Central Vermont Hospital, Inc. v. Town of Berlin

CTRL_VT_HOSP_V_TOWN_OF_BERLIN.94-591; 164 Vt 456; 672 A.2d 474

[Filed 15-Dec-1995]

  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. 94-591


Central Vermont Hospital, Inc., et al.            Supreme Court

                                                  On Appeal from
    v.                                            Washington Superior Court

Town of Berlin                                    October Term, 1995


Alan W. Cheever, J.

       Richard Linton Brock, Sandra E. Levine and James S. Brock of Cheney,
  Brock, Saudek & Mullett, P.C., Montpelier, for plaintiffs-appellants

       Robert Halpert of Paterson & Walke, P.C., Montpelier, for
  defendant-appellee


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


       DOOLEY, J.   Plaintiffs Central Vermont Hospital, Inc. (CVH) and
  Woodridge, Inc. appeal the Washington Superior Court's finding that the
  nursing home facility owned by Woodridge on land leased from CVH is subject
  to property taxation by defendant Town of Berlin.  Plaintiffs claim that a
  nonprofit nursing home, which benefits hospital patients and is located on
  land leased to it by a hospital, is exempted from property taxation by 32
  V.S.A. § 3802(4), and is not subject to taxation, under 32 V.S.A. §
  3832(7), as property "used primarily for health . . . purposes."  We
  affirm.

       CVH is a nonprofit hospital in Berlin, Vermont, providing acute,
  short-term health care to members of the public without regard to their
  ability to pay.  In 1993, Woodridge began operation as a Level I & II
  skilled nursing care facility in Berlin on property owned by CVH and leased
  to Woodridge for one dollar per year.  Admission to Woodridge is by order
  of physician.  Woodridge accepts all patients regardless of their ability
  to pay as long as a bed is available, although a preference is given to CVH
  patients.  The facility has run at a 99%

 

  occupancy rate, with 80% to 83% of the patients receiving Medicaid.

       The management of Woodridge and CVH is essentially the same, although
  the corporations have separate boards of trustees.  Some of the trustees
  serve on both boards.  The holding company of Woodridge and CVH is Central
  Vermont Medical Center, Inc. (CVMC). CVMC is the sole member of both
  Woodridge and CVH.  Its mission is carried out by assigning short-term,
  acute-care responsibilities to CVH and long-term care responsibilities to
  Woodridge.

       In July of 1993, defendant sent a property tax bill to CVH for the
  twelve acres of land leased by CVH to Woodridge, and a bill to Woodridge
  for its nursing facility.  The taxability of only the nursing home is at
  issue.

       Under 32 V.S.A. § 3802(4), real and personal property used for
  charitable purposes is exempt from local property taxes.  There is no
  dispute that the Woodridge facility is a charitable use covered by §
  3802(4), unless an exception applies.  Defendant argues that Woodridge is
  "used primarily for health . . . purposes" and is therefore excepted from
  property tax exemption by § 3832(7).  Plaintiffs respond that because of
  other exceptions within § 3832, the exception relied upon by defendants
  cannot extend to plaintiffs.  Specifically, they argue that the Woodridge
  facility is directly connected to CVH and is exempt from property taxation
  as a "home" or a "hospital,"(FN1) and is not used for health purposes because
  "health" means being free from disease.

       The analytical framework for this dispute is set forth in Medical Ctr.
  Hosp., Inc. v. City of Burlington, 152 Vt. 611, 623, 566 A.2d 1352, 1358
  (1989), in which we upheld the property tax exemption status of the Medical
  Center Hospital and related properties.  As here, the City
 
 

  of Burlington argued that the hospital's property was used primarily for
  health purposes and therefore fit within the exception of § 3832(7).  We
  noted that exceptions in § 3832(2), (6) specifically applied to hospitals
  under certain narrow circumstances, showing a legislative intent that the
  hospital would remain exempt if not within these exceptions.  Thus, we held
  that because the term "hospital" is specifically used in § 3832(2) and (6),
  subsection (7)'s reference to property used for "health . . . purposes"
  could not be considered as encompassing hospital property since such an
  interpretation "would lead to the irrational result of rendering portions
  of subsections (2) and (6) meaningless." Id. at 622, 566 A.2d  at 1358.

