Nebraska State Bar Foundation v. Lancaster County Bd. of Equalization

Decision Date18 January 1991
Docket NumberNo. 87-967,87-967
Citation237 Neb. 1,465 N.W.2d 111
PartiesNEBRASKA STATE BAR FOUNDATION, Appellant, v. LANCASTER COUNTY BOARD OF EQUALIZATION et al., Appellees.
CourtNebraska Supreme Court

Syllabus by the Court

1. Taxation: Appeal and Error. In an appeal from a district court's judgment on the question whether property is tax-exempt, an appellate court determines a tax exemption question de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, when credible evidence is in conflict on a material issue of fact, the appellate court considers, and may give weight to, the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.

2. Taxation. Tax exemption provisions are strictly construed, and their operation will not be extended by construction. Property which is claimed to be exempt must clearly come within the provision granting exemption from taxation.

3. Taxation: Proof. Since a statute conferring an exemption from taxation is strictly construed, one claiming an exemption from taxation of the claimant or the claimant's property must establish entitlement to the exemption.

4. Taxation: Proof. A property owner's exemption from federal income taxation does not determine whether the 5. Taxation: Proof. For tax-exempt status pursuant to Neb.Rev.Stat. § 77-202(1)(c) (Cum.Supp.1984), property must: (1) be owned by a type of organization designated in § 77-202(1)(c); (2) be used exclusively for at least one of the purposes specified in § 77-202(1)(c), i.e., an educational, religious, charitable, or cemetery purpose; and (3) not be (a) owned or used for financial gain to the property owner or user, (b) used more than 20 hours per week for sale of alcoholic liquors, or (c) owned or used by an organization which, on the basis of race, color, or national origin, discriminates in membership or employment.

owner's property is tax-exempt under state law.

6. Taxation: Charities: Words and Phrases. "Operated exclusively," in reference to a "charitable organization" within Neb.Rev.Stat. § 77-202(1)(c) (Cum.Supp.1984), means an organization's primary or predominant activity.

7. Taxation: Charities: Words and Phrases. Regarding "mental" benefit of the public, as one of the requisite purposes of a "charitable organization" within Neb.Rev.Stat. § 77-202(1)(c) (Cum.Supp.1984), "mental" means "intellectual," which in turn means, among other things, "engaged in creative literary, artistic, or scientific labor."

8. Taxation: Charities: Words and Phrases. Relative to a "charitable organization" within Neb.Rev.Stat. § 77-202(1)(c) (Cum.Supp.1984), "an indefinite number of persons" means a group of persons with a common characteristic, that is, a class, uncertain in number and composed from the public at large or a community.

9. Taxation: Appeal and Error. Under Neb.Rev.Stat. § 77-1511 (Reissue 1990), an appeal to a district court concerning a decision by a county board of equalization is a trial de novo, but only the tax liability questions raised before the board of equalization are the questions for adjudication by the district court in its appellate jurisdiction.

10. Jurisdiction: Appeal and Error. Whether or not a question is raised by the parties concerning jurisdiction of the lower court or tribunal, it is not only within the power but the duty of an appellate court to determine whether such appellate court has jurisdiction over the subject matter.

11. Jurisdiction: Appeal and Error. Where lack of subject matter jurisdiction in the original tribunal is apparent on the face of the record, yet the parties fail to raise that issue, it is the duty of the reviewing court to raise and determine the issue of jurisdiction sua sponte.

12. Jurisdiction: Appeal and Error. When a trial court lacks the power, that is, jurisdiction, to adjudicate the merits of a claim, the Supreme Court also lacks power to adjudicate the merits of the claim.

13. Jurisdiction. Litigants cannot confer subject matter jurisdiction on a judicial tribunal by either acquiescence or consent.

James A. Snowden, Knudsen, Berkheimer, Richardson & Endacott, Lincoln, for appellant.

Michael E. Thew, Deputy Lancaster County Atty., for appellees.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

BACKGROUND FOR APPEAL

SHANAHAN, Justice.

