Dеfendant City of Burlington (City) appeals from a judgment declaring plaintiff to be exempt from taxation under 32 V.S.A. § 3802(4). We affirm.
Plaintiff Medical Center Hospital of Vermont (MCHV) is a nonprofit corporation organized under the laws of the State of Vermont with a general purpose, as stated in its amended articles of association, “of establishing and maintaining a public hospital and nursing home exclusively for charitable and educational purposes.” As a nonprofit corporation, MCHV has no capital stock and no shareholders. It is governed by a board of nineteen trustees who serve in that pоsition without pay. MCHV’s mission, as stated by the board of trustees, “is to provide high quality primary, secondary, and tertiary health care at the lowest cost” possible.
On June 23, 1987, defendant sent MCHV a notice of assessment and a tax bill of approximately $2.8 million. Neither plaintiff nor its immediate predecessors
Defendant has appealed the trial court’s decision, alleging four grounds for reversal: (1) that the court erred as a matter of law in declaring MCHV exempt from taxation under 32 V.S.A. § 3802(4); (2) that even if the hospital is a charity, MCHV property that is used for “health purposes” is taxable because no exemption has been voted it as provided by 32 V.S.A. § 3832(7); (3) that the trial court erred in exempting all MCHV property from taxation; and (4) that the City was denied a fair and impartial trial because of various evidentiary and discovery rulings made by the court. We address these issues seriatim.
I.
It is axiomatic that a tax exemption is to be strictly construed against the party claiming it, although such a provision must be construed reasonably and not in a manner that would defeat the purposes of the statute. American Museum of Fly Fishing, Inc. v. Town of Manchester,
In the case of Brattleboro Retreat v. Town of Brattleboro,
*615 [w]hat constitutes a public charity has been stated recently by this Court. The distinctive features of a charitable organization, the property of which is exempt from taxation, are that it has no capital stock and no provision for making dividends and profits, but derives its funds mainly from public and private charity, and holds them in trust for the objects and purposes expressed in its charter, the test being whether it exists to carry out a purpose recognized in law as charitable or whether it is maintained for gain, profit, or private advantage.
To prove its arguments, defendant contends that the only competent evidence as to free care rendered by plaintiff came in the form of policy statements from plaintiff’s president and from written brochures stating that care at the Medical Center was available to the public without restriction on any basis. But we find nothing in Brattleboro Retreat or, indeed, in any subsequent Vermont cases that requires an institution to dispense any free care in order to be considered charitable for purposes of 32 V.S.A. § 3802(4). In fact, in Brattleboro Retreat this Court held that “[tjhe fact that none of its patients are cared for without charge does not deprive it of its charitable feature.”
The better inquiry, it seems to us, is the one used by the trial court in this case: whether health care was made available by the plaintiff to all who needed it, regardless of their ability to pay. This policy was adequately proved by plaintiff through the testimony of its president and through its written documents detailing the availability of free care to those in need.
This “open-door” policy finding by the trial court reflects settled Vermont law regarding the characteristics of charitable trusts, an area of law closely connected to the inquiry at hand. In Jones v. Vermont Asbestos Corp.,
Defendant also claims that Brattleboro Retreat requires a showing by plaintiff that the majority of its income is derived from charitable sources. While it is clear that that was a factor set forth in the Brattleboro Retreat case,
We conclude that the trial court properly rejected this position. We note, first of all, that it is not within this Court’s power to grant tax exemptions, that power reposing solely in our Legislature. See Colton v. City of Montpelier,
Defendant argues that plaintiff cannot be described as “not-for-profit” merely because it does not operate at a loss. We disagree. Our case law supports the proposition that not-for-profit institutions may generate revenues in excess of their expensеs in order to maintain the organization, the criteria being only that such revenues not be passed through to shareholders as profits but put back into operating expenses. See, e.g., Brattleboro Retreat,
Defendant also contends that MCHV¡ although styled as a not-for-profit organization, in fact is operated for personal gain or advantage. See Brattleboro Retreat,
We have found no case, and defendant has directed us to none, requiring employees of not-for-profit institutions to work for less than market rate in order for that institution to be dеemed “charitable” for tax purposes. The one case cited by defendant, Helton v. Sisters of Mercy of St. Joseph’s Hospital,
We conclude that the evidence adduced by plaintiff amply supports the trial court’s conclusion that plaintiff’s operations constitute a charitable use within the meaning of 32 V.S.A. § 3802(4). Plaintiff’s purpose, as spelled out in its articles of association, is to promote the health care needs of neighboring communities and the education of thоse in the health care professions. See West Allegheny Hospital,
II.
