Sigler Foundation v. Town of Norwich

Sigler Foundation v. Town of Norwich (2001-433); 174 Vt. 129; 807 A.2d 442

[Filed 26-Jul-2002]


       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. 2001-433


  Andrew C. and Margaret R. Sigler               Supreme Court
  Foundation	
                                                 On Appeal from
       v.	                                 Windsor Superior Court


  Town of Norwich and 	                         June Term, 2002
  Town of Norwich, Board of Listers


  Alan W. Cheever, J.
      
  Geoffrey J. Vitt and Eric D. Jones of Vitt & Jones, PLC, Norwich, and
    Robert B. Hemley and Johan W.E. Maitland of Gravel & Shea, Burlington, 
    for Plaintiff-Appellant.

  Glenn C. Howland of McKee, Giuliani & Cleveland, P.C., Montpelier, for
    Defendant-Appellee.


  PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
       
        
       SKOGLUND, J.   The Andrew C. and Margaret R. Sigler Foundation, Inc.
  (the "Foundation") is a § 501(c)(3) charitable foundation that operates the
  Dream & Do Farm (the "Farm"), a state-of-the-art dairy farm on 5.26 acres
  in Norwich, Vermont.  It appeals from a superior court order denying its
  request for a property tax exemption pursuant to 32 V.S.A. § 3802(4).  The
  trial court concluded that the Farm provided direct benefits to a
  "definite," rather than "indefinite" class of persons, and therefore,
  failed to meet the second prong of the three-part test in American Museum
  of Fly Fishing, Inc. v. Town of Manchester, 151 Vt. 103, 110, 557 A.2d 900,
  904 (1989).  Because we find that the Farm directly benefits an indefinite
  class of persons who are part of the 

 

  public, we reverse the trial court's order denying the Foundation tax
  exempt status.  In so doing we also clarify proper application of this
  Court's prior precedent handed down in New York Institute for Education of
  the Blind v. Town of Wolcott, 128 Vt. 280, 286, 262 A.2d 451, 455 (1970), 
  regarding a "definite" class of persons.

       We exercise plenary review in determining whether the trial court's
  conclusions of law are consistent with applicable law.  Barrett/Canfield,
  LLC. v. City of Rutland, 171 Vt. 196, 198, 762 A.2d 823, 824 (2000).  If
  consistent with applicable law, and if supported by findings of fact, we
  will uphold the court's conclusions.  Carpenter v. Central Vermont Med.
  Ctr., 170 Vt. 565, 566, 743 A.2d 592, 594 (1999) (mem.).  In this case, the
  trial court's conclusions of law are not consistent with its findings of
  fact nor with applicable law.
   
       The following trial court findings of fact are undisputed and will not
  be disturbed unless clearly erroneous.  In re M.B., 162 Vt. 229, 237-38,
  647 A.2d 1001, 1006 (1994).  The Foundation's mission is to encourage the
  preservation, survival and advancement of dairy farms in New England.  As
  stated in its Articles of Association and By-Laws, the Foundation's
  specific goals are: to develop advanced farming techniques and improved
  dairy animals, to make available the benefits of advanced farming
  techniques to commercial dairy farmers and consumers, and to improve the
  economic performance of family run dairy farms and small producers.  An
  additional goal of the Foundation is education, and to further that end the
  trial court found that the Foundation devotes "considerable time and
  resources to educate students at all levels."  The following groups and
  individuals have received support and benefits from the Foundation: (1)
  local 4-H organizations and local schools; (2) agriculture students from
  regional universities and colleges who regularly visit and take courses at
  the Farm, and whose schools receive financial support from the Foundation;
  (3) dairy 

 

  farmers who regularly visit the Farm and receive information about a wide
  variety of sound dairy farming practices; (4) scientists and researchers of
  agriculture technology who are provided access to the Farm and its
  resources to develop new technologies and procedures to assist small family
  farms; (5) students from nursery, elementary, and high schools who visit
  the Farm with their teachers to learn about dairy farming; (6) foreign
  exchange students who live and work at the Farm to learn about dairy
  farming and herd management so that they can return to their home countries
  with useful knowledge of modern farming techniques; (7) citizens of Norwich
  who benefit from having an operating dairy farm in town and who benefit
  from the preservation of open and rural space, consistent with the Town's
  long-term planning mission; and (8) members of the general public who want
  to learn about dairy farming and those who benefit from the Foundation's
  commitment to preserving and assisting small dairy farms.  The Farm has
  also given grants to one individual, colleges, universities and 4-H
  foundations, and has sponsored research on the sexing of embryos at the
  Farm.  The Farm is open to the public and "[n]o one is required to complete
  an application, attend an interview, or be subject to any selection
  criteria or prerequisites" in order to visit the facilities.  Additionally,
  the trial court found: "Aside from identifying broad categories of
  beneficiaries, the specific persons who receive benefits and support from
  the Foundation cannot be identified, determined, or defined." 

