First Nat. Leasing Corp. v. City of Madison, No. 75-753

• Court: United States State Supreme Court of Wisconsin
• Writing for the Court: HEFFERNAN; ABRAHAMSON
• Citation: 81 Wis.2d 205,260 N.W.2d 251
• Decision Date: 13 December 1977
• Docket Number: No. 75-753
• Parties: FIRST NATIONAL LEASING CORPORATION, a Wisconsin Corporation, Respondent, v. CITY OF MADISON, a Municipal Corporation, Appellant.

Page 251

260 N.W.2d 251 81 Wis.2d 205 FIRST NATIONAL LEASING CORPORATION, a Wisconsin Corporation,
Respondent,
v.
CITY OF MADISON, a Municipal Corporation, Appellant. No. 75-753. Supreme Court of Wisconsin. Argued Nov. 2, 1977.
Decided Dec. 13, 1977.

Page 252

[81 Wis.2d 207] Henry A. Gempeler, City Atty., on brief and Robert E. Olsen, Asst. City Atty., argued, for appellant.

H. Robert Kilkelly (argued) and Lee, Johnson & Kilkelly, S. C., Madison, on brief for respondent.

HEFFERNAN, Justice.

The Methodist Hospital of Madison, Wisconsin, leases x-ray and hospital-type equipment from the First National Leasing Corporation. It is contended that such equipment is exempt from property taxation under the provisions of subsec. 70.11(4m), Stats., which provides:

"(4m) Nonprofit Hospitals. Property which is used exclusively for the purposes of any hospital of 10 beds or more devoted primarily to the diagnosis, treatment or care of the sick, injured, or deformed, which hospital is owned and operated by a corporation, voluntary association, foundation or trust, no part of the net earnings of which inures to the benefit of any shareholder, member, director or officer, and which hospital is not operated principally for the benefit of or principally as an adjunct of the private practice of a doctor or group of doctors. The exemption herein granted shall be effective and apply to assessments of property for taxation made, or permitted to be made pursuant to s. 70.44, in the year 1957 and subsequent years." (Emphasis supplied.)

The City of Madison's position is that the property is not exempt from taxation, because

Page 253

it is not "used exclusively" for the purposes of the hospital. It bases its contention on the stipulated facts that the leasing company does business for profit, takes depreciation on the leased property for income tax purposes, and has put the property up as collateral on a loan. Hence, although the city acknowledges the hospital use, it argues that there [81 Wis.2d 208] are other uses made of the property by the lessor and, accordingly, the hospital's use is not exclusive.

The stipulated facts show that the plaintiff leased property to the Methodist Hospital pursuant to a lease dated January 19, 1968. During the tax years of 1972 and 1973, the periods in contention here, the property principally x-ray equipment was located in the Methodist Hospital, was in its exclusive possession, and was operated only by hospital personnel in the performance of their regular hospital duties. The lease provided that, in the event the property leased was found to be taxable, the Methodist Hospital would pay the taxes.

For the purposes of determining the exemption question, the leasing company paid the taxes for the years 1972 and 1973 and, after filing the appropriate claims with the city for a refund, commenced an action for the return of the taxes paid. The circuit court on December 23, 1975, entered a judgment determining that the property was exempt from taxation under subsec. 70.11(4m), Stats. We affirm that judgment.

Because the facts are stipulated, the only questions presented to this court are matters of law, to which this court may address itself without the requirement of giving special deference to the determinations of the trial court. National Amusement Co. v. Department of Revenue, 41 Wis.2d 261, 266, 163 N.W.2d 625 (1969).

The burden of showing that property is exempt from taxation is on the person seeking the exemption, and the rule is that all doubts are to be resolved against the exemption and in favor of taxability. Wisconsin Electric Power Co. v. Department of Revenue, 59 Wis.2d 106, 111, 207 N.W.2d 841 (1973). We, nevertheless, said in Columbia Hospital Assn. v. Milwaukee, 35 Wis.2d 660, 668, 151 N.W.2d 750, 754 (1967):

[81 Wis.2d 209] "However, a strict construction is nonetheless a construction, and an exemption statute need not be given an unreasonable construction or the narrowest possible construction. A 'strict but reasonable' construction seems to be the pithy and popular statement of the rule."

Moreover, in all problems of statutory construction, legislative intent is to be derived by giving the language its ordinary and accepted meaning. Transamerica Financial Corp. v. Department of Revenue, 56 Wis.2d 57, 64, 201 N.W.2d 552 (1972).

The leasing company's argument is that the statute, in referring to property "used exclusively" for hospital purposes, is satisfied when the property is physically used exclusively for hospital purposes. It contends that it is, therefore, immaterial that the property is owned by another, leased to the hospital for profit, or used by the lessor as a loan collateral.

The City of Madison's argument is basically that utilized by Justice Traynor in his dissent in Ross v. City of Long Beach, 24 Cal.2d 258, 266, 148 P.2d 649, 653 (1944). Therein, Justice Traynor said:

"The word 'property' includes all of the interests and estates therein. Therein is a recognized distinction in the several interests that may exist in property, and this court has sanctioned their separate consideration for purposes of taxation. . . . It follows that the property is not tax exempt unless all interests in the property, including the lessor's interest, are used exclusively for public schools."

While there is much to be said for this legalistic analysis which conceives...