Gay v. State

• Decision Date: 15 March 1934
• Docket Number: 5 Div. 175.
• Parties: GAY et al. v. STATE et al.
• Court: Alabama Supreme Court

153 So. 767

228 Ala. 253

GAY et al. v. STATE et al.

5 Div. 175.

Supreme Court of Alabama

March 15, 1934

Appeal from Circuit Court, Randolph County; C. H. Vann, Judge.

Proceeding by the State of Alabama and Randolph County to assess property of A. J. Gay and the Knight Sanatorium for taxation. From the judgment, defendants appeal. Transferred from Court of Appeals under Code 1923, § 7326.

Reversed and remanded.

BROWN J., dissenting.

Hooton & Hooton and H. M. Brittain, all of Roanoke, for appellants.

Thos E. Knight, Jr., Atty. Gen., and Frontis H. Moore, Asst. Atty Gen., for appellees.

THOMAS Justice.

The appeal is from a judgment fixing the valuation for the purpose of ad valorem taxes of a hospital owned and operated by a private individual.

The property had not been assessed for taxation, and under the authority of section 39 of the Act of 1923 (Gen. Acts 1923, pp. 152, 175; Revenue Compilation 1929, § 162) the tax assessor made the assessment as an escape for the years 1928, 1929, 1930, 1931, and 1932. The trial in the circuit court excluded the tax year of 1932, and the jury found for the state and county as to and for the years 1930 and 1931, and for the defendants-appellants for the years 1928 and 1929.

The defendants-appellants claimed that the hospital was not subject to taxation because it was a charitable institution, basing that exemption claim on section 91 of the Constitution, subdivision (2) of section 3022, Code of 1923, and the Act of 1923, Gen. Acts of 1923, pp. 152, 153, section 2, subdivision (A1). The real question for decision is: What is the meaning of the words "purely charitable" as used in section 91 of the Constitution, or "charity patients" as used in section 3022, subdivision (2), of the Code of 1923, and the act of 1923, Acts 1923, pp. 152, 153, § 2, subdivision (A1)?

The assessment in this case was made under the authority of the act of 1923 Acts 1923, pp. 152, 175, § 39 (Union Central Life Ins. Co. v. State ex rel. Whetstone, Tax Assessor, 226 Ala. 420, 147 So. 187), providing that, whenever the tax assessor shall discover that any property has escaped taxation in any assessment within five years next preceding the current year, he shall list, return, and value the same, adding the penalty provided by statute. Notice was given as provided, there was protest by the taxpayer, and, under the provisions of section 162 of the Revenue Laws 1929, pp. 113, 114-"The property owner may appeal from the assessment to the circuit court of the county in which the property is located at the next regular session of such court after the assessment is made final by the tax assessor, and such property owner shall give bond as provided herein for tax cases appealed to the circuit court,"-an appeal was taken from the tax board to the circuit court.

In sections 59, 60, and 61 of the Revenue Act of 1923 (Gen. Acts 1923, pp. 152, 182, 183) there are pertinent provisions; section 61 providing in part: "The trial upon appeals to the circuit court shall be de novo and the court shall render a judgment ascertaining and fixing the assessable value of property involved." Gen. Acts 1923, p. 183.

Under these provisions the several appeals were taken. The language is broad enough to secure a review or rather a trial of the issues of fact de novo in the circuit court, as was done in this case; the several pertinent provisions of the law are to be considered in pari materia. Union Central Life Ins. Co. v. State ex rel. Whetstone, Tax Assessor, supra.

