Kollasch v. Adamany

• Court: Wisconsin Court of Appeals
• Writing for the Court: DYKMAN; GARTZKE
• Citation: Kollasch v. Adamany, 99 Wis.2d 533, 299 N.W.2d 891 (Wis. App. 1980)
• Decision Date: 24 November 1980
• Docket Number: No. 79-1579,79-1579
• Parties: Sisters Mary Joanne KOLLASCH, Mary David Walgenbach, Mary Raphael Hilger, Mary Concepta Tritz, Mary Philomena Head, Mary Baptista Schlitz, Mary Camillus VanderVorde, Mary Grace Berzani, Mary Cora Marie Kessner, Mary Patricia Delaney, Mary Agatha Bermel, Mary Margaret, Mary Finney, Mary Helen Goebel, Mary Martha Glaser, Mary Joyce Jungles, Mary Loretta Harvey, Mary Denielle Walgenbach, Mary Marian Siedschlag, Mary Sylvia Kimberly, and Sisters of St. Benedict of Madison, Wisconsin, a Wisconsin Corporation, Plaintiffs-Appellants, v. David W. ADAMANY, Secretary of the Department of Revenue, Defendant-Respondent.

Page 891

299 N.W.2d 891

99 Wis.2d 533

Sisters Mary Joanne KOLLASCH, Mary David Walgenbach, Mary Raphael Hilger, Mary Concepta Tritz, Mary Philomena Head Mary Baptista Schlitz, Mary Camillus VanderVorde, Mary Grace Berzani, Mary Cora Marie Kessner, Mary Patricia Delaney Mary Agatha Bermel, Mary Margaret, Mary Finney, Mary Helen Goebel, Mary Martha Glaser, Mary Joyce Jungles, Mary Loretta Harvey, Mary Denielle Walgenbach, Mary Marian Siedschlag Mary Sylvia Kimberly, and Sisters of St. Benedict of Madison, Wisconsin, a Wisconsin Corporation, Plaintiffs-Appellants, v. David W. ADAMANY, Secretary of the Department of Revenue Defendant-Respondent.

No. 79-1579.

Court of Appeals of Wisconsin.

Argued Aug. 20, 1980.

Opinion Released Nov. 24, 1980.

Opinion Filed Nov. 24, 1980.

Review Denied. ^*

Trayton L. Lathrop, Madison, argued for plaintiffs-appellants; Gerald C. Kops, Michael J. Lawton, Michael H. Barton and Isaksen, Lathrop, Esch, Hart & Clark, Madison, on brief.

John E. Armstrong, Asst. Atty. Gen., argued for defendant-respondent; Bronson C. La Follette, Atty. Gen., on brief.

Before GARTZKE, P. J., and BABLITCH and DYKMAN, JJ.

DYKMAN, Judge.

The individual plaintiffs in this action are members of a monastic community of Roman Catholic women known as a priory. The sisters make their facilities ¹ available to individuals and groups for retreats or for use as a meeting place. The issue they raise is whether the fee which they charge for meals served to those who visit the premises is subject to Wisconsin's sales tax. In order to decide this issue, we must determine whether the sales tax applies to the sisters' sale of meals, and if so, whether this taxation violates their constitutional right to the free exercise of their religion.

The following facts are taken from the testimony given at a hearing held in Dane County Circuit Court on March 28 and 29, 1978, and from the exhibits which were introduced into evidence at that hearing. The department of revenue (department) made no attempt to contradict or impeach the vast majority of the evidence presented by the sisters at that hearing. Thus, the facts are largely undisputed.

The priory is incorporated under the name "Sisters of St. Benedict of Madison, Wisconsin." The priory is a part of the Federation of St. Gertrude, which in turn is a part of the Benedictine Order. ² Members of the priory follow the Rule of St. Benedict. While this rule has many facets, the portion which is of primary significance to this action is chapter 53, "On the Reception of Guests," which begins, "Let all guests who arrive be received like Christ, for He is going to say, 'I came as a guest, and you received Me.' " ³

The Benedictine communities which comprise the Federation of St. Gertrude engage in activities which they believe are appropriate for the time and their location. As times change and the communities relocate or expand, the work which the sisters do changes accordingly. When the sisters first arrived in Madison, ⁴ they came in response to a call from a bishop to staff a parochial girls' school. The school began its operation in 1959, but over the years it experienced difficulty in attracting students.

During the mid-sixties, the sisters began offering weekend retreats. ⁵ In 1966, the Executive Committee of the Madison Interfaith Dialogue, a group of clergymen working to advance the spirit of ecumenism in the Madison area, requested that retreats be offered on a broader basis. The bishop approved this request. The sisters ultimately decided that their ability to provide retreats and a central gathering place for those interested in furthering ecumenism was of greater worth to the community than was their school. They closed the school, named their facilities "St. Benedict Center," and began to develop retreats and conferences consistent with their purpose of furthering an ecumenical dialogue within the city. They also believed that the reception of guests at the center was consistent with chapter 53 of the Rule of St. Benedict.

