Christian Business Men's Committee v. State

• Decision Date: 04 March 1949
• Docket Number: No. 34705.,34705.
• Citation: 228 Minn. 549,38 N.W.2d 803
• Parties: CHRISTIAN BUSINESS MEN'S COMMITTEE OF MINNEAPOLIS, Inc. v. STATE.
• Court: Minnesota Supreme Court

38 N.W.2d 803

228 Minn. 549

CHRISTIAN BUSINESS MEN'S COMMITTEE OF MINNEAPOLIS, Inc. v. STATE.

No. 34705.

Supreme Court of Minnesota.

March 4, 1949.

Rehearing Denied August 19, 1949.

Appeal from District Court, Hennepin County; Lars O. Rue, Judge.

Proceeding by the Christian Business Men's Committee of Minneapolis, Inc., opposed by the State of Minnesota to have certain real property declared to be exempt from real estate taxes. From an order denying petitioner's motion for amended findings of fact or a new trial, petitioner appeals.

Reversed and remanded with instructions.

Maurice H. Rieke, of Minneapolis, for appellant.

Michael J. Dillon, County Atty., Edward J. Shannon and John K. Harvey, Asst. County Attys., all of Minneapolis, for respondent.

MATSON, Justice.

Appeal from an order denying petitioner's motion for amended findings of fact or a new trial in a proceeding by petitioner to have certain real property declared to be exempt from real estate taxes for the year 1946 and subsequent years.

Petitioner, under an executory contract for deed dated October 13, 1945, is the equitable owner of the real property described in its petition, which in aggregate embraces the land constituting all of lot One, Auditor's Subdivision 126, Hennepin county, Minnesota. The property, which is located in the downtown business section of the city of Minneapolis on the southwest corner of Ninth street and Hennepin avenue, is improved with a three-story building with a 50-foot frontage on Hennepin avenue and 100 feet on Ninth street. Immediately adjoining this structure, with an 18-foot frontage on Hennepin, is a one-story building 60 feet long. Connected with and immediately to the rear of the three-story structure is a two-story garage building 26 x 33 feet in size.

Petitioner is a nonprofit corporation organized under the general provisions of the social and charitable corporation laws of Minnesota for the purposes expressed in its corporate charter as follows:

"A. To organize and unite Christian laymen for the winning of souls to Jesus Christ.

"B. To conduct evangelistic services, prayer meetings and radio broadcasts of the gospel of Jesus Christ in Minneapolis, Minnesota and vicinity.

"C. To engage in tract and gospel distribution.

"D. To encourage the study of the Bible as the true word of God."

In the tax year of 1946 the property was occupied and used as follows:

(a) Ground floor. The ground floors of all three structures in their entirety were leased to commercial tenants who operated a restaurant, a florist shop, and an army and navy store, subject to the exception that the florist shop and the first floor of the garage were used by petitioner for a few months in connection with a clothing drive. The restaurant yielded petitioner a monthly rent of $150 for the first two months and $175 thereafter. The florist shop paid a monthly rental of $225. The army and navy store — occupying the corner space and the first floor and basement of the garage building — paid $350 a month. The 1946 gross rental income for the ground floor was about $8,700, and such rental for 1947 will approximate $9,250. All first-floor leases expire February 28, 1948.

