USA > Vermont > The Vermont lease lands > Part 34
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The contrasts which have been presented above are the normal pat- tern. It is clear that the tax structure of Vermont is carrying a substantial
5. United States Department of Commerce, Bureau of the Census, Sixteenth Census of the United States, 1940. Agriculture (Washington, 1942), vol. I, pt. 1, Vermont, State Table 6, p. 81.
6. United States Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, 1941, sixty-third number (Washington, 1942), p. 694. 7. Forest Taxation, pp. 22-24.
8. The Commission on Forest Taxation said: "It would be of great benefit to most towns to be able to terminate these leases and get this property onto the tax lists." Ibid., p. 8.
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burden of exempted property in terms of the total acreage of the lease lands.9 Even in the case of those public shares, the avails of which go to town educational purposes, there is a loss, to be measured between the rate of rent and the going rate of taxation. Inasmuch as real property taxation is the major source of revenue of the towns, the matter is seri- ous. And it becomes the more so for those towns suffering a low revenue due to lack of development.
The extremity to which disparities can go, and the inflexibility of the system, are illustrated in the case of a lot pertaining to the University which lies in the central section of the City of Barre. A survey by the City Engineer showed the lot to contain 133.77 acres, of which there was private occupancy of 96.89 acres, the remainder going to streets and rivers. There are over 200 tenants, including 150 or more dwellings, several large granite sheds, manufacturing plants and other business firms. The original lease, still effective, was made in 1801 for an annual rental of $17.00. At present the largest single occupancy is 20.75 acres for an annual rental of $3.53. The City Attorney conferred with the University with a view to purchasing the land, which the city valued at $100,000 or more, exclusive of betterments.1ยบ It was reported by Mr. MacFarland that a sale was not feasible. Mr. Joseph Wilson showed the writer data on a situation as extreme, which prevails in Burlington with respect to an S. P. G. lot.
Another situation, which may be found with some frequency, is in respect to lease lots which have come to be desirable resort sites. Wooded lake shores include pieces which in the early days would simply have been relatively inaccessible and undesirable farm spots. Hence, one finds lease land parcels well represented. Now, such places are much-sought- after scenic locations for summer homes. But, for the most part, the old lease rentals are effective. Unfortunately, this situation is most apt to be frequent in those parts of the state where local government revenue con- ditions are most disturbing and the rent differential has the greatest con- sequence.
An inescapable conclusion is that the system has resulted in a variety . of inequitable conditions, difficult to condone in terms of the present day.
9. There are other significant segments of property enjoying exemptions, which go to increase the seriousness of the matter.
10. These statements are taken from Mr. MacFarland's report, "Lease Lands," I, 96-102. At the time of the report, no rent had been paid for fifteen years, nor, of course, were any taxes being paid. The report includes an addendum that rent in arrears and interest thereon was paid March 14, 1923 in the sum of $408.20.
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CONCLUSIONS
One, of course, is the situation just described by which some individuals carry a heavier burden on the use of real property than do others who happen to have acquired lease rights to public lands. The situation through which approximately a half of the towns contribute to the in- come of the University through tax exemption, whereas the remaining towns do not, cannot be admired. Perhaps an even more undesirable situation is the similar one, resulting from the grants of the grammar school rights, whereby towns, to a various number, involuntarily con- tribute in this same way to the upkeep of a secondary school in some other town.11 And, of course, there is the condition, sometimes a result of town line changes, whereby a town enjoys revenue from land in an- other town. Finally, it would seem difficult to justify the great land- holding of the Episcopal Church in Vermont, comparing that with the religious benefits to other sects, on the one hand, and contrasting the definite minority position of the Episcopalians in relation to the numbers of other communicants, on the other hand.
Much has been said of the inadequate manner in which the reserva- tions of the public rights have been administered. This commenced with the doings of the legislature.12 Nor could the administration carried on by the various grantees be complimented.
