Osteopathic Hosp. of Me., Inc. v. Inhabitants of City of Portland

• Decision Date: 21 May 1942
• Citation: 26 A.2d 641
• Parties: OSTEOPATHIC HOSPITAL OF MAINE, Inc. v. INHABITANTS OF CITY OF PORTLAND.
• Court: Maine Supreme Court

26 A.2d 641

OSTEOPATHIC HOSPITAL OF MAINE, Inc.

v. INHABITANTS OF CITY OF PORTLAND.

Supreme Judicial Court of Maine.

May 21, 1942.

Report from Superior Court, Cumberland County.

Action by the Osteopathic Hospital of Maine, Inc., against Inhabitants of the City of Portland, to recover back taxes paid under protest. The referee reported that judgment should be for the defendant. On exceptions to acceptance of referee's report.

Exceptions sustained.

Before THAXTER, HUDSON, MANSER, WORSTER, and MURCHIE, JJ.

Jacob H. Berman, Edward J. Berman, and Sidney W. Wernick, all of Portland, for plaintiff.

W. Mayo Payson, of Portland, for defendant.

MANSER, Justice.

The Osteopathic Hospital of Maine, Inc., was incorporated in 1935 and for some years conducted a hospital on Pleasant Ave. in Portland. Finding the premises insufficient for its expanding needs, the corporation acquired other property in Portland which had been used as a private hospital. This was effected March 15, 1940. The tract of land purchased contains approximately 5 acres and extends from Brighton Ave. to Prospect St. in Portland.

For the purposes of taxation, however, the assessors divided the tract into two parcels, assessing one and exempting the other. The exempted plot has a frontage of 220 ft. on Brighton Ave. and extends back to the rear of the two vacant lots which border on Prospect St. Upon this lot arc the buildings, and the present hospital is located so that its northerly side wall is 50 ft. southerly of the dividing line. The remainder of the land was taxed. It has a frontage on Brighton Ave. of 185 ft. It contains approximately 2 1/2 acres, and consists of a wooded pine grove and some vacant land, including the two lots fronting on Prospect St. No actual physical demarcation was made. There are no fences or markers.

By their action the assessors conceded that the hospital was a benevolent and charitable institution and was entitled to tax exemption of so much of its real estate as was "occupied for its purposes" as provided by R.S., c. 13, sec. 6, Par. III. The referee found such to be the fact, and the record amply supports the finding.

The hospital paid the tax under protest and brought this action to recover back the amount paid. The Referee reported that judgment should be for the defendant.

The case comes forward on exceptions to the acceptance of the Referee's report. The gist of the exceptions is that the Court should not have accepted the report because the Referee erred in finding and ruling that the right of the hospital to tax exemption must be determined in the light of the use being made of the property on the date of the assessment, April 1, 1940; that the Referee erred in concluding as a matter of law that under the evidence, the land taxed was not shown to be occupied for its own purposes; that although the Referee properly found the land taxed was held for intended use by the hospital, it was error to hold that such use was to be at some indefinite future time, and the land was therefore currently taxable.

Aside from a stipulation as to certain facts not now in issue, the record upon which the referee made his rulings consisted of the testimony of Dr. Campbell, the Treasurer of the hospital. On March 15, 1940 the hospital conveyed the property it then owned to Dr. Westcott and purchased from him the property now owned at the price of $30,000, the original property being valued at $12,500 in exchange. At the time of the conveyance, there were 24 beds in the original hospital and the business having doubled in four years and being consistently on the increase, the present facilities were obtained. At the time of the hearing, there were 35 beds, an elevator and sprinkler had been installed, and a garage was being remodeled for staff meetings and quarters for hospital interns. The property was bought as one parcel. With reference to utilization of the property, Dr. Campbell testified: "We hope to be able in time to enlarge our hospital. We feel certain we are going to have to. (This has reference to the present building which was exempted from taxation). We will, of necessity, have to provide quarters for our nurses, as a nurses home. We will build a solarium. Over there near the woods, in the grove, or near the grove, we intend to put rest places where patients may be taken by the nurses during their convalescence. We intend to use the entire hospital property for hospital uses."

The Doctor further testified that it was not the intention to sell any part of the property or to use it for any purpose not connected with the hospital work. He further said: "We had the opportunity of purchasing this property from Dr. Wescott, to give the hospital proper setting, proper quietness, and sufficient land there to meet any necessities for future development, and that is the reason why we exchanged property with Doctor Wescott."

The Referee, evidently relying upon the theory that present use was essential to tax exemption, elicited the fact that the only buildings then occupied were the hospital and garage, and that the grove and vacant land were not in actual use except as patients and nurses walked therein and occupied chairs scattered throughout the grove. Further, that there had been no definite determination as to the location of the proposed solarium and nurses' home, although the witness testified that an appropriate site for the home would be on one of the vacant lots fronting on Prospect St.

The first ruling complained of is as follows: "All taxes are assessed in this state as of the first day of April of each year. It is the use of the property at the time when a tax is assessed which determines whether the property is or is not exempt from taxation."

Such rule is not arbitrarily controlling or decisive. In Camp Emoh Associates v. Lyman, 132 Me. 67, 166 A. 59, 60, the plaintiff corporation acquired property for the erection and support of camps for the care, maintenance and assistance of poor and indigent Jewish children. In 1930, the corporation had on its land a group of camps. The property was assessed for taxes. During July and August of that year, upwards of 250 children were at the camps by invitation or assignment. Under these facts, our Court said: "At the end of the season, the camp was closed, not to be opened again until the next year. The property, it is true, was not in actual use on the day of the assessment, i. e., the 1st day of April, 1930. To hold that to secure exemption, it must have then been in actual use, would ignore the spirit and intendment of the law. Actual use on that particular day is not the test."

In Ferry Beach Park Ass'n v. Saco, 136 Me. 202, 7 A.2d 428, as in the former case of Ferry Beach Park Ass'n v. Saco, 127 Me. 136, 142 A. 65, property found to be definitely devoted to the purposes of the Association was held to be exempt, although in both cases the property was occupied only during the summer months.

As distinctly pointed out in Camp Emoh Associates v. Lyman, supra, it is the "actual appropriation of its property, for the purposes for which the plaintiff corporation was incorporated," not the physical use on the exact date of the assessment, which controls.

Concerning the broader question of exemption by reason of occupation or appropriation of real estate for the purposes of the corporation, confusion sometimes arises by undertaking to apply identical rules of construction as to tax exemption statutes which are essentially different. Thus in Maine, as in Massachusetts, we find that the statute itself places benevolent and charitable institutions in a different category from purely religious institutions. As to the first group, the law provides, R.S., c. 13, sec. 6, Par. Ill: "The following property and polls are exempt from taxation * * * the real and personal property of all benevolent and charitable institutions incorporated by the state; * * * but so much of the real estate of such corporations as is not occupied by them for their own purposes shall be taxed in the municipality in which it is situated."

The exempting statute as to the second group is found in Par. V of the same section, as follows: "Houses of religious worship, including vestries, and the pews and furniture within the same, except for parochial purposes; tombs and rights of burial; and property held by a religious society as a parsonage, not exceeding six thousand dollars in value, and from which no rent is received, and personal property not exceeding six thousand dollars in value. But all other property of any religious society, both real and personal, is liable to taxation the same as other property."

The term "real' estate" is not found in the...