Bethel Convalescent Home, Inc. v. Town of Richfield
| Decision Date | 28 November 1961 |
| Citation | 15 Wis.2d 1,111 N.W.2d 913 |
| Parties | BETHEL CONVALESCENT HOME, INC., Appellant, v. TOWN OF RICHFIELD, Wood County, et al., Respondents. |
| Court | Wisconsin Supreme Court |
Action for an injunction to restrain the town treasurer of the town of Richfield from returning real estate taxes assessed against plaintiff to the county treasurer of Wood county as delinquent, and for the return of a tax which had been paid by the plaintiff under protest. The case was submitted to the trial court upon a stipulation of facts.
Briefly stated the facts stipulated were that the plaintiff is a nonstock corporation organized to own and operate hospitals, convalescent homes, homes for the aged, and for other benevolent purposes. The incorporators were N. A. Howard, C. H. Garner, and Harold Howard. They were the first members of the corporation. Subsequently Ethel Howard and Mahlon Hammel became members thereof. The real estate owned by the corporation was purchased entirely with borrowed money. N. A. Howard furnished a portion of the purchase price and the balance was secured from a bank. Ethel Howard is the wife of N. A. Howard, and Harold Howard is their son. Mr. and Mrs. Howard and their son are full-time employees of the plaintiff. Mr. Garner is employed as needed as an electrician and plumber. The five members are directors of the corporation and they are paid for attendance at directors' meetings. There are various buildings on the property. The home can accommodate 111 chronically ill and aged patients and at the time of the trial there were 98 such patients. The salaries of the employees are set by the board of directors. In the past as the revenue of the home warranted salaries and wages have been increased. Five per cent of the gross income is set aside for debt retirement.
The plaintiff claims to be exempt from taxation under the provisions of sec. 70.11(4m), Stats., enacted in 1957. That section provides for the exemption from taxation of property owned and operated by a corporation for the purposes of a hospital devoted primarily to the diagnosis, treatment, and care of the sick, injured, or deformed, 'no part of the net earnings of which inures to the benefit of any shareholder, member, director, or officer.'
The trial court filed a written opinion holding plaintiff's property subject to taxation mainly on the ground that upon the retirement of the debt out of earnings the members of the corporation will own a valuable piece of property. Judgment dismissing the complaint, with costs, was entered on December 29, 1960. Thereafter a supplemental stipulation of facts was filed showing that pursuant to the by-laws the members shall not convey the assets and property of the corporation to any person, firm or corporation except to such as may be engaged in a nonprofit undertaking in the state of Wisconsin with general objectives similar to those of the plaintiff. At the same time a stipulation was filed that the court might review its judgment in line with the supplemental stipulation of facts. The court did so review its prior determination but held that the facts in the supplemental stipulation were not controlling. Attention was called to the fact that the other by-laws of the corporation were not made part of the record, particularly that part with reference to amendment thereof. The court therefore presumed that the by-laws could be amended at any time and the above provision could be eliminated. Therefore it was determined that the judgment originally entered should stand. The plaintiff appealed from the judgment.
Brazeau, Brazeau, Potter & Cole, Wisconsin Rapids, for appellant.
Morgan L. Midthun, Wisconsin Rapids, for respondents.
The defendants seem to concede the institution operated by the plaintiff is a hospital for the purposes of this case. Therefore we do not make any determination in that respect. The sole issue presented to us is whether or not any part of the net earnings of the plaintiff inures to the benefit of any member.
In construing the provisions of sec. 70.11(4m), Stats., we do so with a fundamental rule of tax law in mind. That rule, as stated in Madison Aerie No. 623 F. O. E. v. City of Madison (1957), 275 Wis. 472, 476, 82 N.W.2d 207, 210, is as follows:
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