Deutsches Land, Inc. v. City of Glendale

Decision Date16 April 1999
Docket NumberNo. 96-2489,96-2489
PartiesDEUTSCHES LAND, INC., Plaintiff-Respondent-Petitioner, d v. CITY OF GLENDALE, Defendant-Appellant.
CourtWisconsin Supreme Court

For the plaintiff-respondent-petitioner there were briefs by Hugh R. Braun, Jeffrey L. Janik and Godfrey, Braun & Frazier, Milwaukee and oral argument by Hugh R. Braun.

For the defendant-appellant there was a brief by John F. Fuchs, City Attorney, Alan Marcuvitz, Robert L. Gordon and Weiss, Berzowski, Brady & Donahue, LLP, all of Milwaukee and oral argument by Robert L. Gordon.

Amicus curiae was filed by Sandra Stone Ruffalo, Milwaukee, for the Milwaukee Turners, Inc.

Amicus curiae was filed by Dominic H. Frinzi, Milwaukee, for the Italian Community Center, Inc.

Amicus curiae was filed by Grant F. Langley, city attorney, Gregg C. Hagopian, assistant city attorney, Curtis A. Witynski and

League of Wisconsin Municipalities, John E. Meyer and Wisconsin Association of Assessing Officers, all of Milwaukee, for the City of Milwaukee, League of Wisconsin Municipalities and Wisconsin Association of Assessing Officers.


The petitioner, Deutsches Land, Inc. ("Deutsches Land") seeks review of a published decision of the Court of Appeals 1 which reversed the circuit court's grant of exemptions from real property taxes. Deutsches Land argues that as a benevolent association its property is entitled to exemption from Wisconsin property taxes under Wis. Stat. § 70.11 (1995-96). 2 Because we find that Deutsches Land has not offered sufficient evidence to support its requested exemptions, we affirm the court of appeals.

¶2 Deutsches Land is a non-stock, non-profit corporation organized in 1967 under chapter 181 of the Wisconsin Statutes. It primarily serves as a holding corporation for the real estate and fixed assets of five incorporated non-stock, non-profit benevolent associations. See Internal Revenue Code § 501(c)(2). These five benevolent associations--D'Wendelstoana (dancing), D'Oberlandler (dancing), Gesang Verein Bavaria (singing), Vergnuegungs Club (social), and the Bavarian Soccer Club (soccer) (collectively, "the benevolent associations")--exist for the purpose of preserving Germanic heritage and culture.

¶3 For the benefit of the benevolent associations, Deutsches Land holds title to roughly 14 acres of property located in the City of Glendale. Though the property officially comprises a single parcel, Deutsches Land treats this 14-acre property as if it were four "lots." 3 Two of the lots have buildings upon them and the remaining two lots, totaling approximately five and one half acres, are soccer fields.

¶4 One of the two lots containing buildings is called "Old Heidelberg Park" which covers almost four and a half acres. Old Heidelberg Park is the site at which the benevolent associations conduct two major public festivals, Volksfest and Oktoberfest. These festivals are a significant source of fund-raising income for the benevolent associations. Additionally, a 12,000 square foot "Fest Hall" and other minor outbuildings are located in Old Heidelberg Park. Any one of the benevolent associations may use the park and the Fest Hall. In the winter months, the Fest Hall is used at various times by the soccer club for indoor practice.

¶5 While Deutsches Land does not officially lease the park to any entity, Deutsches Land allows Bavarian Waldhaus, Inc. ("Waldhaus") to use it on approximately 20 occasions annually. Waldhaus is a for-profit corporation created by the benevolent associations to isolate their for-profit activities and owned by the benevolent associations in five equal shares. On those 20 yearly occasions, Waldhaus uses the park to host corporate picnics at which it supplies the food and beverage. The corporations that arrange with Waldhaus to hold their event in Old Heidelberg Park do not need to be, and as a rule are not, affiliated with the benevolent associations in any way.

¶6 The Bavarian Inn lot of four acres contains a parking area for the entire 14-acre parcel as well as a significant structure that houses the Bavarian Inn restaurant, which is a full-service, for-profit bar and banquet facility open to the general public. The Bavarian Inn building has two floors. The main floor contains a bar, dining area, and banquet hall in addition to the kitchen, rest rooms, coatroom, and other miscellaneous space associated with a restaurant.

The lower floor, which is accessible both from the main floor and from a separate outdoor entrance, is divided into three more banquet rooms (named the "Rathskeller," "Weinstube," and "Edelweiss"), the offices of the Bavarian Inn, and a storage area for the benevolent associations.