       The trial court further found that "[a] public policy of the State of
  Vermont is the preservation and survival of small dairy farms," and that
  the "Foundation's mission and work serves this public interest." 
  Additionally, the court found that the State has a public interest in the
  education of Vermont farmers: 

 
   
    The State has an interest in having local educational programs
    that permit agriculture students to receive quality education in
    Vermont.  The Foundation's work in education serves these public
    interests . . . . [and the State's additional interest] is to
    educate persons without agriculture backgrounds about agriculture
    issues.  Since agriculture generally, and dairy farming
    specifically, is important to Vermont, the State's interests are
    served by enhancing public awareness of agricultural matters.  The
    Foundation's work with school children, pre-school children, and
    general members of the public serves this public interest.  	

       The Foundation sought a declaration in the court below that the Dream
  & Do Farm was exempt from taxation under 32 V.S.A. § 3802(4) as real
  property "used for public, pious or charitable uses."   We have previously
  outlined the controlling three-part test to determine when property is
  entitled to tax-exempt status as a "public use" under this statute: 

    (1) the property must be dedicated unconditionally to public use;
    (2) the primary use must directly benefit an indefinite class of
    persons who are part of the public, and must also confer a benefit
    on society as a result of the benefit conferred on the persons
    directly served; and (3) the property must be owned and operated
    on a not-for-profit basis. 
   
  American Museum of Fly Fishing, Inc., 151 Vt. at 110, 557 A.2d  at 954. 
  Applying this test, the trial court found that the Farm met the first and
  third prongs of the test.  The court further concluded that the property
  conferred a benefit on society, but that the Farm's primary uses of
  conducting educational classes, engaging in scientific research and dairy
  operations provided direct benefits to "definite classes of farmers,
  students, and researchers," and thus, it failed to satisfy the second prong
  of the test.   In reaching this conclusion the court applied the definition
  of definite classes of persons laid out in New York Institute, 128 Vt. at
  286, 262 A.2d  at 455, and determined that the above 

 

  beneficiaries are "definite" classes because they are groups determined by
  a process of choice or selection involving voluntary action or judgment on
  their part.  This was error. 

       In New York Institute, we held that blind children were an indefinite
  class of persons and the institute which provided them remedial education,
  having met all other prerequisites, was tax exempt under § 3802(4).  128
  Vt. at 287, 262 A.2d  at 455.  In rejecting the town's argument that blind
  children constituted a definite class of people so as to preclude a grant
  of tax exemption to the school, we observed that "class" is "a group
  determined by choice or selection and implies some kind of voluntary action
  or judgment," and rejected as "unrealistic" the argument that being blind
  places a person in a distinctive category or class of people under the law.  
  Id. at 286-87, 262 A.2d  at 455.  The Court emphasized that the institute
  was a school for educating members of the public, "who because of blindness
  need specialized training."  Id. at 287, 262 A.2d  at 455.   
   
       In reaching this determination the Court distinguished the indefinite
  class of blind children from the definite class of Boy Scouts in Fort
  Orange Council, Inc. v. French, 119 Vt. 378, 125 A.2d 835 (1956) and the
  definite class of Peace Corps volunteers in Experiment in International
  Living, Inc. v. Town of Brattleboro, 127 Vt. 41, 238 A.2d 782 (1968) by
  pointing out that in those cases "the matter of membership in a particular
  group as a prerequisite to receiving the benefits of the property was an
  important, if not a deciding, factor in the decision of the court."  New
  York Inst., 128 Vt. at 287, 262 A.2d  at 455.  Further, the Court observed
  that in Fort Orange, the use of the real estate was not extended to any
  groups other than Boy Scouts, thus resulting in "a closed circle to those
  outside the organization."  New York Inst., 128 Vt. at 286, 262 A.2d  at
  455.  While the Court did acknowledge that the Institute was open to "blind
  children without restriction as to race, creed or any other limitation
  except for capacity of its facilities," New York Inst., 126 Vt. at 286, 262 A.2d  at 

 

  455, it appears that its decision was not based on any examination of the
  organization's non-discriminatory process of selecting its beneficiaries. 
  Instead, it appears that the Court's decision was based on the fact that
  blind children have exercised no choice, nor any kind of voluntary action,
  in becoming part of the class of blind children.  This Court has since
  applied the definition of definite "class" of persons  laid out in New York
  Institute to analyze  the level of choice or selection undertaken by the
  beneficiaries themselves who take advantage of an organization's services. 

       For example, in Kingsland Bay School, Inc. v. Town of Middlebury, 153
  Vt. 201, 203-06, 569 A.2d 496, 497-99 (1989), the Court found that a
  non-profit corporation which operates a group home in Middlebury for
  teenagers experiencing social and emotional difficulties was tax exempt
  under § 3802(4).  While we observed that the home provided its services
  without "any other limitation except for the capacity of its facilities,"
  we ultimately applied the New York Institute definition of definite class
  of persons to examine the home's beneficiaries themselves and determined
  that because "troubled adolescents do not become residents of Kingsland as
  a result of any voluntary action or judgment on their part," they were an
  indefinite class of persons.  Id. at 204, 569 A.2d  at 498. 
   
