Little v. Seminary

• Decision Date: 02 May 1905
• Docket Number: 9020
• Citation: 74 N.E. 193,72 Ohio St. 417
• Parties: Little, Treas. v. The United Presbyterian Theological Seminary.
• Court: Ohio Supreme Court

74 N.E. 193

72 Ohio St. 417

Little, Treas. v. The United Presbyterian Theological Seminary.

No. 9020

Supreme Court of Ohio

May 2, 1905

Endowment fund of college - Exempt from taxation, when - Sixth subdivision of section 2732, Revised Statutes - Valid law - Under section 2 of article 12, constitution.

1. The sixth subdivision of section 2732, Revised Statutes, is within the authority which is conferred upon the general assembly by section 2 of article 12 of the constitution.

2 It exempts from taxation an endowment fund of a college which belongs exclusively to it, and which is devoted solely to deriving an income for its support.

The seminary brought suit against the treasurer in the court of common pleas for a decree perpetually enjoining him from the collection of a tax upon its endowment fund. A copy of its petition follows:

"The plaintiff, The United Presbyterian Theological Seminary of Xenia, Ohio, is a corporation duly incorporated under the laws of the state of Ohio.

"The said United Presbyterian Theological Seminary of Xenia, Ohio is an educational institution for the training of young men for the gospel ministry, free and open to all upon the same conditions and is controlled and managed by synods of the United Presbyterian Church of North America.

"The said institution has a large endowment, the income from which it is authorized to use in carrying out its objects and purposes aforesaid. The plaintiff has invested and loaned the endowment fund so held by it and has used the income and revenue therefrom to pay its professors and expenses incidental to the institution. No part of the income from the fund has been or is diverted into private use or profit. Said institution is one of purely public charity.

"The said defendant, Asa Little, is the duly elected and qualified treasurer of Greene county, state of Ohio, having given bond as such and is in the discharge of the duties of said office.

"The plaintiff further says that the auditor of said Greene county has illegally and unlawfully entered and placed upon the duplicate for taxation the said endowment fund of the plaintiff in the sum of $77,590.00, and has without authority of law, directed the defendant, as treasurer of said county to charge and collect from plaintiff upon said property the sum of twenty-four hundred and forty-four dollars ($2,444.00), taxes for the year 1903.

"The defendant intends and threatens to enforce the collection of the said sums and amounts unlawfully demanded as aforesaid and to impose penalties against plaintiff and to illegally seize or distrain plaintiff's property therefor, to the great and irreparable damage and injury of plaintiff.

"Wherefore plaintiff prays that a temporary restraining order may issue against said defendant and that upon a hearing the said defendant may be forever enjoined from demanding and collecting from plaintiff said taxes on said endowment fund or any part thereof and for such other and further relief to which plaintiff may be entitled to in law or equity."

In the court of common pleas a general demurrer to the petition was sustained and the seminary not desiring to plead further, its petition was dismissed. On appeal to the circuit court the demurrer was overruled and the treasurer not desiring to plead further a perpetual injunction was granted in accordance with the prayer of the petition.

Mr Charles F. Howard and Mr. Charles W. Whitmer, attorneys for plaintiff in error.

In the consideration of this case three questions are involved:

First Is section 2732, Revised Statutes, constitutional?

Second: If said section is constitutional, did the defendant in error bring itself within the limitation of the exemption therein provided?

Third: Is the fund, and the income from the fund alleged to be invested and loaned, exempt under the sixth subdivision of section 3732?

The part of this section we maintain to be unconstitutional is subdivision sixth, exempting all moneys and credits belonging to such institutions, and is in violation of section 2, article 12 of the Constitution of Ohio.

The above section of the constitution provides, amongst other things, that personal property to an amount not exceeding in value two hundred dollars, for each individual, may by general laws be exempted from taxation.

We submit that the section of the statutes above referred to goes beyond the provisions of section 2, article 12 of the Constitution and after excepting from taxation institutions of purely public charity, undertakes to exempt all moneys and credits belonging to such institutions, without regard to the amount.

Moneys and credits are certainly personal property, and all the personal property that is authorized to be exempted is an amount not exceeding in value two hundred dollars for each individual; and taking the most liberal view of the matter, and conceding that such institutions have the same rights as individuals, the limit of exemption authorized by the constitution for personal property being two hundred dollars, it seems to us that the limit that could in any event be claimed by this institution would be two hundred dollars.

