North Idaho Jurisdiction of Episcopal Churches, Inc. v. Kootenai County

• Decision Date: 24 April 1972
• Docket Number: No. 10466,10466
• Citation: 496 P.2d 105,94 Idaho 644
• Parties: NORTH IDAHO JURISDICTION OF EPISCOPAL CHURCHES, INC., Plaintiff-Respondent, v. KOOTENAI COUNTY, by and through its Board of Commissioners, a Political Subdivision of the State of Idaho, Defendant-Appellant.
• Court: Idaho Supreme Court

Page 105

496 P.2d 105

94 Idaho 644

NORTH IDAHO JURISDICTION OF EPISCOPAL CHURCHES, INC., Plaintiff-Respondent, v. KOOTENAI COUNTY, by and through its Board of Commissioners, a Political Subdivision of the State of Idaho, Defendant-Appellant.

No. 10466.

Supreme Court of Idaho.

April 24, 1972.

Rehearing Denied May 8, 1972.

Gary M. Haman, Pros. Atty., Coeur d'Alene, for appellant.

Paul D. McCabe, Coeur d'Alene, for respondent.

SHEPARD, Justice.

This is an appeal from a judgment granting an exemption from ad valorem taxes sought to be assessed on property owned by a religious corporation. We affirm the judgment.

Plaintiff-respondent is a non-profit religious corporation organized in Idaho in 1954. It owns approximately 105 acres of contiguous real property located on the shores of Coeur d'Alene Lake in Kootenai County. A part of the total ownership is described as Government Lot 5, Section 26 Township 49 North, Range 4 West, BM, which consists of approximately eleven and one-half acres. The Kootenai County assessor assessed the entire property, exempting therefrom only approximately .10 acres of said Lot 5 upon which was located an outdoor chapel. Plaintiff-respondent appealed that assessment to the County Board of Equalization, and, upon an adverse ruling, thereafter appealed to the State Tax Commission. The Tax Commission affirmed the assessment of the County Board of Equalization and the plaintiff-respondent brought this action in the district court.

In the district court it was stipulated by the parties that the record of the hearing before the State Tax Commission should be submitted to the court and considered as the facts in the case without the need for any further evidence. It was further stipulated that the trial court might 'follow' the decision which at that time had been rendered by the district court in the case of the Upper Columbia Mission Society of Seventh Day Adventists v. Kootenai County. Upper Columbia presented similar facts to the case at bar. The district court in the case at bar entered its memorandum decision, which the parties stipulated could be considered as the findings of fact and conclusions of law, and judgment was entered thereon. Following judgment in the instant case, the judgment in Upper Columbia was reversed in the Supreme Court. 93 Idaho 880, 477 P.2d 503 (1970). From that judgment in favor of the plaintiff, Kootenai County appeals.

The judgment of the district court exempted only that portion of the plaintiff's property contained in Government Lot 5. On that exempted property were located approximately 60 buildings, which consisted of sleeping quarters, dining facilities and an outdoor amphitheater which was used as a chapel. The entire property of the plaintiff is operated as a summer church camp. In that respect the facts of this case are similar to Upper Columbia.

The trial court herein found, and its findings are supported by the record, that the land in question is used for summer camp purposes. Religious services are held at the camp and a portion of the summer camp schedule is devoted to classroom work and religious teaching. Regular classes of instruction in the teachings and doctrines of the Episcopal Church are conducted and during the time when such form of classes are not in progress, supervised pursuits in boating, swimming and other outdoor activities take place. The testimony reveals that a deliberate attempt is made to use the recreational activities to exemplify and put into specific action the Christian teachings of the classroom.

The State Tax Commission determined that the plaintiff did not use its property exclusively for, and in connection with, public worship since it held that operation of recreational facilities, although closely tied to religious training, did not qualify as an exemption under I.C. § 63-105B. ¹ The trial court, as aforesaid, disagreed and reversed that determination of the State Tax Commission, holding that 63-105B should be construed to exempt that portion of the plaintiff's property contained in Lot 5.

Following the decision of the trial court herein, this court issued its decision in Upper Columbia, which is squarely in conflict with the district court's decision in the instant case.

It is necessary therefore, to re-examine the decision in Upper Columbia, which is markedly similar to the instant case and would be controlling herein unless overruled or modified.

