Sisters of the Good Shepherd v. District of Columbia

KING, Senior Judge,

dissenting.

The majority holds that a statute which provides for a property tax exemption for “[bjuildings belonging to and operated by [eligible 1 ] schools” applies to a building “operated” by such a school, but which “belongs” to a charitable institution that is not a school. D.C.Code § 47-1002(10) (1997 Repl.) (“exemption 10”). Because that interpretation impermissibly amends the statute by substituting the word “or” for the word “and” as italicized above, I dissent.

The facts are as set forth by the majority and are not in dispute. The owner of the real property in question is a religious order, The Sisters of the Good Shepherd of the City of Washington, D.C. (“Sisters”), incorporated as a non-profit corporation. It is agreed that the Sisters are not a school within the meaning of exemption 10. Sisters uses part of the property in question as a convent; that portion of the property is not taxed — presumably pursuant to another exemption- in § 47-1002 2 — and is not part of this litigation.

The'remainder of the property is leased to the Selma M. Levine School of Music (“Levine School”), which is also a D.C. non-profit corporation whose charter allows it to provide musical education to students of all ages. It is not disputed that the Levine School is a school within the meaning of exemption 10. The lease for the tenancy, which began in 1984, provides that the Sisters will pay the real estate taxes and the Levine School will reimburse the Sisters for the taxes paid. The record reflects that since 1984, the taxes have been paid as provided for in the lease.

In 1992, the Sisters and the Levine School applied for an exemption' under § 47-1002(8) (exemption 8), (exemption 10), and other provisions that are not at issue in this appeal. The District of Columbia Department of Finance and Revenue (“DFR”) denied the request. With respect to exemption 10, DFR interpreted the language conferring the exemption— property “belonging to and operated by schools” — to require that both the owner and the operator of the property be an eligible school as defined by the statute. Because the owner, in this case the Sisters, was not a school, the exemption provision did not apply and the application was denied.

Thereafter, the Sisters and the Levine School filed a timely petition in the Superior Court of the District of Columbia, Tax Division, appealing the denial of the exemption request by DFR, and seeking a refund for taxes paid for tax years 1993-95. Petitioners argued that the exemption applies if either the owner or the operator of the property is an eligible school. On cross-motions for summary judgment, the trial court denied the petition and this appeal followed. The trial court rejected the application of exemption 8, because it was a general provision, in favor of exemption 10 which is a specific provision. See, e.g., District of Columbia v. Linda Pollin Mem. Hous. Corp., 313 A.2d 579, 583 (D.C.1974) (‘Where ... general provisions ... in one part of a statute are inconsistent with more specific or particular provisions in another part, the particular provisions must govern or control, as a clearer and more definite expression of the legislative will.”).

With respect to exemption 10, the trial court recognized at the outset the “firmly established [principle] in the jurisprudence relating to the District’s-real property tax that exemptions from taxation are to be construed strictly against the party claiming the exemption.” National Med. Ass’n *317 v. District of Columbia, 611 A.2d 53, 55 (D.C.1992). The court concluded, however, that the provision was ambiguous because, as Sisters argued, it could not readily be determined “whether it exempts both property belonging to schools and property operated by schools, or whether it only exempts property that is both owned and operated by schools.” 3 In resolving the ambiguity in favor of the latter formulation (property must both belong to and be operated by an eligible school), the trial court deferred to DFR’s interpretation citing the rule that, in the taxation context, “courts ... defer to reasonable administrative understandings of uncertain legislative commands, and if the Mayor’s interpretation of equivocal statutory language is ‘reasonable’ we will accept it.” District of Columbia v. Casino Assocs., 684 A.2d 322, 325 (D.C.1996). Because, in its view, the administrative interpretation was reasonable and was not contravened by case law, any other provision in the legislation itself, or the legislative history, the trial court upheld it.

