Zlotoff Foundation, Inc. v. Town of South Hero

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@vermont.gov 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.

2020 VT 25

No. 2019-213

Zlotoff Foundation, Inc. Supreme Court

On Appeal from
v. Superior Court, Grand Isle Unit,
Civil Division

Town of South Hero October Term, 2019

Robert A. Mello, J.

Brian P. Monaghan and James F. Conway, III of Monaghan Safar Ducham PLLC, Burlington,
for Plaintiff-Appellant/Cross-Appellee.

Wm. Andrew MacIlwaine and Kendall Hoechst of Dinse P.C., Burlington, for Defendant-
Appellee/Cross-Appellant.

PRESENT: Reiber, C.J., Eaton, J., and Tomasi, Supr. J., Burgess J. (Ret.)1 and
Morris, Supr. J. (Ret.), Specially Assigned

¶ 1. REIBER, C.J. This appeal from summary judgment concerns the taxable status

of a 9.9-acre parcel of land containing an 11,500-square-foot garage that is owned and used by

Zlotoff Foundation, Inc., a nonprofit charitable organization, for the purpose of storing and

maintaining a collection of classic automobiles that it displays at its nearby museum. The trial

court ruled that the garage and the land were tax-exempt because they were used for a public

purpose. However, it denied the Foundation’s request for a refund of property taxes paid to the

1
Justice Burgess was present for oral argument but has since recused himself.
Town of South Hero from 2016 to 2018 because the Foundation did not obtain a certificate of

authority allowing it to transact business in Vermont until 2019. The Foundation and the Town

both appealed. We affirm.

¶ 2. The following facts were undisputed for purposes of summary judgment. Zlotoff

Foundation, Inc., is a Michigan nonprofit corporation organized for charitable, educational, and

conservation purposes. It operates a museum in South Hero, Vermont, that displays colonial tools

and a classic automobile collection. The museum currently displays approximately 3000 tools

from the American colonial era and forty classic cars. It is a member of the New England Museum

Association and the Early American Industries Association. The museum does not charge

admission. It is open to the public every Saturday from Memorial Day to Columbus Day, and all

three of the federal holiday weekends during that period. It is also open to the public for special

events and in response to requests from interested parties to visit on days when it is normally

closed. The museum provides programming for local school groups and has been visited by more

than 1000 people.

¶ 3. The museum operates in a leased barn that is located on property owned by AIR

Development, LLC.2 The Foundation renovated the barn in 2008 to house the museum collection.

For several years, the Foundation used the upper level of the barn to display the tool collection. In

2017, the Foundation began displaying the “Z Motorsports Collection” of vehicles at the museum.

¶ 4. The Foundation owns a 9.9-acre parcel on Landon Road that abuts AIR

Development’s property. In 2016, the Foundation constructed a 11,500-square-foot garage on the

Landon Road parcel. The Foundation uses the garage to store and repair its collection of classic

automobiles, approximately seven of which are shown at the museum on a rotating basis. Prior to

building the garage, the Foundation used part of the museum barn to repair and maintain its classic

2
Paul Zlotoff is the listed agent and chairman of Zlotoff Foundation, Inc. He is also the
sole member of AIR Development, LLC.
2
vehicles. The garage is operated on a not-for-profit basis. It is not open to the public, and it is not

a museum. The Foundation does not use the garage or the land surrounding it for any purpose

other than to support the museum.

¶ 5. In 2007, AIR Development, LLC, applied for site plan approval to improve the barn

where the museum is located for use as “private storage for owner and antique tool collection

housing.” The South Hero Planning Commission issued a decision in October 2007 approving the

project and proposed use. Neither the application nor the Planning Commission’s decision

referenced the possibility that the barn would be used as a public museum, and the permit was not

for public use.

¶ 6. In February 2015, the Foundation applied for a zoning permit to construct the

garage building on its Landon Road parcel. The Foundation’s application for site-plan review

stated the proposed use of the structure was “Private Garage (Structure, Independent).” The

Foundation’s representative testified at a hearing before the Planning Commission that the

proposed independent structure would be used to store and display the landowner’s private car

collection. In April 2015, the Planning Commission granted site-plan approval for the garage. In

May 2015, the Foundation submitted its Act 250 land-use application for the garage project. The

application described the project as “[c]onstruction of a private garage for motor vehicle storage”

and stated that the garage was “not intended for public access, and its purpose is to store

automobiles and motorcycles.” The Town issued a certificate of occupancy for the garage in

January 2016 that identified the structure’s type of use as “Garage—private car collection.”

