Pennsylvania State University v. County of Centre

• Decision Date: 28 October 1992
• Citation: 532 Pa. 142,615 A.2d 303
• Parties: , 78 Ed. Law Rep. 871 The PENNSYLVANIA STATE UNIVERSITY, Appellee, v. The COUNTY OF CENTRE, Board of Assessment Appeals and John T. Saylor, Keith Bierly, and Vicki Bumbarger, Members of the Board of Commissioners and of the Board of Assessment Appeals, Appellants.
• Court: Pennsylvania Supreme Court

Page 303

615 A.2d 303

532 Pa. 142, 78 Ed. Law Rep. 871

The PENNSYLVANIA STATE UNIVERSITY, Appellee, v. The COUNTY OF CENTRE, Board of Assessment Appeals and John T. Saylor, Keith Bierly, and Vicki Bumbarger Members of the Board of Commissioners and of the Board of Assessment Appeals, Appellants.

Supreme Court of Pennsylvania.

Submitted May 5, 1992.

Decided Sept. 16, 1992.

Reargument Denied Oct. 28, 1992.

[532 Pa. 143] Thomas B. Schmidt, III, Harrisburg, for appellant.

Delbert J. McQuaide, State College, for appellee.

Before NIX, C.J., and LARSEN, FLAHERTY, ZAPPALA, PAPADAKOS and CAPPY, JJ.

OPINION OF THE COURT

LARSEN, Justice.

Appellee Pennsylvania State University (University) instituted the underlying action in equity seeking, inter alia, to enjoin appellants County of Centre (County), Board of Assessment Appeals (Board) and John T. Saylor, Keith Bierly, and Vicki Bumbarger, who are members of the Board of Commissioners and the Board of Assessment Appeals, from assessing or taxing the University's property. This is an appeal from the order of the Commonwealth Court affirming the order of the Court of Common Pleas of Centre County, which granted the University's motion for summary judgment.

On June 28, 1984, the County notified the University that the Penn State Book Store and Mid-State Bank and Trust Company (Bank) facilities located on the University's property had been removed from tax exempt status. The University leases a portion of the property in question to the Bank, which utilizes the property for a branch office and automatic teller machines, and a portion to the Penn State Bookstore. The University appealed the tax assessment to the Board on August 6 1984, asserting that the County lacked the power to levy, assess or collect real estate taxes on the University's property. The County subsequently deleted the assessment against the Penn State Bookstore on November 28, 1984, leaving only the bank property at issue.

The University filed the present complaint in equity on January 10, 1985, seeking a court order: preliminarily enjoining appellants from conducting a hearing before the Board, enjoining the assessments already made and enjoining appellants from taking any further action to assess or tax the University until a final determination on the merits; and after a hearing, permanently enjoining appellants from assessing or taxing the University's property and declaring that appellants and their successors are without power to tax or assess the University's property. Appellants filed preliminary objections on January 30, 1985 and amended preliminary objections on February 15, 1985, which objections were overruled on September 30, 1985. Appellants filed an answer and new matter on October 29, 1985, to which the University filed a reply on December 9, 1985.

On March 26, 1986, the University filed a motion for summary judgment. In its motion for summary judgment, the University asserted that it is an agent of the Commonwealth and that the 1939 opinion of the Centre County Court of Common Pleas in Pennsylvania State College v. County of Centre, (No. 2 Equity November Term 1937, filed August 24, 1939), precluded the present action based on the doctrine of issue preclusion. The trial court, in the present action, determined that the Pennsylvania State College case, which was never appealed, held that Pennsylvania State College (now University) was an agency of the Commonwealth and could not be taxed absent specific statutory authority to do so. As such, the trial court held that the issue of whether the University is a Commonwealth agency was previously litigated and that the decision in Pennsylvania State College precluded the present litigation. Accordingly, the trial court granted summary judgment. Appellants then appealed to the Commonwealth Court, which affirmed.

