Ellsworth Coll. of Iowa Falls v. Emmet Cnty.

• Decision Date: 03 April 1912
• Parties: ELLSWORTH COLLEGE OF IOWA FALLS ET AL. v. EMMET COUNTY ET AL.
• Court: Iowa Supreme Court

156 Iowa 52

135 N.W. 594

ELLSWORTH COLLEGE OF IOWA FALLS ET AL.

v.EMMET COUNTY ET AL.

Supreme Court of Iowa.

April 3, 1912.

Appeal from District Court, Emmet County; A. D. Bailie, Judge.

Suit in equity to set aside and cancel the tax levied upon certain real estate in Emmet County, to enjoin the collection of said tax, and for other equitable relief. Decree dismissing the petition, and plaintiffs appeal. Reversed and remanded.Nagle & Nagle and Birdsall & Birdsall, all of Clarion, for appellants.

J. W. Morse, of Estherville, for appellees.

DEEMER, J.

The case involves a construction of paragraph 2 of section 1304 of the Code Supplement as it existed when the taxes complained of were levied against certain real estate in Emmet county. That part of the section referred to, so far as material, reads as follows: “The following classes of property are not to be taxed: * * * (2) All grounds and buildings used for public libraries, including libraries owned and kept up by private individuals, associations or corporations for public use and not for private profit, and for literary, scientific, charitable, benevolent, agricultural and religious institutions, and societies devoted solely to the appropriate objects of these institutions, not exceeding one hundred and sixty acres in extent, and not leased or otherwise used with a view to pecuniary profit, but all deeds or leases by which such property is held shall be filed for record before the property above described shall be omitted from the assessment; the books, papers and apparatus belonging to the above institutions, used solely for the purposes above contemplated, and the like property of students in any such institution used for their education; moneys and credits belonging exclusively to such institutions, and devoted solely to sustaining them, but not exceeding in amount or income the amount prescribed by their charters or articles of incorporation; provided, however, that real estate owned by an educational institution of this state, as part of its endowment fund, shall not be taxed.” We may say, parenthetically, in order that there may be no misunderstanding of the written law, that the proviso found in the last sentence of the paragraph was repealed by chapter 61, Acts 34th G. A., and a substitute enacted. With this substitute we have nothing to do, for the taxes complained of were levied before the adoption thereof. The lands in question were taxed by the authorities of Emmet county as other real estate for the years 1909 and 1910. They were owned by Eugene S. Ellsworth, deceased, at the time of his death, which occurred in February of the year 1907, and passed by a will from which we shall presently quote at some length. Ellsworth College is an institution of learning organized some years ago under the statutes of this state for literary, scientific, and educational purposes, with its principal place of business at Iowa Falls, in Hardin county. Admittedly it is such an educational institution as is referred to in the paragraph from the Code Supplement just quoted. The only question in the case, then, is this: Were the lands in controversy “real estate owned by the college as a part of its endowment fund” at the time the taxes were levied and assessed?

