USA > Vermont > The Vermont lease lands > Part 23
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116. 13 Vt. 525 (1841). The assessment was made under the provisions of an act of 1825 authorizing taxes on the betterments on lease lands. Laws of Vermont, 1822-1826, 1825, pp. 11-12.
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important in considering future possibilities relative to the lease land system. Finally, the opinion, it is believed, deserves some criticism as having been faulty in some of its reasoning.117
It will be recalled that this case was discussed during the examination of the problems of obligation of contract and the powers of the legisla- ture. There the remarks in the opinion were utilized to show how the court felt about the effect of legislative provisions in force at the time of a grant, contrasted with those which might be written after a grant was completed.118
The court opened its review of the situation with a point of great consequence and one which has had little attention in the state :
In the present case there was not, in the terms of the charter of the town of Randolph, any express exemption of this right of land from taxation. There was no act of the legislature, connected with the granting of the charter, which contained any declaration to that effect. Had this been the case, it would have been of the same effect as if that condition had been contained in the charter of the town.119
The point is so significant because this was true with respect to every one of the charters with the single exception of the charter of Wheelock.
The opinion continues :
But, in the present case, it is not claimed that any such condi- tion was, in express terms, annexed to the grant. . . . Neither was there any constitutional, or other general provision of the law, then in force, whereby all lands granted by the state, or by individuals, to pious and charitable uses, were declared perpetu- ally exempt from taxation.[120] The only statute, or law, in force
117. In the writer's opinion, the conclusions reached by the court are sound, from the viewpoint of public policy, and, in fact, might well have been extended to include the land. It is believed that if that had been accomplished, the lease lands would have constituted a far healthier public institution. The writer's quarrel with the opinion is the way in which the conclusions were supported.
118. Supra, pp. 182-183.
119. 13 Vt. 525, 530-531 (1841).
120. In Journal of the General Assembly, October 1784 and June 1785, June 17, 1785, p. 4, a bill entitled "An act prohibiting the taxing public lands," sent to the Assembly by the Council, passed the Assembly and was sent back to the Coun- cil for concurrence. Although on June 7, 1785, the Governor and Council had resolve to appoint a committee to meet with a House committee ". . . to pre- pare a Bill for the exemption of all Land's within this State sequestered to public and pious uses, as well private Donations as public Grants, from all kinds of Taxa- tion whatever .... " no evidence has been found that the committee was appointed or that the bill from the Assembly was concurred in. Records of the Governor and Council (Montpelier, 1875), III, p. 67.
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at the time this charter was granted, which is relied upon by the plaintiff, was the general listing law, which provided that min- isters of the gospel and the president of the college 'shall have all their property, lying in the same town where they dwell, ex- empt : As also shall all lands in the state sequestered to public, pious and charitable uses, be exempted.' This enactment is con- tained in a proviso to the general listing act, which was in force both at the time the charter of Randolph was granted, and when the land in question was leased by the selectmen of that town. Now, it is vain to say that this is equivalent to a general declara- tion by the legislature that all such lands should be forever ex- empt from taxation. If there had been such a law in force at the time of the charter, I admit its provisions would have formed con- ditions of the grant, and the state could not have repealed such conditions, or been allowed to violate them. But any attempt to raise such an inference from such premises must signally fail. . And the fact that this property, at the time the charter of Randolph was granted, was exempt from taxation, argues no more in favor of a perpetual exemption, than the fact that wilder- ness land has always been exempt from taxation at the time it was granted by the state, will justify the inference that such lands, by the terms of the grant, were never to be taxed until im- proved. . . . In all the cases cited from the Connecticut Reports, the exemption of the property from taxation is based upon the act of 1702, which, in terms, declares that all such lands, &., as have been or shall be given, &., shall be exempt from taxes. Here the exemption is a condition of the gift. And with great propriety did that court hold the exemption to be beyond the con- trol of the legislature, so far as lands granted, while that statute was in force, were concerned. . . . It only remains to consider the effect of the act of 1814, which, in effect, provides that all lands granted to public, pious and charitable uses, shall be for- ever exempt from taxation. It is at once obvious that lands granted by the state for these uses, while that statute was in force, would take that exemption, as one of the conditions of the grant, as was held in the Connecticut cases. But that statute could have no effect upon former grants, except while it continued in force.121
It is the writer's view that the opinion, as quoted, is weak in some respects. Too much reliance is placed on the fact that the tax exemption in the legislation prior to the 1814 law is contained as a "proviso" in a listers' law. It is notorious that in those early days the legislators were not well trained at bill drafting, and acts of legislation were apt to con- tain even relatively unrelated subjects; it was also a fairly common practice that rather important legislative provisions would appear as 121. 13 Vt. 525, 531-532 (1841).
