









2014 VT 128










Goodrum
v. Vermont Department of Taxes (2014-102)
 
2014 VT 128
 
[Filed 21-Nov-2014]
 
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 by email at: JUD.Reporter@state.vt.us or by
mail at: 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.
 
 



2014 VT 128



 



No. 2014-102



 



Garfield Goodrum
  and Lucille Goodrum


Supreme Court




 


 




 


On Appeal from




     v.


Superior Court, Windsor Unit,




 


Civil Division




 


 




Vermont Department of Taxes


September Term, 2014




 


 




 


 




Mary
  Miles Teachout, J.




 



Garfield Goodrum and Lucille Goodrum, Pro Ses,
Reading, Plaintiffs-Appellants.
 
William H. Sorrell, Attorney General, and Barbara G. Ripley and
Mary L. Bachman, 
  Assistant Attorneys General,
Montpelier, for Defendant-Appellee.
 
 
PRESENT:    Reiber,
C.J., Dooley, Skoglund and Robinson, JJ., and Maley, Supr. J.,  
Specially Assigned
 
 
¶ 1.            
DOOLEY, J.   Garfield and Lucille Goodrum
appeal the superior court’s decision granting summary judgment to the Vermont
Department of Taxes’ Division of Property Valuation and Review (PVR) and
denying the Goodrums’ cross-motion for summary judgment on their claim that their farm
buildings are eligible for enrollment in Vermont’s Use Value Appraisal (UVA)
Program.  We affirm.[1]
¶ 2.            
The undisputed facts are as follows.  The Goodrums
own 41.54 acres in Reading, Vermont.  All but two acres of land surrounding
their home is enrolled in the UVA Program as undeveloped forest land.  In
2008, the Goodrums formed Turtle Hill Farm of Vermont
Animal Sanctuary, Inc. (THF), a non-profit corporation whose mission is to
rescue, rehabilitate, foster, and adopt out animals, including horses,
chickens, rabbits, and guinea pigs.  The Goodrums
lease four barns and two sheds to THF, which the organization uses to house,
feed, manage, and otherwise care for the animals.  THF is funded almost
exclusively by donations, which it uses to cover its operating expenses. 
Most of the donations come from the Goodrums.
¶ 3.            
In 2010, the Goodrums applied to enroll the
barns and sheds leased to THF in the UVA Program, which would exempt the
buildings from property taxation, but PVR determined that the buildings were
ineligible.  The Goodrums appealed to the
Director of PVR[2],
who also determined that the buildings were ineligible.  The Goodrums then appealed to the superior court, and both
parties moved for summary judgment.  The court granted PVR’s motion,
concluding that the buildings are not eligible for enrollment because THF does
not operate for gain or profit and is therefore not a farmer under 32 V.S.A.
§ 3752(7).  The Goodrums filed this appeal.
¶ 4.            
“We review summary judgment rulings de novo, using the same standard as
the trial court.”  Demag v. Better
Power Equip., Inc., 2014 VT 78, ¶ 9, ___ Vt. ___, ___ A.3d ___. 
Summary judgment will be granted when, viewing the evidence in the light most
favorable to the nonmoving party, “there exist no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law.”  Id.
(quotation omitted); see V.R.C.P. 56(a).  
¶ 5.            
The material facts are undisputed, and we need to determine only a
single legal question: whether THF qualifies as a farmer under 32 V.S.A.
§ 3752(7).  We hold that THF does not qualify as a farmer for the
purposes of the UVA Program.  It does not operate for gain or profit
because it is not profit-driven and its revenue is derived primarily from the Goodrums’ own donations.
¶ 6.            
We begin our discussion with an overview of the statutory and regulatory
scheme.  The UVA Program “is designed to provide a tax incentive for
landowners to maintain their agricultural or forest land by taxing it at its
current use value rather than the higher ‘best use’ value.”  Jones v.
Dep’t of Forests, Parks & Recreation, 2004 VT 49, ¶ 2, 177 Vt. 81,
857 A.2d 271; see 32 V.S.A. § 3752(12) (“With respect to farm buildings,
‘use value appraisal’ means zero percent of fair market value.”).  The UVA
Program accepts as eligible for enrollment
all farm
buildings and other farm improvements which are actively used by a farmer as
part of a farming operation, are owned by a farmer or leased to a
farmer, . . . and are situated on land that is enrolled in
a use value appraisal program or on a housesite
adjoining enrolled land.
32 V.S.A. § 3752(14). 