Something should, however, be offered in extenuation of the latter condition. It cannot be said that the trustees of the public rights have distinguished themselves by careful and diligent stewardship of the lands granted to them. But, it would have been a difficult business, with the best of intentions and effort. During the early period, when administra- tive habits were developed, the area of Vermont included much land that was highly inaccessible-exceedingly difficult of control. To this was added the factor of low values of realty at that time, particularly with respect to timberland. Early writing, such as that in the manuscript records of boards, shows clearly that in those days the future develop-
11. Parenthetically, it is to be noticed that several of the grammar schools and academies which appear to have been substantial beneficiaries of the grammar school rights were situated in Wentworth towns, which, of course, possessed no such land of their own. E. g., Peacham Academy and Thetford Academy.
12. The legislature's fault has been noted by the court :
The reservations and appropriations were for general classes and purposes. The special details of provision, obviously, were not settled and adopted with sharpness of attention to the terms used, or with cautious considera- tion of the possible questions that the course of events thereafter, in the progress of population and society, might give rise to.
Williams v. North Hero, 46 Vt. 301, 319 (1873).
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ment was not conceived of, and it was thought that any return gained from such acreage was just so much to the good.
Later on, another factor militating against sound administration ex- erted an influence. This was the way in which towns were divided into severalty, ordinarily through from three to five divisions. Thus, a public right would have a share broken into as many different parcels within a town. In the making of leases, collection of rent, and so on, the share within a town required just that many different efforts, even to begin with.
This fragmentation was increased through the customs of convey- ancing by the tenants which developed. Two opposite effects are to be found, both adding to the difficulty of administration. One was that whereby, in the course of time, a large farm holding would be put to- gether-most of it consisting of ordinary realty, but including one or more parcels of lease land, undefined somewhere within the farm. The other effect took place when the course of transactions would divide a parcel of lease land between two or more subsequent holders. And, of course, these two tendencies could go together so that what had once been a single, relatively well-defined parcel could conclude by being several parcels, each obscured within a larger holding. All of these con- ditions, together with the low rate of lease-rents, has meant a high cost of administration, relative to the revenue secured. One finds this ad- mitted, by implication and sometimes explicitly, in the various land rec- ords.
The writer has read letters in which land agents quite frankly stated that it was not worth the possible return to go to the effort necessary to clear up some land situations. And from the viewpoint of the trustees, this would in turn cause them to favor the amateur, and "inexpensive," administration which has been characteristic. Furthermore, as to frag- mentation, it is to be kept in mind that although the total lease land acreage is of large consequence in the state, that total is broken down into various grants so that only the University and Diocese possess hold- ings extensive as single units.18
It still remains, however, that the state as the grantor of this great
13. This point would seem to justify the proposition related earlier in this chapter, made by a land agent, that the state take over all the lease lands and ad- minister them. They would then constitute a holding large enough to justify or- ganized administration.
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CONCLUSIONS
land asset, and the grantees, appear to have been remarkably casual with respect to it, once the grants were concluded.
Despite the legislation of 1937, the lease lands continue as a public problem. That act has not proven widely useful. From what could be obtained, information clearly points to the inference that few convey- ances have been consummated under its authority.14 It could hardly have been otherwise. A few situations can be thought of, such as that of the asbestos mine in Belvidere and the public forest developments, in which there would be an effective desire to acquire the fee of the lands. It is further to be conceded that some individual tenants might be among those people who are urgently motivated by a desire to own the land. Other than such, however, there is no incentive to buy. The act offers a general advantage only to the sellers-the present trustees. Whoever buys commences to pay taxes. These would invariably be higher than the lease rent. If the tenant buys, he simply makes this undesirable change of economic status. If a third party should buy, he must buy subject to the outstanding lease right. Consequently, he would suffer a net loss, receiving from his perpetual tenant the lease rent and paying out more than that in taxes.
