Columbia Hospital Ass'n v. City of Milwaukee

CourtUnited States State Supreme Court of Wisconsin
Citation35 Wis.2d 660,151 N.W.2d 750
PartiesCOLUMBIA HOSPITAL ASSOCIATION, Milwaukee Hospital, Mount Sinal Hospital, Inc., and St. Mary's Hospital of Milwaukee, Plaintiffs, St. Luke's Hospital Association, Inc., Plaintiff-Respondent, v. CITY OF MILWAUKEE, Defendant-Appellant.
Decision Date30 June 1967

John J. Fleming, City Atty., Richard F. Maruszewski, John F. Cook and Maurice L. Markey, Asst. City Attys., Milwaukee, for appellant.

Howard T. Foulkes, Richard W. Cutler and Samuel J. Recht, Milwaukee, Wickham, Borgelt, Skogstad & Powell, Milwaukee, Brady, Tyrrell, Cotter & Cutler, Milwaukee, of counsel, for respondent.

HALLOWS, Justice.

In 1957 the legislature enacted sec. 70.11(4m), Stats., 1 which exempts from ad valorem taxes property of nonprofit hospitals which is 'used exclusively for the purposes of any hospital of 10 beds or more devoted primarily to the diagnosis, treatment or care of the sick, injured or deformed, * * *.' There is no question St. Luke's is a nonprofit hospital of more than 10 beds and is devoted primarily to the diagnosis, treatment, and care of the sick. No claim of exemption is made under sec. 70.11(4) as a benevolent institution. The narrow issue is whether the properties involved are used exclusively for the purposes of the hospital within the meaning of sec. 70.11(4m), and this question requires us to examine both the nature of the property and the purposes of the hospital.

The property involved consists of five homes, one duplex and two four-unit apartment buildings. The homes are in the immediate vicinity of the hospital; all but one are unfurnished and all are rented at a low rate. One home is occupied by the director of building services, who is in charge of general hospital maintenance. He works 40 hours a week but is on call at all times. Another home is occupied by the director of nurses who is responsible for all nursing activities at the hospital, involving about one half of all the hospital employees. Her residence near the hospital is considered by the hospital authorities to be necessary as she is frequently called to the hospital during her off-duty hours. The upper unit of the duplex building is occupied by the electronic technician and his family. His duties consist in helping to set up heart-catheterizing equipment and, if heart surgery is performed, maintaining electronic equipment to monitor and sustain the patient's life. It is considered advantageous to the hospital to have him nearby. The trial court considered the occupancy of these close-by properties to contribute to the efficient performance of the occupants' duties and mainly for the benefit of the hospital and therefore held the properties were used exclusively for the purpose of the hospital.

The two four-unit apartment buildings are about two miles from the hospital and contain furnished apartments occupied by married interns and married resident doctors. Three unfurnished homes in the immediate vicinity of the hospital are also rented to married interns and resident doctors. The trial court held these properties were exempt from taxation because such housing was reasonably necessary to the internship and residency programs of the hospital. The trial court also held the lower unit of the duplex building which was occupied by the nursing supervisor (the upper unit being occupied by the electronic technician) and a duplex building, the lower of which was occupied by a nursing supervisor and her family and the upper unit by the operating room surgical nurse, were not exempt from taxation. The proof showed no necessity existed for such persons to live in the immediate vicinity of the hospital for its benefit and such occupancy was more for the occupants' convenience than for that of the hospital. St. Luke's has not appealed from this ruling. It is to be noted that the duplex occupied upstairs by the electronic technician and downstairs by a nursing supervisor was partly exempt and party taxable and the trial court declared the entire assessment null and void leaving it to the city to make a proper partial assessment against the lower unit only. The city claims this is error and the whole duplex must be taxable.

St. Luke's hospital is located on West Oklahoma avenue in the city of Milwaukee and is a complete integrated modern hospital of over 500 beds. Besides devoting itself primarily to the diagnosis, treatment and care of the sick, it also performs essential functions in the area of medical education and research. It has numerous training and research programs and offers American Medical Association approved internship programs and also residencies in obstetrics and gynecology, surgery, medicine, pathology and radiology. St. Luke's is known as a teaching hospital and is one of fourteen in Wisconsin offering an internship program where the one-year internship prerequisite to practicing medicine in Wisconsin can be fulfilled. St. Luke's is more than a building with patient rooms and operating rooms. It is primarily a service organization fulfilling the needs of patients, doctors, and the public generally and in order to do this, it must offer a multitude of services and facilities to treat all the ills of the human body. To function properly it must have not only physical facilities and unlimited equipment but a large nursing, administrative and medical staff. While hospitals differ in their general services and specialities, many large modern hospitals like St. Luke's have internship and residency programs whereby doctors may become more highly skilled in their profession and the care and service rendered by the hospital improved.

