SC Administrative Law Court Decisions

I. STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann. § 12-60-2540 (2000) and S.C. Code Ann. § 1-23-310 et seq. (1986 & Supp. 2000). Petitioners J. M. and Lou D. Guthrie (Petitioners) contend that their two adjoining parcels of land, with one residential building located on each parcel, constitute one legal residence and that the Orangeburg County Assessor's (Assessor) decision to tax one dwelling and lot at the residential rate of 4% of fair market value and the other dwelling and lot at the default rate of 6% of market value for the 2000 tax year is erroneous. The Orangeburg County Assessor's office disagrees, finding that a property owner can receive the 4% residential tax rate on only one residence per tax year and maintaining that it acted properly in assessing one of Petitioners' lots at the residential tax rate and the other at the standard rate.

After timely notice to the parties, a hearing was conducted on August 15, 2001, at the Administrative Law Judge Division, Columbia, South Carolina. Based upon testimony and the evidence presented, I find that Petitioners are not entitled to the 4% residential tax assessment on their property at 152 Scoville Road.

II. FINDINGS OF FACT

Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. For the tax year in question and for over thirty years prior, Petitioners owned and resided at 184 Scoville Road, Orangeburg, South Carolina (184 Scoville).

2. Petitioners purchased the adjoining lot at 152 Scoville Road (152 Scoville) in 1999. This purchase included the house located on the property.

3. Prior to this purchase, 152 Scoville was owned and occupied by individuals other than the Petitioners and was considered to be a plot of land separate and distinct from 184 Scoville.

4. Since the purchase of 152 Scoville, Petitioners have treated the property as a residence. Petitioners keep clothing, furniture, including a bed, kitchen supplies, and other personal property at 152 Scoville. They keep up with maintenance of 152 Scoville. No others, including relatives, have access to the property at 152 Scoville, and Petitioners do not rent out the property or use it for any other commercial purposes.

5. After a fire at 184 Scoville in late 1999, Petitioners lived for seven months in the residence at 152 Scoville and did not return to 184 Scoville until the middle of 2000.

6. On a day-to-day basis, however, Petitioners normally live at 184 Scoville, and use 152 Scoville merely as optional residence space.

7. The properties at 184 Scoville and 152 Scoville were combined by the Assessor for administrative convenience beginning in the 2000 tax year under Parcel Number 0152-11-08-006.000.

8. No official documents have been produced that list 152 Scoville as Petitioners' mailing address. ⁽¹⁾

III. CONCLUSIONS OF LAW

Petitioners' claim that the 152 Scoville residence and surrounding lot should be taxed along with the property at 184 Scoville as their legal residence under S.C. Code Ann. § 12-43-220(c) (2000) must ultimately fail.

As a preliminary matter, it must be noted that the weight of the law is against Petitioners. As Section 12-43-220(c) makes clear, "the burden of proof for eligibility for the four percent [residential] assessment ratio is on the owner-occupant." S.C. Code Ann. § 12-43-220(c)(2)(iv) (2000). Further, South Carolina courts have consistently held that exemptions from generally applicable tax statutes, such the 4% residential exception to the default 6% tax assessment ratio at issue here, must be narrowly construed. The South Carolina Supreme Court discussed this principle of construction at length in Southeastern-Kusan, Inc. v. South Carolina Tax Commission, 276 S.C. 487, 280 S.E.2d 57 (1981):

As a general rule, tax exemption statutes are strictly construed against the taxpayer. This rule of construction simply means that constitutional and statutory language will not be strained or liberally construed in the taxpayer's favor. It does not mean that we will search for an interpretation in the [tax collector's] favor where the plain and unambiguous language leave no room for construction. Only when the literal application of a statute produces an absurd result will we consider a different meaning.

