In re South Dakota Sigma Chapter House Ass'n for Refund of Taxes

• Decision Date: 02 December 1937
• Docket Number: 8032.
• Citation: 276 N.W. 258,65 S.D. 559
• Parties: In re SOUTH DAKOTA SIGMA CHAPTER HOUSE ASS'N FOR REFUND OF TAXES. [a1] v. CLAY COUNTY. SOUTH DAKOTA SIGMA CHAPTER HOUSE ASS'N
• Court: South Dakota Supreme Court

276 N.W. 258

65 S.D. 559

In re SOUTH DAKOTA SIGMA CHAPTER HOUSE ASS'N FOR REFUND OF TAXES. ^[a1]

SOUTH DAKOTA SIGMA CHAPTER HOUSE ASS'N v. CLAY COUNTY.

No. 8032.

Supreme Court of South Dakota

December 2, 1937

Appeal from Circuit Court, Clay County; A. B. Beck, Judge.

In the matter of the application of the South Dakota Sigma Chapter House Association for refund of taxes, opposed by the County of Clay. From a judgment rejecting applicant's claim and an order denying a motion for a new trial, applicant appeals.

Affirmed.

Bailey Voorhees, Woods & Bottum and H. L. Fuller, all of Sioux Falls, for appellant.

Irwin R. Erickson and Raymond L. Collar, both of Vermillion, and R F. Drewry, of Pierre, for respondent.

SMITH Judge.

Appellant made claim in the aggregate amount of $3,502.81, under section 6813, Revised Code of 1919, before the county commissioners of Clay County as for refund of taxes paid on its real property during the years from 1925 to 1935 inclusive. It was asserted in the claim that its property was exempt from taxation under section 6670, Revised Code of 1919, and the enactments amendatory thereto dealing with the property used for benevolent or charitable purposes. Its claim was rejected by the county commissioners, was again rejected by the circuit court on appeal, and is now here on appeal from the judgment and order denying a motion for a new trial.

Sigma Alpha Epsilon is a Greek letter society or fraternity, having a local chapter at the University of South Dakota known as the South Dakota Sigma Chapter to which we hereinafter make reference as the chapter. In 1911, members of S. A. E. as incorporators filed articles of incorporation with the secretary of state of South Dakota and procured a charter under the provisions of sections 8854 to 8861, Revised Code of 1919, dealing with fraternal, benevolent, and charitable associations. That corporation is appellant here. In its articles of incorporation its purposes were stated as follows: "The purpose for which this corporation is formed is: To acquire residence lots in the city of Vermillion, S. Dak., and to erect, furnish, and operate thereon a Chapter House, to be used as the residence and home of members of the South Dakota Sigma Chapter of Sigma Alpha Epsilon Fraternity while in attendance at the University of South Dakota, at Vermillion, S. Dak."

These articles further provided: "The title to all property, both real and personal, shall be in the name of the Association as hereinbefore set forth and money in the hands of the Secretary-Treasurer shall be deposited in the name of the Association in such Bank as the Board may select. * * * In the event the purposes for which this corporation was formed cannot be carried out by reason of operation of law, or otherwise, the Board of Trustees shall convert the corporation property into money and divide same among those holding Certificates, and each member's share shall be subject to off-set on account of any claims not yet due, which the Association may have against him, but no member shall share in such distribution against whom the corporation has any past due claims."

By the terms of its by-laws, its membership was to be recruited solely from members of P. H. P. society of the University of South Dakota (the purposes and background of which is not explained by the record), and from members of S. A. E.; each membership being conditioned upon a contribution of $100 to its capital. Thereafter, it acquired real property and erected thereon a building designed for the convenience of the chapter. The taxes paid on this property are the subject of the controversy. After the erection of the building, the annual taxes ranged from $162.28 to $254.16. During the entire period the building has been occupied by the chapter. The record discloses the activities and purposes of the chapter in some detail, as well as the fact that appellant assessed the chapter annually for the use of the property. We refer to this assessment by appellant as a charge. This charge was fixed according to the needs of appellant and the ability of the chapter to pay, and these payments, together with membership fees and donations, were used to pay the operating expenses of appellant and to accumulate funds with which to discharge the mortgage indebtedness on its property. The operating expenses of appellant do not include salaries to any of its officers. During the period in question, the charge imposed by appellant on the chapter ranged from $750 to $2,500 per annum. The record does not disclose the charge exacted by appellant for any particular year. Counsel for appellant state that when the mortgage indebtedness is paid the funds of appellant will be used to create a sinking fund to improve or replace the present building.

Changes were made in the applicable statutes during the period involved. Section 6670, Revised Code of 1919, originally described property exempt from taxation as follows: "All property belonging to any charitable, benevolent or religious society, or used exclusively for charitable, benevolent or religious purposes." This language was amended by chapter 243 of the Session Laws of 1929 so as to substitute the conjunction "and" for the conjunction "or." By the same amendatory act the terms "charitable society" and "benevolent society,' as used in the exemption statute, were defined. It was there provided: "The term charitable society as used herein shall include all persons, firms, associations, or corporations, owning and/or operating any hospital, sanitarium, orphanage, asylum, home, resort, or camp exclusively, or owns or occupies a building, as a part of the charitable or educational program of any church, lodge, school, or similar institution; also any public sanitarium, hospital, or asylum open generally to the public without regard to the ability of the patient to pay, and admitting all persons for treatment until the said institution is filled to its ordinary capacity, and which institution conforms to regulations of and permits inspections by the state board of health of the State of South Dakota. The term benevolent society as used herein shall include all lodges, patriotic organizations, memorial associations, educational associations, cemetery associations, and similar institutions, operating without profit and devoting their resources to the promotion of virtue by charitable, educational, ritualistic, ceremonial, literary, or other similar methods, or by any or all of such methods."

It thus appears that prior to July 1, 1929, separation of use and ownership was permitted by statute, and the terms "charitable society" and "benevolent society" were undefined. Subsequent to July 1, 1929, it was required that use and ownership concur and that the enumerated societies conform to the definitions contained in the 1929 amendment. Thus we are confronted by two separate fields of inquiry, namely: (1) Was the property used or owned by a charitable or benevolent society, in the ordinary acceptation of those terms, during the period involved prior to July 1, 1929; and (2) was the property used and owned by a charitable or benevolent association, as those terms are defined by chapter 243 of the Session Laws of 1929, during the period involved subsequent to July 1, 1929. These two fields of inquiry include common factors, and our ultimate conclusions rest upon the views we entertain with reference to those common factors.

Whether the chapter may be classified as a charitable or benevolent society is argued at length by both appellant and respondent. Classification of the Greek letter society for similar purposes has proved difficult and troublesome to the courts. The principal cases are collected in the footnotes of 61 C.J at page 493, paragraph 579. For reasons presently to be stated, we do not find it necessary to deal with the subject. For the purposes of our analysis we have...