Village of Lannon v. Wood-Land Contractors, Inc.

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2003 WI 150 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 02-0236 Village of Lannon, Plaintiff-Respondent, v. Wood-Land Contractors, Inc., Defendant-Appellant-Petitioner, Mary L. Barnekow, Defendant. REVIEW OF A DECISION OF THE COURT OF APPEALS 2003 WI App 7 259 Wis 2d. 879, 659 N.W.2d 95 (Ct. App. 2002-Published) OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: September 11, 2003 SOURCE OF APPEAL: COURT: COUNTY: JUDGE: Circuit Waukesha J. Mac Davis JUSTICES: CONCURRED: December 4, 2003 ABRAHAMSON, C.J., concurs (opinion filed). PROSSER, J., concurs (opinion filed). ROGGENSACK, J., concurs (opinion filed). WILCOX and CROOKS, J.J., join concurrence. DISSENTED: NOT PARTICIPATING: ATTORNEYS: For defendant-appellant-petitioner there were briefs by Robert F. Klaver, Jr., James J. Carrig and Niebler, Pyzyk, Klaver & Wagner LLP, Menomonee Falls, and oral argument by James J. Carrig. For the plaintiff-respondent there was a brief by Mark G. Blum and Hippenmeyer, Reilly, Moodie & Blum, S.C., Waukesha, and oral argument by Mark G. Blum. 2003 WI 150 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 02-0236 (L.C. No. 01 CV 1186) STATE OF WISCONSIN : IN SUPREME COURT Village of Lannon, Plaintiff-Respondent, FILED v. DEC 4, 2003 Wood-Land Contractors, Inc., Defendant-Appellant-Petitioner, Cornelia G. Clark Clerk of Supreme Court Mary L. Barnekow, Defendant. REVIEW of a decision of the Court of Appeals. Reversed and cause remanded. ¶1 unpaid ANN WALSH BRADLEY, J. personal property taxes, In this action to collect Wood-Land Contractors, Inc., (Wood-Land) seeks review of a court of appeals' decision that affirmed the circuit court's grant of summary judgment in favor of the 1 Village of Lannon (Lannon).1 It contends that its Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI App 7, 259 Wis. 2d 879, 659 N.W.2d 95 (affirming a decision of the circuit court for Waukesha County, J. Mac Davis, Judge). No. equipment is tax exempt under 02-0236 Wis. Stat. § 70.111(20) (1999- 2000).2 ¶2 Specifically, Wood-Land argues that the court of appeals erred in applying the "primary purpose" of the business test rather than the use of the equipment test. We agree, and conclude that neither the language of the statute nor our prior cases supports the business test adoption here. applied of Rather, should be in exempt from taxation. the the determining "primary use of whether Accordingly, we purpose" the of equipment this the test equipment the reverse is of court appeals and remand to the circuit court. I ¶3 Wood-Land is a closely held headquartered in Lannon, Wisconsin. family corporation It contracts to cut and clear trees on the property of its customers. As part of its operations, Wood-Land removes all of the timber from the site and produces forest products, such as saw logs, wood chips, and firewood. Wood-Land advertises both its land clearing services and sale of firewood and wood chips to the general public. ¶4 Wood-Land equipment. Buncher owns approximately 1.3 million dollars in The most expensive item is a Timbco T-425 Feller machine. approximately The $210,000, Timbco's plus tractor and transport trailer. cost $127,000 to for Wood-Land its was specialized Wood-Land uses the Timbco to cut 2 All references are to the 1999-2000 Wisconsin Statutes unless otherwise noted. 2 version of the No. 02-0236 trees with girths up to 33 inches, which are generally of a height 80 feet or greater. ¶5 For smaller trees, timbering machinery, Wood-Land including uses skidsters attachments, brush hogs, and chain saws. type of several equipment, of its Wood-Land office items more also with grappling In addition to this claimed including conventional a an exemption typewriter, for copier, telephones, calculators, and carpeting. ¶6 After Wood-Land cuts a tree, it either chips it on- site or loads it onto log racks. Wood-Land cuts desirable trees to lengths as saw logs and sells them to mills. It processes less desirable trees for wood chips and firewood that it sells to the public. Wood-Land maintains an eight-acre property where it prepares and sells firewood and wood chips. ¶7 In 2000, Wood-Land had a total revenue of $749,678.90. Of this total, $72,655.85 came from the sale of saw logs, wood chips, and firewood. Thus, Wood-Land's sale of "forest products" represented nearly ten percent of its revenue that year. ¶8 Lannon commenced an action in May 2001 to collect unpaid personal property taxes on Wood-Land's equipment. Land brought a counterclaim seeking a declaratory Wood- judgment action with respect to its exemption rights under Wis. Stat. § 70.111(20). circuit Both sides moved for summary judgment, and the court concluded that the dispute. 