Sante Fe Lodge No. 460 v. Employment Sec. Comm'n.

• Decision Date: 24 May 1945
• Docket Number: No. 4877.,4877.
• Citation: 159 P.2d 312,49 N.M. 149
• Parties: SANTE FE LODGE NO. 460, B. P. O. E.,v.EMPLOYMENT SECURITY COMMISSION.
• Court: New Mexico Supreme Court

49 N.M. 149

159 P.2d 312

SANTE FE LODGE NO. 460, B. P. O. E.,

v.EMPLOYMENT SECURITY COMMISSION.

No. 4877.

Supreme Court of New Mexico.

May 24, 1945.

Appeal from District Court, Santa Fe County; William J. Barker, Judge.

Proceeding by the Santa Fe Lodge No. 460, B. P. O. E., a corporation, against the Employment Security Commission of New Mexico, involving the question whether plaintiff was liable to payment of contribution imposed by the Unemployment Compensation Law. From an adverse judgment, defendant appeals.

Affirmed.

Use of property, not its owner's declared objects and purposes, determines right to exemption thereof from Unemployment Compensation Law as used for charitable purposes. 1941 Comp. § 57-801 et seq.

[159 P.2d 312 , 49 N.M. 150]

A. M. Frazier, of Albuquerque, for appellant.

Manuel A. Sanchez, of Santa Fe, for appellee.

BRICE, Justice.

The question is whether the appellee is liable to the payment of the contribution imposed by the Unemployment Compensation Law of New Mexico. 1941 Comp. § 57-801 et seq.

The findings made by the Court, material to a decision of this question, are as follows:

The appellee is a corporation organized and existing under the laws of New Mexico and the appellant is the administrator of the Unemployment Compensation Law of the state.

The Articles of Incorporation of appellee state the objects of its incorporation as follows:

‘The objects for which the said corporation is formed are to practice benevolence and charity according to the constitution and by-laws, rules and regulations of the Grand Lodge of the Benevolent and Protective Order of Elks, and the constitution and by-laws of Santa Fe Lodge No. 460 as it now exists; to buy, sell, take, receive, hold and lease and otherwise dispose of such real or personal property as may pertain to the purposes of the said organization.’

The Constitution of the Grand Lodge of the Benevolent and Protective Order of Elks provides that the purposes of its organization are as follows:

‘To inculcate the principles of Charity, Jusice, Brotherly Love and Fidelity; to promote the welfare and enhance the happiness of its members; to quicken the spirit of American patriotism; to cultivate good fellowship; to perpetuate itself as a fraternal organization, and to provide for its government, * * *.’

The Constitution and the Grand Lodge statutes of the organization provide for its government, the transaction of its business; and for the organization, institution, management and control of subordinate lodges. The appellee herein is a subordinate lodge of the Benevolent and Protective Order of Elks.

The Constitution of the appellee, Santa Fe Lodge No. 460, provides that:

‘To inculcate the principles of Charity, Justice, Brotherly Love and Fidelity; to promote the welfare and enhance the happiness of its members; to quicken the spirit of American patriotism; to cultivate good fellowship; to perpetuate itself as a fraternal organization, and to provide for its government, the Benevolent and Protective Order of Elks of the United States of America, ordains this Constitution.’

The property of the appellee consists of its home in Santa Fe, which is used exclusively by its members, for meetings of the Order, social meetings of its members and for carrying out the purposes enumerated in its Constitution.

The corporation operates a bar in its home, dispensing liquors and refreshments to its members and invitees. It provides a reading room, card room, and billiard tables for the enjoyment of its members. The prices of liquors are about those paid in other places in Santa Fe where liquors are dispensed.

Since January 1, 1939, appellee has dispensed charity to its members and the public at large, of about $4000 per annum. During the last six years it has expended for charity about $25,000, approximately $750 of which was dispensed to members of the appellee order, their widows and orphans; the balance of over $24,000 was dispensed as charity to the public at large. The expense of operating appellee's home is about $4000 a year, of which an average of about $1600 per annum is paid as annual dues and initiation fees by members. The remainder of the net income of the appellee is from profits made from operation of the bar, and its annual celebrations.