       The two exceptions relied upon in Medical Ctr. Hosp. are central to
  the issues before us because plaintiffs rely on language within them. 
  Subsection (2) permits a town to tax "[r]eal estate owned or kept by a
  religious society other than a church edifice, a parsonage, the
  outbuildings of the church edifice or parsonage, a building used as a
  convent, school, orphanage, home or hospital . . . ."  32 V.S.A. § 3832(2)
  (emphasis added).  Subsection (6) permits a town to tax "property owned or
  kept by an orphanage, home or hospital including diagnostic and treatment
  center not used for the purpose of such institution but leased to others
  for income or profit . . . ."  Id. § 3832(6) (emphasis added).  In Medical
  Ctr. Hosp., there was no question that the entity in dispute was a
  hospital.  Here, the nature of Woodridge is central to the dispute.

       We understand plaintiffs to make three arguments from the statutory
  language: (1) Woodridge is a "home" for purposes of § 3832(2), (6); (2)
  Woodridge is directly connected to CVH so that its facilities are part of
  CVH for purposes of § 3832(2), (6); and (3) Woodridge is a treatment center
  and therefore a "home or hospital" as set out in §3832(6).  We take these
  in turn.

       First, we do not read the term "home" in § 3832(2), (6) as including
  nursing homes.  In reaching this conclusion, we emphasize the rationale of
  Medical Ctr. Hosp. that the "plain and ordinary language" of § 3832(7) does
  not create a general exception for hospitals, because the specific
  treatment of hospitals in § 3832(2), (6) showed a legislative intent to
  exempt hospitals

 

  from property taxation in most circumstances.

       Plaintiffs argue that we should use the same analysis herein because a
  skilled nursing facility is a home for purposes of § 3832(2), (6).  This
  argument, however, sets up an unnecessary conflict between the subsections
  of § 3832.  We have recognized  "a fundamental rule of statutory
  construction that statutes dealing with the same subject matter should be
  construed with reference to each other as parts of one system."  Emmons v.
  Emmons, 141 Vt. 508, 512, 450 A.2d 1113, 1115 (1982).  Where two statutes
  cover the same subject and one is more specific than the other, we
  harmonize them by giving effect to the more specific provision according to
  its terms.  See State v. Buelow, 155 Vt. 537, 541, 587 A.2d 948, 951 (1990)
  (holding that more specific statutory sections on jurisdiction control). 
  Further, we normally enforce a newer statute over an older one in conflict
  with the newer statute.  Lomberg v. Crowley, 138 Vt. 420, 423, 415 A.2d 1324, 1326 (1980).  Subsection (7) of § 3832 was added in 1955, see 1955,
  No. 178, § 1 (property tax exemption does not include "land, buildings, and
  tangible personal property . . . used primarily for health or recreational
  purposes . . . "), whereas subsections (2) and (6) have existed since 1910
  and 1933 respectively, see 1910, No. 32, § 1 (exemption does not include
  "lands or buildings owned or kept by a religious society . . . "); 1933,
  No. 10, § 1 (exemption does not include "any lands or buildings owned or
  kept by any orphanage, home or hospital and not used directly for the
  purpose of such institution, but leased to others for income or profit . .
  . ").

       Here, the more specific and later provision, § 3832(7), which clearly
  makes property used "primarily for health . . . purposes" taxable, controls
  over the more general and vague term "home," which can describe virtually
  any facility in which persons stay overnight for any reason.  The way to
  harmonize the provisions is to conclude that "home" does not include
  property used primarily for health purposes.  In this way, finding that §
  3832(7) controls does not lead to "the irrational result of rendering
  portions of subsections (2) and (6) meaningless," the essential component
  of the Medical Ctr. Hosp. analysis.  See 152 Vt. at 622, 566 A.2d at