Emanuel Lutheran Charity Bd. v. Department of Revenue

• Decision Date: 27 October 1972
• Citation: 502 P.2d 251,263 Or. 287
• Parties: EMANUEL LUTHERAN CHARITY BOARD, a corporation, Appellant, v. DEPARTMENT OF REVENUE, Respondent.
• Court: Oregon Supreme Court

Page 251

502 P.2d 251

263 Or. 287

EMANUEL LUTHERAN CHARITY BOARD, a corporation, Appellant, v. DEPARTMENT OF REVENUE, Respondent.

Supreme Court of Oregon.

Argued and Submitted May 5, 1972.

Decided Oct. 27, 1972.

Chester E. McCarty, Portland, argued the cause for appellant. On the briefs were McCarty & Swindells and Robert E. Nelson, Portland.

Theodore W. de Looze, Chief Tax Counsel, Salem, argued the cause for respondent. With him on the brief were Lee Johnson, Atty. Gen., and Donald C. Seymour, Asst. Atty. Gen.

Before O'CONNELL, C.J., and McALLISTER, DENECKE, HOLMAN, TONGUE, and BRYSON, JJ.

McALLISTER, Justice.

The plaintiff, Emanuel Lutheran Charity Board, operates Emanuel Hospital in Portland. Plaintiff acquired certain real property for use in expanding its hospital facilities and claimed the property was exempt from taxation for the 1968--1969 tax year. The Department of Revenue ruled that the property was not exempt, the Tax Court affirmed, and plaintiff has appealed to this court. We affirm.

Most of the facts are stipulated. Emanuel is a general hospital which also provides teaching and research services. As early as 1957 plaintiff began acquiring real property in the vicinity of its hospital and in 1967 adopted a long-range master plan for future expansion. Pursuant to the master plan plaintiff intended to use the real property involved in this case for an addition to its main hospital, an extended care facility, a self-care, unit, an autitorium, and an employees' apartment building. The Department of Revenue concedes that when these buildings are constructed they will be tax exempt. ¹ On January 1, 1968, the assessment date, the property involved here was vacant awaiting future use, but no construction had begun.

The controlling statute is ORS 307.130, which reads in pertinent part as follows:

'Upon compliance with ORS 307.162 (filing claim for exemption), the following property owned or being purchased by incorporated literary, benevolent, charitable and scientific institutions shall be exempt from taxation:

'(1) * * * only such real or personal property, or proportion thereof, as is actually and exclusively occupied or used in the literary, benevolent, charitable or scientific work carried on by such institutions.'

The simple issue is whether the property on the assessment date was 'actually and exclusively occupied or used' by Emanuel in the benevolent and charitable work carried on by it.

Plaintiff relies on Willamette Univ. v. State Tax Comm., 245 Or. 342, 422 P.2d 260 (1966), in which this court construed ORS 307.130 to allow an exemption for a building which was under construction but not yet completed. Plaintiff urges us to extend our holding in Willamette Univ. to include vacant land held for future use in tax exempt activities, but on which building of facilities has not yet begun. The opinion in Willamette Univ. did not specifically limit its holding to buildings under construction and there is language in the opinion which supports plaintiff's contention that the decision covers the present case. In its discussion of cases from other jurisdictions, the court said:

'In New England Hospital for Women and Children v. City of Boston, 113 Mass. 518, 521, the court stated:

"The facts agreed show that the plaintiffs, at the date of the assessment of this tax, had recently purchased the land in question for the purpose of establishing and maintaining a hospital thereon, and were diligently proceeding with the preliminary measures necessary to the erection of the same. The land must therefore be deemed to have been then occupied by them for the charitable purposes for which they were incorporated, and as such exempted from taxation by the Gen.Sts. c. 11, § 5, cl. 3.'

'The word 'actual' was not contained in the Massachusetts statute at that time, but it is clear that the court determined that the right to control the use of the property as distinct from actual physical occupancy constituted an occupancy contemplated by the Act.' 245 Or. at 347, 422 P.2d at 263.

The final paragraph of the majority opinion reads:

'We are of the opinion that the better rule is found in the opinions of the courts which have carefully considered the issue and reached the conclusion that 'actually occupied and used' pertains to whether or not the premises are then being prepared to carry out the purposes of the exempt charity and if they are they fall within the legislative intent.' 245 Or. at 349, 422 P.2d at 263.

Plaintiff in the present case clearly has the ...