Cornell College v. Board of Review of Tama County

• Citation: 248 Iowa 388,81 N.W.2d 25
• Decision Date: 05 February 1957
• Docket Number: No. 49101,49101
• Parties: CORNELL COLLEGE, Appellant, v. BOARD OF REVIEW OF TAMA COUNTY, Iowa; Carl O. Eilers, Chairman of the Board of Review of Tama County, Iowa; Iowa State Tax Commission, Appellees.
• Court: Iowa Supreme Court

Page 25

81 N.W.2d 25

248 Iowa 388

CORNELL COLLEGE, Appellant, v. BOARD OF REVIEW OF TAMA COUNTY, Iowa; Carl O. Eilers, Chairman of the Board of Review of Tama County, Iowa; Iowa State Tax Commission, Appellees.

No. 49101.

Supreme Court of Iowa.

Feb. 5, 1957.

R. B. Wolfe, Mount Vernon, Hyland & Hyland, Tama, for appellant.

Walter J. Willett, County Atty., Tama, Dayton Countryman, Atty. Gen., M. A. Iverson, Sp. Asst. Atty. Gen., Ruth B. Klotz, Asst. Commission Atty., Des Moines, for appellees.

HAYS, Justice.

The single question presented on this appeal is whether the Southeast Quarter of Section 12, Township 86 North, Range 15 West of the 5th P.M., Tama County, Iowa, is exempt from taxation under Section 427.1(11), Code 1954, I.C.A. The trial court held not, upholding the decision of the County Board of Review, and plaintiff appeals.

Section 427.1, in part provides: 'Exemptions. The following classes of property shall not be taxed: * * * 11. Property of educational institutions. Real estate owned by any educational institution of this state as a part of its endowment fund, to the extent of one hundred sixty acres in any civil township.'

The facts are stipulated subjects to certain objections. Cornell College is an Iowa Educational Institution. It holds the legal record title to the above described real estate and owns no other property in said township. The real estate is worth between $48,000 and $50,000 and the fair cash rental value thereof is $15 per acre. Whether this real estate is carried by the College in its endowment or its annuity fund is in dispute, the trial court finding that it was carried in the annuity fund and thus not exempt. Upon obtaining title to said real estate the College issued to its grantors its annuity bond and has made the payments provided for therein. It has also been in possession and control of the same since obtaining title.

Title was obtained, by quit-claim deed, pursuant to a certain written agreement executed in 1954 but never placed of record. This agreement between C. H. Boothroyd and Bertha L. Boothroyd, the then owners, and the College stated that said owners would deed said premises to the College for the purpose of promoting Christian Education. Possession to be given June 1, 1954, subject to existing lease with the Rudolph Dietrich, the then tenant. Income and rents therefrom during the year 1954 to belong to the College. Grantors to pay the 1953 taxes. The present tenant, Dietrich, to have the privilege of leasing the real estate as long as either of the grantors lived, provided he is able to and does operate the farm in a husbandlike manner. The real estate is not to be disposed of during the lifetime of either of the grantors. The College agreed to issue to said grantors its annuity bond whereby it agrees to pay to said grantors the sum of $1,200 on December 1st, and June 1st of each year as long as either shall live. The first payment to be made December 1, 1954.

While the trial court found the property was not carried in the endowment fund, we think the question is largely one of bookkeeping and for the purpose of this opinion we accept appellant's contention that it was a part of the endowment fund. We do not think this is determinative of the real question.

While there are some jurisdictions that hold statutes granting exemptions, such as the one in question, should be liberally construed, the majority, including Iowa, adopt the view that all exemption statutes must be strictly construed and if there is any doubt upon the question it must be resolved against the exemption. 84 C.J.S., Taxation, § 225; Readlyn Hospital v. Hoth, 223 Iowa 341, 272 N.W. 90; Board of Directors of Fort Dodge Independent School Dist. v. Board of Supervisors, 228 Iowa 544, 293 N.W. 38; Trustees of Iowa College v. Baillie, 236 Iowa 235, 17 N.W.2d 143; Jones v. Iowa State Tax Commission, Iowa, 74 N.W.2d 563.

The basic question is--Is Cornell College the owner of this real estate within the letter and spirit of the statute?

The term 'owner' as it appears in Section 427.1(11), has been before this court on prior occasions. In Ellsworth College of Iowa Falls v. Emmet County, 156 Iowa 52, 62, 135 N.W. 594, 42 L.R.A.,N.S., 530, we said the term meant 'equitable or beneficial ownership rather than legal'. In Trustees of Iowa College v. Baillie, 236 Iowa 235, 239, 17 N.W.2d 143, 146, we quote from the Ellsworth case as follows: 'If the income from the property or from its proceeds were to go to another during the five years, then it would be very clear that the property or fund should be taxed under that period. When one is the equitable owner of property and is entitled to the income from it, he has the enjoyment of every benefit that could come to any one who might own the property.' In that case we held the College, while it had legal title, did so merely as trustee for the grantors who in fact were the beneficial owners.

Appellant would distinguish the...