City of Yankton v. Madson

• Decision Date: 19 October 1945
• Docket Number: 8792,8793.
• Citation: 20 N.W.2d 371,70 S.D. 627
• Parties: CITY OF YANKTON v. MADSON, County Treasurer (COMMON SCHOOL DIST. NO. 9, YANKTON COUNTY, et al., Interveners).
• Court: South Dakota Supreme Court

20 N.W.2d 371

70 S.D. 627

CITY OF YANKTON v. MADSON, County Treasurer (COMMON SCHOOL DIST. NO. 9, YANKTON COUNTY, et al., Interveners).

Nos. 8792, 8793.

Supreme Court of South Dakota

October 19, 1945

Lars A. Bruce, of Yankton, for defendant and appellant.

Henry C. Mundt, of Sioux Falls, for interveners and appellants.

W W. French, of Yankton, for respondent.

ROBERTS Judge.

This action was brought by the city of Yankton against the treasurer of Yankton County to recover the amount of taxes levied against a certain property acquired by the city for a municipal airport. The city paid the taxes under protest. Judgment was rendered in favor of the city for recovery of the amount so paid and from which judgment the county treasurer and interveners, Common School District No. 9 and Mission Hill Township, Yankton County, appeal.

The sole question presented by the record is whether the property is exempt from taxation.

The applicable constitutional and statutory provisions are:

'The property of the United States and of the state, county and municipal corporations, both real and personal, shall be exempt from taxation, provided, however, that all state owned lands acquired under the provisions of the rural credit act may be taxed by the local taxing districts for county, township and school purposes, in such manner as the legislature may provide.' Section 5, Art. 11, State Constitution.

'Property and assets of every kind belonging to any municipality shall be exempt from taxation and levy * * *.' SDC 45.1425.

Appellants contend that the city of Yankton is holding and using the property here involved in a proprietary and not in a governmental capacity; that a municipal corporation cannot engage in the business enterprise of acquiring real estate outside its boundaries and of leasing it for profit and hold the land exempt from taxation to the detriment of the county and other taxing districts in which such property is located. Pursuant to the provisions of SDC 2.02 and amendments thereto authorizing cities and towns to acquire and maintain airports either within or without the corporate limits, the city of Yankton purchased the land here involved. It is admitted that a part of the tract is leased by the city for use as an airport and the remainder of the tract is leased for agricultural purposes.

Section 5 of art. 11 of the Constitution by which property owned by a municipal corporation is exempt from taxation is self-executing and without aid of legislation exempts all property within its terms from taxation by the state or by the political subdivisions of the state in which such property is located. In re Construction of Revenue Law, 2 S.D. 58, 48 N.W. 813. It is urged that it is the implied intention of this section to exempt property only when devoted to governmental purposes and that it is the duty of this court to adopt such construction as will, if possible prevent municipal corporations engaging in business from escaping taxation and acquiring a privilege not accorded to persons engaging in like enterprises. In the case of State v Board of Com'rs of Beadle County, 53 S.D. 609, 222 N.W. 583, 593, the question in controversy was whether or not agricultural land acquired by the state on foreclosure of a rural credit mortgage was exempt from taxation under a statute exempting rural credit properties and under this section of the Constitution as it existed prior to 1930 at which time an amendment was adopted authorizing taxation of rural credit lands for local purposes. It was contended that the Constitution did not embrace the interest of the state engaging in a business, but applied to property of the state in its sovereign capacity. Summing up its conclusions, this court said:

'It follows that there is no constitutional reason arising out of the nature of the capacity in which the state functions in its rural credit operations which would render invalid the legislative declaration (section 10168, Rev.Code 1919) that all property acquired in such operations shall be tax exempt. Whether such tax exemption results, in its actual operation, in placing upon the taxpayers of local taxing districts where foreclosed rural credit land is located an unfair and disproportionate share of the burden arising from the activities of the state in the rural credit field, we do not undertake to say. But if it does, and if such burden is one which ought, in fairness and equity, to be borne by the taxpayers of the entire state generally, nevertheless that is not a matter which this court can change by any judicial interpretation in the present state of our law. We hold, therefore, that the learned trial judge erred in his determination that the tract of land in controversy was not exempt from assessment and taxation after title thereto vested in the state of South Dakota by deed issued pursuant to the foreclosure of the rural credit mortgage.'

The provisions of the Constitution are without limitations or condition. The location of public property or its use is not made a condition of exemption and the provisions apply alike and with the same effect to the United States, the state (except rural credit lands), counties and municipal corporations. Decisions distinguishing between governmental and private ownership by municipal corporations are not determinative of the meaning of the language of the Constitution as applied to exemption of municipal corporations from payment of taxes. The unqualified exemption embraces all property of municipal corporations within the state irrespective of use. This conclusion in substance was reached by this court in Egan Consol. School Dist. v. Minnehaha County, 65 S.D. 32, 270 N.W. 527, 108 A.L.R. 572, wherein it was sought to tax a residence acquired by an independent school district in satisfaction of the liability of a former school treasurer and wherein this court ruled that the words 'municipal corporations' in section 5, article 11, included independent school districts.

Several of the states have identical or similar constitutional provisions, and they are generally construed to require the exemption of property owned by municipal corporations irrespective of use. In the case of City of Omaha v. Douglas County, 96 Neb. 865, 148 N.W. 938, 940, the court held that the property acquired and owned by a city for supplying the inhabitants of the city and its suburban territory with water was exempt from taxation. The Constitution of that state provides that 'the property of * * * municipal corporations, both real and personal, shall be exempt from taxation.' Art. 9,§ 2. In discussing this constitutional provision, the court said:

'The framers of the constitutional provision must have intended to exempt all classes of municipally owned property. That would seem to be the only fair interpretation which can be placed upon the language used in the Constitution and the statute. We do not feel at liberty to disregard the provision of the Constitution prepared by its framers, and adopted by the people when the instrument was voted upon and became the fundamental law of the state.' In the case entitled State v. Mayes, 174 Okl. 286, 51 P.2d 266, 268, in discussing a constitutional exemption, the court said:

'Section...