¶ 7.            
The statute defines farmer as, in relevant part, a person “who earns at
least one-half of the farmer’s annual gross income from the business of farming
as the term is defined in Regulation 1.175-3 issued under the Internal Revenue
Code of 1986.”  Id. § 3752(7)(A). 
Turning to the federal regulations, “a taxpayer is engaged in the business of
farming if he cultivates, operates, or manages a farm for gain or profit,
either as owner or tenant.”[3] 
26 C.F.R. § 1.175-3.
¶ 8.            
The proper interpretation of “gain or profit” is the primary issue in
this appeal.  The United States Tax Court articulated that a farm operates
for gain or profit when the taxpayer has a “dominant motive to make a profit.”
 Austin v. Comm’r, 28
T.C.M. (CCH) 27 (T.C. 1969).  The court noted that a farming
business “will not be excluded . . . merely
because it actually results in losses instead of profits, but it is essential
that profits are being pursued.”  Id.  The tax court also
distinguished farms that are operated for pleasure, stating that an individual
operates a farm for pleasure if he or she primarily is motivated by some
purpose other than making a profit.  Id.
¶ 9.            
The Goodrums, despite their hard work, operate
THF because of their love of animals—not to make a profit.  We agree that
their work with the animals is not all pleasurable, but their motive is
not profit-driven.  Under this standard, THF is not operating for gain or
profit.  Moreover, THF is funded almost exclusively by donations, a large share of which come from the Goodrums
themselves.  These donations cover THF’s operating expenses.  Its
activities generate no income, a point emphasized by the superior court, and it
realizes no profits.
¶ 10.         The
central theme of the Goodrums’ position is that the
Legislature intended to extend eligibility to non-profit corporations. 
The Goodrums find that intent primarily in the
statement of purpose contained in 32 V.S.A. § 3751 and in the absence of
any exclusion of non-profit corporations in the statement of purpose and the
statutory requirements.  They rely on Mollica
v. Division of Property Valuation & Review, 2008 VT 60, 184 Vt. 83, 955
A.2d 1171, in which we stated that, because the current use statute is remedial
in nature, our deference to PVR is “tempered by our paramount concern of
construing the statute consistently with its explicitly stated purposes,” id.
¶ 11, and that “we will not approve an agency’s
statutory interpretation that runs counter to the Legislature’s explicitly
stated purpose for the statute.”  Id. ¶ 20. 

¶ 11.         The Goodrums argue, based on their understanding of the
Legislature’s intent, that we must construe the statutory provisions to extend
eligibility to non-profit corporations.  Accordingly, they argue that
non-profit corporations are operating for gain or profit when they successfully
undertake and enhance their mission.  They contend that the superior
court, in relying on the traditional sense of profit as income generation,
effectively excluded all non-profit corporations from enrolling in the current
use program because non-profits are prohibited by law from making
distributions.  See 11B V.S.A. § 13.01.
¶ 12.         There
is no one way for the Legislature to express its intent.  It need not
address explicitly the eligibility of non-profit corporations, and we cannot
draw from silence an intent to allow non-profit
corporations to be eligible as farmers.  The stated purpose of the UVA
Program is to “encourage and assist the maintenance of Vermont’s productive
agricultural land and forest land,” 32 V.S.A. § 3751, and the Legislature has
the power to define “productive agricultural land” as it deems
appropriate.  The statute implements this stated purpose, and we cannot
conclude that the statute fails to achieve its goals merely because broader
eligibility may result in stronger implementation. 
¶ 13.         The
Legislature adopted requirements that are a clear and explicit barrier to THF’s
eligibility in the UVA Program.  Our decision in Mollica
is distinguishable because there the farm buildings satisfied the statutory
criteria, but PVR nonetheless denied enrollment.  Here, PVR denied
enrollment of THF’s buildings because they do not meet the statutory
criteria.  The Goodrums are attempting to read
the statute more broadly than it was written.
¶ 14.         It
may be, as PVR argued, that non-profit corporation eligibility would be rare
under the “gain or profit” standard; it may be that it is impossible.  In
either case, this consequence cannot change our responsibility to apply the
specific eligibility standards of the statute.
¶ 15.         We
also note that the Legislature’s approach is supported by its adoption of a
specific exemption of certain property that is owned or used by non-profit
corporations.  See, e.g., 32 V.S.A. §§ 3802(4),
(15).  We particularly note § 3802(15), which provides an
exemption for “[r]eal and personal property owned by
a charitable, nonprofit organization devoted to the welfare, protection, and
humane treatment of animals.”  The Legislature may conclude that dealing
with property tax exemptions for non-profit corporations directly rather than
through the UVA Program or other programs that affect tax responsibility is
more appropriate.
Affirmed.
 
 



 


 


FOR THE COURT:




 


 


 




 


 


 




 


 


 




 


 


Associate
  Justice



 







[1]
 PVR moved to strike certain documents from the Goodrums’
supplemental printed case because they were not in the record below.  We
agree that the documents were not in the record below, but they are irrelevant
to the issue before us.  For these reasons, the records played no part in
our decision and their presence in the printed case is harmless.  We deny
the motion to strike.


[2]
 It is not clear why the appeal went to the Director of PVR.  The
statute provides that the appeal goes to the Commissioner of Taxes.  32 V.S.A. § 3758(a).  The Goodrums
raised no claim with respect to this appeal route.  In fact, the decision
was made by a hearing officer for the Department of Taxes and approved by the
Director.


[3]
 The federal regulations also list several factors to be considered when
determining if a taxpayer is engaging in an activity for profit, 26 C.F.R.
§ 1.183-2, which the Goodrums urge are
applicable here.  As the superior court noted, these factors are not
relevant to the “gain or profit” standard under § 1.175-3.  The court
reviewed them nonetheless and concluded that THF was not operating for profit.



