Loyal Order of Moose Lodge No. 1137 v. Pennington County, No. 19943

• Court: Supreme Court of South Dakota
• Writing for the Court: MILLER
• Citation: 1997 SD 80,566 N.W.2d 132
• Docket Number: No. 19943
• Decision Date: 04 June 1997
• Parties: LOYAL ORDER OF MOOSE LODGE # 1137, Appellant, v. PENNINGTON COUNTY, South Dakota Appellee. . Considered on Briefs

Page 132

566 N.W.2d 132 1997 SD 80 LOYAL ORDER OF MOOSE LODGE # 1137, Appellant,
v.
PENNINGTON COUNTY, South Dakota Appellee. No. 19943.
Supreme Court of South Dakota. Considered on Briefs June 4, 1997.
Decided July 9, 1997.

Peter J. Buttaro, Aberdeen, for appellant.

Ronald D. Buskerud, Pennington County Deputy State's Attorney, Rapid City, for appellee.

MILLER, Chief Justice.

¶1 Loyal Order of Moose Lodge # 1137 appeals the Pennington County Board of Equalization's (Board's) determination the Lodge was not used exclusively for benevolent purposes and therefore was entitled to only a sixty-seven percent property tax exemption for property located in Pennington County. We affirm in part and remand in part.

FACTS

¶2 Moose Lodge is a nonprofit fraternal organization under section 501(c)(8) of the United States Internal Revenue Code. It owns property located in Pennington County, South Dakota. It is one of nine Moose Lodges in South Dakota. ¹ The primary objective of the Lodge is to support Moose Haven and Moose Heart programs, through membership dues and donations, designed to help youth and elderly members who cannot provide for themselves. ² Donations also support, to a limited extent, student scholarships and local boy scout troops. Approximately ten percent of Moose Lodge's net income is used for supporting the charities and scholarships. The remainder of the income is used to maintain the property and pay salaries and operating expenses.

¶3 The Moose Lodge facility is approximately 9,600 square feet, including a bar, restaurant area and meeting room. The facility is for "members only" and nonmembers are allowed to use it only during weekly bingo games or when accompanied by a member in good standing. The bar and restaurant (which operate at a net loss and are sustained by member dues and fees) are not open during the times the Lodge is open to the public.

¶4 In response to Moose Lodge's application for renewal of its previously established one hundred percent exemption from the property tax, ³ Board reduced the Lodge's exemption to sixty-seven percent effective January 1, 1995, because the Lodge facilities were not used exclusively for benevolent purposes. Moose Lodge filed a protest of the reduced exemption and appealed the Board's ruling to the Office of Hearing Examiners. A hearing was held on July 26, 1995, and the reduction of the tax exemption was upheld. Moose Lodge appealed the hearing examiner's decision to the circuit court which affirmed the decision in its entirety.

STANDARD OF REVIEW

¶5 Our review of administrative appeals is well settled. "When the issue is a question of law, the decisions of the administrative agency and the circuit court are fully reviewable. When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous." Permann v.

Page 134

Dep't. of Labor, Unemployment Ins. Div., 411 N.W.2d 113, 116 (S.D.1987) (citations omitted); SDCL 1-26-36. DECISION

1. Whether Moose Lodge is used exclusively for benevolent purposes.

¶6 All property is subject to taxation unless expressly exempted by statute. Appeal of Sioux Valley Hospital Ass'n, 513 N.W.2d 562, 564 (1994) (citing South Dakota Education Ass'n v. Dromey, 85 S.D. 630, 188 N.W.2d 833 (1971)). Tax exemptions for a benevolent organization are authorized by SDCL 10-4-9.2, which provides, in part:

Property owned by a benevolent organization and used exclusively for benevolent purposes is exempt from taxation. A benevolent organization is any lodge, patriotic organization, memorial association, educational association, cemetery association or similar association. A benevolent organization must be nonprofit and recognized as an exempt organization under sections 501(c)(3), 501(c)(7), 501(c)(8), 501(c)(10) or 501(c)(19) of the United States Internal Revenue Code of 1986, as amended, and in effect on January 1, 1992. However, if any such property consists of improved or unimproved property located within a municipality not occupied or directly used in carrying out the primary objective of the benevolent organization owning the same, such property shall be taxed the same as other property of the same class is taxed. However, if any such property consists of agricultural land, such property shall be taxed the same as other property of the same class is taxed. For the purposes of this section, an educational association is a group of accredited elementary, secondary or postsecondary schools. For the purposes of this section, a benevolent organization also includes a congressionally chartered veterans organization which is nonprofit and recognized as an exempt organization under section 501(c)(4) of the United States Internal Revenue Code of 1986, as amended, and in effect on January 1, 1992.

¶7...