Church of the Holy Faith Inc. v. State Tax Comm'n

• Decision Date: 15 July 1935
• Docket Number: No. 4034.,4034.
• Citation: 48 P.2d 777,39 N.M. 403
• Parties: CHURCH OF THE HOLY FAITH, Inc.,v.STATE TAX COMMISSION et al.
• Court: New Mexico Supreme Court

39 N.M. 403

48 P.2d 777

CHURCH OF THE HOLY FAITH, Inc.,

v.STATE TAX COMMISSION et al.

No. 4034.

Supreme Court of New Mexico.

July 15, 1935.Rehearing Denied Sept. 24, 1935.

Appeal from District Court, Santa Fe County; Otero, Judge.

Suit by the Church of the Holy Faith, Inc., a religious corporation, against the State Tax Commission and others. From a judgment sustaining defendants' demurrer and dismissing the complaint, the plaintiff appeals.

Affirmed.

Under constitutional provision exempting property “of” state from taxation, ownership is test of whether property is exempt. Const. art. 8, § 3.

Charles B. Barker, of Santa Fe, for appellant.

J. D. Mell, Sp. Tax Atty., and David Chavez, Jr., Dist. Atty., both of Santa Fe, and E. K. Neumann, Atty. Gen., and Quincy D. Adams, Asst. Atty. Gen., for appellees.

BICKLEY, Justice.

The appellant is a corporation organized for religious purposes under the provisions of an act authorizing the organization of corporations for religious, benevolent, charitable, scientific, or literary purposes, or for the establishment of colleges, academies, seminaries, churches, or libraries. Section 32-506 et seq., Comp. Stats. 1929 (Laws 1880, c. 2).

All of its funds are devoted to religious and charitable purposes through the religious and charitable activities of the parish church.

The officers of the state seeking to subject certain property of appellant to a tax are met with the assertion by appellant that under the provisions of section 3 of article 8 of the State Constitution the said property is exempt from taxation. The constitutional provision is found in article 8, § 3, as follows: “The property of the United States, the state and all counties, towns, cities and school districts, and other municipal corporations, public libraries, community ditches and all laterals thereof, all church property, all property used for educational or charitable purposes, all cemeteries not used or held for private or corporate profit, and all bonds of the state of New Mexico, and of the counties, municipalities and districts thereof shall be exempt from taxation.”

The property involved is a dwelling house and the lot upon which it is situated, acquired by devise, and is rented by appellant and the proceeds turned over to the parish church and used as other funds of the corporation are used, that is, for religious and charitable purposes.

There is no claim that the property itself as the source of the rentals is used for religious or charitable purposes, in the sense that it is used as a house of worship, or as a hospital, infirmary, or other similar charities.

The first thing we are required to determine is the meaning of the phrase “all church property.”

Among some ten definitions of “church” given by the lexicographers, two have gotten into the law books generally. One is: “A society of persons who profess the Christian religion.” The other: “The place where such persons regularly assemble for worship.”

Appellant claims the benefit of the first definition and asserts that the phrase “all church property” means “all property of churches,” or “all property owned by churches.” Appellees resist this conception. Appellant also claims the benefit of other provisions of the section on the ground that the property involved is used for religious and charitable purposes. This is also resisted.

A similar controversy arose in Chicago Theological Seminary v. Illinois, 188 U. S. 662, 23 S. Ct. 386, 387, 47 L. Ed. 641, affirming the decision of the Illinois Supreme Court reported in 189 Ill. 439, 59 N. E. 977, which followed People v. Chicago Theological Seminary, 174 Ill. 177, 51 N. E. 198.

The plaintiff in error claimed exemption under its charter entitled: “An Act to Incorporate the Chicago Theological Seminary.” That corporation had power “to acquire, hold and convey property, real and personal.” Its object was declared to be “to furnish instruction and the means of education to young men preparing for the gospel ministry.” Section 5 provided: “That the property, of whatever kind or description, belonging or appertaining to said seminary, shall be forever free and exempt from all taxation for all purposes whatsoever.”

Section 6 provided: “This Act *** shall be construed liberally in all courts for the purposes therein expressed.”