3 material facts were not in No. ¶9 02-0236 In its decision, the circuit court recognized that the commercial use of forest products was a "substantial purpose" of Wood-Land's operations. It further acknowledged that it was "beyond dispute that much of Wood-Land's equipment was used to 'cut trees,' to 'transport trees in logging areas,' or to 'clear land of trees.'" however, harvest because forest customers. the The court refused to grant the exemption, Wood-Land's products, but "primary rather purpose" to clear was land not for to its Accordingly, it granted judgment to Lannon based on "primary purpose" of Wood-Land's business and never addressed the use of the office equipment or any other specific piece of equipment. ¶10 decision. Wisconsin The court of appeals affirmed the circuit court's It acknowledged that "there are no prior cases in adopting the 'primary purpose' test." Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI App 7, ¶17, 259 Wis. 2d 879, 659 N.W.2d 95. Nevertheless, it concluded that it should adopt the test here. Id., ¶16. The court reasoned: We are convinced that the legislature crafted a narrow exemption for the logging industry whose existence is based upon cutting forest products in logging areas or cutting and clearing land in forests so that it can use the fruits of its labor for some commercially viable use. The legislature did not intend to grant this exemption to businesses outside the logging industry. Id. ¶11 Applying the "primary purpose" of the business test, the court of appeals determined that Wood-Land did not qualify 4 No. for the exemption. value [Wood-Land] Id., ¶17. gets from 02-0236 It explained, "Any incidental commercially selling the felled trees it carries from developers' property is collateral to its main occupation. Wood-Land is not engaged in the systematic occupation of logging." Id., ¶13. II ¶12 Our essential inquiry in this case is one of statutory interpretation. The interpretation of a statute presents question of law subject to independent appellate review. a Meyer v. School Dist. of Colby, 226 Wis. 2d 704, 708, 595 N.W.2d 339 (1999). ¶13 When interpreting a statute, our purpose is to discern legislative intent. State ex rel. Angela M.W. v. Kruzicki, 209 Wis. 2d 112, 121, 561 N.W.2d 729 (1997). To this end, we look first to the language of the statute as the best indication of legislative intent. Id. Additionally, statute's context and history. ¶14 we may examine the Id. Because exemption from the payment of taxes is an act of legislative grace, the party seeking the exemption bears the burden of proving entitlement. Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 80, 591 N.W.2d 583 (1999). Exemptions "shall be strictly construed . . . with a presumption that the property in question is taxable . . . ." Wis. Stat. § 70.109. In interpreting tax exemption statutes, we apply a "strict but reasonable construction." Deutsches Land, 225 Wis. 2d at 80. III 5 No. ¶15 02-0236 The issue in this case is whether the court of appeals erred in applying the "primary purpose" of the business test to Wis. Stat. § 70.111(20). We conclude that it did, as neither the language of the statute nor our prior cases supports the adoption of that test. ¶16 tax Lannon maintains that Wood-Land is not entitled to the exemption contends that that under the the subsection's legislature specifically qualifies plain incorporated the exempt commercial use of forest products." language. a "use" equipment It component "for the According to Lannon, Wood- Land does not clear the land to sell and process the trees that it cuts; rather, property. As a it clears result, the land Wood-Land's for the development ancillary sales of cannot transform its equipment into tax-exempt property. ¶17 The problem with Lannon's reading, as adopted by the court of appeals, is that it shifts the focus of the statute from the use of the equipment to the nature of the business seeking the exemption. We believe that such a reading runs contrary to legislative intent. ¶18 statute. We begin our analysis with an examination the Wis. Stat. § 70.111 describes personal property that is exempted from general property taxation. total of subsections reflecting various considerations made by the legislature. It consists of 25 public policy The statute provides in relevant part: The property described in this from general property taxes: 6 section is exempted No. 02-0236 . . . (20) LOGGING EQUIPMENT. All equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products. ¶19 Both parties agree that the phrase, "commercial use of forest products," modifies each of the three types of logging equipment specified in the statute. construction. We too subscribe to this To read the phrase as modifying only equipment used to clear land would render an exemption for nearly every saw in this state. Accordingly, we conclude that the legislature intended no such construction. ¶20 purpose" Where of the parties Wood-Land's disagree business is is whether a the proper determining the tax exempt status of its equipment. it is not under Wis. Stat. § 70.111(20). "primary test for We believe On its face, the statutory exemption contains no language that the equipment be used by a certain business model or industry. Moreover, the exemption