The appellee has employed three persons since January 1, 1939, at the following fixed salaries: Secretary $25 per month; steward $100 per month; janitor $25 per month. No part of the net earnings of appellee inures to the benefit of any individual. There are no private shareholders in the organization.

The Court concluded as follows:

‘Plaintiff corporation is a corporation organized and operated exclusively for charitable purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual and that the services performed in the employment of the plaintiff corporation are not included in the term ‘Employment’ as used in the Unemployment Compensation Law of New Mexico; and that at all times material to this cause of action the plaintiff corporation has been operated exclusively for charitable purposes, and that no part of the net earnings of the said corporation have inured to the benefit of any private shareholder or individual.

‘(a) The practice of benevolence, (b) the inculcation of the principles of justice, brotherly love, and fidelity, (c) the promotion of the welfare and enhancement of the happiness of the members of plaintiff organization, (d) the quickening of the spirit of American patriotism, and (e) the cultivation of good fellowship, all of which are also declared as purposes of plaintiff organization, is charity in its most perfect form; that the perpetuation of plaintiff as a fraternal organization and provision for its government, also declared as plaintiff's purposes, are necessary for plaintiff's existence to perform its charitable practices. * * *

‘That the plaintiff and its employees are exempt and excluded from the provisions of the Unemployment Compensation Law of New Mexico.’

Some questions are raised that we do not deem it necessary to consider. It is probably true that with slight exception, the findings listed as ‘findings of fact’ are evidentiary facts only, and are surplusage. But among the conclusions of law the principal ultimate fact necessary to support the judgment appears, to-wit: ‘That the plaintiff (appellee) corporation has been operated exclusively for charitable purposes, and that no part of its net earnings has inured to the benefit of any private shareholder or individual.’ This finding will be considered by us, notwithstanding it appears under the wrong caption, and we will proceed to determine whether it is supported by substantial evidence.

The statute provides that persons and corporations organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual, are exempt from the payment of the contributions sought to be collected. Appellee asserts that it is organized and operated exclusively for charitable purposes, and that no part of the net earnings of which inures to the benefit of any private shareholder or individual, and therefore it is among those exempt from such payments. If appellee has established this fact by substantial evidence, then the judgment of the trial court should be affirmed.

While the question submitted is one of first impression here, a question involving the liability of such corporations to the payment of general taxes under Section 3 of Article 8 of the state Constitution is not new; that provision is as follows:

‘Property of the United States, the state or all counties, towns, cities and school districts, and other municipal corporations, public libraries, community ditches and all laterals thereof, all church property, all property used for educational or charitable purposes * * * shall be exempt from taxation.’

It was determined in Temple Lodge No. 6, A. F. & A. M. v. Tierney, 37 N.M. 178, 20 P.2d 280, 284, that Temple Lodge, a Masonic corporation, was not subject to general taxes because it was organized for educational and charitable purposes.

The fact that the constitution did not provide that the exemption applied to property used exclusively for charitable purposes was referred to in distinguishing that case from others mentioned in the opinion, and it was observed that the law of New Mexico prior to the adoption of the constitution did provide that the exemption should apply to such corporations and institutions ‘devoted exclusively to the appropriate objects of such institutions.’ In passing upon the contention that the constitution should be construed to mean that the exemption applied only to those corporations used exclusively for charitable and educational purposes, etc., we stated:

‘It should be noted at the outset that few states have constitutional or statutory provisions more favorable to a claim of exemption under facts such as we have here, and that most states have less liberally provided.

‘Educational or charitable use, or ownership by educational or charitable organizations, are common grounds of exemption. But generally some qualifying language has been employed, such as ‘exclusively used,’ ‘devoted to the sole use,’ ‘public charity,’ or ‘purely public charity.’

‘Where such modifying expressions have been employed, judicial opinion appears divided, though a weight of authority could perhaps be claimed in favor of exemption. But where the controlling statutory or constitutional provision approaches ours in liberality, and upon similar facts, there can scarcely be said to be a difference of view.’

The statute to be construed is an exact copy of the Federal statute providing for exemptions from contributions to the National Social Security Act, which in turn is an exact copy of the exemption provision of the...