The majority agrees with the trial court’s assessment that the provision is ambiguous. The majority has concluded, however, that there was nothing in the legislative history to show that Congress intended “to deny a tax exemption” in the circumstances presented here. Ante at 315. In addition, the majority rejects the District’s reliance on both the principle that exemptions be strictly construed against the taxpayer, and the principle that deference is usually accorded the interpretation of the agency responsible for enforcing it, on the ground that the District’s interpretation is contrary to the legislative intent as reflected in the legislative history. With respect, I disagree with the majority on both of its conclusions. In my view, once interpreting case law is taken into account, there is no ambiguity. But, even if there is sufficient uncertainty concerning the meaning of the provision to allow for the use of extrinsic interpretive tools, which I do not concede, the legislative history is far too general to establish the points attributed to it by the majority. In sum, the effect of the majority’s interpretation is to amend the statute by replacing the word “and” with the word “or” in the controlling statute. There is nothing in the legislative history to support such an amendment of the statute.

Before turning to a discussion of the reasoning underlying my disagreement with the majority, it will be helpful to describe, in some detail, the holdings of the only case of this court interpreting exemption 10. See District of Columbia v. Catholic Univ., 397 A.2d 915 (D.C.1979). That case involved the taxation of two separate properties belonging to Catholic University, an eligible school under exemption 10. One of the properties had at one time been leased to the Campus School, which the court described as a nonprofit educational institution. The court does not specify whether that school qualified as an eligible school under exemption 10, but the school apparently did so qualify. The campus School left the premises in the tax year in question and the building thereafter remained empty. About % of the property was used by Catholic University for storage space, but the rest of the building, configured as classrooms, was unused. This court held that the use of a portion of the building as storage and the non-use of the remainder, under the circumstances, constituted sufficient use of the premises by Catholic University to make it both an owner and operator and, therefore, entitled to the exemption.

The other property had different arrangements and the resolution of the competing contentions presented by those arrangements has considerable significance with respect to the issue presented in this case. This other property had two tenants: Gallaudet College, an exemption 10 eligible school, and the American Language Academy, which was not an eligible *318 school because it was a profit-making entity. The District was of the view that the portion of the building occupied by Gallaudet was subject to the tax because, even though both the owner and the operator were eligible schools, the statute requires that both the owner and operator be the same entity. The trial court rejected that argument and this court agreed on appeal. 4 Id. at 922 .

In summary, in Catholic Univ., this court held that so long as both the owner and the user of the property are eligible schools, the exemption applies. In addition, the trial court held that the exemption does not apply if the user is a school which is not an eligible school, even if the owner is an eligible school. This court did not resolve that issue, but the trial court’s interpretation is plainly correct. See note 4, supra. When we put the two holdings together, the meaning of the statute is clear: in order to qualify for the exemption, the property must both be owned and operated by an eligible school; it is not enough that an eligible school own or operate.

To repeat, the governing statute provides for an exemption from taxation for

Buildings belonging to and operated by schools, colleges, or universities which are not organized or operated for private gain, and which embrace the generally recognized relationship of teacher and student[.]

D.C.Code § 47-1002(10) (1997 Repl.). The majority begins its analysis by concluding that the statute is ambiguous because it “does not resolve definitively by its plain language that concurrent ownership and use by a school is required .... ” Ante at 313. Ultimately the majority concludes that this provision can be read to permit the exemption where, as here, the property is owned by a charitable entity that is not an eligible school so long as the property is operated by an eligible school. In short, says the majority, the statute covers “[b]uildings belonging to or operated by schools .... ” (Emphasis supplied.)

I begin my analysis with the observation that the majority’s interpretation rests on the faulty premise that the statute is ambiguous. 5 By definition we are speaking of “ambiguousness in meaning arising from language admitting of more than one interpretation.” Webster’s Unabridged Dictionary (2d ed.1948); Rastall v. CSX Transp., 697 A.2d 46, 61 (D.C.1997); Laskaris v.. City of Wisconsin Dells, 131 Wis.2d 525 , 389 N.W.2d 67, 70 (App.1986). In short there must be two or more plausible readings of the statute, including the one being asserted, in order for the language to be ambiguous. Wood v. Hatcher, 199 Kan. 238 , 428 P.2d 799, 803 (1967). Certainly this statute can reasonably be read to apply where both the owner and user are eligible schools. Try as I may, I cannot, without changing the language (e.g., the “and” to an “or”), discern how it can be read to apply, as the majority holds, where *319 the user is an eligible school and the owner is not. Nor can the language (“Buildings belonging to and operated by [eligible] schools”) be stretched, in my view, to cover any other circumstance other than concurrence of ownership and use by an eligible school.