¶7 Though Deutsches Land owns the land on which the Bavarian Inn sits as well as the building itself, it contracts with Waldhaus to operate the Bavarian Inn restaurant. Waldhaus has in the past entered into a formal lease with Deutsches Land for the entire Bavarian Inn building, although the lease terms required Waldhaus to allow the benevolent associations to use any part of the facility without charge. The last formal lease expired in 1990. However, the relationship between Waldhaus, the benevolent associations, and Deutsches Land has remained essentially the same since that time.

¶8 The record, though not altogether clear, indicates that most areas of the Bavarian Inn are used at certain times by members of the benevolent associations and at other times by Waldhaus. For example, while the benevolent associations most often use either the Rathskeller, Weinstube, or Edelweiss for their gatherings, it is not uncommon for them to also use the banquet hall on the main floor. Similarly, while Waldhaus normally uses the facilities on the main floor, it is not uncommon for Waldhaus to occupy the Rathskeller, Weinstube, or Edelweiss for banquets. The record indicates that the only space in the Bavarian Inn used solely by the benevolent associations is the storage area in the lower level of the building. All other areas are used both by Waldhaus and the benevolent associations.

¶9 Although this arrangement between Deutsches Land and Waldhaus has been in place since 1967, Deutsches Land first sought an exemption from Wisconsin property taxes in 1993. Specifically, Deutsches Land now seeks a full exemption for the soccer fields and Old Heidelberg Park and a 25% exemption for the Bavarian Inn building for the years of 1993-95. Glendale denied the applications and Deutsches Land filed suit in the Circuit Court of Milwaukee County. The circuit court ruled that Deutsches Land was entitled to a full exemption on the soccer fields and Old Heidelberg Park and a 25% exemption for the Bavarian Inn building. 4

¶10 Glendale appealed and the court of appeals reversed. The court of appeals determined that Deutsches Land had not satisfied the "used exclusively" requirement of Wis. Stat. § 70.11(4) and thus could not receive an exemption for Old Heidelberg Park and the Bavarian Inn lot. Citing the same subsection, it also concluded that there was no evidence in the record that the soccer fields were necessary for the location and convenience of any building that was exempt from taxation. Accordingly, it held that Deutsches Land was not entitled to a real property tax exemption on any of its property.

¶11 In asking this court to rule that it is entitled to an exemption from real property taxes, Deutsches Land necessarily requires us to construe Wis. Stat. § 70.11. The construction of statutes is a question of law which we review independent of the legal conclusions reached by the circuit court and court of appeals. Colby v. Columbia County, 202 Wis.2d 342, 349, 550 N.W.2d 124 (1996). While we grant deference to the circuit court's factual findings, we review de novo the application of those facts to the law. Peplinski v. Fobe's Roofing, Inc., 193 Wis.2d 6, 19, 531 N.W.2d 597 (1995).

¶12 In interpreting statutes, our primary purpose is to give effect to the legislature's intent. State ex rel. Angela M.W. v. Kruzicki, 209 Wis.2d 112, 121, 561 N.W.2d 729 (1997). To this end, we look first to the language of the statute, and if that language is unambiguous, we construe the statute in accordance with its ordinary meaning. If, on the other hand, the statutory language is ambiguous, we look to the legislative history in order to ascertain both the legislature's purpose for enacting the statute and its intent as to the statute's meaning. Stockbridge ¶13 In Wisconsin, the taxation of property is the rule and exemption is the exception. Engineers & Scientists of Milwaukee, Inc. v. City of Milwaukee, 38 Wis.2d 550, 553, 157 N.W.2d 572, 574 (1968); Trustees of Indiana Univ. v. Town of Rhine, 170 Wis.2d 293, 299, 488 N.W.2d 128 (Ct.App.1992). In general, we apply a "strict but reasonable construction" to tax exemption statutes. Columbia Hospital Association v. City of Milwaukee, 35 Wis.2d 660, 668, 151 N.W.2d 750 (1967); Madison Aerie No. 623 F.O.E. v. City of Madison, 275 Wis. 472, 476, 82 N.W.2d 207 (1957). Since exemption from the payment of taxes is an act of legislative grace, the party seeking the exemption bears the burden of proving that it falls within a statutoryexemption. Pulsfus Farms v. Town of Leeds, 149 Wis.2d 797, 811, 440 N.W.2d 329 (1989). Consequently, any doubt under the "strict but reasonable" construction rule must be resolved against the party seeking the exemption. Columbia Hospital, 35 Wis.2d at 668, 151 N.W.2d 750.

School Dist. v. Department of Public Instruction, 202 Wis.2d 214, 219, 550 N.W.2d 96 (1996).

Old Heidelberg Park

¶14 The bulk of Wis. Stat. § 70.11 delineates organizations and institutions that have the possibility of an exemption. As a threshold requirement, an organization that seeks an exemption under § 70.11 must fall within one or more of the specified categories outlined in the statute. See Frank Lloyd Wright...

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