This inquiry can only be answered by reference to testator's will construed in connection with such allegations of the petition as may properly be considered, for the case was decided by the court below upon a demurrer to the petition. The petition contained by reference a copy of the will, an order for the probate thereof, letters testamentary to E. O. Ellsworth and F. A. Gowan as executors, articles of incorporation of Ellsworth College, and certain amendments thereto. What are called the amended and substituted articles of incorporation adopted in July of the year 1907 name the following persons as trustees: “S. M. Weaver, F. D. Peet, E. O. Ellsworth, W. H. Woods, J. H. Carleton, Z. K. Hoag, William Weldon, John B. Parmelee, and Hattie A. Ellsworth.” Who the original trustees may have been the record does not disclose. Coming now to the will, we find the following provisions material to the proper determination of the case: After devising certain real estate and personal property to his wife, children, and certain other relatives and making certain bequests to various charitable and eleemosynary institutions, testator made the following provisions: “(12) I give, devise and bequeath to Ernest Orlando Ellsworth, John B. Parmelee and W. H. Woods all of Iowa Falls, Iowa, as trustees, to be held by them in trust.” Here follows the description of many tracts of land, including that in controversy. The will then provides: “Said trustees are given full power and authority to sell said real estate for the best obtainable prices and to make conveyances therefor, and they are hereby directed to sell the same as soon as it can be done to reasonable advantage at not less than the following prices.” Here follows description of the lands with prices affixed. The will then reads: “The said trustees are directed to devote the proceeds from the sale of the above-described lands as follows: “First. Twenty-five thousand ($25,000.00) dollars of the sum or sums received from the sale of said land shall by them be set apart for the purpose of building and maintaining a home for the aged at Iowa Falls, Iowa, said home for the aged to be under the control of five (5) trustees, of which my wife shall be one, the other four of whom shall be residents of Iowa Falls, Iowa, and who shall in the first place be appointed by the trustees first above named and shall hold their office for the term of one (1), two (2), three (3), four (4) and five (5) years respectively, and their successors shall be appointed by the judge of the district court at a session of said court in Hardin county, and on their appointment, giving bond and qualification of said trustees, the twenty-five thousand ($25,000.00) dollars of proceeds derived from the sale of said lands shall be paid to them and of said fund, and not to exceed ten thousand ($10,000.00) dollars of said fund may be used in the erection of buildings and improvements upon the following described real estate.” This is followed by a description of the real estate upon which the home is to be located. The will then proceeds:

“It is my wish that the benefits of said home for the aged to be opened in the first instance to residents of Iowa Falls, Iowa, such residents always being entitled to precedence in the matter of admittance. Then, if the accommodations will permit, to residents of Hardin county, and lastly, to residents of other parts of the state of Iowa.

Second. From the remainder of the proceeds derived from the sale of said lands, I direct my said trustees to pay to the trustees of Ellsworth College of Iowa Falls, Iowa, for the sole use and benefit of such college as an endowment fund, and to pay from the proceeds derived from the sale of said land, incumbrances, if any, upon the said lands, also to pay incumbrances, if any, upon Ellsworth College except such as are held by me, and to pay the balance to the trustees of Ellsworth College as an endowment fund for said college, the income to be used for the support of the school, and I direct my executors to release all mortgages held by me against said Ellsworth College and to cancel and surrender the notes of said college held by me. The funds received from the sale of said lands and paid to the trustees of said college shall be invested in United States bonds, state or municipal bonds or first mortgages on farm lands in the state of Iowa or Minnesota.”

A residuary clause is included in the will, and E. O. Ellsworth, L. E. Jones, and F. A. Gowan were named as executors. It will be noted that one of these, to wit, E. O. Ellsworth, was also made a trustee under the will, and it is to be inferred perhaps, although not charged in the petition, that the three trustees named in the will are the same persons of that name who, with six others, constituted the trustees of the college. If that be true, no reliance is put upon the fact, however, and the claim made in the petition is that the property was devised to the trustees named in the will in trust for the college as part of its endowment fund. It is charged in the petition that, after the payment by the trustees of the money received from the sale of lands to the trustees of the home for the aged to be established after testator's death, the remainder of the funds received from the sale of the lands were to be paid by said trustees to the trustees of the college for the sole use and benefit of said college and as an endowment fund; the income to be used for the support of the school. The petition further alleges: “That under and in pursuance of the terms and provisions of the said will of the said Eugene S. Ellsworth, deceased, the said trustees therein named, Ernest O. Ellsworth, John B. Parmelee, and W. H. Woods, accepted said trust, and on or about April, 1907, qualified as such trustees and took possession of all of said real estate, and have ever since been in possession thereof as such trustees under the provisions of said will. That under and by virtue of the provisions of said will and the probate and record thereof as hereinbefore set forth, said real estate became, constitutes, and is a part of the endowment fund of said college and to build and maintain at Iowa Falls, Iowa, a home for the aged, and has so been at all times since the probate and record of said will, and said real estate is held and administered as such endowment, and the rents and profits derived therefrom are devoted exclusively to the maintenance of said college.”

These are the only relevant facts as gathered from the record, and the primary inquiry is: Was the land in Emmet county real estate owned by the college as a part of its endowment fund at the time the taxes were levied against it?...