contains no language that the user's "primary purpose" is to harvest forest products. ¶21 We read the focus of the exemption to be solely on the use of the equipment. Thus, the relevant inquiry is whether the equipment is used: (1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products. ¶22 If the legislature had intended to narrow the exemption in the way that Lannon suggests, it could have easily 7 No. done so. 02-0236 In looking at this exemption in the context of the whole statute, we note that several of the 24 other subsections in the statute contain examples of qualifying language. Such limiting language is not found in the exemption at hand. ¶23 For example, in the subsection entitled "TOOLS AND GARDEN MACHINES," the legislature chose to narrow the exemption to equipment "used in" or "used by" a particular business model or industry. Wis. Stat. § 70.111(9). Under it, "tools" are exempt if they are "kept and used in the mechanic's trade." (Emphasis added.) they are "owned Id. Moreover, "garden machines," are exempt if and used by any person in the business farming or in the operation of any orchard or garden." (Emphasis added.) of Id. The "used by" qualifier is also employed in Wis. Stat. §§§ 70.111(14), 70.111(24), and 70.111(25).3 ¶24 in the The legislature adopted a variation of this language subsection entitled, Wis. Stat. § 70.111(10). exemption accessories, specifies, "FARM MACHINERY AND EQUIPMENT." Below its definition of "Machine," the "Tractors attachments, fuel 3 and and machines; repair parts including for them; Wisconsin Stat. § 70.111(14) entitled "MILKHOUSE EQUIPMENT" provides, "Milkhouse equipment used by a farmer . . . ." Wisconsin Stat. § 70.111(24) entitled "MOTION PICTURE THEATER EQUIPMENT" provides, "Projection equipment, sound systems and projection screens that are owned and used by a motion picture theater." Wisconsin Stat. § 70.111(25) entitled "DIGITAL BROADCASTING EQUIPMENT" provides, "Digital broadcasting equipment owned and used by a radio station or a television station . . . ." 8 No. 02-0236 whether owned or leased, that are used exclusively and directly in farming . . . ." ¶25 of Id. (Emphasis added.) Finally, the legislature provided yet another example limiting TRAILERS language AND in the RECREATIONAL § 70.111(19)(b). subsection MOBILE entitled HOMES." "CAMPING Wis. Stat. It states, "Mobile homes, as defined in s. 66.0435, that are no larger than 400 square feet and that are used primarily as temporary living quarters for recreational, camping, travel or seasonal purposes." ¶26 (Emphasis added.) Id. Clearly the legislature has demonstrated an ability to use qualifying language which limits an exemption, as evidenced by these different subsections. Therefore, what Wis. Stat. § 70.111(20) does not say is also significant when interpreting its meaning. ¶27 We consider next the subsection's legislative history. Admittedly, policies the history underlying of the § 70.111(20) exemption. is silent Nevertheless, on we the find support for our interpretation. ¶28 We note that an earlier draft of the exemption, 1983 A.B. 38 states: "All equipment used to cut trees for lumber, to transport trees in logging areas or to clear land of trees in lumbering." (Emphasis added.) The phrase "in lumbering" was removed in the later draft and replaced with the phrase "for the commercial use of subsequent change forest as products." still lumbering or logging industry. referring We do not exclusively view the to the Rather, we view the new language 9 No. as removing the industry component from the 02-0236 subsection altogether. ¶29 In sum, we find nothing in the exemption's language, context, or history to support Lannon's construction. To the contrary, of such an examination reveals that the use the equipment test is applied under Wis. Stat. § 70.111(20) when determining whether the equipment is exempt from taxation. ¶30 A review interpretation. of the relevant cases also supports our The court of appeals acknowledged that, "there are no prior cases in Wisconsin adopting the 'primary purpose' test." Wood-Land, 259 Wis. 2d 879, ¶17. It found support, however, in the logic of Village of Menomonee Falls v. Falls Rental World, 135 Wis. 2d 393, 400 N.W.2d 478 (Ct. App. 1986). Id., ¶¶15-16. The court also cited as foundation for its conclusion the "function or use" cases of Ladish Malting Co. v. DOR, 98 Wis. 2d 496, 297 N.W.2d 56 (Ct. App. 1980), and DOR v. Greiling, 112 Wis. 2d 602, 334 N.W.2d 118 (1983). ¶31 Id., ¶17. What the court of appeals failed to address, however, was its decision in Owens-Illinois, Inc. v. Town of Bradley, 132 Wis. 2d 310, 392 N.W.2d 104 (Ct. App. 1986). decided after both Ladish and Greiling and That case was rejected the application of the "primary purpose" test. ¶32 In Owens-Illinois, the Wisconsin Department of Revenue advanced an argument very similar to Lannon's. It claimed that Owens-Illinois' boiler and power house were not entitled to taxexempt status because their "primary purpose" was to produce steam and heat for use in industrial production rather than to 10 No. eliminate pollution. Wis. Stat. § Id. at 315. 