Security Savings & Trust Co. v. Lane County

• Citation: 53 P.2d 33,152 Or. 108
• Parties: SECURITY SAVINGS & TRUST CO. v. LANE COUNTY et al.
• Decision Date: 24 December 1935
• Court: Supreme Court of Oregon

53 P.2d 33

152 Or. 108

SECURITY SAVINGS & TRUST CO. v. LANE COUNTY et al.

Supreme Court of Oregon, En Banc.

December 24, 1935

Appeal from Circuit Court, Lane County; G. F. Skipworth, Judge.

Suit by the Security Savings & Trust Company, as trustee, against Lane County and others, to have certain real property decreed exempt from taxation. From a decree for plaintiff, defendants appeal.

Cause remanded, with instructions.

Eugene V. Slattery, of Eugene (Slattery & Slattery and W. H. Brooke, Dist. Atty., and John Bryson, Deputy Dist Atty., all of Eugene, on the brief), for appellants.

E. R Bryson, of Eugene (Harris, Smith & Bryson and James K. King all of Eugene, on the brief), for respondent.

ROSSMAN Justice.

The issue before us is whether a parcel of real property situated in the city of Eugene, improved with an 8-story and a 2-story structure, used for office and store purposes, is exempt from taxation. The plaintiff claims that it holds title to this property in trust for the state, and that the state is, therefore, the beneficial owner of the property. It uses this alleged circumstance as the basis for a contention that the property is exempt from taxation. The defendants point to the fact that the legal title is not vested in the state, and contend that if the state has a beneficial interest it does not have the sole beneficial interest. They argue that the property is subject to taxation.

A witness, whose testimony is not contradicted, swore that some years ago $340,000 was invested in this property. In 1933 it was assessed on a valuation of $124,265, which was based upon 50 per cent. market value.

February 21, 1933, when W. E. Miner, now deceased, owned this property, he, as donor, and the plaintiff executed an instrument entitled indenture of trust, from which we quote: "*** The said Donor desiring to dedicate certain property to public usefulness has this day granted, bargained, sold and conveyed and in consideration of the covenants and agreements herein contained, hereby grants, bargains, sells and conveys to said Trustee and its successors forever, and the said Trustee for itself and its successors accepts the following property, *** To have and to hold the above-described and granted premises unto the said Trustee, its successors and assigns forever, in trust, nevertheless, for the use and benefit of the State of Oregon, for the following purposes: (a) For the maintenance of a chair of instruction of real estate and insurance in the School of Business Administration of the University of Oregon, the occupant of said chair to be known as the 'Miner Professor of Real Estate and Insurance."'

This paragraph is followed by others which set forth the nature of the educational chair established.

The instrument provides that before anything becomes payable to the state the following items must be paid: (1) Expenses incurred in the operation of the properties; (2) the trustee's charges; (3) annuities reserved to W. E. Miner, H. T. Miner (brother of the donor), and Virgie C. Miner (wife of H. T. Miner); (4) monthly installment payments of $312.50 on principal, plus interest, upon a mortgage of $75,000 which encumbered the property; (5) a note for $2,100 payable to Myron Eaton; and (6) a note for $1,200 payable to Henry Slater.

While the deed conveys title to the plaintiff, its authority to administer the property is limited by authority conferred upon four other groups or persons: (1) W. E. Miner and H. T. Miner; (2) the Miner Professor of Real Estate and Insurance; (3) a committee of faculty members of the University of Oregon; and (4) the board of higher education of the state of Oregon. We shall now review the sections of the trust instrument which thus limit the trustee's power. The instrument provides that as long as either W. E. Miner or H. T. Miner live they "shall manage the real property hereinbefore described, and the buildings situated thereon and the business connected therewith." In the event of the destruction of the building by fire during the lifetime of either of the two Miners, the trustee is authorized to expend any fire insurance money received only upon the approval, in writing, by the Miners. The instrument provides: "Said real property shall not be sold during the lives of W. E. Miner and H. T. Miner or the survivor without the trustee first obtaining the written approval of such sale from said W. E. Miner and H. T. Miner or the survivor."

