SC Administrative Law Court Decisions

This matter came before me upon request of the Petitioner, Rabbit Point Farm Limited ("Taxpayer"), for a contested case hearing pursuant to S.C. Code Ann. §12-60-2540(A)(Supp. 1996). Petitioner is contesting the decision of the Charleston County Board of Assessment Appeals ("Board"). The Board upheld the Charleston County Assessor ("Assessor") in its classification of PID # 069-00-00-004, owned by Petitioner, as agricultural use property for the tax year 1996, and affirmed the Assessor's classification of a portion thereof containing approximately one acre and the house situate thereon as non-agricultural. Petitioner argues that the entire 300.3 acre tract which includes the one acre and the house should qualify for agricultural assessment.

After exhaustion of its prehearing remedies with the Assessor and the Board, Taxpayer has requested a contested case hearing before the Administrative Law Judge Division ("Division"). The hearing was conducted on November 18, 1997 at the Division's offices in Columbia, South Carolina.

I find and conclude that the entire 300.3 acre tract qualifies for special assessment as agricultural real property.

ISSUE

The sole issue in dispute is whether the totality of Taxpayers' 300.3 acre tract, including the acre containing a house, is entitled to an agricultural use classification, valuation, and assessment for the tax year 1996.

Based upon the evidence presented, I make the following findings of fact, taking into consideration the burden of the parties to establish their respective cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to all parties.

3. Rabbit Point Farm Limited ("Farm") is a corporation which owns a 300.3 acre tract of land at 2206 Highway 174, Edisto Island, Charleston County, South Carolina. The owners of the Farm are listed on the tax returns as Anthony P. Cecil and T. Ashton Phillips. Jessica C. Moe and John Cecil, children of Anthony P. Cecil, also have ownership interest in the Farm.

4. A portion of the tract, containing 269.7 acres, is considered high land and the remaining portion, containing 30.6 acres, is considered marsh.

5. Much of the property has been accepted into the Conservation Reserve Program ("CRP"). The agricultural stabilization and conservation service is a federally sponsored program that pays farmers to take their land out of production primarily to prevent soil erosion. Farmers enter into a program contract with the United States Department of Agriculture ("USDA") for a ten to fifteen year period whereby they agree to take the eligible land out of annual crop production and put it into perennial grass, wildlife plantings, wind breaks and/or trees. The farmers are paid by the USDA. Property placed into the CPR Program is considered agricultural property.

6. The subject property is designated by the Charleston County Assessor as PID# 961069-00-00-004. It contains parcel numbers 131-3, B5C and B5B and is located on South Carolina Highway 174. It is bounded by Russell Creek on the north.

7. Located on the Farm is a residence to which is attached a wooden ramp leading to a boat house and boat dock. The one acre lot on which this house is situate together with the wooden ramp and boat house has been denied classification as agricultural by the Assessor for the tax year 1996. The remainder of the 300.3 acre farm has been qualified by the Assessor for agricultural assessment for 1996.

8. The residence, together with the wooden walkway and dock, were built by Mr. Cecil approximately twelve (12) years ago. The entire tract of land has been owned by Mr. Cecil for the last twenty-five (25) years, more or less. It has been utilized for farming purposes during this entire period and is presently operated as a farm.

9. The house was constructed for business purposes. It is used as a farm office. From time to time Mr. Cecil meets therein with employees, contractors and others to conduct business related to the farm and its maintenance.

10. This farm house/office received the 4% agricultural assessment ratio until the year 1995, when the Assessor classified it as residential and assessed it at the 6% residential assessment ratio. In 1996 the Assessor again assessed the farm house/office at the 6% ratio. Assessor contends it is used as a residence and/or for recreational purposes.

11. Mr. Cecil is a resident of the State of Florida and spends his time there. Mrs. Moe is married and lives with her husband and family in downtown Charleston, South Carolina. She is employed part time with the law firm of Turner, Padget, Graham & Laney in its Charleston office. Mr. John Cecil is self-employed as a painter in Charleston, South Carolina and lives with his mother at her home on Church Street, Charleston, South Carolina.