       In contrast to the rationale underlying the Court's decisions above,
  we have also previously denied tax exempt status because an organization
  placed restrictions on access to the subject property which significantly
  limited any benefits derived from the use of the property by the public at
  large.  For example, in Vermont Wild Land Foundation v. Town of Pittsford,
  137 Vt. 439, 407 A.2d 175 (1979) we denied tax exempt status for a tract of
  undeveloped wilderness where the foundation in control of the land
  restricted access to a limited number of pre-approved scientific
  researchers.  Researchers and others interested in accessing the area were
  required to submit applications and 

 

  attend interviews.  Those deemed acceptable by the foundation were
  permitted to use the property.  The foundation in that case argued that
  although the public at large was not permitted to use the property, it
  nonetheless benefitted from the fruit of the research performed on the
  land, and further benefitted from preservation of an undisturbed wilderness
  area.  The issue of whether the beneficiaries constituted a definite or
  indefinite class of persons was not specifically raised, yet underlying our
  decision to deny tax exempt status was commitment to the principle that
  limited use of land by a select group constituted a private, as opposed to
  general, or indefinite benefit.  "It is not essential that every member of
  the community be actually served.  But the benefits conferred must be upon
  the public at large, or an indefinite part of such public . . . rather than
  a 'closed circle' or a group determined by choice or selection. "  Vermont
  Wild Land Found., 137 Vt. at 443, 407 A.2d  at 176-77 (internal quotation
  marks and citations omitted).  It is not surprising that the court below
  followed our confused examples and evaluated the actions of the
  beneficiaries rather than those of the entity seeking the tax exempt
  status.
   
       The legislative purpose of § 3802(4) is to "benefit the community as a
  whole by benefitting that indefinite part of the public served by public,
  pious or charitable organizations."  Lincoln Street, Inc. v. Town of
  Springfield, 159 Vt. 181, 185, 615 A.2d 1028, 1030 (1992).  "It is fair to
  conclude, therefore, that the purpose of the statute is to free from
  taxation land that is being used to serve some public purpose."  Burr &
  Burton Seminary v. Town of Manchester, __ Vt. __, 782 A.2d 1149 (2001). 
  The underlying principle behind the Court's definite/indefinite class
  distinction is the intent to distinguish uses that benefit the public from
  uses that benefit only a selected few.  Public uses are characterized as
  such, in part because of the breadth and scope of the users who need not,
  as a prequisite to availing themselves of these uses, belong to any
  exclusive group.  Private uses, on the 

 

  other hand, are characterized by the benefits bestowed on a particular, and
  most often, limited sector of the public usually distinguishable by certain
  characteristics or membership.  Beneficiaries of public uses are often
  incalculable and may be without definition or common characteristics. 
  Private users are finite and limited.  It is the inquiry into 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. 

       Proper application, therefore, of the oft-cited definition laid out in
  New York Institute, is to guide an inquiry into the character of the
  organization's decision-making criteria regarding its beneficiaries.  The
  broader the scope of an organization's beneficiaries, and less restrictive
  its criteria, the greater the likelihood it is engaged in providing uses
  for an indefinite class of persons.  Restricted and limited benefits may be
  enjoyed only by a limited number of persons.  The level of selection or
  choice or voluntary action or judgment exercised by the beneficiaries
  themselves is largely irrelevant.  To illustrate, we have previously found
  use of land for a public park tax exempt as a public use without inquiring
  into the level of choice or selection or judgment exercised by park
  visitors.  See Middlebury College v. Town of Hancock, 115 Vt. 157, 164, 55
  A.2d. 194, 198 (1947).
   
       The trial court findings in this case clearly demonstrate that the
  Dream & Do's beneficiaries are numerous and varied - ranging from school
  children on field trips to visiting scientists researching embryo sexing. 
  The trial court explicitly observed that "aside from identifying broad
  categories of beneficiaries, the specific persons who receive benefits and
  support from the Foundation cannot be identified, determined, or defined." 
  Appellee urges the Court to find persuasive the fact that the majority of
  individuals who partake of the Farm's services do so through 

 

  an exercise of individual choice, and that many of the students who come to
  the Farm do so in conjunction with a college or university program which
  has further subjected them to that program's own selection process.  To
  characterize the Farm's beneficiaries as "definite" due only to the fact
  that there is some indicia of selectivity at the front-end of the process
  which has led a person to the Farm is an absurd result.   While the bulk of
  the Farm's beneficiaries can be identified as persons interested in dairy
  farming and related practices, the Farm is open to the public at large and
  has never turned anyone away.  Proper application of our precedent requires
  a conclusion that the Foundation's use of the property benefits an
  indefinite class of persons.  The Dream & Do Farm is therefore tax exempt
  under § 3802(4).  

       Reversed and remanded for entry of judgment that plaintiff foundation
  is exempt from payment of property taxes under 32 V.S.A. § 3802(4).



                                       FOR THE COURT:



                                       _______________________________________
                                       Associate Justice