70.11(21)(a), ABATEMENT EQUIPMENT." all exempt property Id. be 02-0236 The exemption in dispute was "TREATMENT PLANT AND POLLUTION It required two things: "(1) that purchased or constructed as a waste treatment facility; and (2) that exempt property be approved by the department of revenue eliminating pollution." ¶33 language for the purpose of abating or Id. The court of appeals concluded that nowhere in the of the exemption was there a requirement that "the primary purpose of a waste facility be pollution abatement in order to qualify for exemption." Id. Accordingly, it rejected the application of the "primary purpose" test. ¶34 case. We find Owens-Illinois instructive Id. in the present As with Wis. Stat. § 70.111(20), the exemption in Owens- Illinois focused on the use of equipment and not the "primary purpose" of its user. As a result, the court of appeals determined that Owens-Illinois' motivation or purpose for using the equipment was irrelevant in evaluating the exemption claim. See id. at 315-316. We believe that Wood-Land's motivation or purpose for using its logging equipment is similarly irrelevant here. All the subsection requires is that the equipment be "used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products." Wis. Stat. § 70.111(20). ¶35 In adopting the "primary purpose" of the business test, the court of appeals relied on the logic of Falls Rental World. Wood-Land, 259 Wis. 2d 879, ¶¶15-16. 11 The sole issue on No. 02-0236 appeal in that case was whether goods held out for rent could be classified as "merchants' stock-in-trade," thereby qualifying it as tax exempt under § 70.111(17). 2d at 395. Falls Rental World, 135 Wis. Falls Rental World based its claim on the fact that it occasionally removed property from its rental group and sold it. Id. The court concluded that the property at issue was not "stock-in-trade" under the plain meaning of the statute. ¶36 Id. The court of appeals' reliance on Falls Rental World is misplaced. Nothing about that decision supports the adoption of the "primary purpose" of the business test in the present case. Indeed, the focus of Falls Rental World was the property held out for rent. Id. To the extent that the court examined the nature of the business, it did so only to give meaning to the entity described in the statute, that is, "merchant." at 398. Id. Here, the subsection at issue contains no corresponding business entity. It is a different exemption with a focus on the use of equipment. ¶37 Likewise, we believe neither Ladish nor Greiling supports the adoption of the "primary purpose" test here. Ladish, a malting company contended that its In attemporators, kilns, and malt elevators were exempt under the so-called "M&E" exemption. 98 Wis. 2d at 498. "[m]anufacturing machinery and The "M&E" exemption applied to specific processing equipment, exclusively and directly used by a manufacturer in manufacturing tangible personal property." Id. It excluded, however, "materials, supplies, buildings or building components." Id. The department of revenue argued that Ladish was not entitled to 12 No. 02-0236 the exemption because its structures were not "machines" but rather "buildings." Id. at 499. The court of appeals disagreed, applying the "function or use" test over the more narrow "physical appearance" test. ¶38 In Greiling, this involving a greenhouse. Id. at 510. court faced a similar issue A taxpayer claimed that his greenhouse was a "machine" used in floriculture, thereby qualifying its components for an exemption. 112 Wis. 2d at 605. The court agreed, noting that, "a greenhouse such as the one in this case does not function plants. simply Instead, it as a shelter actively or storage produces the area for artificial environment necessary to produce plants for commercial use and as such could be considered a machine." cited Ladish use'] test and stated, should be exemption issues." ¶39 "We believe determinative Id. at 606. that when the The court ['function resolving use or tax Id. at 607. We fail to see how either Ladish or Greiling provides foundation for the court of appeals' decision in the present case. The issue in both cases was whether a disputed structure or structures could be considered "machines" for the purposes of tax exemption. Accordingly, the court's focus was on the "function or use" of the property, not the "primary purpose" of the business or taxpayer claiming the exemption. ¶40 In sum, we do not find support in our prior case law for the application of the "primary purpose" of the business test here. To the contrary, the case of Owens-Illinois, in interpreting a similar exemption, rejected such an approach. 