Hibernian Benevolent Society v. Kelly , 30 L.R.A. 167 ( 1895 )

Opinion by

Mr. Chief Justice Bean.

Article IX, section 1 of the state constitution directs that “The legislative assembly shall provide by law for uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes as may be specially exempted by law.” Under this provision no property can be relieved from taxation except such as may be in use for some of the purposes enumerated therein, and then only to the extent specially permitted by legislative enactment. The constitution itself does not exempt any property from taxation, and it authorizes the legislature to do so “only for municipal, educational, literary, scientific, religious, or charitable purposes.” It follows, then, that before property can be exempted from taxation it must not only be used for some of the purposes specified in the constitution, but the exemption must be specially authorized by law. Now, the statute which undertakes to exempt property from taxation, and by which the questions presented in this case must be solved, was passed by the territorial legislature in eighteen hundred and fifty-four, and, so far as not inconsistent with the constitution, was continued in force by section 7, article XVIII of that instrument, and is now section 2732 of Hill’s Code. By subdivision 3 of this section it is provided that “The personal property of all literary, benevolent, charitable, and scientific institutions, incorporated within this state, and such real estate belonging to such institutions as shall be actually occupied for the purposes for which they were incorporated,” shall be exempt from taxation. Under these constitutional and statutory provisions it is manifest that real property, to be exempt from taxation, must belong to some incorporated literary, benevolent, charitable, or scientific institution, and must be actually occupied for literary, benevolent, charitable, or scientific purposes.

1. The contention for the defendant is that the real property upon which the tax in question was laid is not exempt from taxation for the reason, first, that plaintiff is not a charitable institution within the meaning of the law, because its benefits are confined to its own members and their families; and, seeond, that the property assessed is not actually occupied for the purposes for which it was incorporated. Upon the first point the argument of his counsel is that a charitable institution, within the meaning of the exemption law, is one whose benefits are extended to the public generally, or some indefinite portion thereof, without regard to the relation the recipient may bear to the members of the particular organization or society, or to the fees or dues paid. But the principal authorities relied upon by him in support of this position were determinations of controversies arising under constitutional or legislative enactments exempting from taxation property belonging to institutions devoted to “purely public charity,” which it is held does not include charitable institutions whose benevolence is confined to their own members or persons having some particular relationship to such members: Philadelphia v. Masonic Home of Pennsylvania, 160 Pa. St. 572 (23 L. R. A. 545, 28 Atl. 954, 40 Am. St. Rep. 736); Swift’s Executors v. Beneficial Society of Easton, 73 Pa. St. 362; Delaware County Institute of Science v. Delaware County, 94 Pa. St. 103; Donohugh’s Appeal, 86 Pa. St. 306; Mitchell v. Treasurer of Franklin County, 25 Ohio St. 144; Babb v. Reed, 5 Rawle, 150; Burd Orphan Asylum v. School District of Upper Darby, 90 Pa. St. 21; County of Hennepin v. Brotherhood of Gethsemane, 27 Minn. 460 (38 Am. Rep. 298, 8 N. W. 595). But under constitutional or legislative provisions, which, like ours, provide' for the exemption of certain property belonging to “charitable institutions,” and used for charitable purposes, it is believed that such an institution is entitled to the benefit of the exemption, although its benefactions are confined to its own members or their families. Thus, in City of Indianapolis v. Grand Master, 25 Ind. 518, it is held that an institution which extends charity to its own members only is a charitable institution within the meaning of the law exempting such institutions from taxation, the court saying: “The third paragraph of the answer presents the question whether that is a charitable institution, in the sense of the statute, which confines its benefactions to those who have become members of the order, having paid the fees commonly required for that purpose? We think that this question must be answered in the affirmative. It is not essential to charity that it shall be universal. That an institution limits the dispensation of its blessings to one sex, or to the inhabitants of a particular city or district, or to the membership of a particular religious or secular organization, does not, we think, deprive it either in legal or popular Apprehension of the character of a charitable institution. If that only be charity which relieves human want, without discriminating among those who need relief, then, indeed, it is a rarer virtue than has been supposed. And if one organization may confine itself to a sex, or church, or city, why not to a given fraternity? So narrow a definition of charity as the third paragraph presupposes is not; that we are aware of, ever attached to it, and we are not at liberty to circumscribe the effect of the statute, and defeat its intention, by affixing to its terms an unusually limited meaning.” So also in City of Petersburg v. Petersburg Benevolent Mechanics’ Association, 78 Va. 431, it was held that an association which applies its revenues to the payment of current expenses, and to the relief of its indigent members and the families of such as have died in need, was a charitable institution. ' “These are charitable purposes,” says the court, “and the relief afforded is none the less charity because confined to members of the association and families of deceased members. It is not essential to charity that it shall be universal.” And, again, in Book Agents of the Methodist Episcopal Church South v. Hinton, 92 Tenn. 188, (19 L. R. A. 289, 21 S. W. 321,) it was held that a corporation created as an arm or agency of the Methodist Church and charged with the duty of manufacturing and distributing books, periodicals, etc., in the interest and under the auspices of the church, and thereby raising a fund with which to support its worn-out preachers and their families, is a religious and charitable institution within the meaning of the provision of the constitution exempting such institutions from taxation. From an examination of this question, and all the authorites within our reach bearing upon it, we take the result to be that an institution organized for benevolent and charitable purposes, free from any element of private or corporate gain, and which devotes its entire revenue to the payment of current expenses and the relief of the poor and needy, is a charitable institution within the meaning of the law, although it may confine its benefits primarily to its own members and their families.

