Powers v. Harvey

• Decision Date: 19 March 1954
• Docket Number: Nos. 2175,2305,s. 2175
• Citation: 81 R.I. 378,103 A.2d 551
• Parties: POWERS, Atty. Gen. v. HARVEY et al. (two cases). Eq.
• Court: Rhode Island Supreme Court

Page 551

103 A.2d 551

81 R.I. 378

POWERS, Atty. Gen. v. HARVEY et al. (two cases).

Eq. Nos. 2175, 2305.

Supreme Court of Rhode Island.

March 19, 1954.

William E. Powers, Atty. Gen., Archie Smith, Asst. Atty. Gen., for complainant.

William H. Leslie, Jr., Town Sol., Wakefield, Thomas H. Gardiner, Special Counsel, Providence, for respondents.

BAKER, Justice.

These two bills in equity were brought by the attorney general of this state in his representative capacity against the tax collector and tax assessors of the town of South Kingstown and against the tax collector of the Kingstown Fire District to enjoin the collection of certain taxes. The cases were heard together in the superior court where final decrees were entered granting the prayers of both bills. From those decrees the respondents have duly prosecuted their appeals to this court.

In general the bills allege that the taxing authorities of such town and the tax collector of said fire district sought to collect from a number of college fraternities and sororities, which occupied houses located on the campus of Rhode Island State College, now the University of Rhode Island, taxes assessed upon such buildings for the years 1949 and 1950. It is further alleged, among other things, that the buildings are inseparable from the land upon which they stand; that as real estate they belong to the state; that the property is not subject to taxation by the town and fire district; and that the taxes assessed for those years are wholly void. The complainant prays that the respondents be enjoined from further proceedings in relation to the collection of such taxes and that whatever action has already been taken in that connection be vacated.

It appears that the tax for the year 1949 upon the houses in question was carried on the assessment rolls of the town under a listing of 'buildings and improvements.' Thereafter an attempt was made by the assessors, on the ground of an alleged error, to amend the rolls for 1949 by describing the houses as 'tangible personal property.' In 1950, however, they were carried on the rolls for that year under the specific designation of tangible personal property.

The respondents admit that property belonging to the state is excempt from taxation by statute, General Laws 1938, chapter 29, § 2. It also appears that the legislature by Public Laws 1939, chap. 688, sec. 3, created a board of trustees as a public corporation and invested it with legal title, in trust for the state, to all property, real and personal, publicly owned for the use of Rhode Island State College. It is not disputed, therefore, that the land upon which the buildings in question stand belongs to the state and thus is within the above exemption. Moreover chap. 29, § 2, sets out among others the following described exemptions: 'buildings for free public schools * * * so far as said buildings and land are occupied and used exclusively for * * * educational purposes; the buildings and personal estate owned by any ccorporation used for a school, academy or seminary of learning * * * so far as the same is used exclusively for educational purposes * * *.' It is settled in this state that exemptions of the above nature are strictly construed in favor of the taxing authority. Sisterhood of the Holy Nativity v. Tax Assessors, 73 R.I. 445, 57 A.2d 184. In our judgment under the facts herein the above exemptions do not apply in this cause.

The evidence shows that the taxes houses are substantial buildings with permanent foundations and basements; that they are affixed to the real estate upon which they are located; and that they are not readily separable therefrom. They are also connected to water, electric supply, and sewage disposal systems. In usual circumstances such buildings would be considered as part of the realty, being firmly attached thereto and apparently passing with it. McHale v. Rosenblatt, 56 R.I. 120, 184 A. 172; Houle v. Guilbeault, 70 R.I. 421, 40 A.2d 438. It is argued by complainant that they also were intended to be used and enjoyed for college purposes in connection with the land and therefore that they belong to the state.

In the circumstances the cause which we are considering is not an ordinary one but presents several difficult questions respecting the nature and title of the property involved. It appears from the evidence that in 1912, by resolution and later by statute, a policy respecting the operation of Rhode Island State College was adopted. Thereunder fraternities and sororities were encouraged to erect structures which were to be used in part as dormitories for housing students belonging respectively to the particular society concerned. At the time of the hearing about five hundred students were so accommodated and apparently no dormitories were built by the state until many years later. Beginning in 1912 and continuing through the early nineteen thirties the houses involved in this proceeding were erected. They were planned with the approval of the college authorities, were constructed and paid for by the respective fraternity or sorority in accordance with financial arrangements set up by statute, and were operated under certain rules and regulations established by the college.

In G.L.1938, chap. 188, §§ 9-12, the financial arrangements above mentioned are set out. Two of these sections read as follows:

' § 9. The board of regents is hereby authorized and empowered on behalf of the Rhode Island State College to acquire land and also to guarantee in the name of the state approved loans made to societies of students at said college, for the purchase or construction, upon lands owned by said college, of society houses which shall serve as student dormitories. Any loans so approved, upon default, shall become state obligations in like manner as any state bond.'

' § 12. Whenever default is made on the part of a society in the payment of loans guaranteed under the provisions of § 9, or any part of them, the said board of regents is hereby authorized to assume such obligation and to make required payments on principal and interest from any of the appropriations available for the Rhode Island State College. In the event of a default, in such cases where the board of regents assumes the obligation of a society, the state shall have a lien subject to any mortgages or encumbrances existing at the time on any and all property of the society. Said lien may be released after the reimbursement to the state of all payments made on behalf of the society, plus accrued interest.'

Apparently the broad intent of the above sections was to provide assistance to students' societies for the erection of houses upon land owned by the college to serve as dormitories by authorizing the college to guarantee in the name of the state approved loans made by these societies in order to build such houses. A benefit generally was thus derived by the college and the societies. It is of interest to note that in the event of default by a society in making necessary payments on such a loan and the assumption by the college authorities of the obligation, the state is given a lien on any and all property of the society. If this applies to the houses involved here, it is argued with some force that they must have been considered by the parties as belonging to the societies, since it would not be necessary or reasonable to give the state a lien on property already owned by it.

Moreover each fraternity of sorority, when it undertook to build and operate such a house on the campus, entered into a written agreement with the proper officers of the college. Such agreements were similar in all substantial respects and differed, if at all, only as to minor matters. The following portions of one of such agreements show their nature and purpose and set out the understanding of the parties in regard to their respective duties and interest in such houses.

'This agreement entered into * * * between the Board of Managers of Rhode Island State College, party of the first part, and * * * fraternity, an incorporated student organization, party of the second part, witnesses that for and in consideration of certain advantages to accrue to the party of the first part in increased capacity for housing students, etc., and in further consideration of the sum of one dollar from the party of the second part, receipt of which is hereby acknowledged, the party of the first part does hereby covenant and agree to permit the party of the second part to construct upon a part of the grounds of the college, said part to be designated by the party of the first part, a house to be continuously and exclusively used as a fraternity house for lodging students of this...