13 No. ¶41 02-0236 In addition to the above discussion of the statutory language and our prior case law, we note the difficulty in the practical application of the "primary purpose" test. Because the test is subjective in nature, it places an enormous burden on assessors or courts applying the exemption. ascertain whose "purpose" they involving two companies one are to logging could be a troublesome task. First, they must consider. and one In a case processing this Second, they must determine the individual business' "primary purpose" for each taxable year. We can alter imagine scenarios Wood-Land's in percentage which of fluctuating forest markets products could sales and transform otherwise non-exempt equipment into exempt equipment. We conclude the legislature did not intend such a result. ¶42 Having established that § 70.111(20) requires a use of the equipment test, we consider next the application of that test in this recognized case. that requirements of In "much" the its of decision, Wood-Land's statute. the circuit equipment Nevertheless, it court met the applied the "primary purpose" test and rejected the claimed tax exemption because it determined that Wood-Land's clearing land for its customers. granted summary judgment "primary purpose" was Accordingly, the circuit court without addressing which pieces of equipment met the statutory use requirements. ¶43 equipment On of remand, the Wood-Land's circuit is used: court (1) should to cut consider trees for what the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) 14 No. to clear land products. of for the commercial use of forest Wood-Land will bear the burden of proving entitlement to the exemption. ¶44 trees 02-0236 Deutsches Land, 225 Wis. 2d at 80. At oral argument, both parties advanced a "strict but reasonable" standard for applying tax exempt statutes. They relied upon Deutsches Land in support of this standard. ¶45 In Deutsches Land, we considered whether property owned by benevolent associations devoted to the preservation of German culture was entitled to exemption from property taxes Id. at 76. under § 70.11 (1995-96). In construing the statute, we rejected the notion that the term "exclusively" brooked no exceptions. Id. We explained that such an inflexible and strict interpretation would frustrate the intent of the statute. Id. at 83. incidental In essence, we recognized that "inconsequential or uses organization did "exclusive" use. ¶46 of the not property destroy for an gain" by exemption a benevolent calling for See id. at 83. Although Deutsches Land involved the exemption of real property, we nevertheless find it useful in the present case. The personal property exemption at issue is subject to the same "strict but reasonable" construction. See id. at 80. Without such a construction, we believe that the exemption would invite subterfuge or sham in claims involving de minimis use. Accordingly, we recognize the corollary to the above principle here: de minimis uses of the property are not sufficient to invoke this exemption. 15 No. ¶47 02-0236 We are mindful that our holding today may appear to run contrary to the legislative directive that exemptions "shall be strictly construed . . . with a presumption that the property in question is taxable . . . ." we are impelled statute. to our Wis. Stat. § 70.109. conclusion by the However, language of the We believe that if the legislature intended to limit Wis. Stat. § 70.111(20) to the logging industry, it would have explicitly said so, as it has done in several of the other subsections. Indeed, if the legislature still wishes to narrow the exemption, it can amend it at any time by adding a few words to identify a specific business model or, if it so chooses, a "primary purpose." ¶48 In sum, we determine that the court of appeals erred in adopting the "primary purpose" of the business test. We agree with Wood-Land that § 70.111(20) is defined by the use of the equipment. Accordingly, we reverse the court of appeals and remand circuit to the court to determine what equipment is entitled to a tax exemption under the statutory provision. By the Court. The decision reversed and the cause is remanded. 16 of the court of appeals is No. ¶49 (concurring). SHIRLEY S. ABRAHAMSON, C.J. 02-0236.ssa I agree with Judge Nettesheim's dissent that summary judgment is not appropriate in the present case. I, like Judge Nettesheim, agree with the test set forth by the court of appeals. He and I conclude that competing reasonable inferences can be drawn on the question of whether Wood-Land's primary business activity is logging or whether it is the clearing of land with timbering as an ancillary activity. Like Judge Nettesheim, I would remand the cause to the circuit court for trial on that question. ¶50 numerous Wisconsin Stat. § 70.111 provides a conglomeration of tax exemptions. The statute seamless web of tax exemptions.4 pattern or theme. does not set forth a The exemptions do not divulge a Subsection (20) of § 70.111 provides a personal property tax exemption for "[a]ll equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products."5 ¶51 The statutory language to be interpreted in the present case is the phrase "for the commercial use of forest products." The phrase "for the commercial use of forest products" modifies each of the three uses of equipment specified 4 As the court explained in Columbus Park Housing Corp. v. City of Kenosha, 2003 WI 143, ¶35, ___ Wis. 2d ___, ___ N.W.2d ___, chapter 70 "is not a comprehensive, perfectly woven web of tax exemptions . . . rather it represents a conglomeration of exemptions granted to specific and welldelineated entities and property used in a certain fashion." The majority opinion's or the concurring opinion's comparison of this exemption with other statutory exemptions and other tax cases is not persuasive. 