directly benefited "an indefinite
class of persons who are part of the public." The court found that the only
evidence Mountain View offered in this regard was the information in its
handbook concerning the school's admissions process.  The handbook
described a "mutual process" in which an applicant's parents, teachers and the
school "work together . . . to make the final decision with regard to the
acceptance of children into the program."  The court characterized the
handbook description as "vague" and noted that Mountain View had provided no
additional testimony "to clarify the process."  Nor had it presented
evidence concerning the number of students the school had accepted or rejected
over the years.  In short, the court found that Mountain View had adduced
no evidence as to "the character and quality of the choice,' selection,' or
judgment' criteria'" used to determine its "beneficiaries," i.e., students,
and thus concluded that it had failed to carry its burden of demonstrating that
it was entitled to the claimed exemption.  This appeal followed.
¶ 8.            
The meaning and scope of the tax exemptions set forth in 32 V.S.A. §
3802(4) plainly control the disposition of this appeal, and as such our review
is plenary and de novo.  See Kwon v. Eaton, 2010 VT 73, ¶ 13, ___
Vt. ___, 8 A.3d 1043 (mem.)
(stating that questions involving statutory
construction involve matters of law which we review de novo).  Although
cited by neither the parties nor the trial court below, our decision in Willard
v. Pike nearly 125 years ago remains the seminal and controlling authority
governing the exemption for property "owned or leased by colleges, academies or
other public schools."  59 Vt. 202, 9 A. 907 (1887). 
The question in Willard was whether several buildings owned by the St.
Johnsbury Academy and used by students and faculty for lodging and dining
purposes were exempt from taxation. The Academy, then as now a private
corporation organized and operated for educational purposes with private
tuition-paying students, relied on the identical exemption at issue here for
"lands owned or leased by colleges, academies, or other public
schools."    
¶ 9.            
In opposing the claimed exemption, the Town of St. Johnsbury asserted
that the phrase "or other public schools" was designed to modify
the preceding "academies" and "colleges" so as to restrict the exemption to
those academies and colleges that were "public" in the sense of being open to
all students at public expense.  Because the Academy was "purely a private
one" that could accept or reject any pupil and where "the scholars pay tuition"
the Town maintained that it failed to qualify as a "public school" under the
statute.   Id. at 204, 9 A.  at 908.[2]  The Court flatly rejected
this interpretation of the statute.  As it explained: 
Colleges
and academies are, in popular understanding, public institutions, although not
public in the sense as applied in our common schools, which are supported by
public taxation and are free to the public without charge to the pupils. 
 
  The
word "public" in this statute, we hold, is not to be construed in the latter
sense, but in the sense in which academies are regarded as public institutions.
 
Id. at 216,
9 A.  at 915.  In other words, the Court continued, the word "public" in
the phrase "public schools" is "not restrictive of what precedes,
but is explained thereby; that is, public in the sense in which colleges
and academies are public."  Id. (emphasis added).  
"Public" in this sense, the Court observed, meant an institution "incorporated
wholly for the purposes of general education" and operated "without any purpose
of profit" where "tuition is charged only for its maintenance."  Id. 
Again it meant, in the Court's view, an institution operated "without personal
advantage or profit to the incorporators, except as they share with the whole
public in the general advantage by promotion of education and good
morals."  Id. at 217, 9 A.  at 915.  The Court thus concluded
that the Academy qualified as a public school within the meaning of the
statutory exemption.    
¶ 10.        
In an equally important addendum, the Willard Court went on to
hold that, although the statute speaks in terms of lands "owned" by a college,
academy or other public school, the Legislature did not intend to exempt
property "simply because owned" by such an institution.  Id. at
218, 9 A.  at 916.  Rather, the exemption extended only to property owned
by the school and dedicated to the "use and benefit of the institution as an
academy or college in carrying out the purposes of its incorporation."  Id. 
Applying this construction, the Court had little difficulty holding that the
buildings in question were employed "for actual use and convenience of the
academy in carrying on" the educational functions of the school and were
therefore entitled to a tax exemption.  Id. at 219, 9 A.  at 916.
¶ 11.        
We have consistently reaffirmed and applied Willard over the
decades.  Scott v. St. Johnsbury Academy, for example, involved
several additional buildings on the campus of the same Academy which, once
again, were held to be exempt from taxation by virtue of being owned by a
public school and used for the "benefit of the institution as an academy."
 86 Vt. 172, 174, 84 A. 567, 567  (1912). 
Troy Conference Academy & Green Mountain Junior College v. Town of
Poultney, concerned a private non-profit junior college seeking an
exemption for faculty housing under the same statutory provision, but with an
additional wrinkle arising from a 1941 amendment providing that real property
thereafter acquired by "any college, university or fraternity" otherwise exempt
from taxation would nevertheless be set in the grand list unless specifically
exempted by a town vote.  115 Vt. 480, 484, 66 A.2d 2, 5
(1949) (quotation omitted).  The Court held that although the
building in question was otherwise exempt as a public school under Willard,
it was nevertheless a "college" subject to taxation under the 1941
amendment.  Id. at 485-86, 66 A.2d  at 10.
   
