Egan School District v. Minnehaha County, 7961

• Decision Date: 17 December 1936
• Docket Number: 7961
• Citation: 65 S.D. 32,270 N.W. 527
• Parties: EGAN CONSOLIDATED SCHOOL DISTRICT NUMBER 1, MOODY COUNTY, Respondent, v. MINNEHAHA COUNTY, SOUTH DAKOTA, Appellant.
• Court: South Dakota Supreme Court

65 S.D. 32

270 N.W. 527

EGAN CONSOLIDATED SCHOOL DISTRICT NUMBER 1, MOODY COUNTY, Respondent,

v.

MINNEHAHA COUNTY, SOUTH DAKOTA, Appellant. South Dakota Supreme Court Appeal from Circuit Court, Minnehaha County, SD Hon. Lucius J. Wall, Judge. #7961—Affirmed. Louis N. Crill, Sioux Falls, SD Attorney for Appellant. George A. Rice, Flandreau, SD Blaine Simons, Sioux Falls, SD Attorneys for Respondent. Opinion filed December 17, 1936

ROBERTS, J.

The Egan Independent Consolidated School District of Moody County made an application to the Board of County Commissioners of Minnehaha County for abatement of taxes for the years 1933 and 1934 on a residence property in the City of Sioux Falls. The property claimed to be exempt was acquired by the school district in March, 1932, and under the agreed facts the property “is rented for income purposes and was acquired by the school district to protect itself from losses and shortages existing in the sinking fund of the school district.” The application was denied, and the plaintiff school district appealed to the circuit court, which rendered judgment in favor of the plaintiff abating the taxes. Defendant county has appealed to this court.

In the Constitution of this state as originally adopted the following provisions in article 11 under the title of “Revenue and Finance” defined what classes of property shall be exempt from taxation:

“§ 5. The property of the United States and of the state, county and municipal corporations, both real and personal, shall be exempt from taxation.”

“§ 6. The legislature shall, by general law, exempt from taxation, property used exclusively for agricultural and horticultural societies, for school, religious, cemetery and charitable purposes, and personal property to any amount not exceeding in value two hundred dollars for each individual liable to taxation.”

“§ 7. All laws exempting property from taxation other than that enumerated in sections 5 and 6 of this article, shall be void.”

Section 5 was amended in 1930 (see Laws 1929, c. 86), providing that “all state land 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.” With the exception of the proviso authorizing the taxation of lands acquired under the Rural Credit Act, the provisions of section 5 are self-executing and dependent upon no other condition than ownership. Section 6 permits the Legislature to exempt from taxation property used exclusively for school and other enumerated purposes and specifies the amount of exemption that may be allowed to individuals. In re Construction of Revenue Laws, 48 N.W. 813. Prior to the amendment of section 2 of article 11 of the Constitution in 1918 to permit the Legislature “to determine what class or classes of property shall be subject to taxation, and what property if any, shall not be subject to. taxation,” the Legislature was not empowered to grant other exemptions. The constitutional amendment had the effect of abrogating the limitations contained in section 7 in this same article. State ex rel Eveland v. Johns, 178 N.W. 945; Dakota Lodge No. 1 v. Yankton County, 223 N.W. 330. The intention of the Legislature to subject property of a school district to taxation does not appear in the statutes. No mention is made of the taxation of public properties with the exception of state-owned land acquired under the Rural Credit Act. Chapter 257, Laws 1931. When public property is involved, exemption is the rule and taxation the exception. National Surety Co. v. Starkey, 170 N.W. 582. However, a decision as to whether or not public property is included within the purview of tax statutes in the absence of an express statutory declaration is not necessary to a determination of this appeal. It is entirely clear that, if the property in question is either the property of the state or of a municipal corporation, it is not subject to taxation.

The contention of the plaintiff is that the term “municipal corporations” in section 5 of article 11 includes school districts and consequently ownership of the residence property in the City of Sioux Falls by the school district is exempt. A school district in its restrictive sense is not a municipal corporation, but is of the class commonly termed quasi corporations. Town of Dell Rapids v. Irving, 29 LRA 861; Davenport v. Elrod, 107 N.W. 833; Grabe v. Lamro Independent Consol. School District, 221 N.W. 697; Nelson v. Lembcke, 178 N.W. 981. See, also, Bailey v. Lawrence County, 49 AmStRep 881. The term “municipal corporations” may be used in a broad, generic sense, and as such may include quasi corporations. Sanders v. School District of Sioux Falls, 150 N.W. 473; Joint School District No. 132 v. Dabney, 127 Okl. 234, 260 P. 486; School District No. 8 v. Twin Falls County Mut. Fire Ins, Co., 30 Idaho 400, 164 P. 1174; State ex rel Kinder v. Little Rover Drainage District, 291 Mo. 267, 236 S.W. 848; Olsen v. Independent & Consol. School District, 175 Minn, 201, 220 N.W. 606. Thus in Dillon on Municipal Corporations (5th Ed.) § 132, the author says: “We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of the inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation and regulation with respect to their local and internal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a municipal corporation proper. The phrase ‘municipal corporation’ is used with us in general in the strict and proper sense just mentioned; but sometimes it is used in a broader sense that includes also public or quasi corporations, the principal purpose of whose creation is as an instrumentality of the State, and not for the regulation of the local and special affairs of a compact community.”

The framers of the Constitution intended by the term “municipal corporations” in section 5 of article 11 to use it in a broad sense and not to confine it to cities and towns. This is apparent from the language of section 10 of the same article which reads as follows: “The legislature may vest the corporate authority of cities, towns and villages, with...