Idaho is committed to the rule that:

'(a) statute granting tax exemption to certain institutions under prescribed conditions is to be strictly construed and cannot be extended by judicial construction so as to create an exemption not specifically authorized.'

Malad Second Ward of the Church etc. v. State Tax Commission, 75 Idaho 162, 165, 269 P.2d 1077 (1954). While we reaffirm that rule herein, such must be merely the beginning point from which we determine whether the term 'exclusive' should be as narrowly construed as did not majority opinion in Upper Columbia.

We note initially that Upper Columbia was a decision of a closely split court. Upper Columbia considered and rejected the applicability of exemptions contained in I.C. § 63-105B, § 63-105C, ² and § 63-105L. ³ As pointed out by the dissent, the majority opinion in Upper Columbia focused on a very narrow portion of the three statutory exemptions. The majority opinion held that since the word 'exclusive' was used in each subdivision of the exemption statute, the uses must be mutually exclusive and that any combination of exempted uses disqualified the property for tax exemption.

Although the action herein was decided by the trial court on the basis of I.C. § 63-105B, the parties stipulated that the decision could be rendered in accordance with the holding of the trial court in its decision in Upper Columbia. The decision in Upper Columbia involved consideration of all three exemption subdivisions and therefore we are required to utilize those exemptions considered by the court in per Columbia in our decision herein.

There is an elementary axiom of statutory construction that statutes must be construed in pari materia. Christensen v. West, 92 Idaho 87, 437 P.2d 359 (1968); Knudson v. Bank of Idaho, 91 Idaho 923, 435 P.2d 348 (1967). We therefore consider the legislative intent which emerges from consideration of I.C. §§ 63-105B, 105C and 105L.

It is clear that the legislature intended the enactment of the statutes in question to exempt from taxation those types of organizations engaged in religious charitable or educational activities. The rationale therefor may very well have been based on our constitutional provisions which urge the legislature to encourage and promote sobriety, morality and virtue in the people of this state. Art. 3, § 24, Constitution of the State of Idaho. All of the three exempt activities clearly fall within the purview of such constitutional encouragement.

We note also that the legislature has seen fit to encourage religious, charitable and educational activities when conducted without a profit motive, since it allows contributions to such organizations to be deducted from income otherwise taxable by the State of Idaho. I.C. §§ 63-3002, 3022; 26 U.S.C.A. (I.R.C.1954) § 170.

As stated in Buffalo Turn Verein v. Reuling, 155 Misc. 797, 281 N.Y.S. 545, 546 (1935), a case in which a tax exemption was granted:

'We must, as in all other judicial determinations, place in juxtaposition the two extremes of judicial interpretation. On the one hand is the policy of strict construction which frowns upon tax exemptions. (citations). On the other hand, innocent collateral activities essential to the furtherance of the true purposes of the corporation should not blind the court to the genuineness of those purposes nor to the sincerity of their actual accomplishment. (citations)

'The present depression calls, on the one hand, for a more strict limitation of tax exemptions in the contemplation of the present excessive burdens of the taxpayers. On the other hand, we must strive to maintain intact those religious, charitable, educational, and fraternal institutions which have been essential and integral parts not only of the foundation but in the maintenance of the form of government and type of society in which we live.'

The majority opinion in per Columbia holds in effect that any of the three exempted activities must be mutually exclusive, each from the other. No rationale therefor is laid down by the court in Upper Columbia. We can see no overriding purpose to be served by such mutually exclusive ruling by that court.

A strict application of the doctrine announced in Upper Columbia would result in situations which we perceive were clearly not intended by the legislature. For example, we note that almost every religious denomination conducts what are known as Sunday Schools for the religious education of the children of its members. Such Sunday Schools are regularly conducted in the church buildings. Under the strict holding of Upper Columbia, since such building would be thereby used not 'exclusively' for religious services but rather a blend of religion and educational purposes, the church building would then not be qualified for a tax exemption under 63-105B. Likewise, we note that many churches in our state have as an adjunct thereto a hall which at times is used for athletic events, groups of church members organized for charitable pursuits, scout meetings, dances, pageants and like events. Under such a strict construction of Upper Columbia as the majority opinion therein urges, said activities would be deemed to be mutually exclusive each of the other and the charitable and recreational usage would disqualify that building from being exempted under the provisions of 63-105B. Likewise, the religious and educational utilization of the building would prohibit a tax exemption on the basis of 'recreational hall,' or under 63-105C setting forth the educational exemption.

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