Bd. of Trs. of Lawrence Univ. v. Outagamie Cnty.

• Decision Date: 04 June 1912
• Parties: BOARD OF TRUSTEES OF LAWRENCE UNIVERSITY v. OUTAGAMIE COUNTY.
• Court: Wisconsin Supreme Court

150 Wis. 244

136 N.W. 619

BOARD OF TRUSTEES OF LAWRENCE UNIVERSITY

v.OUTAGAMIE COUNTY.

Supreme Court of Wisconsin.

June 4, 1912.

Appeal from Circuit Court, Outagamie County; John Goodland, Judge.

Action by the Board of Trustees of Lawrence University against Outagamie County. From a judgment dismissing plaintiff's complaint, it appeals. Affirmed.Nash & Nash, for appellant.

Francis J. Rooney and H. C. Sloan, for respondent.

TIMLIN, J.

[1] The plaintiff is an educational corporation created by the territorial Legislature of Wisconsin in the year 1847. By chapter 116, Laws of Wisconsin for 1901, the plaintiff's charter was amended in several respects, and by section 8 of this act its board of trustees was authorized to “hold free of taxation any lands or other property acquired by donation, bequest or purchase and held expressly for educational purposes and for the endowment of the institution.” At the time of the enactment of the statute last mentioned, there existed and was in force in this state section 1038, Stats. 1898, which related to property exempt from taxation, and among other things provided the following: “Personal property owned by any religious, scientific, literary or benevolent association, and the real property, if not leased or not otherwise used for pecuniary profit, necessary for the location and convenience of the buildings of such association and embracing the same, not exceeding ten acres; and the lands reserved for grounds of a chartered college or university, not exceeding forty acres.” An incorporated school is a “scientific” or a “literary” association within the meaning of this statute. St. John's Mil. Academy v. Edwards, 143 Wis. 551, 128 N. W. 113, 139 Am. St. Rep. 1123.

Notwithstanding the exemption provided by said chapter 116 and claiming that that part of the statute was unconstitutional, the taxing officers in A. D. 1908 assessed certain city real estate of the plaintiff for general taxes. The plaintiff paid these taxes under protest and brought this action in the regular way by appeal from the county board of supervisors to recover the sum so paid. The controlling question in the case is whether or not that part of the act of 1901 above quoted is valid and constitutional.

[2] It is conceded that a law ought not to be declared unconstitutional unless its repugnance to the Constitution is clear and beyond reasonable doubt and the court should be able to point out the particular part of the Constitution which is violated.

[3] It is further conceded that, unless restrained by constitutional provisions, the state Legislature has full power to exempt any person or corporation or class of property from taxation according to its views of public policy or expediency. Cooley's Const. Lim. (3d Ed.) 127; Wis. Cent. Ry. Co. v. Taylor County, 52 Wis. 37, 8 N. W. 833.

[4]Section 1 of article 8 of the state Constitution reads: “The rule of taxation shall be uniform and taxes shall be levied upon such property as the Legislature shall prescribe.” This section has been the subject of much litigation and much discussion in this court. In Black v. State, 113 Wis. 205, 89 N. W. 522, 90 Am. St. Rep. 853, this court was confronted with a statute which imposed an inheritance tax upon estates of the value of $10,000 or upwards. Estates below this value were exempt. A fair summary of one of the points decided in that case may be found in the third paragraph of the syllabus, as follows: “Under section 1, art. 8, Const., providing that the rule of taxation shall be uniform, and under the equality in the protection of the laws guaranteed by section 1, art. 1, Const., and amendment 14 to the federal Constitution, a classification of persons or property liable to or exempt from taxation does not violate the required rule of uniformity and equality, provided such classification be founded on real differences, affording rational grounds of distinction, and the exemption be reasonable in amount.” The decision, it will be observed, does not put the invalidity of the statute solely or squarely upon its conflict with section 1, art. 8, Const., but recognizes such conflict and finds the statute avoided by this and other constitutional provisions.

In Battles v. Doll, 113 Wis. 357, 89 N. W. 187, a statute exempting villages from certain taxes was before this court for construction, and the court said, among other things: “This exemption has a just and equitable basis to rest upon, and will be sustained, unless the class of cities and villages to which it is made to apply is such as cannot be justified under a proper construction of the Constitution. From the very nature of things, any classification made must, to a greater or less extent, be arbitrary. The grounds upon which such classification must rest were stated in Johnson v. Milwaukee, 88 Wis. 383 and reaffirmed in Boyd v. Milwaukee, 92 Wis. 456 , and Adams v. Beloit, 105 Wis. 363 [81 N. W. 869, 47 L. R. A. 441]. We need not repeat what was said in those cases. The general doctrine is that the classification must be appropriate, and not artificial.” These and other observations in that opinion plainly indicate that this court was then of the opinion that classification was essential to the validity of exemptions under some circumstances.

In State v. Whitcom, 122 Wis. 110, 99 N. W. 468, it was decided that exemptions from the provisions of a law requiring peddlers to obtain a tax license must be based on some legitimate classification germane to the purpose of the law or else the law is invalid. This because it denied the equal protection of the laws. Whether it was invalid under section 1, art. 8, was mooted but not decided. Legal classification was held to be a requisite, but the statute failed because of its conflict with other provisions of the Constitution. It is said, however, that the question whether or not such unclassified and arbitrary exemptions conflicted with section 1 of article 8 of the state Constitution was one not yet authoritatively decided.

In Chicago, etc., R. Co. v. State, 128 Wis. 642, 643, 108 N. W. 581, the court said: “Under our Constitution, it must be remembered there is the amplest power on the part of the Legislature to exempt an entire class of property from taxation, and to make such class very narrow, even excluding from the benefits accorded to the members thereof those owning property of the same general class, so long as the character of that owned by those of the subclass is so far different from that owned by others, as within the boundaries of reason at least, to suggest necessity or propriety, having regard to the public good and the constitutional object to be attained, and limitations in respect thereto, of substantially different legislative treatment. Few cases that can be found have gone further on that line than Wis. Cent. R. Co. v. Taylor Co., 52 Wis. 37, 8 N. W. 833. There, as we have seen, a very small subclass of real estate--a class so small as to be confined to one owner--was deemed sufficiently different from realty generally to warrant the Legislature in exempting it from taxation. It is not likely, as we have before indicated, that this court will soon go further on that line than it did in that case.” Here we have, I think, an express and authoritative recognition of the necessity for classification in making exemptions.

In State ex rel. Sanderson v. Mann, 76 Wis. 469, 45 N. W. 526, 46 N. W. 51, we find Mr. Justice Cassoday, who wrote the majority opinion in Wis. Cent. R. Co. v. Taylor County, 52 Wis. 37, 8 N. W. 833, earnestly, almost vigorously, protesting against any interpretation of the opinion in the last-mentioned case which would authorize exemption except upon some principle of classification or which would authorize arbitrary exemptions. This, as we understand it, expressly recognizes that classification is necessary, although the classification is a very liberal one.

When we are presented with a case in which the exemption is arbitrary and in which other persons of the same class owning property of the same general description are awarded exemptions of a lesser amount, the situation is one in which the rule of uniformity is violated. It is impossible under the most liberal rule of classification to sustain it as a classification, because the class is already made, and the situation is one in which a different amount of exemptions is allowed to one person of the class than to others of the same class. For example, in section 1038, subdiv. 11, there is an exemption from taxation of wearing apparel, family portraits, etc., not exceeding in value $200, and kitchen and other household furniture not exceeding in value $200. Here the class is determined by description of the property...