12. Mrs. Moe and her husband utilize a beach house owned by his family as a secondary home for recreational purposes.

13. Occasionally Mrs. Moe will go to the house located on the Farm on Wednesdays and spend the night with her children. However, these visits are infrequent and do not exceed two nights during any given month. She utilizes the house for business purposes two to ten hours each month.

14. Mr. John Cecil utilizes the house or the facilities very infrequently.

15. Neither the house nor the farm is rented for hunting or recreational purposes.

16. Neither the Farm nor any of its owners keep any boats at the dock at the Farm. Mrs. Moe and her family do own a boat which they keep at the Yacht Club in Charleston, South Carolina.

17. An employee of the Farm, Roy Mandell, works on the farm part-time and uses the farm house for business purposes. Normally, he works on Wednesdays and Sundays. He makes telephone calls from the farm house and meets contractors there. From time to time several other individuals are hired to work on the farm property.

18. The farm house/office is used primarily for the maintenance and upkeep of the farm.

Any other usage of the farm house/office is negligible and is only incidental to the farm business which is conducted therein.

Based upon the foregoing findings of fact, I conclude, as a matter of law, the following:

1. S.C. Code Ann. §12-60-2540 (Supp. 1997) authorizes the South Carolina Administrative Law Judge Division to hear contested cases pursuant to Chapter 23 of Title 1 of the 1976 Code, as amended.

2. Agricultural real property is any tract of real property which is used to raise, harvest or store crops, feed, breed or manage livestock, or to produce plants, trees, fowl or other animals useful to man. S.C. Code Ann. §12-43-230(a) (Supp. 1997).

3. An agricultural use classification is granted to agricultural real property "actually used for agricultural purposes." S. C. Code Ann. §12-43-220(d)(1) (Supp. 1997).

4. S. C. Code Ann. § 12-43-232 (3)(c) (Supp. 1997) provides that real property idle under a federal or state land retirement program is agricultural real property if the property would have qualified as such property subject to satisfactory proof to the assessor.

5. This property was classified for agricultural purposes for the tax year 1994 and has been owned by Taxpayer and its stockholders for approximately the last twenty-five years.

6. S. C. Code Regs. 117-114 defines "agricultural real property" as real property used for agricultural purposes. Real property which is used as the residence of the owner or others is not included within the definition of agricultural real property. Also, this regulation provides that real property that is used for recreation, such as a hunting club or fishing club, or for any other similar use does not qualify for agricultural assessment purposes.

The evidence is totally supportive of Taxpayer's position that the farm house has been used almost exclusively for farm purposes. There is no evidence that it has ever been used as a residence. Further, there is no evidence that any of the entire tract, including the farm house and the small lot on which it is situate, has been utilized for recreational purposes or as a hunting or fishing club. The overwhelming evidence in the record is that the farm house has been and is used almost exclusively in conjunction with the agricultural usage of the property. I therefore conclude that this entire tract of land is used for and committed to agricultural purposes and activities.

7. S. C. Code Ann. § 12-43-232 (3)(d) (Supp. 1997) provides that unimproved real property subject to a perpetual conservation easement as provided in Chapter 8 of Title 27 must be classified as agricultural real property. In John R. Lindsay, Charleston County Assessor vs. John S. Templeton, Charles M. Huff, Thomas Savage, Jr., 96-ALJ-17-0216-CC, this court held that the platting and staking of real property into lots, together with the construction of roads and the placement of underground electrical and phone lines, transformed a "raw property" into improved realty. The Assessor argues that this case is similar to the Lindsay case in that the construction of the farm house in this case constitutes an "improvement" which would disqualify it from the agricultural classification. However, this situation is different from that in Lindsay. Here, the court is faced with the application of a separate statutory provision. S. C. Code Ann. § 12-43-232 (3)(c), rather than § 12-43-232 (3)(d), is applicable herein. Moreover, the farmhouse in this case is an improvement similar to a barn or outbuilding, which does not change the essential agricultural character of the property. Each is part and parcel of a farming enterprise. Each is utilized for agricultural purposes. However, improvements such as those at issue in the Lindsay case, i.e., the subdivision of a tract into lots for sale, constitute a change in the character of the real property from agricultural to commercial. Even though the construction of a building or house on a property constitutes an improvement to the real property, unless it changes the character of the property and the usage of the property, as it did in Lindsay, the property retains its agricultural classification for tax purposes.

