2005-706, ELDERTRUST OF FLORIDA, INC. v. TOWN OF EPSOM

The defendant, Town of Epsom (Town), appeals a

orally), for the defendant. Soltani/Mosca, PLLC, of Epsom (Edward C. Mosca on the brief and

on the brief, and Mr. Chapman orally), for the plaintiff. to press. Errors may be reported by E-mail at the following address: Orr & Reno, P.A., of Concord (William L. Chapman and Jessica E. Storey

page is: http://www.courts.state.nh.us/supreme. v.

editorial errors in order that corrections may be made before the opinion goes No. 2005-706 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Merrimack Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as facilities for a fixed fee.

p. 2 through a mortgage financed by NHI, and contracted with NHC to manage the

occupied its property for charitable purposes.

application for financing in 2001, so ElderTrust purchased the facilities

exemption should have been granted. The Town then appealed to this court. paid. ElderTrust appealed to the superior court, which ruled that the tax and assessed a tax totaling $104,774.90 on both facilities, which ElderTrust N.W.2d 390, 391 (Iowa 1977) (de novo review of charitable tax exemption of charitable tax exemption cases); Iowa Methodist Hosp. v. Bd. of Review, 252 Servs., Inc. v. Lamar County, 633 So.2d 440, 444 (Miss. 1994) (de novo review no pecuniary profit or benefit to its officers or members; and (3) owned, used or of Chesterfield, 153 N.H. 70, 72 (2005); see also Hattiesburg Area Senior questions of law, which we review de novo. See, e.g., Town of Hinsdale v. Town 658, 661 (2001). The interpretation and application of statutes present Development (HUD) to finance the acquisition. However, HUD denied CFN’s of the Evangelical Covenant Church of America v. Town of Swanzey, 146 N.H. obtain funding from the United States Department of Housing and Urban application of RSA 72:23, V (2003) and RSA 72:23- l (2003). See E. Coast Conf. it believed that such an operational arrangement would facilitate its efforts to Resolution of this appeal requires us to consider the interpretation and

II. Standard of Review RSA 72:23, V for the 2002 tax year. The Town denied ElderTrust’s application health care facilities, including retirement housing for elderly persons.”

the purpose of performing some service of public good or welfare; (2) provided and in concluding that ElderTrust: (1) was established and administered for Here, the Town argues the trial court erred in granting the tax exemption

initiated efforts to acquire the facilities. ElderTrust acted through CFN because

Thereafter, ElderTrust sought a tax exemption on the facilities under acquire, own, maintain, and operate hospitals, nursing homes and related

(NHC) to manage them. over their operation, and later contracted with National HealthCare Corporation In 2001, CFN Manchester/North, LLC (CFN), a subsidiary of ElderTrust,

meaning of Section 501(c)(3) of the Internal Revenue Code, to establish, operated, exclusively for public charitable uses and purposes within the of incorporation, ElderTrust was “organized, and at all times thereafter ElderTrust is a Tennessee non-profit corporation. Pursuant to its articles

living facility. In 1999, NHI foreclosed on the mortgages for both facilities, took Epsom Manor is a skilled nursing facility and Heartland Place is an assisted shall not

p. 3 organization’s activities are not conducted for profit those of any related organization. The fact that an its benefits or services to such officers or members, or

officers or members, or any restrictions which confine

Hampshire, with no pecuniary profit or benefit to its public that includes residents of the state of New substantial and indefinite segment of the general

economic well-being of the general public or a established.

advancing the spiritual, physical, intellectual, social or other purpose than the purpose for which they are to perform some service of public good or welfare performing, and obligated, by its charter or otherwise,

amended. This section is not intended to abrogate the United States Internal Revenue Code of 1986, as nor shall the organization’s treatment under the

none of the income or profits thereof is used for any established and administered for the purpose of

organization “charitable” for purposes of this chapter,

owned, used and occupied by them directly for the k, shall mean a corporation, society or organization incorporated, or legally doing business in this state, scope of this chapter, including RSA 72:23 and 72:23corporation, society or other organization within the

charitable organizations and societies organized, [t]he term “charitable” as used to describe a