¶ 12.        
Stowe Preparatory Sch., Inc. v. Town of Stowe reached the
opposite result on the effect of the amendment, but the same conclusion on the
applicability of the "public school" exception.  124 Vt.
392, 205 A.2d 544 (1964).  In Stowe Preparatory, the
private, nonprofit college preparatory school was determined not to be a
"college" subject to taxation within the meaning of the 1941 amendment. 
"[O]n the contrary," the private preparatory school was held to be a public
school and "exempt from taxation by virtue of 32 V.S.A. § 3802(4)."  Id.
at 396, 205 A.2d  at 546-47. 
    
¶ 13.        
Several more recent decisions are noteworthy not only for reaffirming
the meaning of "public school" as announced in Willard but also for
making it plain that this exemption is separate and independent from the
exemption in the same statute for "public, pious or charitable" uses.  In The
Experiment in Int'l Living, Inc. v. Town of Brattleboro, the plaintiff, a
nonprofit organization dedicated to promoting international understanding,
claimed an exemption for its School for International Training located in the
Town of Brattleboro.  127 Vt. 41, 238 A.2d 782 (1968), overruled on
other grounds by Am. Museum of Fly Fishing v. Town of Manchester,
151 Vt. 103, 557 A.2d 900 (1989).  The Court held, under a test later
modified in Sigler, that use of the property
principally by Peace Corps volunteers was "not for the benefit of an indefinite
part of the public" and thus did not satisfy the exemption for "public, pious
or charitable" uses.  Id. at 48, 238 A.2d  at 787. 
Turning, however, to the school's corollary claim that it was entitled to the
exemption for "lands owned or leased by colleges, academies or other public
schools," the Court observed that the only salient issue in this regard was
"whether the use of Experiment's real estate in Brattleboro is that of a
college" requiring a vote of the electorate to qualify for the exemption under
the earlier-mentioned 1941 amendment, "or if such use is for a public school
and therefore exempt from taxation."  Id. at 51, 238 A.2d  at 788.  Based on "the ages of the participants" and the
educational programs offered by the school, the Experiment was determined to be
the equivalent of a college and therefore not exempt.  Id.
¶ 14.        
Conversely, in New York Institute for the Education of the Blind v.
Town of Wolcott, plaintiff's camp school was deemed to serve an indefinite
class of persons, albeit comprised of the involuntarily impaired, and therefore
qualified as a "public use" under the exemption for "public, pious or
charitable uses."  128 Vt. 280, 287, 262 A.2d 451, 455
(1970).  The "public school" exception was raised but not
addressed, the Court observing that once "public use" was settled it was "unnecessary
to consider the question raised by the plaintiff of whether the Institute is a
public school within the meaning of 32 V.S.A. § 3802(4) and, therefore, exempt
for this additional reason."  Id. at 288, 262 A.2d  at 456.  
¶ 15.        
Any doubt as to the independent basis of the exemption for property
owned by "colleges, academies or other public schools" was put to rest in Town
of Williston v. Pine Ridge School, which held that the defendant, a
private, tuition-paying school catering to students with learning disabilities,
was a "public school" as defined in Willard and its progeny and
therefore tax exempt.  132 Vt. 439, 443, 321 A.2d 24, 27
(1974).  Although the school also claimed to be exempt as a
"public, pious or charitable" use, we found the argument to be superfluous in
light of our holding that it qualified as a public school, explaining: "As we
hold that the property involved is exempt because owned by a public school for
educational purposes under § 3802(4), we need not discuss the public use'
issue.  The various clauses of § 3802(4) are disjunctive, not
conjunctive."  Id. at 444, 321 A.2d  at 28 (emphasis added). 
¶ 16.        
Although the foregoing authorities confirm the independent nature and
scope of the "public school" exemption of § 3802(4), two more recent decisions
are also worth noting.  In Berkshire Sch. v. Town of Reading, the
question was whether land owned in Vermont by the plaintiff, a private high
school located in Massachusetts, was entitled to the exemption for "lands owned
or leased by colleges, academies or other public schools" under 32 V.S.A. §
3802(4).  172 Vt. 440, 781 A.2d 282 (2001).
 Assuming that it otherwise qualified as a "public school," the only
question was whether the plaintiff employed the precise land at issue for
educational purposes.  Observing that the property in question was "simply
a plot of land that is not being used at all, let alone for any educational
purposes," it was held not exempt.  Id. at 442-43, 781 A.2d  at 284. 
                                     