The lease lands still generate occasional interest as a problem. In the 1945 session of the legislature a joint resolution, House Bill No. 9, was introduced and referred to committee with the purpose of consideration of the lease lands. The terms of the resolution follow so closely the findings and conclusions herein that it is reproduced in full :
J. R. H. 9. Joint resolution relating to investigation of lease lands ;
Whereas, there exists in many of the towns of the state cer- tain lands known and described by the term lease land, and,
Whereas, some of this land is set aside for the support of the gospel, some for the support of the town schools, some for the support of colleges and higher institutions of learning, and some for other purposes, and,
Whereas, towns are permitted to tax only the improvements on this land, and so far as the land itself is concerned, the only in- come derived therefrom for the purposes aforesaid is a mere nominal consideration known as lease rent, and said land does not bear its fail [sic] and proportionate burden of taxation, with other lands of like nature and condition, not so classified, now There- fore Be It Resolved by the Senate and House of Representatives:
14. It was related earlier how little impression the act has made, even on those concerned with the lease lands.
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That a committee consisting of two Senators to be appointed by the presiding officer of the Senate, and three representatives to be appointed by the presiding officer of the House be appointed to study the above situation pertaining to said "lease lands" and report to the 1947 legislature the advisability or propriety of legis- lation to correct said inequality ;
Which was read and referred to the Committee on Judiciary.
The Judiciary Committee appealed to the Attorney General, Mr. Alban J. Parker, for advice, as a result of which, presumably, the bill was reported adversely and killed. Mr. Parker's advisory opinion is found in his biennial report.15 He was pessimistic on the possibility of anything much being done, basing his attitude on the view that, ". the rights involved in this question are fundamentally property rights residing in the person who is the owner of the leasehold interests." He referred to the rulings in Caledonia County Grammar School v. Burt,16 Herrick v. Randolph,17 and the Asbestos Case.18 He coincided with the present writer's view that the right to buy would not be attractive, with the land thus stripped of its tax exemption.19 His conclusion is quoted in full :
It thus follows that the property rights which vest in the holders of the leasehold rights in all of these lease lands can only be di- vested by condemnation proceedings. In making this statement I do not intend to convey the impression [that] under certain cir- cumstances these property rights in the leasehold lands might not be conveyed in fee. Such, however, contemplates that the convey- ance must be made with the full consent of the owner of these rights.20
It is the opinion of the present writer that the Attorney General was unduly summary in his treatment of the inquiry and might well have offered the committee more positive advice. The letter of inquiry from
15. Biennial Report of the Attorney General, For the Two Years Ending June 30, 1946 (Burlington, [n. d.]), pp. 161-162. The opinion quoted from the letter of in- quiry from the committee. The latter contains an interesting example of the way in which terminology is confused. It refers to the "status of Lease or Glebe lands."
16. 11 Vt. 632 (1839).
17. 13 Vt. 525 (1841).
18. 108 Vt. 79 (1936).
19. Oddly, the Attorney General, in this passage, discussed the two acts of 1935, but made no mention of the 1937 act.
20. Biennial Report of the Attorney General, For the Two Years Ending June 30, 1946, p. 162.
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CONCLUSIONS
the committee dwelt entirely on the one issue of tax exemption and was concerned solely with the possibility of changing the status of the lease lands with respect to local taxation.
In view of this it is felt that Mr. Parker made an unfortunate selec- tion of material from the opinion in Herrick v. Randolph.21 He quoted that part of it in which the court specified that conditions annexed to a grant are as irrevocable as the grant itself. It is to be recalled, however, that the court went on to distinguish this situation from one in which terms or conditions should be annexed after the grant. In fact, the use of this case for his purpose was ill-advised. It was a complaint against the levying of taxes on the improvements on lease land, with a claim of perpetual exemption. The court, time after time in the opinion, spoke of express exemption from taxation so strongly as to lead to the inference that an implied exemption would be inadequate.22 Indeed, the court went on to say : "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. >>23 And the tax was held to be valid.
Morgan v. Cree might well have been considered, too.24 Here we found the court agreeable to local taxation of land which by the grant in the charter was to be free and exempt from "public taxes" so long as it was devoted to the use specified in the grant. It was local taxation with which the legislative committee's letter was concerned.