¶ 7. In February 2016, the Foundation requested a property-tax exemption from the

Town for the Landon Road parcel, arguing that it qualified as real estate used for public, pious, or

charitable purposes under 32 V.S.A. § 3802(4) because the garage supported the museum. In April

2016, the Town’s board of listers and the Foundation informally discussed the exemption request.

Based on the information provided by the Foundation, the listers issued a decision denying the

3
request. The listers reasoned that neither the barn nor the garage had the required permits to be

open to the public for museum use and therefore the Landon Road parcel was not dedicated

unconditionally to public use. The Foundation did not appeal the listers’ decision.

¶ 8. In April 2016, the town zoning administrator sent a letter to AIR Development

stating that the barn was being operated as a public museum in violation of its permitted use as

“private storage for owner and antique tool collection housing.” In June 2016, the zoning

administrator sent a second letter advising AIR Development that the use of the barn as a museum

was a zoning violation and that it would need to apply for a new site-plan approval and conditional-

use change or a notice of violation would be issued. AIR Development subsequently applied to

change the barn’s permitted use to “Tool Museum.” The town zoning board of adjustment and the

planning commission approved the application in late 2016. The Town has not specifically

approved the use of the ground floor of the barn for a car museum. The planning commission’s

decisions state that the ground floor “is empty and is used by the museum.”

¶ 9. In June 2017, the Foundation again requested a tax exemption for the garage

property. The board of listers denied the request. The Foundation appealed to the Board of Civil

Authority (BCA), which denied the appeal. The BCA agreed with the listers that the property was

not dedicated unconditionally to public use because the Foundation had not obtained a permit to

operate a museum on the property. It also found that there was insufficient information to

determine whether the property benefited an indefinite class of the public or was owned and

operated as a nonprofit. It therefore upheld the listers’ appraised value of $1,101,700 for tax year

2017.

¶ 10. The Foundation appealed the BCA’s decision to the civil division of the superior

court. In the spring of 2018, the parties each moved for summary judgment. The Foundation

argued that the Landon Road parcel qualified for the public-use exemption because it was used

solely to support the public use of the museum. It sought a refund of property taxes it paid to the

4
Town in 2016, 2017, and 2018. The Town argued that the Foundation failed to meet its burden of

demonstrating that the parcel was dedicated unconditionally to public use because its zoning

permits did not indicate it was being used to support the museum and it was not being used for

core administrative functions of the museum. Further, it argued the Foundation had not

demonstrated how the rest of the 9.9-acre parcel was being used.

¶ 11. In September 2018, the court issued a written decision denying the Town’s motion

for summary judgment and granting partial summary judgment to the Foundation. The court noted

that the dispute between the parties arose in part from the Town’s “understandable displeasure

with the Foundation’s decision to open a museum in a renovated barn without first securing proper

permissions from the Town.” However, it concluded that the Foundation’s failure to secure

complete and timely permission from the Town to conduct its museum-related activities did not

control whether the Foundation had demonstrated public use as contemplated by 32 V.S.A.

§ 3802(4). The court determined that there was no dispute that the Foundation operated a museum

that was dedicated unconditionally to public use. It concluded that the undisputed material facts

demonstrated that the garage was directly connected to the Foundation’s operation of the museum

and was used in a way that was essential to the operation of the museum and in furtherance of its

charitable purpose. It therefore concluded that the garage qualified for tax exemption under

§ 3802(4). However, it declined to determine whether the rest of the 9.9-acre parcel was exempt

because the Foundation had not established how much of the parcel was dedicated to public use.