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secondary provisions in acts, almost as though they were afterthoughts.
It is also to be noticed that from the earliest legislation such lands had normally been provided with tax exemption, starting with 1779, which is the earliest extant publication of statutes.122 Furthermore, such exemption is to be found in legislative provisions other than the listers' laws: in 1797 an act was passed requiring the selectmen to certify the quantity of public rights to abate the one cent land tax thereon.123 And it is to be found in the records of the State Treasurer, respecting this one cent land tax, that such abatement did in fact take place up until 1814.124 The numerous land taxes laid for financing public roads ex- empted the public lands,125 and the same thing was true in the special tax acts such as those providing revenue for paying off the $30,000 re- imbursement to the New York land grantees and for waging the war.126 Another tax exemption provision is to be found in an act of 1779 ex- empting from proprietors' taxes four public shares.127 (This should, without doubt, be taken to refer to the "Wentworth towns" since no "Vermont towns" had yet been granted and the "Vermont towns" when granted reserved five rather than four such shares.) Another important consideration which the court overlooked is that there had been no gen- eral tax law passed, of any kind or respecting any lands, until the act of 1814, and this first such act did include such exemption. Theretofore the so-called listers' laws had served the purpose of filling in gaps left be- tween the various particular tax acts.
So, it is felt that, at the very best, the reverse analogy with the Connecticut act of 1702 is very questionable. It is most apparent that in every instance in which the legislature had touched upon taxation as respects the lease lands, exemption had been granted until the act of 1825, and it would seem to be the best interpretation that such exemption had been the continuous intent of the legislature. Certain of the remarks by plaintiff's counsel are considered to be much to the point :
122. Slade, State Papers, pp. 297-298, February Session, 1779. Infra, pp. 240- 242, for description of exceptions and their significance.
123. Laws of the State of Vermont, Revised (1797), App., pp. 71-79.
124. See "Ledger of a Tax of One Cents on the acre of Land granted October 1797" in a bound volume labelled VII, 9739, and a bound book, untitled, being the account of State Treasurer Swan for 1800-1816; both volumes are located in the basement vault of the Secretary of State's office in Montpelier.
125. See Laws of Vermont from 1786 on and Records of the Governor and Council, vol. III.
126. Laws of the State of Vermont, Revised (1797), App., pp. 28-32, April 14, 1781. Laws of Vermont, 1793, pp. 7-10, October Session.
127. Laws of Vermont (1808 comp.), II, No. 1, 302.
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The acts which contain the exemption, are in the nature of a contract between the government and the proprietors of Ran- dolph, and those who should take leases of the public lands, that they should be free from taxes. Upon the faith of these laws, it is fair to presume that most of the leases have been taken, and im- provements made; for it is well known that individuals, gener- ally, prefer to purchase lands to which they can obtain a title in fee, rather than lands burdened with an annual rent, and granted only for a term of years. . . . To overcome this objection, in some measure, and to hold out some inducement to individuals to take leases of the public lands, the acts exempting them from taxation were probably passed.128
One is drawn to the supposition that the decision of the court, as in University of Vermont v. Reynolds,129 was in terms of public policy, but that in this instance, the court failed to make that fact clear.
Inasmuch as this case is the single opinion in which the Vermont court ruled on tax exemption of the lease lands, its position has been revealed at length. It would seem that the opinion leaves open the pos- sibility of taxation of the land itself, as well as the betterments thereon.
The attitude of the court toward exemption in the Herrick v. Ran- dolph opinion130 is in striking contrast to the attitude found just three years earlier in Congregational Society of Poultney v. Ashley, et al.131 Here the court considered at length the merits of eleemosynary insti- tutions and the consequent justification of a tax exemption. The court took occasion, even, to call attention to the exemption allowed the public lands and regarded this favorably. Another interesting contrast is that the court here referred to the 1825 act as being just another listing law. We have seen that in Herrick v. Randolph a distinction was drawn be- tween this and earlier "listing laws." The Poultney case drew attention to the fact that the 1825 act had said: "lands sequestered and im- proved."132 The Herrick opinion had admitted that a tax on improve- ments could conceivably be so high as to nullify the usefulness of the public lands.