2. But whether the plaintiff is such an institution or not, we are clear the property in question is not exempt from taxation, for the reason that it is not actually occupied for charitable purposes. Subdivision 3 of section 2732, Hill’s Code, under which the exemption is claimed, exempts only such real property belonging to incorporated literary, benevolent, charitable, or scientific institutions as shall be actually occupied for the purposes for which they were incorporated. It does not exempt from taxation the enumerated institutions as such, or real estate simply because it belongs to such institutions, or even because it is used for literary, scientific, charitable, or benevolent purposes, but it expressly confines the right of exemption to such real estate only belonging to them as shall be actually occupied in a particular manner and for a specified purpose, and this right, therefore, clearly cannot be extended to property occupied and used for other and different purposes, although the revenue derived from its use is devoted exclusively to the objects for which the institution was established. It is the actual occupancy of the property which determines its right to exemption, and not the use made of its proceeds. The plain and obvious meaning of the statute is that only the real estate actually occupied and in use by these different institutions for the purposes for which they were organized, shall be exempt from taxation. While so occupied and used, it does not come in competition with the property of other owners, and the purpose for which it is used was supposed by the legislature to be a sufficient benefit to the public to justify its exemption from the burdens of taxation imposed upon other property. But when such property is used for the purpose of accumulating money, the law imposes upon it the same burden of taxation as it imposes upon other property similarly situated. The statute does not undertake to discriminate between the uses which different societies or individuals will make of the proceéds of their business, and determine for that reason that one shall be taxed and the other not. It deals with the property as it finds it, and not with what may be done with its proceeds in the future. Upon this question the authorities are practically unanimous under similar statutory provisions: City of Indianapolis v. Grand Master, 25 Ind. 518; Presbyterian Theological Seminary v. People, 101 Ill. 578; Washburn College v. Commissioners of Shawnee County, 8 Kan. 344; Detroit Young Men’s Society v. Mayor of Detroit, 3 Mich. 172; Cincinnati College v. State, 19 Ohio, 110; Cleveland Library Association v. Pelton, 36 Ohio St. 253; First Methodist Episcopal Church v. City of Chicago, 26 Ill. 482; City of New Orleans v. St. Patrick’s Hall Association, 28 La. Ann. 512; City of New Orleans v. St. Anna’s Asylum, 31 La. Ann. 293; Mayor of Baltimore v. Grand Lodge, 60 Md. 280; County Commissioners of Frederick County v. Sisters of Charity of St. Joseph, 48 Md. 34; Appeal Tax Court v. Grand Lodge, 50 Md. 429; Redemptorists v. County Commissioners of Howard County, 50 Md. 449; Salem Lyceum v. City of Salem, 154 Mass. 15 (27 N. E. 672); Chapel of the Good Shepherd v. Boston, 120 Mass. 212; Mulroy v. Churchman, 52 Iowa, 238 (3 N. W. 72); Orr v. Baker, 4 Ind. 86; Trustees of Phillips’ Exeter Academy v. Exeter, 58 N. H. 306 (42 Am. Rep. 589); Morris v. Lone Star Chapter, 68 Texas, 698 (5 S. W. 519); Proprietors of the South Congregational Meeting-house in Lowell v. City of Lowell, 1 Metc. (Mass.), 538; Wyman v. City of St. Louis, 17 Mo. 336; State v. Ross, 24 N. J. Law, 498; Massenburg v. Grand Lodge, 81 Ga. 212 (7 S. E. 636); Fort Des Moines Lodge, v. County of Polk, 56 Iowa, 34 (8 N. W. 687). See also notes to City of Petersburg v. Petersburg Benevolent Mechanics’ Association, 8 Am. and Eng. Corp. Cas. 488, and Book Agents of the Methodist Episcopal Church South v. Hinton, 92 Tenn. 188 (19 L. R. A. 289, 21 S. W. 321).