Pursuant to RSA 72:23- l,

then consider their application. misapplied RSA 72:23, V and RSA 72:23- l. We first interpret the statutes, and

the record. [t]he buildings, lands and personal property of

RSA 72:23, V provides an exemption from taxation for:

The Town contends, in essence, that the trial court misinterpreted and

Elwood v. Bolte, 119 N.H. 508, 510 (1979).

findings of historical fact, where those findings are supported by evidence in cases). In conducting our review, we accord deference to the trial court’s benefit.

p. 4 the organization’s officers or members may not derive any pecuniary profit or purpose for which the organization was established. Under the fourth factor, of the organization’s income or profits are used for any purpose other than the

occupied by it and used directly for the stated charitable purposes; and (4) any

the organization; (3) the land, in addition to being owned by the organization, is opportunity to join a number of other courts, organization’s stated purpose to the public rather than simply to members of should be granted under RSA 72:23, V and RSA 72:23- administered for a charitable purpose; (2) an obligation exists to perform the 4 l. We now take the

grounded in the statutory language, as to when a charitable tax exemption whether: (1) the institution or organization was established and is

anchored in the plain language of the statutes, they also have firm moorings in

See RSA 72:23, V; RSA 72:23- l. Although these four factors are evaluated.

synthesize our previous holdings and to delineate a clear, multipartite inquiry, requires the institution to satisfy each of the following four factors; namely, scheme was satisfied. We have not yet been presented with an opportunity to We hold that the plain language of RSA 72:23, V and RSA 72:23- l ascertain whether a particular portion of the charitable tax exemption statutory

of factors against which a charitable tax exemption application must be Commonwealth, 487 A.2d 1306, 1317 (Pa. 1985), in articulating a discrete set 400 N.E.2d 661, 664 (Ill. App. Ct. 1980); Hospital Utilization Project v. Home v. Korzen, 233 N.E.2d 537, 541-42 (Ill. 1968); Clark v. Marian Park, Inc.,

to include. legislature might have said or add language that the legislature did not see fit

whole. 661-62. In most of our past cases, we have conducted a narrow analysis to legislature’s intent as expressed in the words of the statute considered as a (1993); Town of Rollinsford, 141 N.H. at 240-41; Town of Swanzey, 146 N.H. at N.H. 455, 458-59 (2005); Appeal of City of Franklin, 137 N.H. 622, 624-25 a number of previous occasions. See, e.g., Appeal of Town of Wolfeboro, 152 We have interpreted and applied both RSA 72:23, V and RSA 72:23- l on

Id.

legislative intent from the statute as written and will not consider what the of Town of Bethlehem, 154 N.H. ___, ___ (decided Nov. 2, 2006). We interpret statute, we ascribe the plain and ordinary meaning to the words used. Appeal Town of Hinsdale, 153 N.H. at 72. When examining the language of the

In matters of statutory interpretation, we are the final arbiters of the

common law definition of charitable organization.”). Rollinsford, 141 N.H. 239, 241 (1996) (RSA 72:23- l “is consistent with the RSA 72:23- l (emphasis added); see also The Housing Partnership v. Town of

Hampshire. meaning of “charitable” under the common law of New under our analysis of the third factor. Thus, under the current statutory

p. 5 facilities, including retirement housing for elderly persons.” maintain, and operate hospitals, nursing homes, and related health care

facility is not used directly for a charitable purpose, we address that argument exemption on a given parcel of property.

