In re Real Property of Integris Realty Corp.

• Decision Date: 29 October 2002
• Docket Number: No. 96,504.,96,504.
• Citation: 2002 OK 85,58 P.3d 200
• Parties: In the Matter of the Assessment of REAL PROPERTY OF INTEGRIS REALTY CORPORATION, an Oklahoma not-for-profit corporation (Parcel Nos. 2847-14-225-0640) Integris Realty Corporation, an Oklahoma corporation; Integris Prohealth, Inc., an Oklahoma corporation; and Baptist Medical Plaza Associates, Ltd., an Oklahoma limited partnership, Appellees, v. Oklahoma County Board of Tax Roll Corrections and Mike Means, Oklahoma County Assessor, Appellants.
• Court: Oklahoma Supreme Court

58 P.3d 200

2002 OK 85

In the Matter of the Assessment of REAL PROPERTY OF INTEGRIS REALTY CORPORATION, an Oklahoma not-for-profit corporation (Parcel Nos. 2847-14-225-0640)

Integris Realty Corporation, an Oklahoma corporation; Integris Prohealth, Inc., an Oklahoma corporation; and Baptist Medical Plaza Associates, Ltd., an Oklahoma limited partnership, Appellees, v. Oklahoma County Board of Tax Roll Corrections and Mike Means, Oklahoma County Assessor, Appellants.

No. 96,504.

Supreme Court of Oklahoma.

October 29, 2002.

As Corrected November 7, 2002.

Robert L. Garbrecht and Drew D. Webb of McAfee & Taft, Oklahoma City, Oklahoma, for the appellees.

Gretchen Crawford, Assistant District Attorney for Oklahoma County, Oklahoma City, Oklahoma, for the appellants.

LAVENDER, J.

¶ 1 Today's cause requires the Court to determine whether earlier-recognized constitutional guidelines (for determining availability to a charity of an exemption from [ad valorem] taxation under the provisions of OKLA.CONST. art. 10, § 6¹) remain viable. After review of applicable extant jurisprudence, we hold that the Court's earlier-declared entitlement-guidelines for an art. 10, § 6 exemption-from-taxation correctly state the parameters of the sought-after exemption. After the Oklahoma County Board of Tax Roll Corrections denied Baptist Medical Plaza Associates, Ltd. [BMPA], Integris Realty Corporation and Integris Prohealth, Inc.'s [collectively appellees or Integris] application for a refund of earlier-paid ad valorem taxes, appellees appealed to the district court for a de novo trial.² We conclude the district court properly adjudged appellees entitled to summary judgment and the requested exemption.

I FACTS AND PROCEDURAL HISTORY

¶ 2 Integris Prohealth, Inc. (a charitable corporation) is the owner of certain real estate which was leased to BMPA during all times relevant to the requested tax-exemption. BMPA constructed a multi-story office building containing 146,006 square feet of rentable space upon the leased acreage. BMPA leased 44,645 square feet to Integris Realty Corporation [Corporation] during the 1997 to 1999 tax years and 45,191 square feet during the 2000 tax year. Corporation sublet the leased space to various Integris nonprofit entities who used the space for charitable, educational and scientific purposes. Appellees contended below that the exclusive use of the leased facilities for charitable purposes qualified it for exemption from ad valorem taxation.³

¶ 3 Mike Means, Oklahoma County Assessor, and the Oklahoma County Board of Tax Roll Corrections [collectively County or appellants] assert as bases for denying Integris' exemption-claim (1) that BMPA—the building's owner—is not a charitable organization⁴ and (2) that BMPA leases part of the building in issue for profit to entities which are not charities. County claims these facts—when viewed through the provisions of 68 O.S.2001 § 2887(9)⁵ — preclude BMPA's entitlement to the requested exemption. County also asks the Court to overrule Cox v. Dillingham, 1947 OK 250, 184 P.2d 976, where the Court held in assessing entitlement to an art. 10, § 6 exemption from taxation:

"`It is immaterial what name the institution, organization, or society may bear, or who may own the property in question. But it is the use to which the property is dedicated and devoted which constitutes the test as to whether it is exempt.'" [citing Beta Theta Pi Corp. v. Bd. of Com'rs, 1925 OK 176, 234 P. 354, 356] Id. at 978.

County asserts that when deciding Cox the Court focused on use alone without giving adequate consideration to the exclusivity of use required under the applicable constitutional provisions.

¶ 4 BMPA paid all assessed ad valorem taxes and then timely pursued a refund of the same. The Oklahoma County Board of Tax Roll Corrections denied the sought-after exemption and the Integris entities appealed the denial to the district court. Integris moved for summary judgment which was granted. County then brought today's appeal, over which we previously retained jurisdiction.

