55 N.E.2d 265 (Ohio 1944), 29580, Federal Public Housing Authority v. Guckenberger
| Citation | 55 N.E.2d 265, 143 Ohio St. 251 |
| Opinion Judge | WEYGANDT, |
| Party Name | FEDERAL PUBLIC HOUSING AUTHORITY v. GUCKENBERGER et al. |
| Attorney | Norman M. Littell, Vernon L. Wilkinson, Thomas L. McKevitt, David L. Krooth, and Charles N. Malone, all of Washington, D. C., for appellant., Carson Hoy, Acting Pros. Atty., Frank M. Gusweiler and W. Ray Skirvin, all of Cincinnati, for appellees. Mr. Norman M. Littell, Mr. Vernon L. Wilkinson, M... |
| Judge Panel | WILLIAMS and ZIMMERMAN, JJ., dissenting. MATTHIAS, HART, BELL, and TURNER, JJ., concur. ZIMMERMAN and WILLIAMS, JJ., dissent. WILLIAMS, Judge (dissenting). |
| Case Date | April 26, 1944 |
| Court | Ohio Supreme Court |
Page 265
Page 266
Syllabus by the Court.
1. Under the provisions of Section 5351, General Code, and Section 2 of Article XII of the Constitution of Ohio relating to the exemption of public property used for a public purpose, such public use must be exclusive. (Paragraph 2 of the syllabus in the case of Pfeiffer v. Jenkins, 141 Ohio St. 66, 46 N.E.2d 767, approved and followed.)
2. Property owned by an instrumentality of the United States is not ipso facto immune from taxation irrespective of whether it is being used in the exercise of a governmental or proprietary function.
3. When such property is in fact used in the exercise of a proprietary function it is subject to taxation by the state and the political subdivisions thereof in which it is located.
4. The function is proprietary when the property consists of a heating plant, 21 residence buildings containing 1039 apartments leased for private residences, and 2 administration buildings containing administrative offices and 18 retail storerooms the latter being leased to the highest bidders for private business purposes.
5. The first part of Section 5351, General Code, exempting from taxation real or personal property belonging exclusively to the state or the United States is limited by the terms of Section 2 of Article XII to property used exclusively for any public purpose.
Appeal from Board of Tax Appeals.
The appellant, the Federal Public Housing Authority, formerly operating under the name of the United [143 Ohio St. 252] States Housing Authority, filed an application with the Tax Commission of Ohio, the predecessor of the Board of Tax Appeals, asking that certain land and buildings located in the city of Cincinnati, Ohio, and known as Laurel Homes be exempted from taxation for the year 1939.
The matter was submitted on a stipulation of facts, and the application was denied in a decision in which it was held that the property 'is owned by the United States Housing Authority as lessee and is used for private residences and private business; that said property is not used exclusively for public purposes within the meaning of Section 5351, General Code, and Article XII, Section 2 of the Constitution, and under the provisions thereof is not exempt from taxation merely because title is in the United States, Housing Authority, an instrumentality of the United States; that said property is not used exclusively for charitable purposes within the meaning of Section 5353 and Article XII, Section 2 of the Constitution; that said property is not immune from taxation by the state of Ohio and its political subdivisions by virtue of title being in the United States Housing Authority, an instrumentality of the United States; and that it is not exempted from taxation by the state of Ohio or its political subdivisions by Section 1405, Title 42 U.S.Code [42 U.S.C.A. § 1405], and therefore is not legally exempt from taxation.'
The case is in this court for review upon the claim that the order of the Board of Tax Appeals is unreasonable and unlawful.
Page 267
One of the appellant's contentions is that its property is exempt from taxation under favor of Section 5351, General Code, which provides in part that 'public property used for a public purpose shall be exempt from taxation.' This legislative enactment is based upon Section 2 of Article XII of the Constitution of Ohio which authorizes the passage of general laws to exempt from taxation 'public property used exclusively for any public purpose.' (Italics supplied.) This court frequently has held, as it did in the second paragraph of the syllabus in the case of Pfeiffer et al., Trustees, v. Jenkins et al., Board of Tax Appeals, 141 Ohio St. 66, 46 N.E.2d 767, that 'under the provisions of Section 5351, General Code, and Section 2 of Article XII of the Constitution of Ohio, relating to the exemption from taxation of public property used for a public purpose, such use must be exclusive.'