In Morgan v. Cree133 the court's discussion of tax exemption in Wheelock accepted the same view as had been expressed by plaintiff's counsel in Herrick v. Randolph184: "The exemption of the lands from
128. 13 Vt. 525, 526 (1841).
129. 3 Vt. 542 (1831).
130. 13 Vt. 525 (1841).
131. 10 Vt. 241 (1838).
132. Ibid. Laws of Vermont, 1822-1826, 1825, pp. 11-12.
133. 46 Vt. 773 (1874).
134. 13 Vt. 525 (1841).
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state taxes would tend to induce people to take leases under the grantees in the charter. . . .' "'135
Boyce v. Sumner gives definitions of a "tax" which serve the pur- poses of this study. By quotations from other opinions the court ex- plained :
'Taxes are defined as being the enforced proportional contri- bution of persons and property levied by the authority of the State for the support of government and for all public needs.' And . . . 'It is a general term applied to whatever is required by the government or local authority thereon to be paid by the people. It presupposes that the burden is imposed by some author- ity other than that of the individual taxed, else, it would not be a tax, but a voluntary contribution' . burdens imposed by legislative authority in the exercise of the taxing power.186
This matter of legislative authority has been made clear and firm by the court in all respects but one-the question of retrospective legis- lation.137 In State v. Clement National Bank the court asserted :
Speaking generally, all within the jurisdiction of the State, is held subject to its right to impose new taxes, or to increase the rate or change the method of taxation. All contracts are made with reference to the taxing power of the State, and in subordina- tion to it.138
And in Clark v. City of Burlington,139 quoting from Rutland R. R. v. Central Vermont R. R. : 140
The whole power of taxation under our system of govern- ment is lodged in the Legislature subject only to constitutional limitations. What subject-matter, and the method of assessment and collection of taxes are solely questions for the Legislature to determine.141
More particularly, the court has been equally firm in upholding the
135. 46 Vt. 773, 789 (1874).
136. 97 Vt. 473, 479-480 (1924).
137. Various aspects of this are treated in the following cases: Colton and More v. City of Montpelier, 71 Vt. 413 (1899) ; In re Hickok's Estate, 78 Vt. 259 (1904) ; State v. Clement National Bank, 84 Vt. 167 (1911) ; Village of Hardwick v. Town of Wolcott, 98 Vt. 343 (1925) ; Clark v. City of Burlington, 101 Vt. 391 (1928).
138. 84 Vt. 167, 190 (1911).
139. 101 Vt. 391 (1928).
140. 63 Vt. 1 (1890).
141. 101 Vt. 391, 401 (1928).
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authority of the legislature to make exemptions and to classify property for tax purposes. Colton and More v. City of Montpelier contains one of the clearest statements :
The power to tax includes the power to exempt, unless spe- cially prohibited by the constitution. The right is supposed to be exercised on reasons of state policy, and presumptively such exemptions contribute to the general public benefit. . . . The general right to make exemptions is involved in the right to ap- portion taxes, and must be understood to exist in the supreme legislative power, unless expressly forbidden . . through- out the entire legislative history of this State, the power of the legislature to declare what property should be exempt from taxa- tion, has been recognized and exercised.142
And it has been held that the constitution of Vermont does not provide for "equality of taxation," but for "equality in apportioning on the citi- zens the expenses of government." Hence, the legislature is not re- stricted to applying any particular form of tax, nor is it prevented from making exemptions nor classifying property.
The tax authority is asserted in a series of cases143 as also being ap- plicable to the property of the state, or its subdivisions. As put in In re Downer's Estate :
It is true, as claimed, that it is not the policy of the State to subject its own property, nor that of its municipalities which is devoted to a public use, to a general property tax. . . . The power of the State, however, to tax its own property, and that of its municipalities, is universally recognized. It has been recognized and asserted by our own Legislature.144
The Hardwick v. Wolcott145 opinion went so far as to break down any distinction between "governmental" and "proprietary" property of municipalities, in this respect. This, however, may be considered as ex- treme ; it drew a vigorous and well presented protest from Judge Taylor in his dissenting opinion.