For the purpose of property taxation, the Nebraska State Bar Foundation (Bar Foundation) is the owner of real property designated as the "Roman Hruska Law Center" (Law Center) in Lancaster County, Nebraska. In its tax exemption application for 1984, the Bar Foundation asserted that 56.3 percent of the Law Center, that is, the part of the Law Center claimed to be used for educational and charitable purposes, was exempt from property taxation. After the board of equalization for Lancaster County (county board) disapproved the application, the Bar Foundation appealed to the district court for Lancaster County and The district court found that the Bar Foundation was "not a charitable organization; that is to say, '... an organization operated exclusively for the purpose of the mental, social or physical benefit of the public or an indefinite number of persons.' " The court also found that the Bar Foundation was not an "educational organization" and that the Law Center was not "property of the state and its governmental subdivisions." Consequently, the court determined that the Bar Foundation was not entitled to a tax exemption for the Law Center and affirmed the county board's decision, which had denied the foundation's tax exemption application.

contended that part of the Law Center was tax-exempt, since the center was partially used for charitable and educational purposes and the foundation held the Law Center in trust for the Nebraska State Bar Association, which was "created by the Supreme Court of Nebraska by state action to serve the public purpose."

In its appeal, the Bar Foundation contends that part of the Law Center, as property used for "charitable" and "educational" purposes, is exempt from taxation pursuant to Neb.Rev.Stat. § 77-202(1)(c) (Cum.Supp.1984) and that the Law Center, as governmental property, is tax-exempt in accordance with § 77-202(1)(a), all pertaining to the years 1984 to 1987, inclusive.

STANDARD OF REVIEW; TAXPAYER'S BURDEN OF PROOF

In an appeal from a district court's judgment on the question whether property is tax-exempt, an appellate court determines a tax exemption question de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, when credible evidence is in conflict on a material issue of fact, the appellate court considers, and may give weight to, the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Bethphage Com.Servs. v. County Board, 221 Neb. 886, 381 N.W.2d 166 (1986). See, also, Ev. Luth. Soc. v. Buffalo Cty. Bd. of Equal., 230 Neb. 135, 430 N.W.2d 502 (1988); Immanuel, Inc. v. Board of Equal., 222 Neb. 405, 384 N.W.2d 266 (1986); Matzke v. Board of Equalization, 167 Neb. 875, 95 N.W.2d 61 (1959); Neb.Rev.Stat. § 77-1511 (Reissue 1990).

"[T]ax exemption provisions are strictly construed, and their operation will not be extended by construction.... Property which is claimed to be exempt must clearly come within the provision granting exemption from taxation." Bethphage Com. Servs. v. County Board, supra, 221 Neb. at 889, 381 N.W.2d at 169. Accord Indian Hills Comm. Ch. v. County Bd. of Equal., 226 Neb. 510, 412 N.W.2d 459 (1987). "Since a statute conferring an exemption from taxation is strictly construed, one claiming an exemption from taxation of the claimant or the claimant's property must establish entitlement to the exemption." Nucor Steel v. Leuenberger, 233 Neb. 863, 867, 448 N.W.2d 909, 912 (1989); Bethphage Com. Servs. v. County Board, supra.

NEBRASKA'S STATUTE FOR TAX-EXEMPT PROPERTY

Originally, the constitutional provision for property tax exemption appeared in 1875 as article IX, § 2, of the Nebraska Constitution:

The property of the state, counties and municipal corporations, both real and personal, shall be exempt from taxation, and such other property as may be used exclusively for agricultural and horticultural societies, for school, religious, cemetery and charitable purposes, may be exempted from taxation, but such exemptions shall be only by general law.

Hence, the initial statute for the charitable and educational exemptions from property taxation was Comp.Stat. § 4934 (1903), which provided in part: "The following property shall be exempt from taxes: First--All property of the state, counties, and municipal corporations. Second--Such other property as may be used exclusively for agricultural and horticultural societies, for schools, religious, cemetery and charitable purposes."

As the result of a constitutional amendment in 1920, the geNesis for prOPERTY TAX EXEMption is neb. const. art. viii, § 2, which, pertinent to the present appeal, provides:

The property of the state and its governmental subdivisions shall be exempt from taxation. The Legislature by general law may exempt ... property owned and used exclusively for educational, religious, charitable, or cemetery purposes, when such property is not owned or used for financial gain or profit to either the owner or user.

Consequently, in 1921, the Legislature amended the property tax exemption statute to provide in part:

The following property shall be exempt from taxes:

(1) The property of the state and its governmental subdivisions.

(2) Property owned by and used exclusively for agricultural and horticultural societies, and property owned and used exclusively for educational, religious, charitable or cemetery purposes, when such property is not owned or used for financial gain or profit to either the owner or user.

Comp.Stat. §...

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