Section 501(c)(3) of the Internal Revenue Code, to establish, acquire, own,

property”); 71 Am. Jur. 2d 5

apartment or rental units. To the extent the Town argues that a particular than simply offer rental units in order to be eligible for a charitable tax

exclusively for public charitable uses and purposes within the meaning of

aggregate-living facility for the elderly in order to qualify as a charitable use of

describe facilities that provide a level of care or services above that of mere under our State’s statutory scheme, a provider of elderly housing must do more of Wolfeboro, 152 N.H. at 459-62, ElderTrust’s articles of incorporation Here, with the possible exception of basic retirement housing, see Town language of ElderTrust’s articles of incorporation required it to be “operated, assisted living facilities for the elderly.” We agree with the trial court. The for the elderly fulfill the charitable purpose requirement of the statute. (2001). to perform a service of public good, namely providing skilled nursing and State and Local Taxation §§ 327, 328, at 623-26

(charitable tax exemption “requires something more than merely providing an Riverview Place, Inc. v. Cass County, 448 N.W.2d 635, 642 (N.D. 1989) N.H. at 626 (homes for the aged are not per se tax exempt organizations);

that “[t]he burden of demonstrating the applicability of any exemption [is] upon for elderly housing). Consistent with other jurisdictions, we have held that misapplied the statutory charitable tax exemption scheme, keeping in mind Town of Wolfeboro, 152 N.H. at 459-62 (discussing charitable tax exemptions

three occasions, we have discussed whether particular housing arrangements ElderTrust’s “articles of incorporation demonstrate that it was established . . . therefore ElderTrust was not established for a charitable purpose. On at least ElderTrust’s articles of incorporation do not assist “worthy aged people” and Second, the Town contends that the types of housing referenced in

factors. Accordingly, we turn to the Town’s argument that the trial court

not sufficiently indicative of a charitable purpose. The trial court ruled that First, it contends that the wording of ElderTrust’s articles of incorporation is As to the first factor, the Town advances essentially two contentions.

demonstrates that the trial court gave consideration to each of these four While not in the precise form we articulated above, the record

Cincinnati v. Town of Exeter, 92 N.H. 348, 352 (1943). our case law. See, e.g., Town of Rollinsford, 141 N.H. at 241-42; Society of previous charitable tax exemption cases. p. 6 documents is consistent with our approach to the obligation inquiry in

although the Town contends that enforcement of a charitable purpose is

articles of incorporation, among other documents or evidence. Examining such required to be “operated[ ]

reaching its decision. ElderTrust’s articles of incorporation cited above upon which it relied in However, on the first page of its order, the trial court quoted the portion of V are not satisfied.

uncontrolled discretion the requirements of RSA 72:23

significant and enforceable limitation on ElderTrust’s operation. Moreover, plaintiff sees fit to provide at its option or in its (Emphasis added.) In context, the use of the word “exclusively” places a with a charitable purpose did exist, the trial court examined ElderTrust’s exclusively for public charitable uses and purposes.” By the express language of its articles of incorporation, ElderTrust was providing some service of public good. Franklin, 137 N.H. at 625 (quotation omitted). “might at its option and in its uncontrolled discretion see fit to furnish.” City of concern that an organization would provide no more services than what it organization’s articles of incorporation, at least to some extent, may alleviate a Nelson, 107 N.H. 316, 319-20 (1966). The language of a particular under an enforceable obligation to perform a service of public good or welfare. See, e.g., Nature Conservancy v.

that if the public benefit is limited to that which the

purpose. In reaching its conclusion that an enforceable obligation to operate ElderTrust did not operate under an enforceable obligation to fulfill a charitable charitable purposes, from obtaining the benefits of a tax exemption without The Town’s substantive argument regarding the second factor is that

the articles of incorporation it had in mind” in holding that ElderTrust was Town preliminarily argues that “[t]he trial court did not specify what portion of In challenging the trial court’s conclusions on the second factor, the against it if the service is not performed. It follows

General or other public officer to enforce this right must be obligatory so as to enable the Attorney Id. at 626.

obligation requirement is to prevent organizations, even if they operate for City of Franklin, 137 N.H. at 625 (quotation omitted). The purpose of the

the public service which [the applicant] is to render

In terms of the second factor, we have held that

for a stated charitable purpose. scheme, we uphold the trial court’s conclusion that ElderTrust was established enforced. ElderTrust is not left with an impermissible level of discretion. p. 7 sufficiently define a charitable purpose such that the purpose could be our analysis. Accordingly, we hold that ElderTrust’s articles of incorporation

properties to directly advance a charitable mission. accounts for charitable institutions that do not necessarily use all of their inquiring beyond simply who owns a particular parcel, the third factor

in analyzing how an entity carries out its obligation under the third factor of

particular parcel of property for which the exemption is being sought. By

actual provision of services to such persons may be an important consideration charitable purposes.”

