City of Petersburg v. Petersburg Benev. Mechanics' Ass'n

• Decision Date: 28 February 1884
• Citation: 78 Va. 431
• Parties: CITY OF PETERSBURG v. PETERSBURG BENEVOLENT MECHANICS ASSOCIATION.
• Court: Virginia Supreme Court

78 Va. 431

CITY OF PETERSBURG v. PETERSBURG BENEVOLENT MECHANICS ASSOCIATION.

Supreme Court of Appeals of Virginia.

February 28, 1884

Appeal from decree of hustings court of city of Petersburg, rendered 25th February, 1881, in suit wherein the Petersburg Benevolent Mechanics Association was plaintiff, and the City of Petersburg was defendant.

The question was, whether the real estate of the association is subject to taxation. No tax on its property is assessed by the State, but in 1880 it was assessed for taxation by the city of Petersburg, and the collection of the tax was enjoined by the corporation court of that city. The property in question is a lot in Petersburg, upon which is a building one-third of which is used by the association, and the other two-thirds is rented out and the proceeds applied exclusively to the purposes of the association. The association claimed the right of exemption under an act of the legislature approved April 2, 1877, which provides that real estate owned by Masonic, Odd-Fellows, and other like benevolent associations, when the proceeds arising from said property are devoted exclusively to charitable or school purposes shall be exempt from taxation. The claim to exemption was resisted by the city on three grounds: 1. Because the legislature has no power, under the constitution, to exempt property from taxation which is not used by the association although the proceeds derived from its use are applied to the purposes of the association. 2. Because the proceeds arising from the leased property are not applied to charitable purposes; and 3. Because the statute relied on does not exempt property which is used for private purposes or for profit, no matter to what purposes the proceeds are applied.

The cause was heard on the bill, answers, depositions of witnesses, & c.; and the court perpetuated the injunction.

From this decree the City of Petersburg obtained an appeal from one of the judges of this court.

The other facts are stated in the opinion.

Richard B. Davis, for the appellant.

1st. The act of assembly relied on, so far as it purports to exempt from taxation the real estate of benevolent associations whenever the proceeds arising from its use are devoted to charitable or school purposes, is palpably contrary to the constitution of the State, and null and void.

2d. The revenues of the said association are not, by its constitution and by laws, devoted, nor, in point of fact, are they applied to a charitable or school purpose, within the meaning of the statute.

3d. Upon a proper construction of the statute relied upon, no real estate of the said association, which is let to private use, is exempted from taxation, whatever may be the purpose to which the proceeds of such use are applied.

In reference to the first, the constitution lays down, as the general rule to be observed in apportioning taxation, that all property in the State shall be taxed ratably. The only exception to the rule is where discretion is left to the legislature in the third clause of article 10, which is in these words; " The legislature may exempt all property used exclusively for State, county, municipal, charitable benevolent, educational and religious purposes."

Any exemption from the burden of taxation being in derogation of common right, this clause giving the power to exempt must be strictly construed. " All exemptions must be strictly construed. They embrace only what is within their terms." Cooley, Tax. 146-7. The power of exemption is limited by the constitution to cases where the property is used exclusively for charitable purposes, & c. It does not extend to cases where the proceeds of a private use of the property is used for charitable purposes. In order to come within the meaning of the constitution, as frequently decided by the courts, the use of the property for charitable purposes must be direct and immediate and exclusive. Purvis v. Trent, 3 Exc. 344; Clarendon's Appeal, 70 E. C. L. R. 804; Wyman v. City St. Louis, 17 Mo. 335; State v. Ross, 4 Zab. 134; Pierce v. Inhabitants of Cambridge, 2 Cush. 611; St. Mary's College v. Crowl, Treasurer, 10 Kan. 442; Cincinnati Col. v. State, 19 Ohio 110.

In the last case cited the court says: " On the part of the Cincinnati College it is contended that although the property is not immediately used for literary or scientific purposes, yet the fact that the fund is to be applied to such purposes brings it within the exemption of this statute. The language of the statute is very explicit… . The buildings belonging to scientific and literary societies are to be used exclusively for scientific and literary purposes to bring them within the exemption. It would, we think, be a forced construction of language to say that this building, with its eight stores, its merchant's exchange, and its other rooms used for miscellaneous purposes, is used exclusively for literary and scientific purposes."

And so in the case from Kansas, where the constitution exempted property of educational institutions used exclusively for educational purposes, and part of the lands belonging to the college were used to raise produce for sale, the court held the property liable to the tax, and said that in order to exempt from taxation the use must be " direct and immediate, not indirect and remote." 10 Kan. 442 ...