The construction of the farm house, without any supportive evidence that it is used for commercial, recreational or residential purposes, is not sufficient to change the character of the property from agricultural to residential for tax assessment purposes. The argument of the Assessor lacks merit.

8. In construing a statute, its words must be given their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute's operation. First Baptist Church of Malden v. City of Malden, 308 S.C. 226, 417 S.E.2d 592 (1992). Statutory construction is within the province of the courts. Johnson v. Pratt, 200 S.C. 314, 20 S.E.2d 865 (1942). The cardinal rule of statutory construction is that a court is to ascertain and effectuate the actual intent of the Legislature; to ascertain this intent, statutes which are part of the same act must be read together. Burns v. State Farm Mutual Automobile Ins. Co., 297 S.C. 520, 377 S.E.2d 569 (1989). When interpreting a statute, legislative intent must prevail if it can be reasonably discovered in the language used, which must be construed in light of the intended purpose of the statutes. Gambrell v. Travelers Insurance Company, 280 S.C. 69, 310 S.E.2d 814 (1983).

ORDER

Based upon the foregoing findings of fact and conclusions of law, it is hereby,

ORDERED that the Taxpayers' property containing 300.3 acres, specifically including the farm house and attachments, identified as PID# 961-969-00-00-004, being parcels 131-3, B5C, and B5B, located on 2206 Highway 174, Edisto Island, Charleston County, South Carolina must be classified as agricultural real property for the tax year 1996.

AND IT IS SO ORDERED.

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

February 10, 1998

Rabbit Point Farm Limited, )

) Docket No: 97-ALJ-17-0501-CC

Petitioner, )

)

vs. )

)

Charleston County Assessor, ) FINAL DECISION

)

Respondent. )

____________________________________)

APPEARANCES: Jessica C. Moe, Esquire: Pro Se for the Petitioner

Samuel W. Howell, IV, Esquire: Attorney for the Respondent

This matter came before me upon request of the Petitioner, Rabbit Point Farm Limited ("Taxpayer"), for a contested case hearing pursuant to S.C. Code Ann. §12-60-2540(A)(Supp. 1996). Petitioner is contesting the decision of the Charleston County Board of Assessment Appeals ("Board"). The Board upheld the Charleston County Assessor ("Assessor") in its classification of PID # 069-00-00-004, owned by Petitioner, as agricultural use property for the tax year 1996, and affirmed the Assessor's classification of a portion thereof containing approximately one acre and the house situate thereon as non-agricultural. Petitioner argues that the entire 300.3 acre tract which includes the one acre and the house should qualify for agricultural assessment.

After exhaustion of its prehearing remedies with the Assessor and the Board, Taxpayer has requested a contested case hearing before the Administrative Law Judge Division ("Division"). The hearing was conducted on November 18, 1997 at the Division's offices in Columbia, South Carolina.

I find and conclude that the entire 300.3 acre tract qualifies for special assessment as agricultural real property.

ISSUE

The sole issue in dispute is whether the totality of Taxpayers' 300.3 acre tract, including the acre containing a house, is entitled to an agricultural use classification, valuation, and assessment for the tax year 1996.

Based upon the evidence presented, I make the following findings of fact, taking into consideration the burden of the parties to establish their respective cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to all parties.

3. Rabbit Point Farm Limited ("Farm") is a corporation which owns a 300.3 acre tract of land at 2206 Highway 174, Edisto Island, Charleston County, South Carolina. The owners of the Farm are listed on the tax returns as Anthony P. Cecil and T. Ashton Phillips. Jessica C. Moe and John Cecil, children of Anthony P. Cecil, also have ownership interest in the Farm.

4. A portion of the tract, containing 269.7 acres, is considered high land and the remaining portion, containing 30.6 acres, is considered marsh.