Defendant next contends that even if plaintiff proved itself to be eligible for tax-exempt status under 32 V.S.A. § 3802(4), it still had the burden of proving that it was not excepted from the exemption by the provisions of 32 V.S.A. § 3832(7), which states as follows:
The exemption from taxation of real and personal estate granted, sequestered or used for public, pious or charitable uses shall not be construed as exempting:
*622 (7) Real and personal property of an organization when the property is used primarily for health or recreational purposes, unless the town or municipality in which the property is located so votes at any regular or special mеeting duly warned therefor.
Claiming plaintiff to be used primarily for health purposes, defendant argues that no tax exemption is warranted absent a vote of the citizens of Burlington.
Section 3832(7) appears on the surface to support defendant’s contention. But while the plain and ordinary language of a statute is presumed to be intended, In re Middlebury College Sales & Use Tax, 137 Vt. 28, 31, 400 A.2d 965, 967 (1979), courts are not necessarily confined to a literal interpretation of the statutory language. Like all statutory language, subsection (7)’s meaning must be garnered from a reading of the statute as a whole, so as not to reach an absurd or irrаtional result. In re Judy Ann’s Inc.,
Whereas § 3802(4) grants tax-exempt status to certain property used for religious, public or charitable purposes, § 3832 enumerates specific exceptions to that provision. Two of the seven subsections deal specifically with hospital property. First, subsection (2) excepts certain property owned by a religious society, while clearly preserving the exemption for the society’s church edifice and parsonage, and its buildings used as a school or hospital. Subsection (6) in turn removes the tax-exempt status of real or personal property owned by orphanages, homes or hospitals that are “not used for the purpose of such institution but leased to others for income or profit” unless the town votes to so exempt it.
To read subsection (7) as removing plaintiff’s tax-exempt status absent voters’ approval is to ignore the plain meaning of subsections (2) and (6), which clearly intend to retain the tax-exempt status of hospital property so long as it is not leased out for profit. Therefore, to read subsection (7) as encompassing hospital property would lead to the irrational result of rendering portions of subseсtions (2) and (6) meaningless.
We conclude, as did the trial court, that the phrase “for health purposes,” as used in 32 V.S.A. § 3832(7), cannot be read to include hospital property. Anticipating this interpretation, defendant further argued that if hospital property is not included within subsection (7)’s purview, then MCHV property used for outpatient care should be included, since “hospital” is defined at 18 V.S.A. § 1902(a) as “a place devoted primarily to the maintenance and operation of diagnostic and therapeutic facilities for in-patient medical or surgical care.” (Emphasis added.)
We are not persuaded by this argument. First, we note that defendant failed to raise this issue until its post-trial motion under V.R.C.P. 52(b) to reopen discovery, which was denied. Furthermore, neither § 3802(4) nor § 3832(7) distinguishes between a hospital’s inpatient and outpatient facilities for taxation purposes; by its own terms, the definitions set forth in § 1902 apply only to “words and phrases, as used in this chapter,” and absent a further expression of legislative intent, we see no compelling reason to incorpоrate the definition used in Title 18,
III.
Defendant raises as its third claim of error the trial court’s exemption of all plaintiff’s property from taxation. Specifically, it claims that the parking garage, the Burgess Building, the Adams Building, offices used by anesthesiologists and radiologists, and the data processing and laboratory facilities all represent incidental uses of hospital property and, as such, should be taxable under Gifford Memorial Hospital v. Town of Randolph,
It is defendant’s position that the enumerated’facilities associated with the medical center are not used for purposes sufficiently “directly connected” to its operation. We disagree, and conclude that the findings support such a connection as to each of the facilities challenged by defendant. The Burgess Building houses the administrative offices of the Vermont Health Foundation, a not-for-profit corporation which functions as plaintiff’s parent company. The Foundation, like plaintiff, is organized “to promote the charitable, educational and scientific purposes” of the medical center. The Adams Building houses sleeping quarters for plaintiff’s house staff, residents and physicians employed by the hospital to provide around-the-clock patient care. We conclude that both buildings are “directly connected” to plaintiff’s operation and are used “in a way that is essential to the operation of the [hospital] and in furtherance of its charitable purpose.” Shelburne Museum, Inc. v. Town of Shelburne,
So, too, is the parking garage directly connected to plaintiff’s operation. The court found, and defendant does not challenge, that the facility is used primarily by families and visitors of patients and by patients obtaining services at the medical center. We note other jurisdictions have similarly found hospital parking lots to be tax exempt. Compare Northwestern Memorial Foundation v. Johnson,
Plaintiff also provides office space, free of charge, to anesthesiologists and radiologists on its staff. Defendant claims that the use of these offices is not connected to the hospital’s primary purpose, a statement with which we must disagree. These physicians’ duties require their presence at the hоspital in order to fulfill their staff functions. Thus, these offices seem directly and reasonably connected to the hospital’s operation, since, as the trial court found, the offices are there for the convenience of the hospital and for the benefit of its patients.