It is so manifestly just that all property shall bear its due proportion of the expenses of government that laws granting exemption from taxation are always strictly construed, and before such exemption can be admitted, the intent of the legislature to confer it must be clear beyond a reasonable doubt. Thus, it is held that laws exempting from taxation “houses of religious worship,” or “buildings erected and used for religious worship,” or “property used for religious purposes,” etc., do not exempt a parsonage erected by a religious society for the use of its minister, although occupied by him free of rent and built on grounds which would otherwise be exempt: State v. Axtell, 41 N. J. Law, 117; County of Hennepin v. Grace, 27 Minn. 503 (8 N. W. 761); Ramsey County v. Church of the Good Shepherd, 45 Minn. 229 (11 L. R. A. 175, 47 N. W. 783); Third Congregational Society v. Springfield, 147 Mass. 396 (18 N. E. 68); Wardens of St. Mark’s v. Mayor of Brunswick, 78 Ga. 541 (3 S. E. 561); Gerke v. Purcell, 25 Ohio St. 229; Trustees of the Methodist Episcopal Church v. Ellis, 38 Ind. 3; Vail v. Beach, 10 Kan. 214. And a building belonging to the Young Men’s Christian Association, which contains above the basement, in which are the gymnasium, bowling-alley, and bathroom, twenty-two rooms, only one of which is devoted to public worship, was held not exempt under a law exempting “every building used exclusively for public worship”: Young Men’s Christian Association of New York v. Mayor of New York, 113 N. Y. 187 (21 N. E. 86). The constitution of this state requires an equal and uniform rate of assessment and taxation of all property, excepting “such only for municipal, educational, literary, scientific, religious, or charitable purposes as may be specially exempted by law.” Taxation is, therefore, the rule: exemption, the exception; and nothing can be held to be exempt by implication. It is only such property used for the purposes specified in the constitution as the legislature may specially exempt which can escape taxation. Exemption is not a matter of right, but a pure matter of grace; and every person or corporation claiming that his or its property, or any part thereof, is exempt must be able to show some clear constitutional or legislative provision to that effect. The legislature in its wisdom has provided that of the real property belonging to literary, benevolent, charitable, or scientific institutions incorporated within this state, such only shall be exempt from taxation as shall be actually occupied for the purposes for which they were incorporated, and under all the rules for the construction of exemption laws this cannot be held to include real property which is occupied for other purposes, although the revenues received therefrom may be used for the purposes of the corporation. Some of the authorities cited go to the extent of holding that when a portion only of a building belonging to such an institution is occupied for the purposes for which it was incorporated, and the remainder is occupied by tenants paying rent, the entire building is liable to taxation, but the general tenor of the authorities, and no doubt the better rule, is that in such cases the assessor, in estimating the value of the property, should make a proper allowance for the portion of the building occupied by the society, so that the tax levied will be laid only upon the value of that which is not exempt, though the property may be assessed as a whole.

3. It is insisted - by the plaintiff that the state is estopped from levying the tax in question for the reason that, while it has owned the property assessed since eighteen hundred and seventy-seven, no attempt was made'to assess it until the year eighteen hundred and ninety, and that, relying upon that fact, it borrowed in that year thirty-three thousand dollars on a mortgage, to enable it to erect the building now on the premises, and stipulated and agreed to pay the taxes on such mortgage. But the neglect or omission of the proper officers to assess the property cannot control the duty imposed by law upon their successors, or affect the legal construction of the statute under which its exemption from taxation is claimed: Vicksburg Railroad Company v. Dennis, 116 U. S. 665 (6 Sup. Ct. 625), The case of State v. Addison, 2 S. C. 499, relied upon by plaintiff, is not in point. That was a proceeding to enforce a municipal tax. The city had by ordinance in seventeen hundred and ninety-three exempted all and every religious and charitable society from the payment of any city tax, and the city council for more than three quarters of a century had included the relators as among the societies thus exempted, and the court held that the action of the city council for so long a time would be received as the proper interpretation of their own enactment so long as it remained in force.

4. Again, it is claimed that because the name appearing on the assessment roll as the owner of the property is “Hibernian Benevolent Society,” and not the “Portland Benevolent Hibernian Society,” — the' real owner, — the assessment is void, and should be enjoined. We understand the rule to be that a court of equity will not interfere by injunction to restrain the collection of a tax merely because of the alleged illegality or irregularity appearing upon the face of the assessment, but will leave the party to his remedy at law: 1 High on Injunctions, § 491; Odlin v. Woodruff, 31 Fla. 160 (22 L. R. A. 699 and note, 12 So. 227). “In view of the authorities,” says Lord, C. J., “the considerations which influence a court of equity to restrain the collection of a tax are confined to cases where the tax itself is not authorized, or, if it is, that such tax is assessed upon property not subject to taxation, or that the persons imposing it were without authority in the premises, or that they have proceeded fraudulently”: Welch v. Clatsop County, 24 Or. 457 (33 Pac. 934). It follows that the decree.of the court below must be reversed and the complaint dismissed.

Reversed.