New Orleans Bank & Trust Co. v. City of New Orleans

• Decision Date: 27 February 1933
• Docket Number: 32051
• Citation: 147 So. 42,176 La. 946
• Parties: NEW ORLEANS BANK & TRUST CO. v. CITY OF NEW ORLEANS
• Court: Louisiana Supreme Court

147 So. 42

176 La. 946

NEW ORLEANS BANK & TRUST CO. v. CITY OF NEW ORLEANS

No. 32051

Supreme Court of Louisiana

February 27, 1933

Dissenting Opinion March 15, 1933; Rehearing Denied March 27 1933

Appeal from Civil District Court, Parish of Orleans; Wm. H. Byrnes Jr., Judge.

Suit by the New Orleans Bank & Trust Company against the City of New Orleans and others. From judgment for plaintiff, defendants appeal.

Affirmed.

Nat W. Bond, City Atty., Henry B. Curtis, Asst. City Atty., Wm. C. Dufour, Atty. Board of Assessors, and Alvin R. Christovich, Atty. State Tax Collector, all of New Orleans, for appellants.

Spencer, Gidiere, Phelps & Dunbar, of New Orleans, for appellees.

ODOM, Justice. ST. PAUL J., absent on account of illness takes no part.

OPINION

ODOM, Justice.

Plaintiff owns certain property in the city of New Orleans which formerly belonged to the Presbyterian Hospital. The property was acquired on January 24, 1930. Admittedly the property, while owned by the Presbyterian Hospital, was exempt from taxation under section 4, article 10, of the Constitution; the same being "property devoted to charitable undertakings." The property was not assessed or taxed for the years 1928 and 1929. But, having been purchased on January 24, 1930, by plaintiff, it was assessed to it for that year. Plaintiff brought this suit to have the property declared exempt from taxation for the year 1930, to have the assessment declared void, and to enjoin the tax collector from selling it for the taxes.

The defense is that the property, though exempt from taxation while owned by the hospital, was not exempt for the year 1930, having been acquired by plaintiff on January 24. There was judgment in the lower court for plaintiff as prayed for, and the defendants appealed.

The case was submitted on an agreed statement of facts which shows that the Presbyterian Hospital of New Orleans was a non-trading corporation, organized under the laws of Louisiana for charitable purposes, and that it practiced charity; that all the property here involved was owned by it and was "devoted to charitable undertakings," and was used for these purposes "and not leased for profit or income," and that the same was exempt from taxation under section 4, article 10, of the Constitution of 1921; that on December 12, 1927, it granted a mortgage on all its property in favor of the plaintiff, which mortgage was not paid when due. Plaintiff obtained judgment against the hospital for the amount of the loan on October 8, 1929, but no action was taken until December 9, 1929, when a writ of fieri facias was issued and the property seized thereunder.

On December 6, 1929, plaintiff notified the physician in charge of the hospital that it would proceed to seize all the property on the 9th of that month. As a seizure of the movables necessarily meant the closing of the hospital, the physician in charge removed all the patients therefrom on that date, and all hospital operations were discontinued at that time. The property was seized on December 9, and remained under seizure until January 24, 1930, when it was adjudicated by the sheriff to plaintiff. None of the property involved in this suit was used or occupied by any one until after January 24, 1930, and no portion thereof was leased for profit or income between December 9, 1929, when it was seized, and January 24, 1930, when it was adjudicated to plaintiff. A formal deed was executed by the sheriff in accordance with the adjudication made on January 24.

1. The seizure of the property under fi. fa. on December 9, 1929, divested the hospital of legal possession on that date but not of ownership. Its ownership was divested on January 24, 1930, when the property was adjudicated to plaintiff. The property was therefore owned by the hospital for 24 days in 1930. This is conceded by both sides, and it is admitted that the Presbyterian Hospital devoted the property to charitable purposes and that it practiced charity. It was therefore exempt from taxation while owned and used for such purposes by the hospital. But it is contended by defendant that the property lost its exempt status on December 9, 1929, when it was seized by the sheriff under the writ of fi. fa., on which date the hospital was ousted of legal as well as actual possession. It is argued that, inasmuch as the hospital did not possess the property after the seizure, the property could neither be devoted to nor used by it for charitable purposes, and for that reason it lost its exempt status as of that date.