These, we believe, are the principal provisions which reserve authority to the Miners.

Next, we shall review the provisions which subject the trustee to the Miner Professor of Real Estate and Insurance. The instrument provides: "The said Miner Professor of Real Estate and Insurance, or such other person as may be appointed by him with the approval of the Dean of the School of Business Administration *** shall assist the said W. E. Miner and/or H. T. Miner in the management of said property *** such services in assisting in the management of said building shall be rendered without compensation."

The instrument provides that the courses taught and the research work done with the funds derived from the trust "shall be under the direction of the said Miner Professor of Real Estate and Insurance." It further provides: "The application of said funds to the purpose for which this trust is created shall be determined by the Miner Professor of Real Estate and Insurance, with the approval of the president or corresponding administrative head of the University of Oregon, and the dean or corresponding academic head of the School of Business Administration."

We next come to the powers conferred upon the committee of faculty members; the Miner professor, the president of the university, and a dean. These are given power to approve or disapprove expenditures of the proceeds of the trust fund The instrument provides that the plaintiff's power to sell the property is subject to the approval of this committee. It further provides that in the event the trustee "shall be in doubt as to the course to be followed in any particular matter under the provisions of this indenture *** or in case the application of such provisions is doubtful or in case there is an absence of any provision governing its conduct, then the trustee may refer the question to the said committee for decision and direction, and the decisions and directions of said committee shall fully authorize the trustee to proceed."

These are the principal provisions subjecting the trustee's authority to the supervision of the faculty committee. The instrument also subjects some of the trustee's authority to the board of higher education of this state. We quote from the instrument: "If in the opinion of the committee hereinafter appointed it shall hereafter appear advisable or desirable to convey and/or transfer the property or a part of the property forming the corpus of this trust to the State of Oregon, the committee shall refer the matter to the Board of Higher Education of the State of Oregon or its successors, and the trustee, upon the written application of said State Board of Higher Education, signed by a majority or more of the members thereof, shall thereupon convey and/or transfer said property to the State of Oregon for the purposes hereinabove specified and subject to all of the terms, provisions and conditions of this indenture. ***"

Due, apparently, to the fact that the building will eventually become valueless, the instrument provides that the trustee shall annually deduct from the amount otherwise payable for the state's benefit a depreciation charge which shall become a "sinking fund." It directs that this fund "shall be invested in such income-bearing securities as are authorized by the laws of the State of Oregon at the time being for the investment of trust funds of trust companies or funds of savings banks."

We have mentioned the fact that the trust instrument provides that annuities should be paid W. E. Miner, H. T. Miner, and the latter's wife. These annuities do not run concurrently, but successively. The instrument provides that there should be paid to W. E. Miner and to H. T. Miner and to their survivor all of the net income from the 2-story building and one-half of the net income from the 8-story building. Subsequent paragraphs provide the manner in which the income is payable to the survivors of these two men, and finally makes provision for the payment of the annuity to the survivor of the three Miners. Upon the death of the last of the three, the entire net income becomes payable to the state for purposes for which the trust was created. In order to assure the Miners of a sufficient income, the instrument provides that during their lives some items of expense may be ignored. For instance, contributions into the sinking fund may be lessened during their lives. It also provides that in the event real property taxes should be exacted they should be paid from the state's portion of the fund, and not out of that payable to the Miners. The same is true of attorneys' fees.

The record does not disclose the age of W. E. Miner when the instrument was executed, but a witness testified that at the time of the trial, one year later, H. T. Miner was 71 years old, and that his wife, Virgie, was then 50. About the time the trust instrument was executed the state board of higher education adopted a resolution accepting the provisions of the indenture of trust and expressing the state's purpose to abide by them. Concurrently with the execution of this instrument, the plaintiff assumed charge of the property. About two months later, W. E. Miner died.

May 24 1933, H. T. Miner and the plaintiff executed another instrument which recited that H. T. Miner granted to the plaintiff...