applicant is not entitled to a tax exemption.

out its mission. charitable purpose identified under the first factor is being carried out on the property must be reasonably necessary for the charitable organization to carry

reference to persons of “low and moderate income.” We note, however, that the and define an enforceable charitable obligation even without an express to be occupied by the association and used directly by the association for its taxation.”); ElderTrust’s articles of incorporation sufficiently circumscribe its discretion public charity does not, by that fact alone, exempt the property from

negligible or insignificant, or not in the performance of the public purpose, the

Town of Rollinsford, 141 N.H. at 242. When the use is slight,

are interdependent – that is, the third factor primarily asks whether the In order for a residence to satisfy the third prong, the occupancy of the

(1960).

see also Appalachian Mountain Club v. Meredith, 103 N.H. 5, 9-10 exemption, the land, in addition to being owned by the association, would have

particular income level for residents of or applicants to the facilities. In short, N.W.2d at 640 (“The ownership of the property in question by an institution of

of the third factor may overlap with that of the first because these two factors

In terms of the third factor, we have held that in order “[t]o qualify for an could not create an enforceable charitable obligation unless they specified a and thus reject the Town’s argument that ElderTrust’s articles of incorporation Town of Rollinsford, 141 N.H. at 241. charitable character.” (quotation omitted)). We find this reasoning persuasive See

of applicants); for exemption because its admissions process depended upon financial status

the charitable exemption.” does not necessarily have to serve the poor or the needy in order to qualify for Massachusetts Supreme Judicial Court has reasoned that “[a]n organization

than those who are poverty stricken does not cause an institution to lose its N.E.2d 240, 251 (Ill. 2004) (“[C]harging fees and dispensing benefits to other

accord Eden Retirement Center, Inc. v. Dep’t of Revenue, 821

N.E.2d 97, 104 (Mass. 2001) (holding that elderly living facility did not qualify

expressly reference elderly persons with “low and moderate income,” the compromised by the fact that ElderTrust’s articles of incorporation do not benefits provided.

p. 8 purpose.”

pays” and that ElderTrust required would-be residents to sign an admission

that the charged fees were equal to, or exceeded, the value or cost of the to its residents. independent living facilities, with the former generally providing more services charitable purpose, or are necessary for the organization to accomplish its have previously distinguished between assisted living facilities and 8

Hampshire. and related health care facilities and services for the elderly in southern New collected. The Town correctly notes that a number of patients were “private

financial loss, it is not surprising that we have been directed to no evidence provides.” (citations omitted)). Considering that both facilities operated at a charitable tax exemption, as long as the fees “directly fulfill the organization’s elderly and disabled tenants to receive the special benefits this housing order to obtain certain of these services. With respect to Heartland Place, we elderly housing does not alone preclude an organization from obtaining a for a charitable purpose. We have held that charging fees to residents of

for ElderTrust to carry out its mission of providing hospitals, nursing homes, The Town also takes issue with the facilities’ policies on the fees of medicine, among other services.

of the residents and the occupancy of such housing is necessary in order for to no evidence that Epsom Manor residents were required to pay extra fees in nature of elderly . . . housing . . . is often modified to accommodate the needs occupants as part and parcel of their residency there. We have been directed Heartland Place and Epsom Manor were not owned, used, or occupied directly See Town of Rollinsford, 141 N.H. at 243 (“[T]he specially adapted purpose. For example, Epsom Manor provided nursing and other care to its

charged to live in Epsom Manor and Heartland Place are reasonably necessary trial court, entitled to 24-hour nursing care, housekeeping and administration (2001); 71 Am. Jur. 2d State and Local Taxation § 308 (2001). Here, the fees 1104, 1108 (1982); see also Appeal of City of Laconia, 146 N.H. 725, 728-29

Senior Citizens Housing Dev. Corp. v. City of Claremont, 122 N.H.