5 See Wis. Stat. § 70.111(20). 1 No. 02-0236.ssa in the statute: cutting trees, transporting trees in logging areas, and clearing land of trees.6 Wood-Land focuses on the phrase "to clear land of trees for the commercial use of forest products." ¶52 The sole issue before the court is whether "for the commercial use of forest business purpose of cutting, transporting the or products" entity means claiming clearing land that the of the primary exemption trees for is the commercial use of forest products or whether, as the majority opinion puts it, the entity merely utilizes its equipment for some commercial use of forest products.7 ¶53 That the statute requires equipment to be used for the commercial use of forest products rather than a commercial use of forest products suggests that the first, highest, or foremost purpose of the business using the equipment, or of the use of the equipment products.8 itself, is for the commercial use of forest Use of the definite article in the statute rather than the indefinite article, coupled with the various references to "logging" in both the title and body of the statute, and general rules of interpreting tax exemptions lead me to believe 6 Majority op., ¶19. 7 The court of appeals concluded that "the statute was designed to give an exemption for those systematically involved in the logging business, not to those who incidentally cut logs and sell the products as a small part of an altogether different kind of business." Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI App 7, ¶1, 259 Wis. 2d 879, 659 N.W.2d 95. 8 See Bluebird Partners, L.P. v. First Fid. Bank, N.A., 731 N.E.2d 581 (N.Y. 2000). 2 No. 02-0236.ssa that the legislature sought to craft a very narrow exemption limiting the business entities capable of claiming an exemption to those that are part of the logging industry. ¶54 which The court of appeals read the title of the statute, refers to "logging equipment,"9 along with the text, including the provision referring to the transport of trees in logging areas, and concluded that the legislature intended that the exemption industry.10 apply The court to entities of appeals involved in the logging concluded on review of a summary judgment that the primary purpose of Wood-Land was to clear the land for development, not to make commercial use of forest products.11 The dissent in the court of appeals agreed with the test expressed by the majority but concluded that the summary judgment record supported competing inferences drawn by both parties as to whether Wood-Land is engaged in the logging business and urged that the matter should go to trial.12 ¶55 I agree with the court of appeals that the legislature crafted a narrow exemption for those in the business of clearing forest land for the express purpose of using the fruits of their 9 The title of a statute may be persuasive interpretation to be given the statute and legislative Mireles v. LIRC, 2000 WI 96, ¶60 n.13, 237 Wis. 2d N.W.2d 875 (quoting Pure Milk Prods. Coop. v. Nat'l Org., 64 Wis. 2d 241, 253, 219 N.W.2d 564 (1974)). 10 of the intent. 69, 613 Farmers Wood-Land, 259 Wis. 2d 879, ¶¶13, 16. 11 The income Wood-Land derived from the sale of forest products in the present case was less than 10% of its business revenue. 12 Wood-Land, concurring). 259 Wis. 2d 879, 3 ¶20 (Nettesheim, J., No. labor for eventual commercial use. The 02-0236.ssa legislature did not intend to grant the exemption to businesses outside the logging industry. The question for me, then, is whether Wood-Land is engaged in the systematic business of logging and using this equipment in that business. ¶56 The concluding majority that the opinion statute need this approach,13 consider Wood-Land's rejects not motivation or purposes for using its logging equipment and looks only to determine whether the use of the equipment is for a commercial use of forest products.14 ¶57 The majority opinion states it is adopting a "use of equipment test" but never explains the test. It remands the matter to the circuit court to decide the exemption but merely reiterates the words of the statute in instructing the circuit court on remand. According to the majority opinion, on remand the circuit court should consider "what equipment of Wood-Land's is used: (1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products."15 13 Majority op., ¶34. 