June h. Davis, et al. 1 V. Board of assessors of

JUNE H. DAVIS, et al.¹ v. BOARD OF ASSESSORS OF

June 19, 2001

Commissioner Egan heard these appeals and was joined in the decision for the appellee by Chairman Burns and Commissioners Sharaffa, Gorton, and Rose.

These findings of fact and report are promulgated at the request of the appellants pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Peter A. Sundelin, Esq., for the appellants.

Ruth J. Weil, Esq., for the appellee.

FINDINGS OF FACT AND REPORT
These appeals raise the issue of whether tenants of certain real estate, owned in a charitable testamentary trust by the Town of Barnstable and used for non-public purposes, are subject to assessment of local real estate taxes. Based on the undisputed facts contained in the parties’ pleadings, the Appellate Tax Board (“Board”) made the following findings of fact.

Under the November 13, 1754 will of Parker Lombard, a parcel of land (“Lombard parcel”) located in West Barnstable was devised in 1755 to a charitable public trust (“Lombard Trust”). Lombard’s will, as recorded in its handwritten original form in the Barnstable County Records at Volume 9, page 214, specifies in pertinent part:

The Lombard parcel consists of approximately forty-eight acres of land, bounded by Meeting House Way (State Route 149) and Navigation Road. It is a long and comparatively narrow, irregularly shaped parcel, over one mile in length and, at most, six hundred feet in width.

At all times from 1755 until 1991, the Lombard parcel was owned by the Selectmen of Barnstable, as trustees of the Lombard Trust. In 1991, after elimination of the Board of Selectmen in the Town of Barnstable, the Town Manager was designated by the Town Council to manage all trust properties and assets.²

Over time, the trustees have leased portions of the Lombard parcel to various individuals for non-public purposes. The leases, typically for periods of up to thirty years, required that the lessee pay rent for the land he or she occupied.³ The lessees, in turn, built private residences and commercial enterprises on the Lombard parcel.⁴ In 1975, the Barnstable Probate Court approved the practice of leasing the Lombard parcel, but instructed the trustees to seek a greater reasonable return from each leaseholder for the benefit of the poor people of the town.⁵ Following that decree, the trustees leased portions of the Lombard parcel pursuant to long-term commercial and residential leases.⁶ All leases expired by December 31, 1995 and have not been renewed since that time.

The appellants currently occupy their respective parcels within the Lombard property as tenants in sufferance, having previously occupied their parcels under long-term leases. The parties agree that all parcels at issue are used either for businesses conducted for profit or otherwise occupied for non-public purposes. Each appellant pays, without dispute, real estate taxes on the assessed value of any improvement situated on his or her respective parcel.

On January 1, 1997, the appellants were each persons in possession of and with an interest in parcels of real estate in the Town of Barnstable. For fiscal year 1998, the assessors valued the subject properties and assessed taxes thereon at the rate of $13.72 per thousand. The appellants timely paid their taxes for fiscal year 1998, without incurring interest.

On August 27, 1998, the appellants each timely filed an application for abatement for fiscal year 1998, on or before the last day for payment of the related actual tax bill. By notices dated November 17, 1998, the assessors denied each abatement request. Thereafter, the appellants seasonably filed fiscal year 1998 appeals with the Board on February 9, 1999. Accordingly, the Board found that it had jurisdiction over these appeals.

The appellants claim that the real estate that they occupy and use for non-public purposes is not subject to local assessment and taxation because it is owned by the trustee of a charitable testamentary trust and is, therefore, outside the scope of G.L. c. 59, § 2B. For the reasons discussed in the following Opinion, the Board found and ruled that the appellants were properly subject to local assessment and tax, as users and occupants of real estate used for non-public purposes and held in a charitable testamentary trust.

Accordingly, the Board issued a decision for the appellee in these appeals.

OPINION

These appeals raise the issue of whether tenants of land, used and occupied by them for non-public purposes, and owned by a trustee of a testamentary charitable trust, are subject to assessment and tax pursuant to G.L. c. 59, § 2B.