The Town argues that since these services were not provided for free, facility and were occupied and used directly to advance ElderTrust’s charitable

applies here insofar as the residents of Heartland Place were, as found by the

See Town of Wolfeboro, 152 N.H. at 457. This distinction

provided more services than would be provided at a mere aggregate living as a skilled nursing facility, and Heartland Place, as an assisted living facility, Here, the record supports the trial court’s conclusion that Epsom Manor,

and stay, within the bounds prescribed by the constitution or statute.”). organization or institution, in order to have its property exempt, must come, be decided on its own peculiar, or particular, facts or circumstances, and an of the case. See 84 C.J.S. Taxation § 323, at 391-92 (2001) (“[E]ach case must organization performs a charitable purpose depends upon the particular facts directly for a charitable purpose within the meaning of the statute.

p. 9 its charitable mission. Thus, we hold that ElderTrust operated both facilities

order to keep Epsom Manor and Heartland Place in operation and to advance also reflects that ElderTrust used profits generated at other of its facilities in who otherwise would have imposed a burden upon the government. The record

services, which cost more than the fees charged, to a portion of the population

services provided. Accordingly, it follows that the facilities provided care and court found that Medicaid payments did not cover the entire cost of the 70% of the days billed at Epsom Manor were at Medicaid rates, and the trial

were also substantially below the published rate, were accepted. In fact, some

used directly for a stated charitable purpose.

also testimony that a number of Medicaid patients, whose monthly payments Heartland Place, some residents paid $25 on rooms valued at $60. There was months without paying. accommodations and services they received at the facilities. For example, at

higher than the resident could afford to pay.

crucial to our conclusion concerning whether the facilities are occupied and

to make payments. Indeed, some residents remained at the facility for ten or residents paid substantially below the advertised rate for the

the resident to retain the same room, even if that room had a market value Medicare coverage or other sources of funds ran out, both facilities permitted suffered from an inability to pay as promised). Moreover, when a patient’s the facilities despite an inability to pay. ElderTrust’s actual practices are the evidence of its actual practices shows that it allowed people to remain at although ElderTrust does require a resident to sign the admissions agreement,

financial difficulty in order to find a lower rate at which the patient could afford services was charitable in nature, including evidence that a number of patients Medicaid; and (4) representatives of ElderTrust negotiated with patients in some cases before ElderTrust knew whether the patient would receive

because the facility supported a large number of patients even if the patient

less likely that he or she will become a burden on governmental coffers. Thus,

In addition, other evidence tends to demonstrate that the provision of

Heartland Place operated at a financial loss; (3) patients were accepted in

fact that there was no written policy of accepting patients for charity, in part

bed, even if that individual cannot pay the cost of services rendered, makes it operating as a charity.”). Permitting an individual to remain in a particular regardless of one’s ability to pay, that is evidence that the organization is not Local Taxation § 308, at 596 (2001) (“Where everyone must pay the same rate

ability to pay was not a prerequisite for admission; (2) Epsom Manor and at the hearing before the trial court, there was testimony that: (1) a patient’s ElderTrust operated the facilities directly for its charitable purpose. However,

209, 212-13 (Vt. 1934) (declaring facility eligible for tax exemption, despite the

The Town argues that these two facts undermine the extent to which agreement that permitted ElderTrust to discharge a patient for failure to pay. least some occasions when the NHC contract or NHI mortgage were discussed.

p. 10 private citizens; and (2) one of the overlapping shareholders left the room on at distributions of net earnings and other profits to officers, directors, or other that: (1) ElderTrust’s articles of incorporation contain provisions prohibiting

establish that [ElderTrust] exists for the benefit of NHI or NHC.” We also note phrases from the trial court’s order out of context.

