Kappa Gamma Rho v. Marion County

• Decision Date: 16 July 1929
• Citation: 130 Or. 165,279 P. 555
• Parties: KAPPA GAMMA RHO v. MARION COUNTY ET AL.
• Court: Oregon Supreme Court

279 P. 555

130 Or. 165

KAPPA GAMMA RHO v. MARION COUNTY ET AL.

Supreme Court of Oregon

July 16, 1929

In Bank.

Appeal from Circuit Court, Marion County; L. H. McMahan, Judge.

Suit by Kappa Gamma Rho, a corporation, against Marion County and others. Decree for defendants, and plaintiff appeals. Affirmed.

This suit was instituted by plaintiff to enjoin the defendants from collecting a tax on real property belonging to plaintiff. Plaintiff is a Greek letter society and owns a lot or tract of land 90X100 feet in Salem on which is its fraternity house. Plaintiff claims its property exempt on the ground that it is a benevolent, charitable, literary, and scientific society. The specific grounds on which plaintiff bases its claim for exemption is stated as follows:

"That at and during all the times herein mentioned the plaintiff has actually occupied and is actually occupying the above described premises and maintains thereon a college fraternity house used exclusively for the purposes for which the plaintiff was and is incorporated and not otherwise, as follows, towit:

"(a) That the said premises and each and every part and the whole thereof have been, are, and will be actually occupied and used as a fraternal home for students who have attended and are attending and will hereafter attend, the Willamette University, a literary, benevolent, charitable and scientific institution engaged in the education of young men and women at Salem, Marion County, Oregon.

"(b) That the said fraternal home constitutes a place where the members of the plaintiff corporation live and carry on their studies in connection with their literary pursuits as students in the said Willamette University.

"(c) That the only persons occupying the said fraternal home are actual members of plaintiff corporation and must be actual students regularly enrolled at said Willamette University.

"(d) That the membership in said plaintiff corporation is limited to students actually enrolled or who have been actually enrolled as students in the said Willamette University.

"(e) That admission to and retention of active membership in said plaintiff corporation is limited to students who have attained and maintain a certain standard of scholarship in studies pursued in said Willamette University.

"(f) That the officers of plaintiff corporation constantly investigate the scholastic standings and supervise the studies of the active members of plaintiff corporation as students of Willamette University.

"(g) That the funds necessary for the acquirement and maintenance of said fraternal home and premises above-described have been, are being, and will be voluntarily contributed by the members of plaintiff corporation for the purpose of perpetuating a fraternal home for students attending, or who will hereafter attend said Willamette University who are or who will hereafter become members of plaintiff corporation.

"(h) That officers and members of plaintiff corporation receive no compensation in any form for their services except that the business manager thereof receives the equivalent of approximately the sum of $15.00 per month for services rendered.

"(i) That plaintiff corporation furnishes the active members thereof with room and board and a place to pursue their studies at the actual cost thereof except that each of said members voluntarily contributes, in addition thereto, sums of money used for paying the purchase price of said premises to the end that after such purchase price is paid in full the then active members and students of said University may be able to attend said University, pursue their studies and live in said fraternal home at less expense."

Attached to the complaint, and made a part thereof as "Exhibit A," are the articles of incorporation of plaintiff. Plaintiff describes its object, business, and pursuit in article 2 as follows:

"The object, business and pursuit of this corporation is and shall be to organize a fraternal home for students attending Willamette University. To provide, establish and organize a place where the students of the aforesaid fraternal body may congregate, make their homes, eat their meals and in a general way use the property owned by them as a home for the college year or any other time agreed on in the by-laws of their organization.

"The object of this corporation, however, is purely fraternal and not for gain.

"The incorporators and their successors shall have the power to manage their own affairs, i. e., pay bills, pay insurance taxes, interest, yearly installments, repair buildings and, in fact, do everything incident to maintaining a fraternal home.