G.L. c. 59, § 2B (“Section 2B”) provides, in pertinent part, that:

real estate owned in fee or otherwise or held in trust for the benefit of the United States, the commonwealth, or a county, city or town, or any instrumentality thereof, if used in connection with a business conducted for profit or leased or occupied for other than public purpose, shall for the privilege of such use, lease or occupancy, be valued, classified, assessed and taxed annually as of January first to the user, lessee or occupant in the same manner and to the same extent as if such user, lessee or occupant were the owner thereof in fee . . . .

(Emphasis added.) In the instant appeals, the Board found that Section 2B was lawfully applied to the appellants, as tenants of real estate used for non-public purposes and owned by the Town of Barnstable in fee or otherwise.

In this matter, and antecedent to assessment, the statute requires that the government have some form of present possessory ownership interest, expansively set forth as “own[ership] in fee or otherwise or held in trust for the benefit of the United States, the commonwealth, or a county, city or town, or any instrumentality thereof . . . .” Logically, the present possessory ownership interest under the statute must be of a nature that enables the government owner to grant some form of tenancy, so that the premises can be “used in connection with a business conducted for profit or leased or occupied for other than public purposes . . . .”

When land is conveyed in trust, the trustees generally take such an estate as is necessary to enable them to perform the trust. See 1A Scott, Trusts, § 88, at 751 (3d ed. 1967); Harrison v. Marcus, 396 Mass. 424, 429 (1985); Richardson v. Warfield, 252 Mass. 518, 520 (1925). In this matter, the trustees took legal title to Lombard’s real estate upon its devise to the Lombard trust, a charitable testamentary trust.⁷ Board of Assessors of Provincetown v. Attorney General, 15 Mass. App. Ct. 639, 644-646 (1983).

The Board found that while the terms of Peter Lombard’s will imposed conditions on the use of income derived from the real estate held in the Lombard Trust, the res was devised to the Trust in fee, “from one Generation To another forever and never to be sold.” The Board found, therefore, that the Lombard parcel was real estate owned in fee by the Barnstable Selectmen and later the Town Manager, thereby satisfying the first requirement of Section 2B. The Board also found, without dispute, that the appellants occupy the real estate as tenants in sufferance, for non-public purposes. Accordingly, the Board found that all of the statute’s prerequisites were literally satisfied. Inescapably, the statute therefore mandates that the appellants in this matter be subject to local taxation on the real estate they occupy and use.

The appellants assert that the 1974 amendments to Section 2B specifically removed charitable testamentary trusts from the statute’s reach. The Board, however, rejected the appellants’ argument and found that their statutory interpretation was contrary to the plain meaning of the statute as well as to its dominant legislative objectives.

It is well settled that in construing statutes “‘[t]he general and familiar rule is that a statute must be interpreted according to the intent of the Legislature ascertained from all the words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied and the main object to be accomplished, to the end that the purpose of its framers may be effectuated.’” Industrial Finance Corporation v. State Tax Commission, 367 Mass. 360, 364 (1975) quoting Hanlon v. Rollins, 286 Mass. 444, 447 (1934); see also Board of Education v. Assessor of Worcester, 368 Mass. 511, 513 (1975); Lincoln-Sudbury Regional School District v. Brandt-Jordan Corporation of New Bedford, 356 Mass. 114, 117-118 (1969). “While courts should look to dictionary definitions and accepted meanings in other legal contexts, . . . their interpretations must remain faithful to the purpose and construction of the statute as a whole.” American Honda Motor Co., Inc. v. Bernardi’s, Inc., 432 Mass. 425, 430 (2000), quoting Heritage Jeep-Eagle, Inc. v. Chrysler Corp., 39 Mass. App. Ct. 254, 258 (1995); Polaroid Corporation v. Commissioner of Revenue, 393 Mass. 490, 497 (1984). Tax statutes, in particular, are to be strictly construed according to their plain meaning. Commissioner of Revenue v. Franchi, 423 Mass. 817, 822 (1996).

