Corporation Commission v. Oxford Seminary Const. Co.

• Decision Date: 11 December 1912
• Citation: 76 S.E. 640,160 N.C. 582
• Parties: CORPORATION COMMISSION v. OXFORD SEMINARY CONST. CO.
• Court: North Carolina Supreme Court

76 S.E. 640

160 N.C. 582

CORPORATION COMMISSION v. OXFORD SEMINARY CONST. CO.

Supreme Court of North Carolina

December 11, 1912

Appeal from Superior Court, Granville County; Carter, Judge.

Proceedings before the Corporation Commission to assess for taxation property of the Oxford Seminary Construction Company. From a judgment of the superior court affirming the ruling of the Commission, the defendant appeals. Reversed.

On the hearing it was made to appear that the Oxford Seminary Construction Company, incorporated "for the purpose of constructing, altering, enlarging, etc., buildings and dwelling houses, etc., to be used for school purposes, etc had rebuilt the buildings of Oxford College," a seminary of learning conducted and controlled by F. P. Hobgood, who owns 264 of the 543 shares of the capital stock of the company; that building of this Oxford College is the only thing done thus far by the company, in the exercise of its chartered rights; that all of the company's assets consist of this lot of lands and buildings, situate in the town of Oxford; that the real estate in question and the buildings thereon are "used exclusively for school purposes, and have been so used for many years past." Stating facts more in detail, the affidavit of said F. P Hobgood was filed in terms as follows: "That he is the president of Oxford Seminary Construction Company, a corporation duly created by and under the laws of the state of North Carolina, with its principal office in the town of Oxford, said state and county; that said Oxford Seminary Construction Company is the owner of the buildings and grounds now used and occupied by the Oxford College, and wholly and exclusively devoted to school purposes, and the total number of shares of the capital stock issued and now outstanding of said corporation is 543, of the par value of $25 per share, making a total of the capital stock of said corporation issued and outstanding of $13,575; that for the purpose of completing buildings to be used for and exclusively devoted to school purposes it became necessary for the said corporation to borrow the sum of $10,000, which was secured by a deed in trust upon the property of the said corporation; that of the said $10,000 thus borrowed $1,000 has been repaid, leaving a balance due by said corporation on said loan of $9,000; that the said corporation leases the said grounds and buildings to this affiant for school purposes; that said ground and buildings are exclusively used for and devoted to school purposes; that this affiant pays as rental for said school property the interest on the money borrowed by said corporation, pays the insurance premiums on the buildings situate thereon, keeps said buildings and grounds in good repair, and pays into the treasury of said corporation the sum of $250 per annum for the purpose of creating a sinking fund with which to discharge the principal of the money borrowed as aforesaid; that said lot of land and the buildings thereon have been used exclusively for school purposes for more than 50 years; and that during all these years neither the state nor the county nor the town of Oxford has ever demanded the payment of any taxes on said school property." On these, the facts chiefly relevant to the inquiry, the Corporation Commission held the property liable for taxation, basing its ruling principally on the ground that the term "held for educational purposes" in the constitutional provision did not sanction or permit the exempting of school property used for the private and personal profit of the proprietor and head of a school, and that neither the Constitution nor the statute made or intended to make any exemption in such case.

Quoting from the learned opinion of Hon. E. L. Travis, who spoke for the Commission: "It will be noted that the language of the Constitution is somewhat different from that of the statute; that the Constitution authorizes the General Assembly to exempt only 'property held for educational purposes,' but the statute declares as exempt 'property used exclusively for educational purposes' and buildings and lands 'wholly devoted to educational purposes, exclusively occupied and used by a school or college for such purpose.' The matter was argued before us upon the language of the statute only, and without reference to the Constitution, but it is clear that the statute cannot operate to exempt any property except that which is authorized by the Constitution to be exempted. It therefore could not, if it attempted to do so, exempt any property except such as is 'held for educational purposes.' We think that the words, 'held for educational purposes,' included only the property so held, in respect to its title and beneficial ownership, that the property itself, and all its profits and accretions, are dedicated to educational purposes, in such sense that neither the property, nor its profits, could be diverted by the holder, either in whole or in part, to any other use or purpose, as distinguished from property which, though used for educational work, is held for a private person, or corporation, for his or its own benefit, with a view to private gain or profit, and which the holder may at will put to any other use or appropriate to his or its private purposes. ***" And further: "To make a valid exemption, the property must come within the provision of both the Constitution and the statute. To be within the former it must be 'held for educational purposes.' To come within the latter; if general property, it must be 'used exclusively for educational purposes,' and, if buildings and lands, it must be 'wholly devoted to educational purposes,' and must 'belong to and be actually and exclusively occupied and used by' an incorporated college, school, etc., for such purpose. It will be noted that the buildings and lands, of which the property in question consisted, to be exempt under the statute, must belong to as well as be 'exclusively used' by the school so using them. We might dispose of this particular matter on the ground that they did not belong to the school but to the Construction Company. We find, however, that Mr Hobgood, who conducts the school, is president of the Construction Company, and is the owner of the greater part of the capital stock in this corporation, so that the diversity of ownership is legal rather than actual. We therefore prefer to put our decision of the matter which is important as affecting other schools in the state, on the broad ground that the property is not 'wholly devoted to' nor 'used exclusively for educational purposes' within the meaning of the Constitution and the statute. The property, whether considered as held by the Construction Company or by Mr. Hobgood, is not 'held for educational purposes.' It is held by the Construction Company generally for its own benefit, with full power to use, sell, or consume the same and its profits in any manner and at any time it sees fit and to put the same to any use or purpose it may desire for its own profit. We are of the opinion that this property is neither 'wholly devoted to' nor 'used exclusively for educational purposes' within the meaning of the statute. ***" And again: "The contention of the company, claiming this exemption, seems to be rested upon the view that the words 'used' and 'purposes' are synonymous, and have in this statute and the Constitution practically the same meaning. These two words have, however, different meaning and different scope, according to our view, as used in the statute and Constitution. Williamette University v. Knight, 35 Or. 33, 56 P. 124; University v. People, 99 U.S. 309, 25 L.Ed. 387. The word 'used' in this connection signifies mere employment, but 'purposes' has...