The sisters and members of the center's advisory board were concerned that the activities of the center would be focused too narrowly. The sisters and others active in the center's work wanted to carry on a continuing dialogue with as much of the community as possible. They did not want to limit access to the center solely to religious leaders and church groups. Toward the end of broadening the base of people who made use of the center, the sisters sent letters to businesses offering the use of the center as a meeting place. ⁶

The center has been used as a meeting place by government agencies, university groups, church groups, nonprofit organizations, and business groups. The center provides several meeting rooms, including a large auditorium for these groups to use. It also offers outdoor recreational opportunities. The center provides overnight use of the facilities for a fixed fee, ⁷ including a room, linens, three meals, two coffee breaks, and facility use. It also provides, again for a fixed fee, daytime facility use, including lunch and coffee breaks, and evening facility use, including dinner and one coffee break. In addition, the center makes equipment such as projectors and typewriters available for a rental fee.

Effective September 1, 1977, the base rate for an overnight stay was $22.50 per person, or $40 per couple. For church related groups, however, these rates were discounted to $19 per person and $34 per couple. Daytime and evening rates were $6 and $5.50 per person, respectively. No discounts were offered to church groups for daytime and evening rates.

The food which the sisters prepare is simple, and normally includes vegetables grown in the center's garden. There is no menu. The rooms provided for overnight stay are also simple. Guests are expected to make up their own beds when they arrive.

In accordance with the Rule of St. Benedict, if a guest arrives who cannot afford to pay for food or lodging, he is not turned away. The guest is asked to do some work around the center in exchange for the sisters' hospitality. Even those guests who pay are invited to help with the dishes.

Guests at the center are given a short orientation lecture and are invited to attend the daily prayer meetings if they wish to do so. The sisters join the guests at their meals and converse with them. They do not discuss religion during their meals with business guests unless the guests bring it up.

The sisters' attorney received a letter dated January 10, 1974, from a representative of the department which stated that it would be necessary to have St. Benedict Center register for sales tax, obtain a permit, and make records for sale of meals available from September 1, 1969 to date. He also received a letter dated February 8, 1974, stating that the sisters fell within the definition of "retailer" provided in sec. 77.51(7)(a), Stats., and that the gross receipts from their sale of meals were subject to taxation. ⁸ Section 77.52(12), Stats., provides that any person who operates as a seller in the State of Wisconsin without a permit is guilty of a misdemeanor.

The sisters brought this action for a declaratory judgment, claiming that the state's threat to impose a sales tax on them violates their right to the free exercise of their religion, contrary to both the state ⁹ and federal ¹⁰ constitutions, ¹¹ and to 42 U.S.C. sec. 1983. ¹² The sisters also asked that the department be enjoined from attempting to penalize them for failure to obtain a sales tax permit and from requiring them to pay a tax on their sales. In its answer, the department requested a judgment declaring that the sisters are required to obtain a sales tax permit for the sale of meals, and to pay tax on non-exempt sales.

Two issues are raised for our consideration on appeal:

(1) Does the sales tax apply to the sisters' sale of meals to business groups?

(2) If the sales tax does so apply, does imposition of liability for collection of the sales tax on the sisters violate their right to the free exercise of their religion?

(1) Applicability of Sales Tax

The sisters first contend that the sales tax statutes do not apply to their sale of meals to business groups. ¹³ The department relies on sec. 77.52(1), Stats., to establish its taxing authority. That statute provides in part: "For the privilege of selling ... tangible personal property ... at retail a tax is hereby imposed on all retailers ...." Tangible personal property is defined broadly as "all tangible personal property of every kind and description." Sec. 77.51(5).

The sisters argue, however, that they are not retailers, and that the tax thus does not apply to them. The term "retailer" is defined by statute as follows: " 'Retailer' includes: (a) Every seller who makes any sale of tangible personal property or taxable service." (Emphasis added.) Sec. 77. 51(7)(a), Stats. The terms "sale" and "seller" are given these definitions:

"Sale", "sale, lease or rental", "retail sale", "sale at retail", or equivalent terms include any one or all of the following: ...

(f) The furnishing, preparing or serving for consideration of food, meals, confections or drinks. Sec. 77.51(4), Stats.

"Seller" includes every person selling ... tangible personal property or selling ... or furnishing services of a kind the gross receipts from the sale ... of which are required to be included in the measure of the sales tax. Sec. 77.51(9), Stats.

Section 77.54(20)(c)1, Stats., provides that "(t)he gross receipts from sales of meals, food, food products and beverages sold by any person, organization or establishment for direct consumption on the premises are taxable ...."

Thus, in furnishing meals for consideration, the sisters are making sales. Sec. 77.51(4), Stats. Because the gross receipts from the sale of the meals are subject to taxation, sec. 77.54(20)(c)1, the sisters are a seller. Sec. 77.51(9). Because the sisters are a...