¶ 12. In December 2018, the Foundation filed a supplemental motion for summary

judgment, arguing that the entire 9.9-acre Landon Road parcel was exempt from taxation because

it supported the garage, was not used for any other purpose, and could not be used for any other

purpose due to the size of the garage, parking area, and driveway; setback restrictions; wastewater

treatment restrictions; well; wetlands; and site topography. The Town opposed the motion, arguing

that the Foundation had failed to show that the land was unconditionally dedicated to public use

5
or that the entire parcel directly conferred a benefit on society. The Town further argued that the

Foundation had not registered with the Secretary of State and therefore was not lawfully operating

as a nonprofit in Vermont. The Foundation responded that its failure to register with the Secretary

of State was an inadvertent oversight and that it had registered as of February 28, 2019, rendering

the latter argument moot.

¶ 13. The court issued a second summary-judgment decision holding that the Foundation

had met its burden of demonstrating that the land, in addition to the garage, was exempt from

taxation under § 3802(4). The court acknowledged that there were portions of the parcel that were

not directly used to support the garage. It determined that because the parcel was undivided, and

the primary and only use of the property was to support the garage, which in turn supported the

museum, the entire parcel was exempt. However, it denied the Foundation’s request for a refund

of taxes paid in 2016, 2017, and 2018, reasoning that because the Foundation failed to register

with the Vermont Secretary of State pursuant to Vermont’s Nonprofit Corporation Act until

February 28, 2019, it was not permitted to maintain a legal proceeding in Vermont until then.

Accordingly, it concluded that the Foundation could not use this lawsuit to obtain any exemption

from property taxes paid prior to February 2019.3

¶ 14. Both parties appealed. The Foundation argues that the court erred in denying it a

refund for taxes paid in 2016, 2017, and 2018 because the Town waived its argument that the

Foundation lacked capacity to bring suit by failing to raise the issue earlier and because the

Foundation registered during the pendency of the suit. The Town argues that the court erred in

concluding that the garage or the land surrounding it were exempt under § 3802(4).

3
The Foundation initiated a petition for declaratory relief at the same time that it lodged
its appeal from the BCA. The trial court’s summary-judgment rulings disposed of both the appeal
and the declaratory-judgment action.
6
 ¶ 15. We review an appeal from a decision granting summary judgment without

deference and using the same standard as the trial court. Ice Ctr. of Washington W., Inc. v. Town

of Waterbury, 2008 VT 37, ¶ 4, 183 Vt. 616, 950 A.2d 464 (mem.). That is, we will affirm “if the

movant shows that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” V.R.C.P. 56(a). We conclude that the trial court did not err in

determining that the garage and land were exempt and properly denied the Foundation’s request

for a refund, and therefore affirm its decisions below.

I.

¶ 16. We first consider whether the trial court correctly ruled that the Landon Road parcel

qualifies for a tax exemption under 32 V.S.A. § 3802(4), which exempts from taxation “[r]eal and

personal estate granted, sequestered or used for public, pious or charitable uses.” To determine

whether a property qualifies for the public-use exemption, we use the three-part test first set forth

in American Museum of Fly Fishing, Inc. v. Town of Manchester, 151 Vt. 103, 557 A.2d 900

(1989). First, “the property must be dedicated unconditionally to public use.” Id. at 110, 557 A.2d

at 904. Second, “the primary use must directly benefit an indefinite class of persons who are part

of the public, and must also confer a benefit on society as a result of the benefit conferred on the

persons directly served.” Id. Third, “the property must be owned and operated on a not-for-profit

basis.” Id. It is the taxpayer’s burden to prove eligibility for the claimed exemption, and “any

doubts as to its application will be interpreted against the exemption.” Vt. Studio Ctr., Inc. v.

Town of Johnson, 2010 VT 59, ¶ 7, 188 Vt. 223, 5 A.3d 904 (quotation omitted). On appeal, the

Town argues that the Foundation did not provide sufficient evidence to meet the first two

requirements of the Fly Fishing test. We address each argument in turn.

¶ 17. The Town’s primary argument is that the Landon Road property is not dedicated

unconditionally to public use because the Foundation did not obtain a permit to use the first floor

of the barn for displaying classic cars or mention a connection to the museum in its permit

7
applications for the garage. The Town argues that § 3802(4) contains an implied limitation that

the use for which an exemption is sought must be “legal,” that is, that it must be expressly

authorized by the municipality where the property is located.

¶ 18. Our goal when interpreting a statute is to carry out the intent of the Legislature.