Accepting Herrick v. Randolph25 as a leading case, as did the At- torney General,26 the lease lands could be regarded as subject to taxa- tion,27 in line with the ruling in State v. Clement National Bank in which it was said : "All contracts are made with reference to the taxing power
21. 13 Vt. 525 (1841).
22. This inference agrees with the rulings in later cases, observed in previous chapters, in which it was held that a claim of such privilege is to be interpreted most strongly against the one claiming, if there is any doubt whatever.
23. 13 Vt. 525, 531 (1841).
24. 46 Vt. 773 (1874).
25. 13 Vt. 525 (1841).
26. At this point, the writer is accepting and utilizing the ruling in this case, although he subjected it to certain serious criticisms in Chapter V. Even though those criticisms are regarded as valid, it cannot be escaped that this decision is the only one on taxation relating to the lease lands. It has never been noticed adversely by the Vermont court in later cases. And so, it is still to be treated as ruling law.
27. The Herrick opinion, op. cit., stated that any grants made while the act of 1814 was in force would be forever exempt. No lease lands were granted after that date.
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of the State, and in subordination to it."28 An additional reinforcement of this view is found in the words of the court in various opinions deal- ing with such tax problems as classification. The general attitude of the judges has been that the Vermont constitution contemplates that prop- erty and persons shall contribute their fair share to the cost of govern- ment.
Piper v. Meredith29 was cited by Chief Justice Moulton in his dis- sent in the Ward Case30 and should be considered here. It was in abate- ment of a tax on property which had been exempt from 1876 until 1925. At the earlier date Piper's predecessor had conveyed to the town in a rather involved transaction by which he received a perpetual lease of a part of the premises. The court said :
For the purpose of taxation, it is immaterial who is the ultimate owner of the fee. Title is not the test of taxability. . . . A holder of a defeasible title having the income or use of the land, may be taxable for the land, and not merely for his title. An ordinary land tax is an ordinary expense and burden of the land, and is naturally borne by those who have the benefit of the land. . . . 'The positions of rent-paying tenants, tenants for life and holders of defeasible titles, as tax-payers, are illustrations of the rule that title is not the test of taxability. Such persons, enjoying the prod- uct out of which the land tax may be taken, may be regarded, for the purpose of taxation, as the owners of the land, although the value of their title may be much less than the value of the land. The justice of taxing a piece of land to its tenant for life, who draws a great annual income from it, is apparent."31
The opinion cited various other cases, of which one, Wells v. Savan- nah, is of particular interest, being an opinion from the United States Supreme Court32 and closely in point to the situation with which the legislative committee was concerned. There are some distinguishing cir- cumstances which must be accounted for, but the opinion, generally, coincides with the views in Herrick v. Randolph33 and Piper v. Mere- dith.34 The principal difference in the circumstances is that the instru-
28. 84 Vt. 167, 190 (1911).
29. 83 N. H. 107 (1927).
30. 104 Vt. 239 (1932).
31. Piper v. Meredith, 83 N. H. 107, 109-110 (1927).
32. 181 U. S. 531 (1901).
33. 13 Vt. 525 (1841).
34. 83 N. H. 107 (1927).
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CONCLUSIONS
ments of conveyance in Savannah contained an optional clause under which the grantee could purchase with a fee simple.
The important points of similarity are: 1) that the Georgia lands were public lands, the so-called "common lands" belonging to the mu- nicipality ; 2) that the conveyances included an option (which was at issue in the case) which provided for a partial payment of the purchase price and a perpetual rental payment, and on this basis the tenure was inheritable and assignable, just as are the Vermont durable leaseholds ; 3) that the lands had been tax exempt for more than 100 years since the conveyance in question ; 4) that the specific issue raised by the plain- tiffs was that of impairment of obligation of contract, as was the theme of Mr. Parker's opinion. It should be noted, too, that various municipal ordinances and other papers in Savannah referred to the arrangement as "leases," or "leased lands" and, although later on in the opinion they are spoken of as purchases, Mr. Justice Peckham in his opening statement twice refers to the lands as "leased lots."