Retrospective legislation, as was remarked, is not a matter in which
142. 71 Vt. 413, 414-415 (1899).
143. See Village of Hardwick v. Town of Wolcott, 98 Vt. 343 (1925) ; In re Downer's Estate, 101 Vt. 167 (1928) ; Clark v. City of Burlington, 101 Vt. 391 (1928) ; In re Taft's Estate, 110 Vt. 266 (1939) ; First National Bank v. Harvey, 111 Vt. 281 (1940).
144. 101 Vt. 167, 174-175 (1928). The court referred to General Laws (1917), secs. 465, 688 ; and No. 22 of Laws of Vermont, 1925, as examples.
145. 93 Vt. 343 (1925).
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a reading of the Vermont opinions will give any positive conclusion as to what might be allowable if the legislature should undertake to tax the lease lands. We have seen that the court opened the way for con- siderable revision of tax legislation, in Herrick v. Randolph,146 so long as provisions for taxation privileges were not in effect at the time of grants. And some of the cases cited respecting the tax authority of the legislature lead to a similar conclusion. On the other hand, United States v. United States Fidelity and Guaranty Co.147 came out very strongly against legislation of this sort. It admits some small loopholes, but not much. State v. Clement National Bank148 was more liberal with the leg- islature, but a careful reading of Brattleboro Retreat v. Town of Brat- tleboro149 1.49 again leads to doubts. The last case stressed the matter of a status, which has been accepted and acted upon by the corporation, as being inviolable.
Finally, in respect to legislation, the court has held pretty steadily to the position that provisions authorizing, or alleged to authorize, a tax exemption are to be strictly construed against the grantee of such tax privilege.150 The statute must be clear, positive and unequivocal. Any slightest doubt is to be construed in favor of a tax liability and against an exemption.
Nevertheless, the court has recognized that the general, established policy of the state has been to authorize tax exemption for the property of institutions devoted to charitable work-that property falling within the phrase "public, pious, and charitable use." This view has been ob- served in quotations from some of the opinions analyzed under earlier topics. The point is fully developed in Congregational Society, Poultney v. Ashley, et al.,151 St. Albans Hospital v. Town of Enosburg,152 and In re Downer's Estate.153 It is to be seen, however, by following the
146. 13 Vt. 525 (1841).
147. 80 Vt. 84 (1907).
148. 84 Vt. 167 (1911).
149. 106 Vt. 228 (1934).
150. Cases in point include Morgan v. Cree, 46 Vt. 773 (1874) ; Willard v. Pike, 59 Vt. 202 (1886) ; In re Hickok's Estate, 78 Vt. 259 (1904) ; Town of Sheldon v. Sheldon Poor House Association, 100 Vt. 122 (1927) ; Clark v. City of Burlington, 101 Vt. 391 (1928) ; Grand Lodge of Masons F. & A. M. v. City of Burlington, 84 Vt. 202 (1911) ; S. C., 104 Vt. 515 (1932) ; Brattleboro Retreat v. Town of Brattleboro, 106 Vt. 228 (1934) ; First National Bank of Boston v. Harvey, 111 Vt. 281 (1940).
151. 10 Vt. 241 (1838).
152. 96 Vt. 389 (1923). 153. 101 Vt. 167 (1928).
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course of tax legislation and court decisions in cases of tax litigation, that the general trend has been a slow, gradual, but steady reduction of the area of property enjoying tax exemption. This is true with respect to all charitable property except the lease lands. The latter have not been affected.
Two principles, in particular, have been of influence in subjecting various charitable properties to taxation. Both of them are to be given attention because they each provide strong constrasts in the attitudes as to the lease lands in contradistinction to other charitable property.