14 The tax cases the majority opinion relies on and distinguishes do not interpret the tax exemption in the present case. All the cases the majority opinion cites, including Owens-Illinois, Inc. v. Town of Bradley, 132 Wis. 2d 310, 392 N.W.2d 104 (Ct. App. 1986), which reject a "primary purpose" test, relate to different exemptions with different focuses. 15 Majority op., ¶43. 4 No. ¶58 02-0236.ssa The only guidance the majority opinion gives to the circuit court in applying the statute on remand is that sham claims involving de minimis use of equipment for commercial use of forest products are not sufficient to sustain an exemption. The majority opinion thus interprets the statute to exclude from the exemption inconsequential uses of the designated equipment for the commercial use of forest products.16 ¶59 In doing so, the majority opinion injects a quantity element into § 70.111(20) at the same time as it objects to the court of statute. appeals' insertion of a quantity element into the The majority opinion carefully avoids commenting on how de minimis is de minimis and how equipment used for dual purposes should be treated.17 Indeed, this case may very well present a case in which much of Wood-Land's equipment is used for dual purposes. If one of the majority's criticisms is that the court of appeals decision is difficult to apply, the same criticism can be levied against the majority opinion's interpretation. ¶60 Perhaps the tests set forth in the majority opinion and in the decision of the court of appeals are distinctions without a difference. Regardless of whether courts are required to determine whether an entity is a logging enterprise and has 16 Majority op., ¶¶45-46. 17 Wood-Land's equipment is, at best, used for a dual purpose: to clear land at the request of persons who hire it and to obtain forest products for commercial use. Brief and Appendix of Defendant-Appellant-Petitioner Wood-Land Contractors, Inc., at 22. 5 No. as its primary clearing land business of trees purpose for the cutting, 02-0236.ssa transporting, commercial use of or forest products, or whether courts must evaluate whether the equipment is used solely, partly, or de minimis for a commercial use of forest products, the tests ultimately require a determination of how much use must be for commercial use of forest products in order to qualify for a tax exemption. ¶61 Having concluded that both tests introduce a quantity element into the statutory language, I am not persuaded that the "use" interpretation adopted by the majority opinion is any better than the "primary purpose" interpretation adopted by the court of appeals. Indeed I think the majority opinion may be more difficult to apply. ¶62 a To determine under the "primary purpose" test whether business entity is in the logging consideration of several factors. industry will require These factors include, but are not limited to, whether an entity holds itself out as being a logging business and the amount or percentage of revenue generated from the entity's cutting trees, transporting trees in logging areas, and clearing of land for commercial use of forest products. ¶63 The majority opinion acknowledges that its holding "may appear to run contrary to the legislative directive."18 In light in of the Wis. Stat. § 70.109 legislature's that exemptions explicit "shall command be strictly construed . . . with a presumption that the property in question 18 Majority op., ¶47. 6 No. is taxable,"19 and our interpretive rule tax that 02-0236.ssa exemption statutes be given a strict but reasonable interpretation,20 I conclude that the majority opinion is contrary to the that its legislature's intent and our interpretive rule. ¶64 The construction intent; burden is "any is on supported doubt the by taxpayer clear under the to evidence 'strict show of but legislative reasonable' construction rule must be resolved against the party seeking the exemption."21 The court of appeals' interpretation of § 70.111(20) to include a "primary purpose" of the business test more accurately effectuates the language of the statute and the intent of the legislature than does the majority opinion's. Accordingly, I concur and would, for the reasons set forth by Judge Nettesheim, remand the cause to the circuit court for trial. 19 See Wis. Stat. § 70.109. 20 Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 80, 591 N.W.2d 583 (1999). 21 Deutsches Land, 225 Wis. 2d at 80-81. 