Case Title: Chamberlin v. Dept. of Taxes

Citation: 160 Vt. 578, 632 A.2d 1103

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1993-02-01T00:00:00Z

Document:
CHAMBERLIN_V_DEPT_OF_TAXES.92-360; 160 Vt. 578; 632 A.2d 1103


 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.


                                 No. 92-360


 Marvin and Marie Chamberlin                  Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 Vermont Department of Taxes                  February Term, 1993


 Alden T. Bryan, J.

 David M. Sunshine of Saxer, Anderson, Wolinsky & Sunshine, Richmond, for
 plaintiffs-appellees

 Jeffrey L. Amestoy, Attorney General, and Danforth Cardozo, III, Special
 Assistant Attorney General, Montpelier, for defendant-appellant


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.  The Vermont Department of Taxes appeals from a judgment
 that taxpayers substantially conformed to the requirements of the builder's
 exemption to the land gains tax, see 32 V.S.A. { 10002(f), by preparing a
 parcel of land for the installation of a modular home by the purchaser of
 the property.  We affirm.
      Taxpayers purchased the parcel of land at issue from a seller in a
 transaction that normally would be subject to a land gains tax of
 approximately $10,000.  Taxpayers claimed exemption from the tax, imposed by
 32 V.S.A. { 10001, under what is known as the builder's exemption.  This
 exemption is codified at 32 V.S.A { 10002(f), and provides:
           Also excluded from the definition of land is any land
         up to ten acres . . . acquired by a person who will
         
                             

         build on that land a house which, by the next succeeding
         sale, will be the principal residence of the occupant
         when he purchases from the person who built the house.
         The person acquiring such land must . . . begin building
         within one year of the date of purchase, complete the
         building within 2 years . . . and sell it within 3
         years, from the date of purchase . . . .
 There was no dwelling on the land at the time of the transfer of the land
 from taxpayers to the subsequent purchaser.  Taxpayers, however, had
 prepared the land for the installation of a modular home by grading the lot,
 pouring a cement foundation, installing a waste water disposal system,
 water supply and utility connections, and constructing a driveway.  Shortly
 after the transfer, the purchasers had a modular home placed on the
 foundation and occupied it as their primary residence.
      The evidence before the Tax Commissioner indicated that taxpayers had
 bought the parcel with the expectation they would build a house on it and
 sell it and the land to a purchaser who would use it as a primary residence.
 The prospective purchaser, however, was unable to afford an individually
 built single-family home, and the parties agreed that a prefabricated home
 would be placed on the property once the site was prepared by taxpayers.
 After investigation, it was determined that the cost of the home and the
 land would be significantly higher if taxpayers bought the modular home and
 resold it to purchasers.  As a result, the overall transaction was
 structured so that the purchasers bought the home directly and had it placed
 on the site prepared by taxpayers.
      In arguing that the builder's exemption does not apply, the department
 relies on familiar canons of statutory construction.  Primarily, it argues
 that the meaning of { 10002(f) is plain and needs no construction.
 Specifically, it emphasizes that the statutory wording requires the taxpayer
 
                              

 to "build on that land a house" and that taxpayers plainly did not do so in
 this case.  It also points out that tax exemptions must be construed
 strictly against the taxpayer.  See Kingsland Bay School, Inc. v. Town of
 Middlebury, 153 Vt. 201, 206, 569 A.2d 496, 499 (1989).
      Ordinarily, these arguments will prevail.  The principles on which the
 department relies, however, are not absolutes.  "We ordinarily rely on the
 plain meaning of the words to construe statutes because we presume that it
 shows the intent of the Legislature."  State v. Papazoni, ___ Vt. ___, ___,
 622 A.2d 501, 503 (1993).  Where such a presumption is doubtful, the "plain"
 meaning of the words will not necessarily control.  Id. at 503 n.1.
 Further, our rule that tax statutes should be strictly construed against the
 party claiming exemption must be tempered by the paramount concern that
 statutes be construed "reasonably so as not to defeat their purpose."  In re
 R.S. Audley, Inc., 151 Vt. 513, 516, 562 A.2d 1046, 1049 (1989).  "[W]e must
 presume that no unjust or unreasonable result was intended."  International
 Business Machs. Corp. v. Department of Taxes, 133 Vt. 269, 275,