The first of these legal positions is that the determining factor in the eligibility of property for exemption shall be the use of that property for a public purpose.154 In the earlier cases this was sometimes utilized by the court as a device by which to admit property to the privilege of tax exemption. More recently, it has been a means by which to exclude property from the privilege. It is this latter position which is significant herein because it has had some startling influence, although none on the lease lands. The proposition has, been carried so far as to mean that the property must be directly in such use. If it is only indirectly applied to the benefit, it is taxable; if, for example, it is rented out and the in- come is devoted to the charity, a tax will be levied against it. The two cases between the Grand Lodge of Masons and the City of Burlington illustrate the application of the principle.155
The Masons built a building in the City of Burlington on which they claimed an exemption under authority of Public Statutes (1906), sec. 498, which exempted property exclusively used for the support of hospitals and asylums. The basis of this claim was that the Grand Lodge, by formal vote, had determined to appropriate the rental in- come of the building to paying off the cost of the construction, after which the income would be used for masonic charity, within the scope of the act. The court found against the Grand Lodge. It saw no objection to the nature of the charity contemplated. But it held simply that the money was not then going to charity-and might never do so; before the amortization of the building was completed the Lodge conceivably could rescind its resolution. This was in 1911.
154. See Willard v. Pike, 59 Vt. 202 (1886) ; Grand Lodge of Masons F. & A. M. v. City of Burlington, 84 Vt. 202 (1911) ; S. C., 104 Vt. 515 (1932) ; Rut- land Ry., Light and Power Co. v. Clarendon Power Co., 86 Vt. 45 (1912) ; John- son v. Jones, 86 Vt. 167 (1912) ; Scott v. St. Johnsbury Academy, 86 Vt. 172 (1912) ; St. Albans Hospital v. Town of Enosburg, 96 Vt. 389 (1923).
155. 84 Vt. 202 (1911) ; 104 Vt. 515 (1932).
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The Lodge again came to the court in 1932 with a renewal of the claim for exemption, this time under General Laws (1917), sec. 684, subdivision VI, which provided that real and personal estate granted, sequestered or used for public, pious or charitable purposes should be exempt from taxation. The building had been paid for, and the income from it was now being devoted to the masonic charities. Again, the court held against the Lodge :
. it was further pointed out [in the previous case] that by the . word 'used' employed in the statute, as applied to real estate, the direct and immediate use of the property itself is meant, and not the remote and consequential benefit derived from its use, and various decisions were cited with approval, holding that where the profits or income of buildings are appropriated to pious or educational purposes, the real estate itself is not used for such purposes.156
No such rule has been applied or even proposed respecting the lease lands, and yet practically all of them come within specification of the rule.
The second principle mentioned above is that property devoted to public uses will not be exempt when it is located elsewhere than in the town in which the benefit is accomplished. This rule has been applied in the case of property pertaining to municipally operated public utilities ; it has also been applied to charitable enterprise.157 The general under- lying principle is that one town should not be burdened for the benefit of a different town. The Sheldon case158 is presented in illustration be- cause it demonstrates how rigorously the rule can be applied, and it shows the rule in operation against an enterprise which might well have excited the sympathy of the court respecting its laudable purpose. Nor- mally, in Vermont, each town makes its own individual provision for caring for the poor, by establishing a poor farm, or otherwise. The sys- tem has not been notable for high quality relief administration ; smaller towns, particularly, have neither the resources nor the number of in- digents to support relief by which administration can be either economi- cal or enlightened.
Several towns, including Sheldon, decided to pool their poor farm
156. 104 Vt. 515, 518-519 (1932).
157. In point are : Stiles, Collector of Taxes v. Newport, 76 Vt. 154 (1904) ; Swanton v. Highgate, 81 Vt. 152 (1908) ; St. Albans Hospital v. Town of Enos- burg, 96 Vt. 389 (1923) ; Village of Hardwick v. Town of Wolcott, 98 Vt. 343 (1925) ; Town of Sheldon v. Sheldon Poor House Association, 100 Vt. 122 (1927). 158. 100 Vt. 122 (1927).
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operation, and this developed finally into the defendant association. The operation was bequeathed several pieces of property by individuals, at various times, for its purposes. This was the property against which the tax in issue was levied. The cooperative venture commenced in 1846, and, finally, in 1906 the legislature passed an act incorporating it.159
Another act of 1906 (No. 24), which became part VII, sec. 362 of Public Statutes (1906), provided certain general tax exemptions. In this, the first clause included: "Real and personal estate granted, se- questered or used for public, pious or charitable uses"; the last clause ran : ". . . and lands and buildings owned and used by towns for the support of the poor therein, but private buildings in such lands shall be set in the list to the owners thereof, and shall not be exempt." The Association claimed exemption under the first clause. The court held against it, under the last clause.
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