Concord Gen. Mut. Ins. Co. v. Sumner, 171 Vt. 572, 573, 762 A.2d 849, 851 (2000) (mem.). We

begin by examining the plain language of the statute and presume the Legislature intended its

ordinary meaning. Burlington Elec. Dep’t v. Vt. Dep’t of Taxes, 154 Vt. 332, 335, 576 A.2d 450,

452 (1990). If the plain meaning of the statute conflicts with the intent of the Legislature, we may

look beyond the statutory language to give effect to legislative intent. Burr & Burton Seminary v.

Town of Manchester, 172 Vt. 433, 436, 782 A.2d 1149, 1152 (2001). However, “[w]e will not

read an implied condition into a statute unless it is necessary in order to make the statute effective.”

Brennan v. Town of Colchester, 169 Vt. 175, 177, 730 A.2d 601, 603 (1999) (quotation omitted).

¶ 19. The plain language of § 3802(4) does not contain the limitation suggested by the

Town, and we decline to read it into the statute. The focus of § 3802(4) is on the actual use of the

property, not whether that use is permitted by the town. Unlike in Burr & Burton Seminary, where

well-settled case law and other provisions of the statute evidenced legislative intent that the public-

use exemption be limited in a way that was not plainly stated, the Town has not identified any

authority suggesting that a property owner’s compliance with municipal zoning regulations is an

implied precondition for the public-use tax exemption. See 172 Vt. at 438-39, 782 A.2d at 1153-

54. The Town argues that such a condition is necessary to protect its power to enforce its zoning

laws. However, the Town’s power to ensure compliance with its zoning laws is amply protected

by the zoning statutes, which provide various enforcement mechanisms.4 See, e.g., 24 V.S.A.

§§ 1974a, 3028 (allowing fines to be imposed for violations of zoning ordinances); 4451-4454

4
Nothing in this decision affects the Town’s ability to enforce its zoning regulations.
8
(authorizing fines and other remedies for violation of municipal bylaws and enforcement of

permits). There is no indication in the plain language of § 3802(4) that the Legislature intended

to engraft zoning laws into the public-use exemption, and such a condition is not necessary to

effectuate the statute, the purpose of which is to exempt from taxation land used to serve a public

purpose. Burr & Burton Seminary, 172 Vt. at 437, 782 A.2d at 1152. Whether a property owner

has obtained permits for a particular use is a separate and unrelated question to whether the

property is being used to serve the public.

¶ 20. The Town argues that requiring strict compliance with municipal laws to be eligible

for exemption from tax under § 3802(4) is good public policy. While that may be so, “there are

many ways that we could design a tax exemption eligibility policy consistent with the Town’s

view of legislative intent. . . . [T]he choices presented here are complex and far more suited to

legislative resolution than to case-by-case judicial decision making.” Inst. of Prof’l Practice, Inc.

v. Town of Berlin, 174 Vt. 535, 537, 811 A.2d 1238, 1241 (2002) (mem.). The decision about

whether to impose the limitation proposed by the Town on the public-use exemption is best left to

the Legislature.

¶ 21. The Town also claims that we should defer to the BCA’s interpretation of § 3802(4)

because the BCA has authority to decide whether a property is exempt from tax and the Town is

best suited to evaluate its own zoning requirements. It is true that the BCA is empowered to

determine a property’s tax-exempt status under 32 V.S.A. § 4404. See Vt. Coll. of Fine Arts v.

City of Montpelier, 2017 VT 12, ¶ 9, 204 Vt. 215, 165 A.3d 1065 (holding that BCA has authority

to rule on questions of tax-exempt status). And, “[e]ven in the context of de novo review, a court

must still defer to an administrative agency’s interpretation of a matter within its ‘legislatively

delegated expertise.’ ” Plum Creek Me. Timberlands, LLC v. Vt. Dep’t of Forests, Parks &

Recreation, 2016 VT 103, ¶ 23 n.7, 203 Vt. 197, 155 A.3d 694. However, we will not defer to an

interpretation of a statute that is plainly incorrect. See Comm. to Save the Bishop’s House, Inc. v.

