Grand Lodge of Ancient and Accepted Masons of New Mexico v. Taxation and Revenue Dept. of State of N.M.

• Decision Date: 18 June 1987
• Docket Number: No. 8583,No. 1,I,1,8583
• Citation: 1987 NMCA 81,740 P.2d 1163,106 N.M. 179
• Parties: GRAND LODGE OF ANCIENT AND ACCEPTED MASONS OF NEW MEXICO; Scottish Rite Cathedral Association of Las Cruces, Inc.; Santa Fe Lodge of Perfectionnc.; and York Rite Corporation, Inc., Plaintiffs-Appellees, v. TAXATION AND REVENUE DEPARTMENT OF the STATE OF NEW MEXICO, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 1163

740 P.2d 1163

106 N.M. 179

GRAND LODGE OF ANCIENT AND ACCEPTED MASONS OF NEW MEXICO Scottish Rite Cathedral Association of Las Cruces, Inc. Santa Fe Lodge of Perfection No. 1, Inc.; and York Rite Corporation, Inc., Plaintiffs-Appellees, v. TAXATION AND REVENUE DEPARTMENT OF the STATE OF NEW MEXICO Defendant-Appellant.

No. 8583.

Court of Appeals of New Mexico.

June 18, 1987.

Certiorari Denied Aug. 14, 1987.

[106 NM 179] Gerald R. Bloomfield, Tara Selver, Kool, Kool, Bloomfield & Hollis, P.A., Albuquerque, for plaintiffs-appellees.

Hal Stratton, Atty. Gen., Gerald B. Richardson, Sp. Asst. Atty. Gen., Taxation and Revenue Dept., Santa Fe, for defendant-appellant.

OPINION

MINZNER, Judge.

The Taxation and Revenue Department (department) appeals from a judgment declaring all properties owned by Masonic lodges exempt from property taxes under the New Mexico Constitution, article VIII, Section 3. The department contends that the trial court applied an erroneous standard of law in concluding that the properties are tax-exempt, and that under the correct standard, the Masonic lodges are not used for educational or charitable purposes. See id. We reverse and remand with instructions to dismiss the petition for lack of jurisdiction.

BACKGROUND

The record indicates that properties owned by Masonic lodges in New Mexico have not been assessed for a number of years, on the ground that the properties are used for charitable or educational purposes. Beginning with the 1983 tax year, the legislature required that non-governmental entities claim the exemptions by filing proof of eligibility with the county assessor; however, once allowed, the exemptions need not be claimed again until there is a change in eligibility. See NMSA 1978, Sec. 7-38-17(C), (F) (Repl.1986). If claims for exemptions were not filed by the last day of February 1983, the property was presumed not to be exempt and was taxed.

In response to a request for a ruling concerning property owned by Sacramento Lodge No. 24, located in Alamogordo, the department concluded that this property is not used for educational or charitable purposes within the meaning of article VIII, Section 3. The ruling, P.T.D. Ruling No. 83-02, also stated that each request for property tax exemption must be evaluated on its own facts and that other cases, while illustrative, are not controlling. The ruling therefore held that Temple Lodge No. 6, A.F. & A.M. v. Tierney, 37 N.M. 178, 20 P.2d 280 (1933) is not dispositive of the facts presented by the Sacramento Lodge.

Subsequently, four groups of Masons, representing all of the Masonic lodges in New Mexico, filed a petition for declaratory judgment in district court. The petition states that, since the ruling, many county assessors have issued notices to lodges that their properties are no longer exempt, and it is anticipated that such assessments will soon be made on a statewide basis. The petition asked the district court to issue a declaratory judgment that all Masonic lodges affiliated with any of the petitioners are exempt from property taxes, contrary to the ruling. The court issued an order staying any further notices of assessment on Masonic properties, and any administrative proceedings involving notices and protests filed pursuant thereto, until a final determination was made with respect to the taxability of the properties. After trial, the court entered findings and conclusions which did not differentiate among the associated lodges and an order granting petitioners tax-exempt status, on the ground that their operations are both educational and charitable in nature. The department appeals this order.

The record does not reflect that exemptions have been denied to any lodge other than Sacramento Lodge No. 24. In fact, P.T.D. Ruling No. 83-03 states that "[e]ach request for property tax exemption under Article VIII, Sec. 3 of the New Mexico Constitution must be evaluated on its own facts, and other cases, although illustrative, are not controlling." Fifty-seven other lodges were involved in the litigation in district court. Based on the allegations in the petition, they had not all been assessed.

After this case was submitted to this panel for decision, the court requested supplemental briefing on the jurisdiction of the district court to enter the order from which the department appeals. See State ex rel. Overton v. New Mexico State Tax Comm'n, 81 N.M. 28, 462 P.2d 613 (1969). We asked the parties to discuss the jurisdiction of the district court with respect to the lodges other than Sacramento Lodge No. 24, it appearing that there is at present no actual controversy as to them; and as to Sacramento Lodge No. 24, whether the trial court lacked jurisdiction because this lodge had not exhausted its administrative remedies. For the following reasons, we now reverse.