The assessment and levy of taxes is primarily a legislative function, and, when the board of review, as set up by the Legislature, hears tax cases and fixes the value of property for taxation purposes, it acts as a court of limited jurisdiction, and may be properly termed a part of the tax-assessing machinery of the state provided by the Legislature. In hearing the case de novo on appeal to the circuit court, the record of the board of review or of the tax commission or of the tax assessor is a due appearance on the part of the state in that court, and makes a prima facie case until evidence on the part of the taxpayer shows either (1) that the property is exempt absolutely, or (2) that it is of less value than that fixed in the assessment, or shows its correct value for the levy of the ad valorem tax imposed by the law. There is no provision of law requiring formal information or other formal pleading (than that before the board of review) to be filed by the solicitor or the attorney representing the state. The cases of Daffin, Tax Assessor, v. Scotch Lumber Co., 226 Ala. 33, 145 So. 452, Union Central Life Ins. Co. v. State ex rel. Whetstone, Tax Assessor, 226 Ala. 420, 147 So. 187, and State of Alabama et al. v. Mobile and Ohio Railroad Co. (Ala. Sup.) 154 So. 91, indicate the required procedure in the several cases dealt with; hence, in this case, by the appearance and the introduction in evidence of the assessment made for the five years in question, a question of facts for the jury is presented.

There was a suggestion in this case that, because the tax officials had failed to assess this property in the previous years while assessing other property of the taxpayer, that failure and inference to be drawn therefrom, constituted an ascertainment that the same was exempt. There is no record that the property was returned by that taxpayer and claimed and actually allowed as exempt by the tax assessor, the board of review, or any other competent, lawful authority. The failure to so return the property and the failure to claim it as exempt would not operate as an estoppel or any obstacle in the nature of a judicial ascertainment of the question presented by this proceeding. The question of the exemption of property is one of law when the facts of its use are determined. And these facts the parties have the right to try under the law, for each tax year, and within the time provided and recognized by the statutes and decisions. Union Central Life Ins. Co. v. State ex rel. Whetstone, Tax Assessor, 226 Ala. 420, 147 So. 187. The case of Anniston City Land Company v. State, 160 Ala. 253, 48 So. 659, is not contrary to the views we have expressed.

It is true that, once the officers proceed to a valuation of the property, it cannot be disturbed by the state during that tax year. State v. Doster-Northington Drug Co., 196 Ala. 447, 71 So. 427; Union Central Life Ins. Co. v. State ex rel. Whetstone, Tax Assessor, supra; Perry County v. Selma, Marion & Memphis Railroad Company, 58 Ala. 546; State ex rel. Tallapoosa County v. Butler, State Tax Com'r, 227 Ala. 212, 149 So. 101.

It is also true, that the exemption in question under the Constitution is self-executing (Anniston City Land Company v. State, 160 Ala. 253, 48 So. 659) when the facts of its use are indisputable (Johnson v. Holifield, 79 Ala. 423, 58 Am. Rep. 596; Dunn v. Ellisor, 225 Ala. 15, 17, 141 So. 700; Lovelace v. Marion Institute, 215 Ala. 271, 110 So. 381). The original purpose will not control; it is "the use (under the Constitution and statute) during the current tax year" for which the assessment is made that determines the exemption, and this fact was for the jury to find under this phase of the case.

Considering the insistences of counsel, we may again observe that appellants base their claim of exemption (1) on section 91 of the Constitution, which says "The legislature shall not tax the property, real or personal * * * to the extent of one acre * * * with the buildings thereon, when same are used exclusively for religious worship, for schools, or for purposes purely charitable;" (2) on subdivision (1) of section 3022 of the Code, which is, in effect, almost a repetition of the exemption set out in section 91 of the Constitution, so far as here pertinent; and (3) that exemption is likewise claimed under section 2, subdivision (A1), of the Act of 1923 (Gen. Acts 1923, p. 153), as follows: "All property, real or personal, used exclusively for hospital purposes, to the amount of twenty thousand dollars, where such hospitals maintain wards for charity patients and give treatment to such patients, provided that the treatment of charity patients constitutes at least fifteen per cent. of the business of such hospital."

Under the constitutional proviso, did the defendants-appellants sustain the burden of proof? The testimony tended to show that the larger portion of the patients who came to the hospital were "pay patients" and patients who actually paid for services rendered them in the hospital that a number of patients termed "charity patients" did not pay for...