Id. at 489-90, 280 S.E.2d at 58 (citations omitted). It is clear, then, that if Petitioners are to avail themselves of the residential tax exemption that they claim, they must establish that the term "legal residence" as used in Section 12-43-220(c) and strictly construed by this tribunal encompasses both of their houses on Scoville Road.

The Petitioners are, however, unable to meet this burden. This tribunal finds that the term "legal residence" as used in Section 12-43-220(c) must be understood to refer to a single dwelling house, and not to extend to multiple dwellings. Both the language of Section 12-43-220(c) and the use of "legal residence" elsewhere in South Carolina law suggest that the term "legal residence" should be construed only in the singular number.

The language of Section 12-43-220(c) seems to compel this result. It reads, in relevant part:

The legal residence and not more than five acres contiguous thereto, when owned totally or in part in fee or by life estate and occupied by the owner of the interest, and additional dwellings located on the same property and occupied by immediate family members of the owner of the interest, are taxed on an assessment equal to four percent of the fair market value of the property. . . . For purposes of the assessment ratio allowed pursuant to this item, a residence does not qualify as a legal residence unless the residence is determined to be the domicile of the owner-applicant.

S.C. Code Ann. § 12-43-220(c)(1) (2000) (emphasis added). The statute uses the term "residence" solely in the singular number, referring throughout to "the legal residence," "the residence," and "a residence." Further, the first sentence of this section appears to conceive of the legal residence as a single dwelling when it draws a distinction between the "legal residence" and "additional dwellings located on the same property": the former is always entitled to the 4% assessment, whereas the latter is only so entitled when occupied by immediate family members of the owner of the property. This distinction is consistent with the proposition that the taxpayer can only dwell in one residence at a time, as it is not the taxpayer, but rather a member of his family, who can occupy the "additional dwellings" allowed under the exemption. Tax exemption statutes must be narrowly interpreted; here, a narrow interpretation of Section 12-43-220(c) requires that "legal residence" be understood as referring to a single dwelling.

Beyond its repeated use of "legal residence" in the singular number, Section 12-43-220(c) also contains a critical term of art that suggests that the legal residence can be only one dwelling. That section requires that if a residence is to qualify for the tax exemption, it must "be the domicile of the owner-applicant." S.C. Code Ann. § 12-43-220(c)(1) (emphasis added). ⁽²⁾ It is well-settled doctrine that an individual can have legal domicile in only one dwelling. Indeed, an individual can maintain any number of residences, but only one of those residences can be that individual's domicile. The South Carolina Supreme Court recognized this "elementary proposition" in 1975, holding that "[a] person may have more than one residence, but cannot have more than one domicile or be a citizen of more than one state at the same moment." Ravenel v. Dekle, 265 S.C. 364, 379, 218 S.E.2d 521, 528 (1975). Other jurisdictions have reached the same conclusion as to the singularity of one's domicile under the law. See, e.g., Haggard v. Graham, 236 S.E.2d 92, 94 (Ga. Ct. App. 1977) ("One may, for purposes of convenience, maintain a residence at a place not intended as a permanent abode without affecting any change in legal domicile."); Bearman v. Camatsos, 385 S.W.2d 91, 93 (Tenn. 1964) ("A person may have two or more residences but only one domicile, or legal residence."); 28 C.J.S. Domicile § 4(a) (1996) (noting that a person "may have more than one residence at the same time, but . . . only one domicile"). In sum, whether an individual has a secondary residence in another state or simply next door, like Petitioners, the law holds that, unless and until abandoned, only that individual's primary residence can be his domicile. Therefore, the requirement in Section 12-43-220(c) that the claimed legal residence be the owner's domicile limits the 4% assessment for an owner-occupied dwelling to a single dwelling.

