Immanuel, Inc. v. Board of Equalization of Douglas County

• Decision Date: 04 April 1986
• Docket Number: No. 84-712,84-712
• Citation: 222 Neb. 405,384 N.W.2d 266
• Parties: IMMANUEL, INC., Nebraska Nonprofit Corporation, Appellant, v. BOARD OF EQUALIZATION OF DOUGLAS COUNTY, Nebraska, Appellee.
• Court: Nebraska Supreme Court

Page 266

384 N.W.2d 266

222 Neb. 405

IMMANUEL, INC., Nebraska Nonprofit Corporation, Appellant, v. BOARD OF EQUALIZATION OF DOUGLAS COUNTY, Nebraska, Appellee.

No. 84-712.

Supreme Court of Nebraska.

April 4, 1986.

Syllabus by the Court

Taxation: Appeal and Error. In its appellate review of a question whether property is exempt from taxation pursuant to Neb.Rev.Stat. § 77-202(1)(c) (Reissue 1981), the Supreme Court determines tax exemption in an equitable trial of factual questions de novo on the record, subject to the rule that where credible evidence is in conflict on material issues of fact, the Supreme Court will consider the fact that the trial court observed the witnesses and accepted one version of the facts over another.

Wesley E. Hauptman of Erickson & Sederstrom, P.C., Omaha, for appellant.

Donald L. Knowles, Douglas Co. Atty., Rockford G. Meyer, and H.L. Wendt, Omaha, for appellee.

KRIVOSHA, C.J., BOSLAUGH, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ., and COLWELL, District Judge, Retired.

GRANT, Justice.

Immanuel, Inc. (Immanuel), doing business as Immanuel Medical Center, appeals the decision of the district court for Douglas County, Nebraska, which held that a facility owned and operated by Immanuel Medical Center known as the Immanuel Employee Child Care Center (Child Care Center), was not exempt from property taxation in 1982. Immanuel assigns as error the trial court's (1) failure to find that the subject property was exclusively used for charitable purposes, (2) failure to find that the issue regarding educational use of the subject property was properly raised before the Douglas County Board of Equalization, (3) failure to find that the subject property was exclusively used for educational purposes, and (4) failure in not using a liberal standard in construing the terms "educational" and "charitable." For the reasons set out hereinafter, we reverse.

The record shows that Immanuel is a nonprofit corporation organized and doing business under the Nebraska Nonprofit Corporation Act. Neb.Rev.Stat. §§ 21-1901 et seq. (Reissue 1983). Immanuel does not distribute any part of its income to its members, directors, officers, or private individuals and is exempt for federal income tax purposes. Immanuel's primary purpose is to provide health care to the public. Immanuel Medical Center is a 615-bed health care complex located on a 130-acre campus near 72d Street and Redick Avenue in Omaha, Nebraska. Immanuel Medical Center consists of Immanuel Hospital, Immanuel Professional Plaza, a center for continuing education, a community mental health center, an alcoholism treatment center, a nursing home, a motel for outpatients and families of inpatients, an apartment complex serving persons of retirement age, and, for children of Immanuel employees, the child day-care center which is the subject of the instant case. All of these buildings are located on Immanuel's 130-acre campus in close proximity to one another.

In 1980 Immanuel began construction on the Child Care Center. That facility became operational in May 1981. As previously stated, the Child Care Center provides child day care for the exclusive use of Immanuel employees. The Child Care Center is open 5 days a week from 6 a.m. to 6 p.m. and is licensed by the Department of Social Services. Sixty children, ranging in age from 6 weeks to 12 years, are cared for at the Child Care Center. The initial motive in establishing such a facility was for the recruitment and retention of nurses and other professional employees. The cost to Immanuel employees utilizing the Child Care Center is slightly above the average charged by similar day-care centers in the Omaha area.

On August 26, 1982, Immanuel applied for a real estate tax exemption with the Douglas County assessor's office for the property upon which the Child Care Center is located. On October 8, 1982, the county assessor's office denied Immanuel's claim for exemption, stating, "This property is used as a Child Care center by Immanuel employees and is an employee benefit."

A hearing was held before the Douglas County Board of Equalization (Board) on October 26, 1982, concerning the tax-exempt status of the Child Care Center. See Neb.Rev.Stat. § 77-202.02 (Reissue 1981). Upon the recommendation of the Douglas County assessor's office, the Board denied Immanuel's application for exemption from real estate taxes.

Immanuel then timely appealed the Board's decision to the district court, which held that the Child Care Center "is not reasonably necessary for the operation of the Immanuel Medical Center, and is not being used exclusively for charitable purposes."

The power and right of the state to tax property are presumed, and therefore tax exemption provisions are strictly construed, and their operation will not be extended by construction. The subject property which is claimed to be exempt must clearly come within the provisions granting tax exemption. However, this does not mean that the statutory language should not receive a liberal construction to carry out the express legislative intent. See Bethphage Com. Servs. v. County Board, 221 Neb. 886, 381 N.W.2d 166 (1986).

The relevant statute in this case is Neb.Rev.Stat. § 77-202(1)(c) (Reissue 1981). We have previously held that in our appellate review of a question whether property is exempt from taxation pursuant to § 77-202(1)(c), this court determines tax exemption in an equitable trial of factual questions de novo on the record, subject to the rule that where credible evidence is in conflict on material issues of fact, the Supreme Court of Nebraska will consider the fact that the trial court observed the witnesses and accepted one version of the facts over another. See Bethphage Com. Servs. v. County Board, supra.

Section 77-202(1)(c) requires the applicant for tax exemption to prove three things: (1) That the subject property is owned by a charitable, educational, religious, or cemetery organization; (2) That the subject property is not being used for financial gain or profit to the owner or user; and (3) That the subject property is being used exclusively for charitable, educational, religious, or cemetery purposes. The Board concedes that the Child Care Center is owned by a charitable organization and is not being owned or used for financial gain or profit to Immanuel. The Board, however, contends that the Child Care Center is not being used exclusively for charitable or educational use.

In reference to § 77-202(1)(c) this court has held that exclusively means the primary or dominant use of property, not an incidental use of the property. Lincoln Woman's Club v. City of Lincoln, 178 Neb. 357, 133 N.W.2d 455 (1965). Immanuel's first assignment of error is that the district court erred in not finding that the Child Care Center is used exclusively (as that term has been...