The Supreme Court of Illinois had held that the provision granting the exemption from taxation in section 5 referred only to property used in connection with the seminary and did not include other property which might be owned, rented, or held by the seminary as an investment, although the income thereof was used solely for school purposes. The pieces of real estate upon which the taxes were levied were acquired by the plaintiff in error by gift or purchase and were held by it to promote the objects for which it was incorporated, and the rentals received were used for those purposes, although the property was not used in immediate connection with the seminary. The Supreme Court of the United States, in affirming the decision of the Illinois Supreme Court, said: “The rule is that, in claims for exemption from taxation under legislative authority, the exemption must be plainly and unmistakably granted; It cannot exist by implication only; a doubt is fatal to the claim.”

The court continued:

“The reasoning of the supreme court of Illinois (174 Ill. 177, 51 N. E. 198), in refusing the exemption claimed, so far as relates to the property not connected with the seminary, is best stated in the language of the opinion of that court. After stating the rule of construction, as above mentioned, the court said ([174 Ill.] p. 181 [51 N. E.] p. 199):

“‘If, however, taking the express words of the act, and without extending their meaning by implication, they may be held to include all property belonging or appertaining to the “seminary” mentioned in the 2d section, or to include all the property belonging or appertaining to the corporation, and there is reasonable ground for doubt which was intended by the legislature, that doubt must be resolved in favor of the state. In other words, if the language is capable of a broad or more restricted meaning, the latter must be adopted. The 2d section of the charter mentioning certain property to be located in or near the city of Chicago, and which is denominated “the seminary,” we think the words in the 5th section, “said seminary,” refer to that particular property, and to so hold seems to do no more than to give the language of the two sections their literal and ordinarily understood meaning. To say, as is contended by appellee, that “said seminary” was intended to mean the corporation is to extend the meaning of those words by implication, which is not permissible.

“‘It is said that the only entity mentioned in the charter capable of owning property is the corporation, and therefore it could not have been intended that property belonging or appertaining to the seminary was meant by § 5. We think this position is based upon a too limited meaning of the words “belonging or appertaining,” as here used. Of course, if the language of § 5 had been that the property, of whatever kind or description, owned by the said seminary shall be forever free from all taxation, etc., or if, as counsel seem to assume, the words “belonging or appertaining” here necessarily meant ownership of the property, then there would be force in this argument of counsel. It is undoubtedly true that the word “belonging” may mean ownership, and very often does. But that is not its only meaning. Webster's International Dictionary defines it: “2. That which is connected with a principal or greater thing; an appendage, an appurtenance.” He also defines the word “pertain” as meaning “to belong or pertain, whether by right of nature, appointment, or custom; to relate, as ‘things pertaining to life.”’ Manifestly, the purpose of § 5 was to exempt property owned by the corporation, but it does not follow that the intention was to include in that exemption all property owned by it used for purposes of the school.'

“We think there is force in this reasoning, and we are disposed to concur in the result arrived at.

“It is contended by counsel for plaintiff in error that the words ‘said seminary,’ contained in § 5 of the charter, referred to the corporation created by the act, and not to the school buildings and grounds, and that, therefore, the exemption necessarily exempted from taxation all the property against which the judgments below were rendered.

“Here are two different constructions of the exemption clause, each of which might be maintained with some plausibility. That view which limits the range of the exemption to property used in immediate connection with the seminary might seem to many to be the correct one, while in the opinion of others the broader claim of total exemption would be the best founded. The judges of the supreme court of Illinois have unanimously taken the former view, while counsel for the plaintiff in error very strongly and very ably has taken and maintained the other. We can ourselves see that a construction either way would not be clearly erroneous, or, at any rate, either construction would not be so obviously erroneous as to leave no doubt upon the question. In such cases we think the rule as to the construction of statutes of exemption from taxation should be applied, and as there may be room for reasonable doubt whether a total or only a partial exemption was meant, the partial exemption should alone be recognized.”

To say the least, there is as much or more ambiguity in the phrase “all church property” read with the context as there was in the language in the Illinois statute. There are many other decisions to the same effect as those cited from Illinois and the Supreme Court of the United States.

Mr. Cooley in his work on Taxation (4th Ed.) at section 680, treats of “the importance of use of property as against ownership.” He ...