Conceding for the sake of the argument that this statute is constitutional and that the legislature had the power to make the exemption, has the defendant in error brought itself within the provisions thereof? We submit not.

Laws exempting property from taxation must be strictly construed. Cincinnati College v. State, 19 Ohio 110; Lima v. Association, 42 Ohio St. 128; Lee v. Sturges, 46 Ohio St. 159; State ex rel v. Cappeller, 6 W. L. B., 339; Library Association v. Pelton, 36 Ohio St. 258; Sturges v. Carter, 114 U.S. 521 (5 O. F. D., 428); Montgomery v. Wyman, 130 Ill. 17; Railway v. Thomas, 132 U.S. 174; People v. Cook, 148 U.S. 397; Railway v. Maryland, 51 U.S. 376; Delaware Railroad Tax, 85 U.S. 206; Bailey v. Maguire, 89 U.S. 215; Railway v. Missouri, 122 U.S. 561; Railway v. New Orleans, 143 U.S. 192; Indianapolis v. Grand Lodge, 25 Ind. 518; Bank v. Billings, 29 U.S. 514; Gilfillan v. Canal Co., 109 U.S. 401; (?) 23 Wall., 527; Railway v. Supervisors, 93 U.S. 595.

Intent to confer immunity from taxation must be clear beyond a reasonable doubt, for as in the case of a grant nothing can be taken against the state by presumption or inferred. Railway Co. v. Maguire, 87 U.S. 46; Railway Co. v. Gaines, 97 U.S. 697; Tennessee v. Whitworth, 117 U.S. 139; Railway Co. v. Missouri, 152 U.S. 301; New York v. Cook, 148 U.S. 397; Lima v. Association, 42 Ohio St. 128.

Exemptions from taxation should be confined to the clear and strict terms of the law. Matlock et al. v. Auditor, 13 O. D. Re., 2; Crumpaker v. Railway Co., 4 West, 655.

Section 2732, Revised Statutes, amongst other things, provides that all moneys and credits appropriated solely to sustain and belonging exclusively to such institutions shall be exempt.

Applying the rule that exemptions should be confined to the clear and strict terms of the law, we find that the first part of this section exempts all buildings together with the land actually occupied by such institutions not leased or otherwise used with a view to profit shall be exempt. Two conditions exist under the statute when such buildings become liable for taxation.

First: When leased.

Second: When otherwise used for profit.

The words, "With a view to profit," are omitted in the latter part of this section for the obvious reason that if appropriated solely to sustain the institution and belonging exclusively to said institutions and military organizations, they could use it in no other way and for no other purpose. If the legislature had intended to exempt moneys and credits, the income of which is used solely to sustain such institutions, they would have said so. The legislature evidently had in mind only the moneys and credits actually appropriated for such purpose, and nothing more. That the legislature did not intend to exempt either real or personal property used with a view to profit is very clear. Applying the rule of strict construction to this statute, it is evident that no exemption exists unless three things are made to appear:

First: There must be an actual appropriation of the fund.

Second: That appropriation must be for a specific purpose, namely, to sustain the institution.

Third: The money and credits must belong exclusively to said institution.

The fact as alleged in the petition that the income is used solely to pay its professors, and the expenses incidental to the institution, will make no difference. To be exempt the fund itself must be so used.

Government cannot discriminate between the uses which individuals and institutions will make of the proceeds of their business, and determine that this society or individual make a more worthy distribution of the proceeds of his or its business than the other. The legislature could not without a flagrant violation of the principles of equity make such a distinction. Cincinnati College v. State, 19 Ohio 110; Gerke v. Purcell, 25 Ohio St. 229; Association v. Pelton, 36 Ohio St. 258; Humphreys v. Sisters, 29 Ohio St. 201; Kendrick v. Farquhar, 8 Ohio 189; Association v. Brooks, 4 Circ. Dec., 478; 8 C. R. R., 439; Burrows on Taxation, 130; Trustees v. Boston, 120 Mass. 212; Men's Soc. v. Mayor, 3 Mich. 172.

Mr. C. H. Kyle and Mr. C. C. Shearer, attorneys for defendant in error.

1. Institution for education of young men for ministry, a purely public charity. An institution for the education of young men for the gospel ministry, and open to all, is a "purely public charity," within the meaning of section 2, article 12 of the constitution of Ohio.

2. Collegiate endowment funds exempt from taxation. The endowment fund of such institution, which is...