The construction of the term "legal residence" to refer to a single dwelling is supported not only by the language of Section 12-43-220, but also by language found elsewhere in South Carolina law. Instructive to this inquiry is the decision by the United States Bankruptcy Court in In re Nerios, 171 B.R. 224 (Bankr. N.D. Tex. 1994). In that case, the court was faced with determining whether a family could claim two separate houses on adjoining residential lots as one "homestead" under the Texas homestead exemption, where the family used both houses equally as residences. Id. at 225-26. After examining Texas case law "spanning over 100 years," the court found that because those cases "all refer[red] to the residence or house in singular terms, implying that the homestead is meant to be comprised of only one residence," id. at 226 (emphasis added), the Nerios' could not claim their two residences on adjoining lots as one homestead. Id. at 227. Using a similar approach, this tribunal finds that the term "legal residence" is used exclusively in singular terms in South Carolina law. See, e.g., S.C. Code Ann. § 12-8-540(B)(2) (2000) (referring to an individual renting "a residential housing unit which is his legal residence"); S.C. Code Ann. § 12-37-266(1) (2000) (concerning a trustee who holds title "to a dwelling that is the legal residence of a beneficiary"); S.C. Code Ann. § 12-37-290 (2000) (defining "dwelling place" for the homestead exemption as "the permanent home and legal residence of the applicant"); 27 S.C. Code Ann. Regs. 117-124.6 (1976) (defining "legal residence" as "the permanent home or dwelling place owned by a person and occupied by the owner thereof"). ⁽³⁾ It appears that, under South Carolina law, "legal residence" is a singular term that refers to a single dwelling of an individual.

It is clear that the term "legal residence" as used in Section 12-43-220(c) for the residential assessment ratio must be construed in the singular number, and must, therefore, be understood to refer to a single dwelling of the taxpayer. Only under a strained and liberal definition of "legal residence" could the term be construed in the taxpayer's favor to include two separate dwellings on two separate lots, whether contiguous or not. But, tax exemption statutes must not be interpreted liberally or in strained ways. Southeastern-Kusan, 276 S.C. at 489, 280 S.E.2d at 58. Thus, Petitioners' claim that both the 184 Scoville and 152 Scoville residences are their legal residence for purposes of the 4% residential assessment ratio must fail; only one dwelling can qualify as a legal residence, and only that dwelling can receive the residential assessment ratio. The Orangeburg County Assessor's decision to assess Petitioners' property at 184 Scoville at the residential rate and their property at 152 Scoville at the default rate was appropriate.

ORDER

For the foregoing reasons, Petitioners cannot claim both their residence at 184 Scoville and their residence at 152 Scoville as one legal residence under S.C. Code Ann. § 12-43-220(c) (2000), so as to receive the 4% residential tax assessment ratio on both properties. Accordingly, the Orangeburg County Assessor's assessment of Petitioners' property at 184 Scoville at the 4% residential rate under Section 12-43-220(c) and their property at 152 Scoville at the 6% standard rate under S.C. Code Ann. § 12-43-220(e) (2000) is proper. Petitioners' claim that their residence at 152 Scoville should be assessed at the 4% residential rate is therefore denied.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

September 5, 2001

Columbia, South Carolina

1. Respondent also introduced evidence that Petitioners listed 184 Scoville as their address on their 1967 voter registration applications and elicited testimony that Mr. Guthrie lists 184 Scoville as his address on his driver's license. However, this evidence is not significantly probative of the issues at hand. Petitioners clearly could not have listed property acquired in 1999 as their residence on a 1967 application, and there was no testimony presented to indicate that Mr. Guthrie's driver's license had been issued or renewed since the purchase of 152 Scoville such that he could have listed that property as his residence on his license.

2. It is presumed that this statute uses the word "domicile" in its formal, legal sense. See State v. Bridgers, 329 S.C. 11, 13, 495 S.E.2d 196, 198 (1997) ("[W]here a statute uses a term that has a well-recognized meaning in the law, the presumption is that the General Assembly intended to use the term in that sense.").

3. This tribunal did not discover any South Carolina case law construing the term "legal residence" in a relevant manner. Accordingly, this analysis is limited to an examination of state statues and regulations.