"The incorporators and their successors shall have the power to purchase, hold, possess and dispose of real estate, to make by-laws, to appoint agents and subordinates as the business may require, to have continuous succession under its artificial name, to take and grant property, and contract obligations, within the limits conferred on it by its charter, to receive grants of privileges and immunities and to enjoy them in common."

Defendants filed a general demurrer. There is only one issue joined by the complaint and demurrer, and that is whether or not plaintiff is a benevolent, charitable, literary, or scientific society within the meaning of the statute exempting such societies from taxation. It is not claimed by defendants that the complaint is defective or deficient. Defendants simply claim that the plaintiff, as described in the complaint and its articles of incorporation, is neither a benevolent, charitable, literary, or scientific society so as to exempt it from the operation of the laws of taxation within the state. The demurrer was sustained, and from the consequent judgment plaintiff appeals.

Greek letter society held not a "benevolent, charitable literary or scientific society" entitled to have its property exempted from taxation. ORS 307.040 et seq.

Lamar Tooze and Nicholas Jaureguy, both of Portland (Cake & Cake and L. A. Liljeqvist, all of Portland, and William S. Levens, of Salem, on the brief), for appellant.

John H Carson, Dist. Atty., of Salem, for respondents.

COSHOW, C.J. (after stating the facts as above).

The Constitution of the state prescribes: "The legislative assembly shall, and the people through the initiative may, provide by law uniform rules of assessment and taxation. All taxes shall be levied and collected under general laws operating uniformly throughout the state." Constitution of Oregon, art. 9, § 1.

"All real property within this state, and all personal property situated or owned within this state, except such as may be specifically exempted by law, shall be subject to assessment and taxation in equal and ratable proportion." Or. L. § 4232.

"The right of a state government, through its legislature, when not restricted by constitutional provisions, to limit its power of taxation, is a doctrine too firmly established to admit of discussion. The legislature has power to exempt from taxation any person, corporation, or class of property according to its views of public policy or expediency, provided always that no constitutional provisions are violated." 2 Cooley, Taxation (4th Ed.) 1378, § 659.

In this state the only constitutional limitation is that taxes should be levied and collected under general laws operating uniformly throughout the state. Assessment of property for taxation is the rule, and exemption of property from taxation is the exception.

"An intention on the part of the legislature to grant an exemption from the taxing power of the state will never be implied from language which will admit of any other reasonable construction. Such an intention must be expressed in clear and unmistakable terms, or must appear by necessary implication from the language used, for it is a well-settled principle that, when a special privilege or exemption is claimed under a statute, charter or act of incorporation, it is to be construed strictly against the property owner and in favor of the public. This principle applies with peculiar force to a claim of exemption from taxation." 2 Cooley, Taxation, 1403, 1404, § 672. See Corporation of Sisters of Mercy v. Lane County, 123 Or. 144, 261 P. 694; Willamette University v. Knight, 35 Or. 33, 56 P. 124; Hibernian Benevolent Society v. Kelly, 28 Or. 173, 42 P. 3, 30 L. R. A. 167, 52 Am. St. Rep. 769.

"When it is said that exemptions must be strictly construed in favor of the taxing power, this does not mean that if there is a possibility of a doubt it is to be at once resolved against the exemption. It simply means that if, after the application of all rules of interpretation for the purpose of ascertaining the intention of the legislature, a well founded doubt exists, then an ambiguity occurs which may be settled by the rule of strict construction. The rule of strict construction does not relieve the court of the duty of interpreting the exemption by the ordinary rules of construction in order to carry out the intention of the legislature, and does not apply where there is no language in the act justifying or requiring construction." 2 Cooley, Taxation (4th Ed.) 1415, 1416, § 674.

The case presented is one of first impression in this court. Plaintiff has very ably argued for the exemption of its property, has very thoroughly analyzed the case, and collected authorities claimed to support its contention. It is recognized by both plaintiff and defendants that authorities from other jurisdictions must be examined with great care because they are helpful only and to the degree that the statutes under construction are similar to the statute of this state on the subject of exemption from taxation. Plaintiff has presented three cases wherein the property...