In considering this exemption problem we cannot restrict our consideration to the primary purpose of a hospital or to a typical small hospital offering limited facilities. The language of the section does not so limit the meaning of the word 'hospital.' In fact, sec. 70.11(4m), Stats., recognizes the primary purpose of an exempted hospital and by that token recognizes such a hospital may have other legitimate purposes. The section has carefully expressed the exemption in terms of a hospital whose primary purpose is diagnosis, treatment and care and this contemplates that a hospital may have other functions and objects, whether they be directly or indirectly associated with the care of the sick. The language of the section refers to property used exclusively for the purposes of the hospital. This means any and all purposes, not just for the primary purpose of care, diagnosis or treatment.

It is argued this section must be given a strict construction and it is true this is the general rule applicable to the construction of tax exemption statutes. Madison Aerie No. 623 F.O.E. v. Madison (1957), 275 Wis. 472, 476, 82 N.W.2d 207; Katzer v. City of Milwaukee (1899), 104 Wis. 16, 21, 79 N.W. 745, 80 N.W. 41; Methodist Episcopal Church Baraca Club v. City of Madison (1918), 167 Wis. 207, 211, 167 N.W. 258. However, a strict construction is nonetheless a construction, and an exemption statute need not be given an unreasonable construction or the narrowest possible construction. A 'strict but reasonable' construction seems to be the pithy and popular statement of the rule. See State ex rel. Spillers v. Johnston (1908), 214 Mo. 656, 113 S.W. 1083, 21 L.R.A.,N.S., 171; Cedars of Lebanon Hospital v. Los Angeles County (1950), 35 Cal.2d 729, 221 P.2d 31, 15 A.L.R.2d 1045. The difference between a liberal and a strict construction is best illustrated in those cases where the meaning of the language expressing the objective intent of the legislature is doubtful; in such cases, any doubt under the strict construction rule must be resolved against the exemption. Thus an exemption should be expressed in such clear language as to leave no doubt. Bethel Convalescent Home v. Richfield (1961), 15 Wis.2d 1, 4, 111 N.W.2d 913; Moore Motor Freight Lines v. Dept. of Taxation (1961), 14 Wis.2d 377, 386, 111 N.W.2d 148; Albion v. Trask (1950), 256 Wis. 485, 487--488, 41 N.W.2d 627; Evangelical L. Church v. Shawano County (1949), 256 Wis. 196, 200, 40 N.W.2d 590.

The city argues the tax-exempt status of these residences is doubtful because they are not expressly exempted by subsec. (4m) and that when the legislature intended residences to be exempted it expressly so provided, as with residences of college faculty members under sec. 70.11(3)(b) and residences of pastors under sec. 70.11(4), Stats. If sec. 70.11 were a comprehensive scheme of exemptions enacted substantially at the same time so we could say the legislature in fact had the whole scheme in mind at its enactment, there would be some merit in the city's argument. However, while the exemptions are extensive and grouped together and require the application of the pari materia rule, we think the rule expressio unius est exclusio alterius is not necessarily to be used in construing this statute. Although based upon logic and the working of the human mind, it is not a 'Procrustean standard to which all statutory language must be made to conform.' State ex rel. City of West Allis v. Milwaukee L., H. & T. Co. (1917), 166 Wis. 178, 182, 164 N.W. 837, 839, quoting Black on the Interpretation of Laws (2d ed.) 219. Factually, there should be some evidence the legislature intended its application lest it prevail as a rule of construction despite the reason for and the spirit of the enactment. Section 70.11(4m) was created in 1957 solely to apply to hospitals and its language is much broader than that used in the older exemption statutes applicable to charitable and benevolent institutions.

It is argued by the city that the 'purposes of a hospital' are to be determined by the concept of the primary function of diagnosis, treatment and care of the sick and the decision of the hospital management of what is necessary for its purposes is not conclusive in determining what property is to be exempt. We think the hospital...

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