In this matter, it is plain from the words of “fee or otherwise” that the statute specifically applies to real estate owned by a charitable testamentary trust. The word “fee,” used synonymously in legal parlance with “fee simple,” is defined as an “estate of inheritance in land, either absolute and without limitation to any particular class of heirs (fee simple) or limited to a particular class of heirs (fee tail)” The Random House Dictionary of the English Language, 705-706 (2^nd ed. 1987) (emphasis added), or more plainly put, as “an estate of lawful inheritance or pure inheritance, ‘fee’ standing for inheritance . . . .” Ballentine’s Law Dictionary, 462 (3^rd ed. 1969). Inherent in the definition of fee, therefore, is the real estate’s fundamental character as inherited real estate. “The words ‘fee simple’ relate to the quantity or extent of the interest in land; it is the largest estate and greatest interest that can be enjoyed in land. A fee simple is an absolute estate of inheritance.” Richardson v. Lane, 226 Mass. 224, 230 (1917).

The words “or otherwise” following ownership in “fee,” ensure that an even broader class of ownership be included within the statute’s reach. “Wherever possible, we give meaning to each word in the legislation: no word in a statute should be considered superfluous.” International Organization of Masters, Mates & Pilots v. Woods Hole, Martha’s Vineyard & Nantucket Steamship Authority, 392 Mass. 811, 813 (1984). Clearly, ownership of the subject property by the town government trustees for the benefit of the town’s poor meets the broad standard under Section 2B, of ownership “in fee or otherwise . . . for the benefit of the . . . town.”

Significantly, the statute provides no specific exemption for real estate owned by a charitable testamentary trust when used for a non-public purpose. It is well settled that exemptions from taxation are generally viewed with a “hostile eye.” Trustees of Boston University v. Board of Assessors of Brookline, 11 Mass. App. Ct. 325, 331 (1981), quoting Oklahoma Tax Commission v. United States, 319 U.S. 598, 612 (1943). An “exemption from taxation is a matter of special favor or grace. It will be recognized only where the property falls clearly and unmistakably within the express words of the legislative command.” New England Legal Foundation v. City of Boston, 423 Mass. 602, 607 (1996), quoting Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 716 (1944); see also Born v. Board of Assessors of Cambridge, 427 Mass. 790, 794 (1998); Board of Assessors of Newton v. Pickwick LTD., Inc. 351 Mass. 621, 623 (1967); Massachusetts Medical Society v. Assessors of Boston, 340 Mass. 327, 331 (1960). While public policy permits reasonable tax exemptions, “taxation is the general rule” and therefore “statutes granting exemptions from taxation are strictly construed.” Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 332 (1941).

The Massachusetts Supreme Judicial Court (“SJC”), in considering the fundamental purpose of the statute, noted that “the Legislature has made no express provision for tax exemption . . . in the hands of tenants operating for pure profit . . . even though such occupants directly and indirectly contribute to the accomplishment of the public purposes.” Gloucester Ice and Cold Storage v. Assessors of Gloucester, 337 Mass. 23, 27 (1957) (emphasis added).⁸ The SJC in Atlantic Refining Company v. Assessors of Newton, 342 Mass. 200 (1961) highlighted that the statute’s fundamental purpose is to

The history of the statute sheds further light on its overall legislative design. “It is permissible to look to the history of a statute for light upon its purpose and meaning.” Boston Safe Deposit & Trust Co. v. Commissioner of Corporations and Taxation, 273 Mass. 212, 214 (1930); Loring v. Young, 239 Mass. 349, 368 (1921); Old South Association in Boston v. Boston, 212 Mass. 299, 304-305 (1912).