DISCUSSION

The petition was filed pursuant to the Declaratory Judgment Act. See NMSA 1978, Sections 44-6-1 to -15. Under the act, district courts can declare rights, status, and other legal relations "[i]n cases of actual controversy." Sec. 44-6-2. There must be an actual controversy before a court has jurisdiction to hear a declaratory judgment action. State ex rel. Overton v. New Mexico State Tax Comm'n. The supreme court has held that the elements of actual controversy for this purpose are:

[ (1) ] a controversy involving rights or other legal relations of the parties seeking declaratory relief; [ (2) ] a claim of right or other legal interest asserted against one who has an interest in contesting the claim; [ (3) ] interests of the parties must be real and adverse; and [ (4) ] the issue involved must be ripe for judicial determination.

Sanchez v. City of Santa Fe, 82 N.M. 322, 324, 481 P.2d 401, 402 (1971).

In addition to the statutory requirement of actual controversy, case law holds that the district court does not have jurisdiction over a declaratory judgment action unless the parties have first exhausted any administrative remedies. See State Racing Comm'n v. McManus, 82 N.M. 108, 476 P.2d 767 (1970). This is analogous to the procedural rule which precludes appellate review prior to a final judgment of the trial court. Cf. Illinois Bell Tel. Co. v. Allphin, 60 Ill.2d 350, 326 N.E.2d 737 (1975) (holding that as no hearing had yet been held and no formal final assessment had issued, the revenue department had not reached a final administrative decision; thus, under the state administrative act, the agency's notice of tax liability will not be reviewable).

Actions for declaratory judgment were not intended as a substitute for statutory judicial review of administrative action. Hays v. City & County of Denver, 127 Colo. 154, 254 P.2d 860 (1953); V-1 Oil Co. v. County of Bannock, 97 Idaho 807, 554 P.2d 1304 (1976). They should not be used to usurp or replace specific administrative relief. City of Cheyenne v. Sims, 521 P.2d 1347 (Wyo.1974). The theory which underlies administrative law is that the issues with which it deals ought to be decided by experts. Weyerhaeuser Timber Co. v. Galloway, 168 Or. 85, 121 P.2d 469 (1942).

The supreme court has held that before resort to a court of equity can be had for relief from discriminatory taxation, the complaining taxpayer must have either no adequate legal or statutory remedy, or he must have first exhausted the same without avail. First National Bank of Raton v. McBride, 20 N.M. 381, 149 P. 353 (1915). This doctrine was extended to declaratory judgments in Associated Petroleum Transp., Ltd. v. Shepard, 53 N.M. 52, 201 P.2d 772 (1949).

Consequently, the declaratory judgment statute must be read in tandem with statutes providing judicial review of administrative actions. Chesapeake and Potomac Co. v. State Tax Dep't, 161 W.Va. 77, 239 S.E.2d 918 (1977). Whether statutory relief is exclusive depends on legislative intent. See E. Borchard, Declaratory Judgments 344 (2d ed.1941). Where there is a complete remedy otherwise provided by statute, and obviously intended to be exclusive, the issue is not subject to disposition by declaratory judgment. Crews v. Collins, 252 Iowa 863, 109 N.W.2d 235 (1961). See generally 2 F. Cooper, State Administrative Law 605-611 (1965) (discussing the rule that where a statutory method of review is provided, that method is exclusive); Annot., Tax Questions as Proper Subject of Action for Declaratory Judgment, 11 A.L.R.2d 359 (1950).

We doubt that an actual controversy exists as to those lodges other than Sacramento Lodge No. 24. Any injury to those lodges is speculative, based on the assumption that they will be assessed, and they are seeking in effect an advisory opinion. Cf. Sanchez v. City of Santa Fe (where defendants required plaintiffs to pay fee and plaintiffs refused to do so, an actual controversy existed). However, we are persuaded that the dispositive issue is whether there is an adequate remedy other than declaratory judgment, which all petitioners have failed to pursue. We conclude that there is.

The power to grant or deny exemptions lies with the county assessors and the Property Tax Division. See NMSA 1978, Secs. 7-38-22, -24 (Repl.1986). The denial of an exemption by the county assessor may be reviewed by a county valuation protests board. NMSA 1978, Sec. 7-38-27 (Repl.1986). Orders resulting from these reviews may be appealed to this court. NMSA 1978, Sec. 7-38-28 (Repl.1986). A property owner also may protest by filing a claim for refund after paying the taxes alleged to be due. See NMSA 1978, Sec. 7-38-21 (Repl.1986).

The department contends that there is no provision for protesting the denial of an exemption by ruling. See NMSA 1978, Sec. 7-1-5(B)(2) (Repl.1986). The record supports a conclusion that petitioners in effect were attempting to protest the ruling by bringing a petition for declaratory judgment. The complaint expressly states, however, that the ruling "constitutes a substantial departure from prior authority and the long...