Case Title: Davis v. Property Valuation and Review Division

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1991-06-01T00:00:00Z

Document:
Davis v. Property Valuation and Review Division  (91-052)

                                ENTRY ORDER

                      SUPREME COURT DOCKET NO. 91-052

                              JUNE TERM, 1991


Norton and Maxine Davis           }          APPEALED FROM:
                                  }
                                  }
     v.                           }          Property Valuation
                                  }            and Review Division
                                  }
Property Valuation                }
and Review Division               }          DOCKET NO. Addison 1990-5


             In the above entitled cause the Clerk will enter:

     Taxpayers enrolled 195 acres of their property in the farmland use-
value program, 32 V.S.A. { 3762, in 1987 and appeal from a decision of the
State Board of Appraisers affirming their liability of $3323.46, incurred
under 32 V.S.A. { 3762(e) when the property was transferred to a foreclosing
bank and consequently withdrawn from the program.  We reverse and remand.

     Under the farmland program, a person who earns at least one-half of his
income from the business of farming may enroll his actively-used agricul-
tural land in the program for a minimum of three years.  32 V.S.A. {{
3762(b)(1), (e).  The State pays local property taxes on assessed value in
excess of use value.  If the owner does not keep the land in the program for
at least three years, he becomes liable to pay a tax of three times the
benefits received for the preceding year on the affected portion of the
land.  { 3762(e).  Only actively used agricultural lands owned by a farmer
may be enrolled in the farmland program.  32 V.S.A. {{ 3762(a), (b)(2), (d).

     Taxpayers put 195 acres of their property into the program on April 1,
1987, and in August 1989 the Vermont Federal Bank foreclosed on the
property.  Because of the resultant conveyance to the bank, taxpayers
necessarily failed to keep the property in the program for three years.
Following foreclosure the director of property valuation and review removed
the parcel from the program and notified taxpayers of their liability to pay
the amount triggered by withdrawal.  Taxpayers appealed to the State Board
of Appraisers, which affirmed the director's action.  The present appeal
followed.

     Taxpayers argue that they should be relieved of liability because they
transferred the land as a result of a foreclosure, and did not voluntarily
withdraw from the program.  In opposition, the State relies on the plain
meaning of { 3762(e), which states in relevant part:

            Farmland enrolled under this section shall be enrolled
          for a minimum of three years and shall remain enrolled
          thereafter until withdrawn or converted. . . .  If
          farmland enrolled under this section is converted or
          withdrawn within the initial three-year enrollment
          period, the landowner shall be liable to pay to the
          commissioner . . . an amount equal to three times the
          property tax benefits received by the owner for the
          preceding year . . . .

After foreclosure, the land remained in agriculture but was owned by the
foreclosing bank, which did not qualify as a farmer.

     Taxpayers argue that their transfer to the bank was involuntary and
should not have triggered the recapture provision.  The State argues that
the literal application of the statute, which speaks of property
"withdrawn," mandates the imposition of treble damages.

     The State's position is that, under the "plain meaning" of the statute,
treble-damage recapture is triggered by withdrawal in fact of land in the
program, regardless of the reason for the withdrawal.  We strongly favor
the "plain meaning" doctrine as one that generally supports the intention of
the Legislature.  In Dykstra v. Property Valuation and Review Division, 2
Vt. L.W. 97, 97-98 (March 22, 1991), we held that conveyance to nonfarmers
by farmers who had enrolled property in the Working Farm Tax Abatement
Program (32 V.S.A. {{ 3764-3775) automatically converted the property to
nonfarm use under a literal reading of { 3764(2)(B), and that this "plain
meaning" result was not constitutionally irrational.

     But the "plain meaning" rule does not resolve the present issue so
easily.  The State contends that the word "withdrawn" in { 3762(e) includes
involuntary withdrawals, including foreclosures that could not be avoided
by farmer-enrollees.  But in the context of a treble-damage provision, (FN1)
taxpayers' argument that "withdrawn" implies some volitional action by the
enrollees makes sense.  Treble damage provisions, whether or not considered
penalties,(FN2) are intended to discourage violation of statutory or contractual
obligations.  See United States v. Redovan,