contract with NHC are the products of arm’s length negotiations and do not of income or profits that would contravene the statute. We refuse to consider interest rate it offered to ElderTrust; and (4) “[t]he mortgage with NHI and the demonstrate that [ElderTrust] intended to benefit NHI” especially in light of the

financial and related documents in the record, it did not find evidence of a use the Town. Instead, the trial court simply noted that, upon review of the many purchase of the facilities “from NHI was not structured in such a way as to court’s whole order, we conclude that the trial court did not shift the burden to

intent to use [ElderTrust] purely as a means to benefit NHC”; (3) ElderTrust’s misreads the trial court’s order. Reading this finding in the context of the trial

contract with NHC for the management of the property does not evidence any offer evidence on this prong of the charitable tax exemption inquiry. The Town submitted the best bid for operating the facilities”; (2) ElderTrust’s “choice to impermissibly shifting the burden of proof from the applicant to the Town to had substantial experience running charitable healthcare facilities and had that this finding indicates that the trial court violated RSA 72:23-m by

facilities because, after completing due diligence, [ElderTrust] found that NHC [it] is run for the benefit of either for-profit corporation.” The Town contends

and related organizations.

The trial court also found that: (1) “NHC was chosen to manage the or those of any related organization.” RSA 72:23- [ElderTrust] is so intertwined with the affairs of either NHC or NHI such that l; restrictions which confine its benefits or services to such officers or members,

established; and (2) offering pecuniary profit or benefit to some of its members

The trial court found that “[t]here is no evidence to suggest that offers a “pecuniary profit or benefit to its officers or members, or any

using its income or profits for purposes other than that for which it was ElderTrust’s board hold stock in NHC and/or NHI, ElderTrust is both: (1) earnings to NHC and NHI, two for-profit entities, and since two members of The Town argues that since ElderTrust pays a substantial amount of its

N.H. at 352.

RSA 72:23, V. We also consider, as part of this inquiry, whether ElderTrust purpose other than the purpose for which the organization was established. determined whether the organization’s income or profits are used for any Finally we turn to the fourth factor. Under this factor, it must be manage Heartland Place. p. 11 fees of $20,000 per month to manage Epsom Manor and $4,000 per month to

proposal submitted by Beverly Enterprises. Ultimately, NHC was paid fixed

offered terms which were more favorable financially than those contained in the management companies arguably might not have been; and (2) NHC had over ownership, so it was familiar with the facilities in a way that other

factors, including: (1) NHC had managed both facilities before ElderTrust took

would be the lesser of either the HUD valuation or the pre-existing NHI these efforts. ElderTrust’s board based its selection of NHC upon a number of submission of a bid to manage the ElderTrust facilities. NHC was selected after of these companies, and attempted to speak with a third, to discuss the

ElderTrust had negotiated with NHI that the total amount of the mortgage

[NHC].” The chairman also spoke by telephone with officials from at least two

court credited this testimony as well.

would be used solely to advance the company’s charitable mission. Further, . . . [ElderTrust] [would] pay monies into a capital improvements account” that ElderTrust was able to negotiate a deal whereby “in lieu of payments to [NHI], Care Centers of America, Beverly Enterprises, Inc., HCR ManorCare and

between ElderTrust and NHI. However, the trial court received testimony that contract and working capital proposals from 4 different operators including Life that the chairman discussed with the board “his efforts to obtain management However, the minutes from a meeting of ElderTrust’s board of directors indicate

mortgage with NHI, reduced from 10.8%. At trial, NHI’s senior vice president testimony, which it credited, that ElderTrust received a 6.9% rate on its [rate offered to ElderTrust] was ‘at below market rates.’” The trial court heard

law. trial court unless they are lacking in evidential support or tainted by error of The Town also contends that there is no evidence of any negotiation

ElderTrust was improperly using its funds to make NHC more profitable.