The court was even more explicit than was the Herrick v. Randolph opinion35 respecting implied tax exemption :
The payment of taxes on account of property otherwise liable to taxation can only be avoided by clear proof of a valid contract of exemption from such payment and the validity of such contract presupposes a good consideration therefor. If the property be in its nature taxable the contract exempting it from taxation must . . . be clearly proved. It will not be inferred from facts which do not lead irresistibly and necessarily to the existence of the con- tract. . . If there be any doubt on these matters, the contract has not been proven and the exemption does not exist. This has been many times decided by this court.36
The court was unimpressed by the long period of exemption : "Mere nonuser by a government of its power to levy a tax, it matters not for how long it continued, can never be construed into a forfeiture of the power."37 The exempting ordinances were effective only for the period of the ordinance. The opinion then went on along the same line, as re-
35. 13 Vt. 525 (1841).
36. 181 U. S. 531, 539-540 (1931).
37. Ibid., p. 541. The court did not even consider as effective the public utter- ances by responsible city officials, at the time of the sales, that the property would be tax exempt. In Vermont there was not even this much promise made.
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cited above from the New Hampshire court, that the use and control of the marketable value of the land is a sufficient basis for taxation.
This last, and the quoted passage from Piper v. Meredith38 are im- portant in relation to the Vermont law, which has regularly (excepting in the 1880's) provided for laying a tax against either owner or possessor of land. It would seem inequitable for the Vermont legislature to attempt taxation against the grantees of the public lands. Such would be tanta- mount to forcing them to surrender the lands to the lessees, inasmuch as any worthwhile tax would be greater than the revenue from lease rents. On the other hand, the rigours of clearing the frontier land are long past and were not, in any case, suffered by any present tenants who are now enjoying the considerable advantage of lease rent rates as opposed to tax rates. A tax laid on the tenants might well make the provisions of the 1937 act sufficiently attractive to induce them to purchase under its authority.
In view of the more liberal attitude toward the system of the lease lands, taken in the Asbestos Case opinion,39 and the favorable view held by the late Chief Justice toward Piper v. Meredith,40 it would seem that legislation designed to permit the laying of local taxes against the lessees of the public lands would be a justifiable effort on the part of the legis- lature. Such legislation, in conjunction with the provisions of the 1937 act, could hardly be considered to violate the limitation laid down in the Asbestos Case,41 that the trusts be not modified, even though the corpus of the trust may be transformed.
One other legislative change seems advisable in the writer's view. He would recommend that the exemption from adverse possession be revoked. It would seem that 150 years should have given any of the grantees of the reservations sufficient time in which to assert their rights and gain control of the lands involved.42 If they have not by now suc- ceeded in acquiring the benefit of a reservation, it would appear to be justified to allow the public the benefit through taxation of such land. The result of such a change would probably not be extensive, but any parcels to which an adverse title were perfected would thereupon be
38. 83 N. H. 107, 109-110 (1927), supra, p. 324.
39. 108 Vt. 79 (1936).
40. 83 N. H. 107 (1927).
41. 108 Vt. 79 (1936).
42. However, see App. E for example by recent legislation of how slowly things can move.
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CONCLUSIONS
legitimately on the tax rolls, and any such change would help local reve- nue to that extent. Of course, it must be noted that some occupants of unadministered parcels of public land might prefer not to assert an ad- verse claim, simply committing a trespass instead, at least in any case in which the town were omitting such land from the grand list.
These appear to the writer to be the only available actions by which to attempt a change in the lease land system. The suggestion that the state administer all of the lease lands by a professional administrative establishment is not regarded as particularly useful, except to the gran- tees, who would thereby be relieved of the chore. It is admitted that cer- tain improvements might result. Some parcels which are now under neither taxes nor rent could be found and made to bear their proper burden. The towns, as well as other grantees, might very well gain some income by better collection of rents. Perhaps the most important possible result could be a better supervision and control of lumbering operations on those lease land parcels lying in the timber areas, whereby the state's forest resources would be better protected. But this scheme by itself would produce no general change in the revenue status of the lease lands and would obviously add the cost of the administration to the burden of government borne by the people of the state at large.
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