Are the appellant's land and buildings 'public property used exclusively for any public purpose?'
According to the stipulation of facts it appears that the land involved was acquired by the United States by ordinary purchase from the various owners; that the construction of buildings was started by the Federal Emergency Administration of Public Works in the year 1936; that in 1937 the property was transferred to the United States Housing Authority whose name has been changed to the Federal Public Housing Authority; that in 1938 the construction of the buildings was completed and the property was leased to the Cincinnati Metropolitan Housing Authority, an Ohio corporation; that said property has since been in continuous operation by this lessee; that the property consists of a heating plant, 21 residence buildings containing 1039 private apartments, and 2 administration buildings containing offices and 18 retail storerooms; that the storerooms were advertised and rented[143 Ohio St. 254] to the highest bidders; that the auditor of Hamilton county entered the property on the tax duplicate for the year 1939; that previously the project manager for the Federal Emergency Administration of Public Works entered into an agreement with the city of Cincinnati whereby the full amount of taxes would be paid on the property as if it were privately owned; and that in return the city contributed the sum of $750,000 to the project.
This question was squarely decided by this court in the case of Columbus Metropolitan Housing Authority v. Thatcher, Aud., 140 Ohio St. 38, 42 N.E.2d 437, in which the circumstances were similar. The chief difference in the facts is that in the earlier case the title to the property was in the Columbus Vetropolitan Housing Authority, an Ohio corporation, while in the instant controversy the title is in the Federal Public Housing Authority. However, the mere ownership of property manifestly is not determinative of its use. The decision in the Thatcher case was approved and followed recently by this court in Dayton Metropolitan Housing Authority v. Evatt, Tax Com'r, 143 Ohio St. 10, 53 N.E.2d 896. Perhaps it should be added that this court is not permitted to concern itself with any question of policy involved in either the constitutional provision or the building project. Whether the members of this court approve or disapprove of either or both is of no moment whatsoever. The clear duty of the court is to accept the requirement the people of this state have placed in their organic law providing that 'general laws may be passed to exempt * * * public property used exclusively for any public purpose * * *.' If the word 'exclusively' is to be eliminated or if benefit instead of use is to be made the test, the people alone have the power to do so. Under the circumstances of this case it would constitute the plainest contradiction in terms for this court to hold that the [143 Ohio St. 255] use is exclusively public when in fact the property is occupied by sublessees for private residences or for privately owned and operated businesses.
According to the opinion of the Board of Tax Appeals the appellant's second contention before that body was that the property is immune under Section 5353, General Code, providing for the exemption of 'property belonging to institutions used exclusively for charitable purposes.' However, in this court the appellant has abandoned that contention and the Board of Tax Appeals manifestly was correct in holding that this privately occupied residence and business property is not being used exclusively for charitable purposes.
Page 268
A third contention of the appellant is that it is an instrumentality of the United States and that therefore its property is ipso facto immune from taxation irrespective of whether it or its lessee may be using the property in a governmental or proprietary function. Assuming the correctness of the appellant's theory that it is an instrumentality of the United States, no provision of either the federal or the state constitution is cited as a basis for the claimed exemption; and it is axiomatic that exemptions from taxation are not favored by law but an intention therefor must be expressed clearly. Furthermore, it is a settled rule of law that when a government or its agency undertakes a proprietary or nongovernmental function it divests itself of its sovereign character and forfeits its immunity from taxation. In the case of State of Ohio v. Helvering, Com'r, 292 U.S. 360, 54 S.Ct. 725, 726, 78 L.Ed. 1307, it was held in the opinion written by Mr. Justice Sutherland that the challenge to the validity of the tax imposed by the federal government on the sale and distribution of intoxicating liquors by the state of Ohio 'seeks to invoke a principle, resulting from our dual system of government, which frequently[143 Ohio St. 256] has been announced by this court and is now firmly established, that 'the instrumentalities, means and operations whereby the states exert the governmental powers belonging to them are * * * exempt from taxation by the United States.' * * * But, by the very terms of the rule, the immunity of the states from federal taxation is limited to those agencies which are of a governmental character. Whenever a state engages in a business of a private nature, it exercises nongovernmental functions, and the business, though conducted by the state, is not immune from the exercise of the power of taxation which the Constitution vests in the Congress. * * * If a...
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