9
Med. Ctr. Hosp. of Vt., Inc., 137 Vt. 142, 150-51, 400 A.2d 1015, 1019-20 (1979) (“It is a

venerable principle that construction of a statute by those charged with its execution should be

followed unless there are compelling indications that it is wrong.” (quotation omitted)). As

discussed above, the BCA’s interpretation of § 3802(4) is not supported by the language of the

statute. We therefore are not required to defer to it.

¶ 22. The Town next argues that the Foundation has failed to demonstrate that the

primary use of the garage is essential to the operation of the museum and in furtherance of its

charitable purpose. We have long recognized that “[r]eal estate used for purposes directly

connected with the running of” a charitable institution is exempt. Gifford Mem’l Hosp. v. Town

of Randolph, 119 Vt. 66, 72, 118 A.2d 480, 484 (1955). In Shelburne Museum, Inc. v. Town of

Shelburne, we held that a home on museum property that was occupied by the museum director

and his family was exempt because the director was required to live there for security reasons, he

made himself available at all times there, the home was used for business and entertaining in the

interests of the museum, and the director’s role was to see that the policies of the institution were

complied with and the purposes and aims of the museum promoted. 129 Vt. 341, 344, 278 A.2d

719, 721 (1971). We concluded that the museum was using the director’s home “in a way that is

essential to the operation of the museum and in furtherance of its charitable purpose.”5 Id.

Similarly, in Medical Center Hospital of Vermont v. City of Burlington, we held that several

administrative offices and a parking garage were exempt under § 3802(4) because they were

necessary to the operation of the hospital. 152 Vt. 611, 624, 566 A.2d 1352, 1359 (1989). In

Institute of Professional Practice, Inc. v. Town of Berlin, we rejected a town’s argument that real

5
On the other hand, we rejected the museum’s argument that a residence provided for its
landscaper was tax-exempt because the evidence showed that the landscaper was not required to
be present at the museum at all times, the provision of the residence was only a convenience to the
museum, and the benefit to the museum from the residence was “collateral to the historical and
educational purposes for which the institution was founded.” Id. at 345, 278 A.2d at 721.
10
property owned by a charitable organization providing services to individuals with developmental

and other disabilities in group homes, foster homes, and other assisted living programs in other

states was not exempt because it was used for “back office functions.” 174 Vt. at 538, 811 A.2d

at 1242. We held that the parcel was used for purposes directly connected to the running of the

nonprofit’s services and therefore qualified for the public-use exemption. Id.

¶ 23. The Town argues that these cases create a requirement that the supporting property

for which an exemption is sought be necessary for the primary institution to function, or, put

another way, that the institution could not function without the supporting property. The Town

argues that this test is not met because the Foundation plainly could operate the museum without

the garage, having done so for years before the garage was constructed.

¶ 24. We disagree with the Town’s characterization of our case law. The critical test in

each of the above decisions was not whether the charitable institution could not run without the

supporting property, but rather whether the institution was using the supporting property for

purposes “directly connected to the running of” the institution. Id. (quotation omitted). The

Foundation demonstrated that the garage satisfied this broader test. The undisputed facts showed

that the museum could only display seven of its forty vehicles at a time and needed a place to store,

repair, and maintain the other vehicles. Before the garage was built, the museum used the first

floor of the barn to repair the vehicles, rendering the space unsuitable for public visitation. After

repair, maintenance, and storage functions were transferred to the garage, the museum was able to

make the first floor presentable for the public display of vehicles.6 The garage therefore serves an

6
The Town argues that the Foundation “alleged without explanation that the first floor of
the barn space was not suitable for public visitation until after the construction of the garage.” This
is inaccurate. The Foundation provided an affidavit from its chairman explaining that the first
floor was previously used for repair operations and was not suitable for public visitation, and has
since been made presentable for display of vehicles because the Foundation moved the repair,
maintenance, and storage operation to the garage. The Town did not properly demonstrate that
this assertion was genuinely in dispute in accordance with the summary-judgment rule. See
V.R.C.P. 56(c) (providing that party asserting fact is disputed must support assertion by filing
11
essential function that is directly connected to the running of the museum and furthers the

museum’s charitable purpose. The Foundation accordingly met its burden of demonstrating that

the garage is exempt under § 3802(4) and the above precedent.