Defendant also challenges the tax-exempt status of the data processing area and laboratories of plaintiff on the grounds that these activities admittedly generated a small amount of business income not related to the hospital’s main use, on which plaintiff pays federal income taxes. We do not agree with defendant’s position that because some taxable income is generated by these activities, they are not as a whole tax-exempt. It is clear that the profit-generating activities of these two facilities were incidental to their main uses by plaintiff, and it is the primary use of property that determines its taxable status. Gifford Memorial Hospital,
IV.
Finally, defendant argues at length that various discovery and evidentiary rulings deprived it of a fair and impartial trial.
A review оf the record indicates that there was ample evidence to support a finding that an open-door policy was in effect at the medical center. Plaintiff’s president testified that the policy existed, the written brochures reiterated that policy, and the president further testified that it was MCHV’s policy and practice to carry out this mission. The chair of the “charity committee,” which is the MCHV instrument for deciding who is eligible to receive free care, also testified as to plaintiff’s policy and practice. We therefore conclude that the trial court’s findings as to рlaintiff’s open-door policy were supported by credible evidence and are not clearly erroneous. V.R.C.P. 52(a).
Defendant next argues that the trial court wrongly excluded facts and opinion evidence regarding MCHV’s executive compensation scheme, through which it attempted to prove that such compensation was actually a pass-on of corporate profits. To the extent that evidence was not allowed on this subject, we find there to be no error. Defendant’s main contention is that it
Defendant also urges as еrror the trial court’s denial of certain discovery requests to pursue an allegation that there was self-dealing between the hospital’s trustees and other entities with which plaintiff had business dealings. We note, first, that discovery rulings are within the court’s sound discretion, and will not be disturbed on appeal unless that discretion has been abused or withheld entirely. Poplaski v. Lamphere,
Affirmed.
Notes
MCHV was formed in 1967 by the merger of the Mary Fletcher Hоspital, founded in 1876, and the DeGoesbriand Memorial Hospital, founded in 1924.
32 V.S.A. § 3802(4) provides that “[r]eal and personal estate granted, sequestered or used for public, pious or charitable uses” is exempt from taxation.
As plaintiff pointed out at trial, if the economy in the Burlington area were to fall off dramatically and unemployment to soar, fewer people would be covered by health care insurance through employers and, consequently, more free care would be rendered to those in need. Should the economy make a turnaround the following year, the аmount of free care given might fall again should unemployment levels drop.
We also note that even in Brattleboro Retreat it is not clear that the majority of its funds were derived from charity. See
In fact, in December of 1985 the Mayor of Burlington created a task force to consider revenue-raising alternatives available to the defendant City, which was faced with what the task force described as a “financial crisis.” Its report, issued on January 10,1986, concluded thаt the tax exemption granted to MCHV was “inherently unfair,” since these institutions “do not compensate the City of Burlington for services rendered.” The task force accordingly recommended that the City change its charter to allow taxation of plaintiff. Three weeks later, on January 29, 1986, House Bill 687 was introduced into the Legislature to accomplish that goal. The provisions allowing taxation of MCHV¡ however, did not survive, and the bill as finally passed did nothing to change the taxable status of plaintiff.
Defendant contends that had it known the court would rely on the written evidence of an open-doоr policy at MCH\( it would have proffered testimony that certain patients had been denied admission to the hospital because of their inability to pay. A review of the record, however, indicates no attempt by defendant to bring forth any such evidence nor any offers of proof. There can be no claim of error when defendant failed to adduce proof of its own accord even though it viewed the legal significance of plaintiff’s testimony in a different light than the trial court.
Finding 21 states: “Plaintiff does not deny essential care on any basis.” Finding 25 states: “The plaintiff does not deny anyone needed care.”