5. Much of the property has been accepted into the Conservation Reserve Program ("CRP"). The agricultural stabilization and conservation service is a federally sponsored program that pays farmers to take their land out of production primarily to prevent soil erosion. Farmers enter into a program contract with the United States Department of Agriculture ("USDA") for a ten to fifteen year period whereby they agree to take the eligible land out of annual crop production and put it into perennial grass, wildlife plantings, wind breaks and/or trees. The farmers are paid by the USDA. Property placed into the CPR Program is considered agricultural property.

6. The subject property is designated by the Charleston County Assessor as PID# 961069-00-00-004. It contains parcel numbers 131-3, B5C and B5B and is located on South Carolina Highway 174. It is bounded by Russell Creek on the north.

7. Located on the Farm is a residence to which is attached a wooden ramp leading to a boat house and boat dock. The one acre lot on which this house is situate together with the wooden ramp and boat house has been denied classification as agricultural by the Assessor for the tax year 1996. The remainder of the 300.3 acre farm has been qualified by the Assessor for agricultural assessment for 1996.

8. The residence, together with the wooden walkway and dock, were built by Mr. Cecil approximately twelve (12) years ago. The entire tract of land has been owned by Mr. Cecil for the last twenty-five (25) years, more or less. It has been utilized for farming purposes during this entire period and is presently operated as a farm.

9. The house was constructed for business purposes. It is used as a farm office. From time to time Mr. Cecil meets therein with employees, contractors and others to conduct business related to the farm and its maintenance.

10. This farm house/office received the 4% agricultural assessment ratio until the year 1995, when the Assessor classified it as residential and assessed it at the 6% residential assessment ratio. In 1996 the Assessor again assessed the farm house/office at the 6% ratio. Assessor contends it is used as a residence and/or for recreational purposes.

11. Mr. Cecil is a resident of the State of Florida and spends his time there. Mrs. Moe is married and lives with her husband and family in downtown Charleston, South Carolina. She is employed part time with the law firm of Turner, Padget, Graham & Laney in its Charleston office. Mr. John Cecil is self-employed as a painter in Charleston, South Carolina and lives with his mother at her home on Church Street, Charleston, South Carolina.

12. Mrs. Moe and her husband utilize a beach house owned by his family as a secondary home for recreational purposes.

13. Occasionally Mrs. Moe will go to the house located on the Farm on Wednesdays and spend the night with her children. However, these visits are infrequent and do not exceed two nights during any given month. She utilizes the house for business purposes two to ten hours each month.

14. Mr. John Cecil utilizes the house or the facilities very infrequently.

15. Neither the house nor the farm is rented for hunting or recreational purposes.

16. Neither the Farm nor any of its owners keep any boats at the dock at the Farm. Mrs. Moe and her family do own a boat which they keep at the Yacht Club in Charleston, South Carolina.

17. An employee of the Farm, Roy Mandell, works on the farm part-time and uses the farm house for business purposes. Normally, he works on Wednesdays and Sundays. He makes telephone calls from the farm house and meets contractors there. From time to time several other individuals are hired to work on the farm property.

18. The farm house/office is used primarily for the maintenance and upkeep of the farm.

Any other usage of the farm house/office is negligible and is only incidental to the farm business which is conducted therein.

Based upon the foregoing findings of fact, I conclude, as a matter of law, the following:

1. S.C. Code Ann. §12-60-2540 (Supp. 1997) authorizes the South Carolina Administrative Law Judge Division to hear contested cases pursuant to Chapter 23 of Title 1 of the 1976 Code, as amended.

2. Agricultural real property is any tract of real property which is used to raise, harvest or store crops, feed, breed or manage livestock, or to produce plants, trees, fowl or other animals useful to man. S.C. Code Ann. §12-43-230(a) (Supp. 1997).

3. An agricultural use classification is granted to agricultural real property "actually used for agricultural purposes." S. C. Code Ann. §12-43-220(d)(1) (Supp. 1997).