(b) Second and third floors and basement (except basement of garage). All of the second and third floors, as well as the basement, throughout 1946 were used exclusively by petitioner for its program of activities conducted under the name of The Hospitality House. These floors house petitioner's general offices and are equipped with lounges, library, assembly and game rooms, dining room and kitchen, wash and powder rooms, and storage space. The roof is equipped with a signboard conveying a gospel message. Long prior to its purchase of the premises, in fact since about November 1943, petitioner under a lease operated a Christian Hospitality Center for the members of the armed forces, to whom it provided, without charge, sleeping quarters, meals, baths, lounge-room space, writing materials, and spiritual guidance. The demand for the servicemen's program commenced to decrease in 1944. In 1946, the decrease was substantial, and at that time petitioner commenced the conversion of the upper floors into a youth center and as a regular meeting place for various clubs, societies, and church organizations interested in promoting a Christian way of life. These organizations so using petitioner's premises are independent of and in no sense subordinate to or sponsored or controlled by petitioner. Noon and evening meals have regularly been served to the members of these organizations, to members of petitioner's staff, and incidentally to members of the general public. Among the services available is a nursery where children may be left by mothers who are shopping downtown. As long as there was need for the servicemen's program, interdenominational religious worship was conducted on Sunday mornings. Throughout the week, the premises had been available as a youth center where young folks might gather for study, for refreshment, to meet friends, and to engage in games and other social activities. On Fridays, Saturdays, and Sundays, the youth activities are closed with song and informal religious services. A clergyman, a regular member of the staff, acts as chaplain in giving spiritual guidance to youth who have been brought into juvenile court; he also assists in finding Christian homes for the placement of children under the guidance of the probation office. Another staff member is a full-time evangelist, who appears before various denominations and before factory worker and high school student meetings throughout the northwest to show special religious films and to point out how the Hospitality House may be of service to young people living in or visiting Minneapolis. Religious broadcasts are given over the radio. Petitioner also sponsors special Christian work among high school students.

At the time of the hearing before the trial court in November 1947, petitioner presented evidence to establish that it had formulated plans for converting the ground floor to its own purposes in the following manner:

(a) Upon the expiration of the lease for the restaurant on February 28, 1948, the tenant was to be permitted to remain on a month-to-month basis "until such time, a little later in the year," when petitioner could remodel this portion of the first floor for use as a nonsectarian chapel with regular noonday and evening services.

(b) The corner or army and navy store space, and also the first floor of the garage, covered by a lease expiring February 28, 1948, to be possibly remodeled in 1948 — depending upon petitioner's experience with the food service on the second floor — to permit petitioner to operate a restaurant catering to the general public on a cost basis with the express motive of using that operation as a means of giving petitioner a chance to reach the general public on a spiritual plane; in other words, the food service would be used as a method of making new contacts.

(c) The space occupied by the florist shop upon the expiration of the lease was to be converted in part into a book and gospel literature store or depot. Part of this area was to be used in providing a number of religious organizations with office space for which a certain charge might be made.

The trial court found that during 1946 and at all times since the said real property has not been used for church purposes or as a house of worship and is not church property, and that it has not been exclusively used for purely public charity within the meaning of Minn.Const. art. 9, § 1, M.S.A., which provides: "* * * all churches, church property and houses of worship," and "institutions of purely public charity, * * * shall be exempt from taxation, * * *."

1. In order for any institution to qualify for tax exemption under Minn. Const. art. 9, § 1 — and M.S.A. § 272.02 enacted pursuant thereto — there must be a concurrence of ownership of the property by an institution of the type prescribed by the constitution and a use of the property for the purpose for which such institution was organized.¹ In the instant case, the necessary element of ownership exists, in that petitioner qualifies as an institution of purely public charity. It is a Christian laymen's organization dedicated to the unselfish purpose of teaching and exemplifying the gospel by precept and by a beneficent service extended to all members of the public without regard to race or creed. Fundamentally, petitioner's general purpose is to promote the moral and educational welfare of youth by bringing them under religious influences for the improvement of their characters and for the stimulation in them of higher ideals of life and conduct. It follows that the controlling issue herein is whether the property is devoted exclusively to a proper use.

2. Inasmuch as taxation is the rule and exemption is an exception in derogation of equal rights, there is a presumption that all property is taxable. Therefore he who seeks tax exemption bears the burden of proof.² Whether the use to which the property has been devoted justifies tax exemption is a question of fact, which has here been determined adversely to petitioner by the trial court. In the light of the controlling legal principles, was that determination correct?

3-4. We turn first to a consideration of the use to which the first floor has been devoted. It has been practically in its entirety rented to lessees who have been in business for themselves. The renting of property to third parties, although the entire rental received therefrom be devoted exclusively to charitable purposes, is not a purely public charitable use of the property within the meaning of Minn. Const. art. 9, § 1, which provides that "institutions of purely public charity, * * * shall be exempt from taxation". The word "purely" means "wholly," "solely," and "exclusively" in such exemption provisions and qualifies the use that...