¶ 25. The Town further argues that the Foundation has failed to meet the second prong

of the Fly Fishing test because it has not demonstrated that the garage sufficiently benefits the

public to be exempt under § 3802(4). The Town claims that the Foundation did not present

evidence that the cars displayed in the museum confer a significant enough benefit on society to

justify exempting the garage.

¶ 26. The Town waived this argument by failing to timely raise it below in response to

the Foundation’s motion for summary judgment on the taxability of the garage. See Progressive

Ins. Co. v. Brown ex rel. Brown, 2008 VT 103, ¶ 9, 184 Vt. 388, 966 A.2d 666 (explaining that in

response to defendant’s motion for summary judgment, plaintiff was required to raise any

arguments that defeated motion or supported its own claim for summary judgment). The Town

had the opportunity to argue that the garage did not benefit the public in response to the

Foundation’s first motion for summary judgment or in its own cross motion for summary

judgment. However, the Town only challenged the first prong of the Fly Fishing test in those

filings. The trial court noted as much in its decision granting partial summary judgment to the

Foundation on the issue of whether the garage was exempt, and the Town did not object to the

court’s characterization of its arguments. Only after the Foundation filed a supplemental motion

for summary judgment on the taxability of the land surrounding the garage did the Town argue—

for the first time—that the garage itself did not confer a benefit on the public. The trial court acted

within its discretion in declining to consider this new argument after having granted summary

statement of disputed facts with citations to record, or showing that materials cited do not establish
absence of genuine dispute or that adverse party cannot present admissible evidence to support
fact).
12
judgment to the Foundation on the taxability of the garage, because there was no reason that the

Town could not have raised it earlier. See Campbell v. Stafford, 2011 VT 11, ¶ 17, 189 Vt. 567,

15 A.3d 126 (mem.) (holding trial court did not abuse discretion in denying motion to reconsider

summary judgment that relied on new theory that could have been raised before summary

judgment awarded to defendants). And, because it was not raised in a timely manner, the Town

failed to preserve the issue for our review. See Vt. Agency of Nat. Res. v. Parkway Cleaners, 2019

VT 21, ¶ 45, __ Vt. __, 210 A.3d 445 (holding defendant failed to preserve statute-of-limitations

defense by properly presenting it to court in opposition to State’s motion for summary judgment

or in own motion for summary judgment); Lanphere v. Beede, 141 Vt. 126, 129, 446 A.2d 340,

341 (1982) (“Contentions not raised or fairly presented to the trial court are not preserved for

appeal.”).

¶ 27. Finally, the Town argues that the land surrounding the garage should be taxable

even if the garage itself is exempt. Our previous decisions contain some support for the idea that

a property may be divided for the purpose of taxing the portions that are not dedicated to public

use, although we have never had occasion to conduct such an analysis. See, e.g., Vt. Coll. of Fine

Arts, 2017 VT 12, ¶ 18; Our Lady of Ephesus House of Prayer, Inc. v. Town of Jamaica, 2005 VT

16, ¶ 35, 178 Vt. 35, 869 A.2d 145; Med. Ctr. Hosp. of Vermont, Inc., 131 Vt. at 199, 303 A.2d at

470-71. In this case, the undisputed facts do not support such a division. As the trial court noted,

the Landon Road property is an undivided parcel that the Town is attempting to tax as an undivided

parcel. The undisputed facts showed that the primary and only use of the land is to support the

garage, and that other uses of the property are not feasible.7 Since the primary use of the land is

to support the garage, which itself is necessary to the running of the museum, the land is also

7
Although the Town disputed that these facts made the land exempt, it did not genuinely
dispute the facts themselves.

13
exempt. See Inst. of Prof’l Practice, Inc., 174 Vt. at 538, 811 A.2d at 1242 (“[T]he crucial factor

is the primary use to which the property is put.”).

¶ 28. The Town argues that at least some of the land is not used for any purpose and

therefore is not exempt. But the Town does not explain how, on the record before us, the exempt

portion can be distinguished from the taxable portion. “Where a tax is assessed upon property, a

part of which is exempt and a part is not, and there is no way to distinguish the exempt from the

taxable, the whole is exempt.” Spaulding v. City of Rutland, 110 Vt. 186, 190, 3 A.2d 556, 557-

58 (1939); see also Town of Orange v. City of Barre, 95 Vt. 267, 272, 115 A. 238, 240 (1921)

(holding same).