7 02-0236.dtp ¶65 DAVID T. PROSSER, J. (concurring). majority opinion with because directive that property construed in every reservation tax exemptions instance." of I join the the "shall statutory be strictly Wis. Stat. § 70.109. This directive, which was inserted into the statutes in 1998, is even more pointed than construction rule. the modern formulation of the strict See Sisters of St. Mary v. City of Madison, 89 Wis. 2d 372, 379, 278 N.W.2d 814 (1979); Friendship Village of Greater Milwaukee, Inc. v. City of Milwaukee, 181 Wis. 2d 207, 220, 511 N.W.2d 345 (Ct. App. 1993). ¶66 The concurrence of the Chief Justice asserts that the majority opinion never explains the "use of equipment" test. Concurrence, ¶57. There is some legitimacy in this criticism. In the wake of the court's decision, a property owner may be able to secure a property tax exemption for certain equipment merely by demonstrating that the equipment is used to cut trees for the commercial use of forest products, to transport trees for the commercial use of forest products, or to clear land for the commercial use of forest products, so long as use of the equipment for one or more of these purposes is not de minimis. This may be a broader exemption than the legislature intended. ¶67 On the other hand, the problem with the "primary use" test is that it could nullify the exemption on logging equipment under Wis. Stat. § 70.111(20) if less than 50 percent of the income generated by the equipment in the previous year came from cutting trees for the commercial use of forest products, transporting trees for the commercial use of forest products, or 1 02-0236.dtp clearing land for the commercial use of forest products. As a result, the viability of a taxpayer's exemption could depend upon the fluctuating market value of forest products or the varying and unpredictable utilization of logging equipment as new work becomes available. ¶68 for Wisconsin Stat. § 70.111 contains multiple exemptions personal machines,23 and § 70.112(5) tractors, property, rented contains similar horses,22 including personal an motor tools property.24 exemption for vehicles, connection with these vehicles. and and garden Wisconsin motor Stat. trucks, truck trailers used in These exemptions overlap the exemption for logging equipment, regardless of how the exemption for logging equipment is construed. ¶69 Thus, even if the court of appeals' interpretation of § 70.111(20) were affirmed, a person who used a horse or motor truck to clear land for development would have a property tax exemption for the horse or truck, irrespective of whether any affected forest products had commercial value. Similarly, "logging equipment" for rental would normally be exempt for the rental business, no matter how the equipment was used. would produce identical an "logging inexplicable equipment," consequences. 22 Wis. Stat. § 70.111(7). 23 Wis. Stat. § 70.111(9). 24 Wis. Stat. § 70.111(22). 2 patchwork with of exemptions potentially This for inequitable 02-0236.dtp ¶70 Against this background, I conclude that the majority opinion represents the proper interpretation of the exemption. The legislature is entitled to clarify its intent. 3 No. ¶71 PATIENCE D. ROGGENSACK, J. (concurring). with the conclusions reached in the majority opinion. I write separately statutory to point out that the majority analysis of Wis. Stat. § 70.111(20) is a 02-0236.pdr I agree However, opinion s departure from that which has been this court s mode of statutory analysis and that it is not one that the court has discussed and decided to adopt. ¶72 Our jurisprudence has repeatedly explained that the interpretation of a statute is a question of law that we review de novo. State ex rel. Angela M.W. v. Kruzicki, 209 Wis. 2d 112, 121, 561 N.W.2d 729 (1997); Stockbridge Sch. Dist. v. DPI, 202 Wis. 2d 214, 219, 550 N.W.2d 96 (1996). Our goal in statutory interpretation is to ascertain and give effect to the legislature s intent. Angela M.W., 209 Wis. 2d at 121; Ball v. Dist. No. 4, Area Bd. of Vocational, Technical and Adult Educ., 117 Wis. 2d 529, 537-38, 345 N.W.2d 389 (1984). We begin our interpretation with the language the legislature has chosen to use in the statute. Angela M.W., 209 Wis. 2d at 121. We give that language its plain and ordinary meaning. Id. at 121; Bruno v. Wis. 2d Milwaukee N.W.2d 656. County, 2003 WI 28, ¶20, 260 633, 660 If the language is clear on its face, we need go no further and we simply apply it. Bruno, 260 Wis. 2d 633, ¶20. As a general rule, we do not review extrinsic sources unless there is an ambiguity in the statute. However, if the language is ambiguous, we consult the scope, history, context, subject matter and object legislative intent. of the statute in order Ball, 117 Wis. 2d at 537-38. 1 to ascertain A statute is No. ambiguous if it interpretations. ¶73 is susceptible to two or more 02-0236.pdr reasonable Angela M.W., 209 Wis. 2d at 121. The majority opinion employs the analytic framework for a statute that is ambiguous, while purposely not analyzing whether Wis. Stat. § 70.111(20) is ambiguous. This is a change in our traditional analysis, which is set out above. I offer no opinion about whether our mode of statutory analysis ought to be changed. However, when we change the statutory analysis in a majority opinion without explaining that the majority of the court has readers not to decided conclude to that change we have its analysis, changed. we This lead can our cause confusion among those we write to assist and make our opinions less useful to the public. ¶74 Accordingly, I respectfully concur. I am authorized to state that Justices JON P. WILCOX and N. PATRICK CROOKS join this concurrence. 2 No. 1 02-0236.pdr

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