4. S. C. Code Ann. § 12-43-232 (3)(c) (Supp. 1997) provides that real property idle under a federal or state land retirement program is agricultural real property if the property would have qualified as such property subject to satisfactory proof to the assessor.

5. This property was classified for agricultural purposes for the tax year 1994 and has been owned by Taxpayer and its stockholders for approximately the last twenty-five years.

6. S. C. Code Regs. 117-114 defines "agricultural real property" as real property used for agricultural purposes. Real property which is used as the residence of the owner or others is not included within the definition of agricultural real property. Also, this regulation provides that real property that is used for recreation, such as a hunting club or fishing club, or for any other similar use does not qualify for agricultural assessment purposes.

The evidence is totally supportive of Taxpayer's position that the farm house has been used almost exclusively for farm purposes. There is no evidence that it has ever been used as a residence. Further, there is no evidence that any of the entire tract, including the farm house and the small lot on which it is situate, has been utilized for recreational purposes or as a hunting or fishing club. The overwhelming evidence in the record is that the farm house has been and is used almost exclusively in conjunction with the agricultural usage of the property. I therefore conclude that this entire tract of land is used for and committed to agricultural purposes and activities.

7. S. C. Code Ann. § 12-43-232 (3)(d) (Supp. 1997) provides that unimproved real property subject to a perpetual conservation easement as provided in Chapter 8 of Title 27 must be classified as agricultural real property. In John R. Lindsay, Charleston County Assessor vs. John S. Templeton, Charles M. Huff, Thomas Savage, Jr., 96-ALJ-17-0216-CC, this court held that the platting and staking of real property into lots, together with the construction of roads and the placement of underground electrical and phone lines, transformed a "raw property" into improved realty. The Assessor argues that this case is similar to the Lindsay case in that the construction of the farm house in this case constitutes an "improvement" which would disqualify it from the agricultural classification. However, this situation is different from that in Lindsay. Here, the court is faced with the application of a separate statutory provision. S. C. Code Ann. § 12-43-232 (3)(c), rather than § 12-43-232 (3)(d), is applicable herein. Moreover, the farmhouse in this case is an improvement similar to a barn or outbuilding, which does not change the essential agricultural character of the property. Each is part and parcel of a farming enterprise. Each is utilized for agricultural purposes. However, improvements such as those at issue in the Lindsay case, i.e., the subdivision of a tract into lots for sale, constitute a change in the character of the real property from agricultural to commercial. Even though the construction of a building or house on a property constitutes an improvement to the real property, unless it changes the character of the property and the usage of the property, as it did in Lindsay, the property retains its agricultural classification for tax purposes.

The construction of the farm house, without any supportive evidence that it is used for commercial, recreational or residential purposes, is not sufficient to change the character of the property from agricultural to residential for tax assessment purposes. The argument of the Assessor lacks merit.

8. In construing a statute, its words must be given their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute's operation. First Baptist Church of Malden v. City of Malden, 308 S.C. 226, 417 S.E.2d 592 (1992). Statutory construction is within the province of the courts. Johnson v. Pratt, 200 S.C. 314, 20 S.E.2d 865 (1942). The cardinal rule of statutory construction is that a court is to ascertain and effectuate the actual intent of the Legislature; to ascertain this intent, statutes which are part of the same act must be read together. Burns v. State Farm Mutual Automobile Ins. Co., 297 S.C. 520, 377 S.E.2d 569 (1989). When interpreting a statute, legislative intent must prevail if it can be reasonably discovered in the language used, which must be construed in light of the intended purpose of the statutes. Gambrell v. Travelers Insurance Company, 280 S.C. 69, 310 S.E.2d 814 (1983).

ORDER

Based upon the foregoing findings of fact and conclusions of law, it is hereby,

ORDERED that the Taxpayers' property containing 300.3 acres, specifically including the farm house and attachments, identified as PID# 961-969-00-00-004, being parcels 131-3, B5C, and B5B, located on 2206 Highway 174, Edisto Island, Charleston County, South Carolina must be classified as agricultural real property for the tax year 1996.

AND IT IS SO ORDERED.

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

February 10, 1998