¶ 29. Contrary to the Town’s argument, our decision in Governor Clinton Council, Inc.

v. Koslowski, 137 Vt. 240, 403 A.2d 689 (1979), does not require a different conclusion. In

Koslowski we held that a tract of forested land held as “forever wild” by a scouting organization

was not exempt from taxation under 32 V.S.A. § 3802(2) because the evidence indicated that the

land was primarily used not to further the goals of the organization but rather for no purpose at all.

Id. at 248, 403 A.2d at 694. Whether the tract could be divided into taxable and nontaxable

portions was not at issue in Koslowski; the case turned on the primary use of the entire undivided

tract. Because the primary use of the tract was no use, it was taxable. Here, by contrast, it is

undisputed that the primary use of the entire Landon Road parcel is to support the garage, which

in turn supports the museum. The parcel therefore qualifies for the exemption under § 3802(4).8

8
The Town argues the court incorrectly reasoned that if the parcel were 99.9 acres and
only a small portion of it were being used for the garage, then it might make sense to require the
parties to hire surveyors and engineers to determine how much of the parcel was devoted to
supporting the building. The Town argues it was error for the court to base its decision on the size
of the parcel. Even if the court’s statement was error, it does not justify reversing the decision
below. Because the Town did not genuinely dispute that the primary use of the entire parcel was
to support the garage, a tax-exempt purpose, the court correctly ruled that the parcel was exempt.
Bloomer v. Gibson, 2006 VT 104, ¶ 26 n.4, 180 Vt. 397, 912 A.2d 424 (explaining that “this Court
may affirm a trial court’s decision if the correct result is reached, despite the fact that the court
based its decision on a different or improper rationale” (quotation omitted)).
14
 II.

¶ 30. Having concluded that the Landon Road parcel is exempt under § 3802(4), we turn

to the Foundation’s argument that the trial court erred by denying it a refund for property taxes

paid to the Town in 2016, 2017, and 2018 because the Foundation was operating without a

certificate of authority during that time. We conclude that the trial court correctly denied the

refund.

¶ 31. The Vermont Nonprofit Corporation Act provides that “[a] foreign corporation may

not transact business in this State until it obtains a certificate of authority from the Secretary of

State.” 11B V.S.A. § 15.01(a). Section 15.02(a) provides that “[a] foreign corporation transacting

business in this State without a certificate of authority may not maintain a proceeding or raise a

counterclaim, crossclaim, or affirmative defense in any court in this State until it obtains a

certificate of authority.” Id. § 15.02(a). The trial court held that because the Foundation, a foreign

corporation, was operating without a certificate of authority from the Vermont Secretary of State

until February 2019, it could not use this lawsuit to seek such a refund of taxes paid prior to then.

¶ 32. The Foundation argues that a claim that a corporation is precluded from

maintaining suit because it lacks a certificate of authority is a capacity defense, and the Town

waived any objection to the Foundation’s capacity by failing to raise the issue earlier in the

litigation. The Foundation further claims that it cured the problem by obtaining a certificate of

authority in February 2019 and that its acquisition of capacity related back to the initiation of the

action. We find both arguments to be without merit.

¶ 33. The Foundation first argues that the Town waived any objection to the Foundation’s

capacity to file suit by failing to assert the defense “by specific negative averment” in a responsive

pleading at the outset of the litigation, as required by Rule 9(a) of the Vermont Rules of Civil

Procedure. The Foundation raised this argument for the first time in its appellate brief. “To

properly preserve an issue for appeal a party must present the issue with specificity and clarity in

15
a manner which gives the trial court a fair opportunity to rule on it.” State v. Ben-Mont Corp., 163

Vt. 53, 61, 652 A.2d 1004, 1009 (1994). The Foundation did not present this issue to the trial

court and we therefore decline to address it on appeal.9

¶ 34. The Foundation also claims that the Town conceded that it was operating legally in

Vermont by failing to dispute the Foundation’s statement in its summary judgment motion that the

Foundation “operated in Vermont.” We disagree that the Town’s admission that the Foundation

had been operating in Vermont for several years amounts to a concession that it had a certificate

of authority to do so. The term “operate” does not imply such a condition. The Foundation also

argues that the Town did not dispute the Foundation’s incorrect assertion in a supplemental

statement of facts that the Foundation was “registered to operate in the State of Vermont.” The

record reflects that the Town did in fact dispute that assertion when it responded to the

Foundation’s second motion for summary judgment. The Town therefore did not concede the

issue below.