“there is no evidentiary support for the trial court’s finding that the mortgage With respect to ElderTrust’s mortgage from NHI, the Town contends that

evidence claims as a matter of law, and uphold the findings and rulings of the

“to solicit competitive bids” for the services provided by NHC and, therefore,

support some of these findings. On appeal, we review sufficiency of the

The Town first argues that there was no evidence that ElderTrust acted

weight to be given testimony. Id. weight to the trial court’s judgments on the credibility of witnesses and the Fichtner v. Pittsley, 146 N.H. 512, 515 (2001). We accord considerable

The Town argues that the evidence in the record is not sufficient to

using its profits for purposes other than that for which it was established. These findings support the trial court’s conclusion that ElderTrust was not benefit of a tax exemption. p. 12 interests of Richmond and Neal are sufficient to deprive ElderTrust of the

never served as a director of ElderTrust. Thus, the question is whether the $750 for his services (to ElderTrust) in 2002.

presented both companies’ proposals to the ElderTrust board; however, he generation of revenue was likely. No director of ElderTrust received more than financial losses at either facility were markedly improving such that a net generated profits for excessive salaries to ElderTrust’s members or that the

performed or time spent at the institution); 26 U.S.C. § 503(b)(6) (requiring the

who held the title of senior vice president of finance for both NHI and NHC links or connections with members of the charitable organization’s board. ElderTrust’s board served as a board member of NHI or NHC. An individual interest in NHI or NHC. Further, Richmond testified that no member of portion of the record indicating that Epsom Manor or Heartland Place

large salaries for directors where there was no evidence of actual work charitable organizations and other entities with overlapping interests). v. County of Dauphin, 645 A.2d 290, 294 (Pa. Commw. Ct. 1994) (describing

may never enter into agreements with for-profit entities that happen to have

the record that any other members of ElderTrust’s board had any financial been violated. For example, the Town does not point to, nor do we find, any record in this case, we are unable to conclude that the statutory scheme has participants to the transactions at issue. See id. However, based upon the We harbor some concern about the overlapping interests of the

26 U.S.C. § 503(b)(6) (2000) (limiting but not precluding transactions involving supported by the evidence. See

authority indicating a bright-line rule that tax exempt charitable organizations company for services rendered; and (2) the Town has not pointed to any legal regional vice president of NHC, also held stock in NHC. There is no evidence in ElderTrust is one client of these two companies, and as such, it pays each stock in NHC. Michael Neal, a member of ElderTrust’s board and a senior In responding to this query, we make two preliminary observations: (1) owned 14,000 to 15,000 shares of stock in NHI and 8,000 to 10,000 shares of

to its officers or members,

income or profits for purposes other than that for which it was established are

William Richmond, the president of ElderTrust and chairman of its board,

As to whether ElderTrust operated to provide pecuniary profit or benefit

hold that the trial court’s findings concerning whether ElderTrust was using its health care facilities. Accordingly, based upon our review of the record, we contained in any of the fifty to seventy mortgages that NHI had granted to other property under the prior owner.) These terms were more favorable than those investment in the properties. (As stated above, NHI held the mortgage on the or benefit to its officers or members. p. 13 and rulings concerning whether ElderTrust operated to provide pecuniary profit circumstances, we conclude that the record supports the trial court’s findings

organizations and the formation thereof. Accordingly, under these

upheld the trial court’s findings concerning the relationship between the three ElderTrust’s management contract with that company. Furthermore, we have Neal’s salary as regional vice-president of NHC increased as a result of

particular. Nor has the Town pointed to any evidence clearly indicating that

speculative and not clearly linked to the relationship with ElderTrust in would improve to the extent that NHI was profitable, such a profit was although Richmond testified on cross-examination that the value of his stock

burden with respect to each of the four factors. BRODERICK, C.J., and DALIANIS, GALWAY and HICKS, JJ., concurred.

(decided Oct. 31, 2006); Town of Derry v. Adams, 121 N.H. 473, 480 (1981). increased due to the transactions with ElderTrust particularly. Indeed, we reach today. See In the Matter of Fulton & Fulton, 154 N.H. ___, ___ course free to amend the statutory scheme, should it disagree with the result Whitcomb v. Town of Carroll, 141 N.H. 402, 412 (1996), the legislature is of and fourth factors. While we are bound to apply the statute as written, we regard this as a particularly close case, especially with respect to the second

In sum, we uphold the trial court’s determination that ElderTrust met its

that the value of Richmond’s or Neal’s stock necessarily or automatically

In addition, the Town has not pointed to any evidence clearly indicating

percentage of shares or interests before transaction is prohibited). individual or entity holding the overlapping interests to own a particular