¶ 17.        
Berkshire referenced Burr & Burton Seminary v. Town of
Manchester, 172 Vt. 433, 782 A.2d 1149 (2001), a companion case issued on
the same date and dealing with the same issue.  The question there was
whether two properties owned by the plaintiff, "a private high school in
Manchester," qualified under the exemption for "colleges, academies and other
public schools" and more specifically whether the school was required to
demonstrate that they were used for educational purposes.  Id. at
434-35, 782 A.2d  at 1151.  Reviewing the history
of the exemption since Willard, we reaffirmed our holding there that
"the school must use its property for an educational purpose, in
addition to own it, in order to claim the exemption."  Id. at 439, 782 A.2d  at 1154.  Under this test, the headmaster's
house qualified for the exemption, but a converted dormitory used for
commercial rental purposes did not.  Id.  Although the school
also claimed that the former dormitory was exempt under the provision for "public,
pious or charitable" uses, we declined to address the issue because it had not
been raised below and preserved for review on appeal.  Id. at 440, 782 A.2d  at 1155.  
¶ 18.        
In light of the foregoing authorities, the trial court's error here is
readily apparent; the court mistakenly conflated the "public use" and "public
school" exemptions, seeking to determine whether the school served "an
indefinite class" under the former when, in fact, Mountain View was relying on
the latter.  As we observed in Pine Ridge, the "various clauses of
§ 3802(4) are disjunctive, not conjunctive," 132 Vt. at 444, 321 A.2d  at 28,
and Mountain View was not required to satisfy the criteria for the
"public, pious or charitable" use exemption in seeking an exemption for land
owned by a "college, academy or other public school." 
  Alternatively, however, Mountain View was required to show
that it meets the broad definition of a public school articulated in Willard
and applied by this Court to a variety of selective, nonprofit private schools,
and that the specific property in question was actually used for educational
purposes.  Burr & Burton, 172 Vt. at 439, 782 A.2d  at 1154.  
¶ 19.        
The record reveals no basis of dispute on these points.  The Town
here conceded that Mountain View owned the properties in question, that it was
a nonprofit corporation organized and operated solely for educational purposes,
that it was licensed by the State as an independent elementary school, and that
the properties in question were at all relevant times employed for "the
appropriate use and benefit of the school."  Thus, there is no doubt that
Mountain View qualified for the exemption for lands "owned by colleges,
academies or other public schools" under 32 V.S.A. § 3802(4), and that the
trial court erred in concluding otherwise.  Our conclusion renders it
unnecessary to reach Mountain View's additional claims. 
Reversed.   
    
    
 
 
 
FOR THE COURT:
 
 
 
 
 
 
 
 
 
 
 
Associate
  Justice
 

[1] 
This section, in pertinent part, provides: 
 
 
"The following property shall be exempt from taxation:
 
. . . .
 
  (4) Real
and personal estate granted, sequestered or used for public, pious or
charitable uses; . . . and lands owned
or leased by colleges, academies or other public
schools . . . ."
 
32 V.S.A §
3802(4).   
 
[2]
 Although then, as now, towns were authorized to tuition students to local
private academies, it is unclear whether or to what extent this was actually
occurring at the time of the decision in Willard.  See Laws of
Vermont, 1869, No. 9 § 1 (providing that "any school district in this State, in
which any academy is located . . . is hereby authorized . . . to make any
arrangement or agreement with officers of said academy, to instruct in said
academy all or part of the scholars belonging to such district").  The Willard
decision does not mention or rely on the statute or the possible presence of
such students at the school, but rather assumes that, as the Town asserted, it
was private in nature.  See Willard, 59 Vt. at 216, 9 A.  at 915 (noting that "[n]o colleges or academies in this state
are yet free to the public like our public schools").