II THE STANDARD OF REVIEW

¶ 5 Today the Court is called upon to review a trial court's grant of summary judgment. Such review is conducted de novo.⁶ Although in its consideration of a motion for summary judgment the trial court considers factual matters, it ultimately must decide entitlement to judgment as a matter of law. When reviewing summary judgment, the Court focuses on (1) whether the evidentiary materials as a whole demonstrate undisputed facts on material issues and (2) whether they support but a single inference in favor of the moving party.⁷ Only when the evidentiary materials eliminate all factual disputes relative to a question of law is summary judgment appropriate on that issue.⁸ Summary process is properly invoked only when it serves to eliminate a useless trial.⁹

¶ 6 Today's cause also presents a question of law concerning the scope of the constitutionally-mandated exemption from ad valorem taxation for real property used by charities. Questions of law are reviewed de novo which necessitates a plenary, independent and non-deferential examination of the trial court's legal rulings.¹⁰

III THE DISTRICT COURT CORRECTLY APPLIED OKLA.CONST. ART. 10, § 6's PROVISIONS IN DETERMINING APPELLEES' ENTITLEMENT TO SUMMARY JUDGMENT

¶ 7 County predicates its denial of an ad-valorem-tax exemption for the space leased to the Integris-related charitable entities upon the fact that BMPA (the building owner) is economically benefitted by the lease payments received. The Court's attention is further drawn to the fact that BMPA is leasing space in the same building to for-profit organizations. County's legal argument is that the (economic) use of rental space in BMPA's building for financial gain affronts art. 10, § 6's exclusive-use provision.

¶ 8 County does not refute that the Integris-related entities which are physically using the space (for which the exemption is claimed) are charitable.¹¹ Rather in support of the tax-exemption denial County points to BMPA's (the building owner) legal status which is neither that of a 501(c)(3) organization under applicable Internal Revenue Code provisions nor that of a charitable entity under Oklahoma statutes. County asserts that under the provisions of 68 O.S.2001 § 2887(9)¹² the latter facts disqualify BMPA from receiving the requested exemption. The essence of County's legal argument is that the term "used exclusively for religious and charitable purposes" (as employed in the art. 10, § 6 grant of a tax-exemption) should be redefined to include both economic and physical use components and that both uses must be of a charitable character. To accomplish this County would have the Court overrule Cox v. Dillingham, 1947 OK 250, 184 P.2d 976, which focuses solely on the physical use (for a constitutionally recognized exempt-purpose) of the property sought to be taxed.

A THE CONSTITUTIONAL EXEMPTION FROM TAXATION HERE IN ISSUE IS PREMISED UPON THE EXCLUSIVE (PHYSICAL) USE OF THE SOUGHT-TO-BE-TAXED REAL PROPERTY FOR A CHARITABLE PURPOSE

¶ 9 Oklahoma's extant jurisprudence teaches that the proper interpretation of the words "used exclusively" in the constitutional provision in issue is "the use to which the property is dedicated and devoted."¹³ The Court in Autumn House v. State ex rel. Oklahoma Tax Com'n, 1991 OK 73, 814 P.2d 1036, 1038, further clarified the framers' intent in crafting the art. 10, § 6 exemption, when it held that the phrase "used exclusively" was not to be viewed in the abstract but rather in the context of constitutionally-recognized exempt purposes. In Autumn House the Court also held that "use" denotes the application or employment of something for a purpose. Id. at 1039. Extant jurisprudence teaches that the absence or presence of pecuniary profit to the property's owner is not what determines whether or not a property is exempt from taxation. Rather the physical use to which the property is devoted is the determinative factor.¹⁴

¶ 10 In Cox v. Dillingham land owners leased real property to Cox to build a school. While rent was minimal during the first years of the lease term, it increased from a flat rate to an additional amount equal to five percent of the Cox's gross operating receipts. The lessee was given credit against lease payments for taxes and insurance. In allowing the exemption the Court rejected Dillingham's [Washington County Treasurer] argument that the exemption should be denied because the land owner profited from Cox's lease payments. The Court instead focused upon the purpose to which Cox devoted the leased premises—i.e., a school—as determinative of entitlement to the ad-valorem-tax exemption.¹⁵ The Cox Court emphasized that for a "use" to qualify property for exemption, it must be "exclusive," i.e., the land for which the exempt status is sought must be used exclusively for a constitutionally recognized purpose.

¶ 11 In seeking Cox's repudiation County is attempting to resurrect a construction of the pertinent art. 10, § 6 language which was earlier considered and rejected by the Court not in Cox v. Dillingham but rather in Oklahoma County v. Queen City Lodge No. 197, I.O.O.F., 1945 OK 55, 156 P.2d 340. There the International Order of Oddfellows [Lodge] purchased a twelve story building in Oklahoma City. Lodge [a charitable organization] physically occupied and used the twelfth floor and leased the remaining eleven floors to various for-profit businesses and shops. It sought an exemption from ad valorem taxes for the entire building on the basis that it used the rental income received to support its charitable purposes. The Court rejected the Lodge's analysis deciding that entitlement to a constitutionally permitted exemption was predicated not upon how the building owner used the rents from the leased premises but rather upon consideration of the purpose to which the property was physically dedicated and...