¶ 35. Alternatively, the Foundation argues that it acquired capacity by immediately

obtaining a certificate of authority from the Secretary of State when the Town raised the issue, and

that its acquisition of capacity relates back to the filing of the action for all purposes, including

obtaining a tax refund. The Foundation argues that the Legislature’s use of the words “maintain”

and “until” in § 15.02(a) means that an unregistered corporation may initiate a suit but must cure

the lack of registration to continue it if the opposing party properly objects. The Foundation argues

9
We note, however, that while a defendant ordinarily must raise a capacity defense in a
responsive pleading or risk waiver of the defense, courts have held that a trial court may ignore a
failure to comply with Rule 9(a) where there is no prejudice and the parties have a full opportunity
to brief the issue. C. Wright & A. Miller, 5A Fed. Prac. & Proc. Civ. § 1295 (4th ed.); see, e.g.,
In re Raffin, 284 F. App’x 405 (9th Cir. 2008) (noting that “a motion for summary judgment may
be an appropriate vehicle for asserting lack of authority by specific denial pursuant to Rule 9”);
Gardner by Gardner v. Parson, 874 F.2d 131, 139 n.12 (3d Cir. 1989) (holding defendant did not
waive capacity defense by failing to initially raise it in responsive pleading where parties had full
opportunity to brief issue and plaintiff was not prejudiced). Furthermore, a responsive pleading is
not technically required in a Rule 74 appeal. V.R.C.P. 74(d).
16
that it obtained a certificate of authority in February 2019 and that its acquisition of capacity related

back to the filing of the suit. The Foundation relies on our statement in Korda v. Chicago Insurance

Company that “where, as here, a plaintiff acquires capacity to sue after the suit is filed, and before

the action is dismissed for lack of capacity, the acquisition of capacity relates back to the filing of

the action for all purposes, including compliance with the statute of limitations.” 2006 VT 81,

¶ 16, 180 Vt. 173, 908 A.2d 1018.

¶ 36. Korda does not control the issue before us because we are not reviewing a dismissal

of a lawsuit for lack of capacity, but rather considering whether the Foundation’s right to a tax

exemption existed before it obtained a certificate of authority to transact business in Vermont.

Neither Korda nor the other cases relied upon by the Foundation involved a claim for a tax refund

by a foreign corporation. They are therefore unhelpful to resolving the question at hand, which is

whether an unregistered foreign corporation whose property is determined to be tax exempt is

entitled to a refund of taxes paid or owed prior to obtaining a certificate of authority.

¶ 37. We conclude that it is not. “[Tax] exemptions are the exception to the rule and not

favored. The burden is on the person claiming the benefit of the exemption, and the exemption

statute must be strictly construed against that person.” Brownington Ctr. Church of Brownington,

Vt., Inc. v. Town of Irasburg, 2013 VT 99, ¶ 9, 195 Vt. 196, 87 A.3d 502. As discussed above,

the Foundation is currently entitled to an exemption from property tax for the Landon Road parcel

because it has demonstrated that it uses the property for the public purpose of supporting the

museum. The tax exemption, in other words, is based on the business that the Foundation transacts.

We agree with the trial court that because the Foundation was not authorized to transact business

in Vermont until it obtained a certificate of authority in February 2019, 11B V.S.A. § 15.01(a), it

was not eligible for the tax exemption prior to then and is not entitled to a refund of taxes it paid

or owed previously. While the Foundation’s registration may have cured the defect of lack of

capacity for purposes of maintaining its lawsuit, it does not follow that the belated registration

17
retroactively entitled the Foundation to the tax exemption. We therefore affirm the trial court’s

decision to deny the Foundation a refund of taxes paid from 2016 to 2018.

Affirmed.

FOR THE COURT:

Chief Justice

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