Summary judgment is properly granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Pa.R.C.P. 1035(b). "The record must be viewed in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party." Marks v. Tasman, 527 Pa. 132, 135, 589 A.2d 205, 206 (1991). Summary judgment may be entered only in those cases where the right is clear and free from doubt. Musser v. Vilsmeier Auction Co., Inc., 522 Pa. 367, 369, 562 A.2d 279, 280 (1989).

At issue in this appeal is the applicability of the doctrine of issue preclusion, based on the prior decision in Pennsylvania State College. Appellants contend that the decision in Pennsylvania State College does not preclude taxation here because significant changes in the factual circumstances of the University's relationship with the Commonwealth and in the property's use have occurred in the last 50 years. We agree. ¹

In Pennsylvania State College, the Centre County Court of Common Pleas was called upon to determine whether certain property belonging to the College was subject to taxation by the municipal subdivisions of the Commonwealth. The case arose after the County and several other local municipalities assessed and taxed portions of the College's property for the years 1935-1937, and upon nonpayment of taxes, advertised the property for public sale by the County Treasurer. The property in question consisted of nine tracts of farmland used by the College as an agricultural laboratory for student instruction and agricultural experimentation. The College brought an action in equity to have the County and local municipalities enjoined from selling the property at the County Treasurer's sale and from assessing or levying taxes on the property in question.

The court in Pennsylvania State College specifically held that:

A review of the history of the organization and development of the Pennsylvania State College makes it clear that it is an agency of the Commonwealth for the purpose of carrying on educational functions and experimentation, with particular emphasis upon education and experiment of an agricultural character.

Slip Op. at 10-11. The court in Pennsylvania State College went on to describe the history of the College and its relationship with the Commonwealth, find that the property in question was being utilized solely for educational and agricultural purposes, and state that "Once the conclusion is reached that the [College] is an agency of the state government, it follows that its property is exempt from taxation." Id. at 15. In support of this exemption, the court in Pennsylvania State College stated that:

The specific constitutional and statutory authorities for this exemption of public property are found in Article IX, Section 1, of the Constitution of Pennsylvania, and in the Act of 1933, P.L. 853, Article II, Section 204, 72 P.S. 5020-204 (supplement). The Constitutional provisions, Article IX, Section 1, reads as follows:

"Section 1. Taxes to be uniform; exemptions. All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws; but the General Assembly may, by general laws, exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private corporate profit, institutions of purely public charity, and real and personal property owned, occupied, and used by any branch, post, or camp of honorably discharged soldiers, sailors, and marines."

The power given to the General Assembly to exempt "public property used for public purposes" has been exercised in the Act of 1933 above cited as follows:

"The following property shall be exempt from all county, city, borough, town, township, road, poor and school tax, to wit:

"(g). All other public property used for public purposes, with the ground thereto annexed and necessary for the occupation and enjoyment of the same."

Id. at 16-17. In summation, the court in Pennsylvania State College reviewed the College's history as a public institution and specifically found that the College:

(1) was established and is maintained in furtherance of a long-established government policy of aid to agricultural education and experimentation;

(2) in recent years it has become the center of an additional large system of extension work whereby agricultural education is brought in contact with farmers in their own sections, and the results of experimentation are disseminated;

(3) it has from the beginning relied principally for its support upon appropriations made by the state and federal governments;

(4) its board of directors is so constituted that control is given to the public, a substantial part of which is directly in the government;

(5) the plant of the college and experimental station have been so established by public funds that the institution is under compulsion to conduct such agricultural college and experiment station, and is not free at its option to divert its property and franchises to other purposes; [and]

(6) the institution is the one of its kind in the State, and the history of its relations with the state government indicate throughout the recognition of its peculiar character as a state agency.

Id. at 24-25. The court in Pennsylvania State College then concluded that "[i]n view of these circumstances as to the institution it seems clear that the Pennsylvania State College is an institution of such a public nature that its property and activities are not subject to local taxation." Id. at 25. As a result, the court in Pennsylvania State College entered an order enjoining "the further assessment and attempt to subject the levy of taxes on the said tracts so long as the same continue to be owned by the [College] and used...