At common law, a public charitable trust was considered exempt from taxation, unless specific authority to tax was granted in an enabling statute. See, e.g., Collector of Taxes of Norton v. Oldfield, 219 Mass. 374, 375, 377-378 (1914); Burr v. Boston, 208 Mass. 537, 539, 543, 544 (1911). In 1928, however, legislation was enacted that required the leaseholders of public charitable trust property, when leased for non-public purposes, to pay local real estate taxes.⁹ Specifically, G.L. c. 59A, § 3A provided that:

Real estate owned by or held in trust for the benefit of a city or town, if used or occupied for other than public purposes, shall be taxed to the lessee or lessees thereof, or their assigns, or to the occupant or person in possession thereof, in the same manner and to the same extent as if said lessee or lessees or their assigns or the occupant or person in possession were the owners thereof in fee, free of any trust. This section shall apply to real estate which shall have been acquired by virtue of the provisions of a will or deed, and held by any city or town in trust for public charitable purposes whether or not the same is subject to a duly recorded lease which provides that the lessee shall assume or pay all taxes assessed thereon.

The appellants argue that by the 1974 Acts, users, occupiers and lessees of charitable testamentary trust real estate were specifically eliminated from the statute’s coverage. The 1974 amendment, entitled “An Act Providing for  the   Local  Taxation  on  Certain  Real   Estate   on

Government-owned Property,” removed language that specifically referenced real estate held in a charitable testamentary trust, and added “the United States” in its list of government entities. It provided, in pertinent part:
Real estate owned in fee or otherwise or held in trust for the benefit of the United States, the commonwealth, or a county, city or town, or any instrumentality thereof, if used in connection with a business conducted for profit or leased or occupied for other than public purposes shall for the privilege of such use, lease or occupancy, be assessed and taxed annually as of January first to the user, lessee or occupant in the same manner and to the same extent as if such user, lessee or occupant were the owner thereof in fee, whether or not there is any agreement by such user, lessee or occupant to pay taxes assessed under this section.¹⁰

St. 1974, Chapter 383.

Rather than shrink the applicability of the statute as the appellants suggest, the Board found that the intent of the 1974 act, consistent with its predecessors, was to broaden the class of properties, used or leased for non-public purposes, that were subject to local taxation. The emergency preamble to the act underscored that the purpose of the amendment was to allow for “the  immediate  taxation

of certain real estate on government-owned property.” Further, in light of the fact that the thrust of the 1974 act was to increase the number of government-owned taxable properties, it follows that the deletion of the second statutory reference to real estate, acquired by will or deed and held in trust, was done in recognition of an unnecessary redundancy, remedied during the amendment process. See generally, Connecticut National Bank v. Thomas M. Germain, 503 U.S. 249 (1992). A basic rubric of statutory construction is that statutory redundancy is disfavored, because no portion of a statute should be deemed surplusage, and all sections of a statute must be reconciled so as to achieve a harmonious interpretation of the statute as a whole. Bolster v. Commissioner of Corps. v. Taxation, 319 Mass. 81, 84-85 (1986); Hite v. Hite, 301 Mass. 294, 297 (1938). As noted above, the words of real estate ownership devised through inheritance is subsumed in the words “fee or otherwise.” Viewed as a whole, then, the Board found that the statutory changes were not intended to remove public charitable trusts from the purview of the statute.

Finally, the Board’s reading of Section 2B is harmonious with the overall legislative purpose of G.L. c.  59. Board of Education v. Assessor of Worcester, 368 Mass. at 513-514 (“where two or more statutes relate to the same subject matter, they should be construed together so as to constitute a harmonious whole consistent with the legislative purpose.”) G.L. c. 59, § 2 explicitly states that “[a]ll property, real and personal, situated within the Commonwealth wherever situated, unless expressly exempt, shall be subject to taxation.” Further the statutory exemption for charitable organizations, found at G.L. c. 59, § 5, clause 3, requires not only that the organization be of a charitable nature, but that the real estate be used in furtherance of that charitable purpose.

“Any doubt must operate against the one claiming tax exemption, because the burden of proof is upon the one claiming an exemption from taxation to show clearly and unequivocally that he comes within the terms of the exemption.” Boston Symphony Orchestra, Inc. v. Board of Assessors of Boston, 294 Mass. 248, 257 (1936); Boston Chamber of Commerce v. Assessors of Boston, supra. In general, “the party claiming an exemption from the provisions of a statute has the burden to show that it is entitled to the exemption.” Goodrow v. Lane Bryant, Inc. 432 Mass. 165, 170 (2000).