When property becomes exempt from taxation by virtue of the purpose for which it is acquired and the use made of it, the duration of the exemption depends upon the length of time it is so devoted and used. The exempt status ceases when the property is no longer devoted to or used for the purposes which give rise to the exemption, or, as stated by Mr. Cooley, in his work on Taxation, vol. 2, § 716, p. 1500:

"If the exemption of property is based upon the use to which it is put, the exemption ceases when the use ceases."

This means that the right of exemption is lost when the use is voluntarily abandoned or thrown away or its possession is voluntarily forsaken by the owner. When property once becomes devoted or dedicated to charitable purposes and is used as such and for that reason acquires an exempt status, that status remains until the property and its uses are abandoned, and by that we mean voluntarily and intentionally abandoned. It is uniformly held that, where houses of public worship and property owned by charitable institutions are abandoned by the owners, the exempt status of the property ceases with abandonment, but a reading of the cases will show that the holding was based upon the finding that there was a voluntary and intentional abandonment. The mere fact of abandonment alone will not suffice to defeat the right of exemption once established. Reason dictates the wisdom and necessity for the rule established by the courts, and law sanctions it. The property and rights of individuals are ofttimes abandoned by reason of circumstances and exigencies over which they have no control, such as war, plague, epidemic, or flood, exigencies brought about by "the act of God." To hold that one's property or rights are lost by abandonment under such circumstances would be punishing him for his adversities.

The general rule relating to the loss of property or rights by abandonment applies as well to the right of exemption from taxation once established in favor of property devoted and used for religious or charitable purposes. We quote the following from Cyc. vol. 1, pp. 4, 5, 6, under the general heading "Abandonment":

"A. In General --. 1. Rule Stated. Abandonment includes both the intention to abandon and the external act by which the intention is carried into effect.

"2. Abandonment of Property. To constitute abandonment in respect of property, there must be a concurrence of the intention to abandon and an actual relinquishment of the property, so that it may be appropriated by the next comer.

"3. Abandonment of Right. To constitute abandonment in respect of a right secured, there must be a clear, unequivocal, and decisive act of the party; an act done which shows a determination in the individual not to have a benefit which is designed for him.

"4. Intention as Element. In determining whether one has abandoned his property or rights, the intention is the first and paramount object of inquiry; for there can be no abandonment without the intention to abandon. Thus, in jurisdictions recognizing the doctrine that title to land may be lost by abandonment, ceasing to cultivate land, or mere inaction and removal to another place, is not enough, without some act of disclaimer or other fact importing and showing a positive intention to abandon all claim of ownership. So the mere suspension of the exercise of a right, without evidence of the intention to abandon it, is not sufficient to destroy the right. The intention to abandon is to be derived from all the facts and circumstances of the case."

"Abandonment means an absolute relinquishment; a giving up; a total desertion." 1 Corpus Juris, 5.

"Abandonment" means "the act of forsaking or leaving." The characteristic element of abandonment is voluntary relinquishment, 1 R. C. L. 1.

The case of Old South Society v. City of Boston, 127 Mass. 378, involved the exemption from taxation of certain church property. The congregation had made arrangements to build a new church and had secured temporary quarters elsewhere. It was held that the old property was not exempt because it had been voluntarily and intentionally abandoned by the congregation as a place of worship. But in the course of its opinion the court said:

"An unfinished church edifice, in the process of construction, is exempt, and so also is a house of worship the use of which has been temporarily interrupted. The reason of the exemption in such cases is that, although the property is not actually in present use for purposes of religious worship, yet it is held in good faith for such uses and none other."

The case of Bradford v. Mote, Tax Collector, a Delaware case, reported in 2 Marv. 159, 42 A. 445, 446, involved the exemption from taxation of a manufacturing plant which was exempt under the law by reason of its being such. The property was assessed because the plant had ceased operations and it was contended by the tax collector that the exempt status of the property was at an end because it had been abandoned for the purposes which brought about the exemption. The court held against the tax collector, saying:

"The suspension of work in the plant was by reason of want of funds to carry on the business. Under these...