The majority is saying that the language of the statute is ambiguous because it does not cover the use of the property presented here, a use it views as being worthy of favorable tax consideration. And, the analysis goes, because the language is ambiguous, extrinsic factors such as legislative history can be taken into account. Finally, because the legislative history supports an exemption here, the statute will be read accordingly. That reasoning puts the cart before the horse. The unhappy fact that the statute plainly does not permit an interpretation that would permit an exemption to a seemingly deserving petitioner does not make the provision ambiguous. Wood, supra (a provision is not ambiguous because it does not cover the situation presented by one of the parties). Ineligibility for an exemption in these circumstances might well be anomalous, or illogical, or even a bad policy choice; but those characterizations do not make the language ambiguous.

Because the language of the statute was not, in my view, ambiguous, there is no call to resort to extrinsic interpretative aids such as legislative history. But even assuming for the sake of argument there is ambiguity, no reading of this legislative history would justify such a stretching of the language of the statute as the majority has done. The most that can be said for the excerpts from the committee reports that have been cited, is that the Congress was in favor of granting tax exempt status to non-profit and charitable organizations that met the criteria set forth in the statute. None of the comments relied upon were directed to the circumstances presented here. And none of the comments purported to resolve the issue are presented here. The same can be said for the remarks of a senator during debate. Even if those floor remarks were on point, we have “recently cautioned against relying upon the views expressed by individual legislators during the debates preceding the enactment of a statute.” District of Columbia v. Morrissey, 668 A.2d 792, 799 (D.C.1995). I agree with the trial judge, who reading the same legislative history, could find no basis for interpreting the language of the statute in the way the petitioners urge.

In summary, I believe the majority has erred in its interpretation of the statute. 6 First, the statute is not ambiguous, and its plain meaning does not permit an interpretation that in effect amends the statute. But even if there is some uncertainty, the majority stretches the language too far. Moreover, the majority fails to give the proper deference to the interpretation of the taxing authority, and fails to apply the well accepted principle that exemptions from taxation are construed strictly against the party seeking the exemption. Finally, the majority’s reliance on the fragmentary and general remarks in the legislative history is misplaced. For all of these reasons, I dissent.

. Section 47-1002(10) defines eligible schools as those which are "not organized or operated for private gain, and which embrace the generally recognized relationship of teacher and student

. The majority says that the Sisters are a nonprofit charitable and religious organization within the meaning of exemptions 8 and 14. D.C.Code § 47-1002(8), (14). Ante at 314 n.6.

. Record at 215-16.

. The trial court also ruled that the portion of the building occupied by the American Language Academy was subject to the tax because the user was not an eligible school. That portion of the trial court ruling was not cross-appealed by the tax payer; therefore, that issue was not before this court. The majority is in error when it says that the ruling was a holding of this court. Ante at 313.

Even though this court did not formally hold that the exemption is not available where the owner is eligible and the operator is not, it is evident that no other interpretation would be permissible or reasonable. The same could be said where the owner is not eligible and the operator is. See State ex rel Hammer v. MacGurn, [ 187 Mo. 238 ,] 86 S.W. 138, 139 (Mo.1905) (property exempt from taxation only if the private owner "allows his land to be used for ... [exempt] purposes, ... and derives no personal benefit”); accord, Warden Plaza v. Board of Review of the City of Fort Dodge, Iowa, 379 N.W.2d 362, 365-66 (Iowa 1985); Sisters of Providence v. Municipality of Anchorage, 672 P.2d 446, 450-51 (Ala[ska].1983).

. The only ambiguity in the statute was resolved by this court in Catholic Univ., where we held that the exemption applies if the owner is an eligible school and the user is a different eligible school.

. Because the majority finds for the tax payer under exemption 10, it did not need to address whether exemption 8 would apply. The trial court concluded that exemption 8 did not apply. I agree. In order to qualify for an exemption under this provision, the Levine School would have to establish that the premises was “used for purposes of public charity.” D.C.Code § 47-1002(8). I am satisfied that it failed to make such a showing.