South Dakota Ed. Ass'n v. Dromey, No. 10823

• Court: Supreme Court of South Dakota
• Writing for the Court: BANDY; HANSON; BANDY, Retired Circuit Judge, sitting for WINANS; HANSON
• Citation: 188 N.W.2d 833,85 S.D. 630
• Parties: SOUTH DAKOTA EDUCATION ASSOCIATION, Plaintiff-Appellant, v. Joe DROMEY, et al., Defendants-Respondents.
• Decision Date: 29 July 1971
• Docket Number: No. 10823

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188 N.W.2d 833 85 S.D. 630 SOUTH DAKOTA EDUCATION ASSOCIATION, Plaintiff-Appellant,
v.
Joe DROMEY, et al., Defendants-Respondents. No. 10823. Supreme Court of South Dakota. July 29, 1971.
Rehearing Denied Aug. 23, 1971.

[85 S.D. 631] Martens, Goldmith, May, Porter & Adam, Pierre, for plaintiff-appellant.

Keith A. Tidball, State's Atty., Edward M. Blando, Deputy State's Atty., Pierre, for defendants-respondents.

BANDY, Judge. ^*

Pursuant to the requirements of SDCL 10--4--15 the South Dakota Education Association, a corporation, made application claiming tax exempt status for its property in Pierre, Hughes County, South Dakota. Upon recommendation of the Director of Taxation of that county the Board of County Commissioners, sitting as the County Board of Equalization, denied the application. On appeal the State Board of Equalization affirmed the Hughes County

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Board. The matter was appealed to the Circuit Court of Hughes County which, after hearing, found the property to be subject to taxation. The present appeal followed.

While the express wording of the last sentence of SDCL 10--11--42 would seem to prevent a multiple appeal in all instances, SDCL 10--11--43 expressly providing for appeals from decisions of the State Board of Equalization makes it clear that SDCL 10--11--42 is only intended to prevent appeals to the State Board of Equalization following an appeal to the Circuit Court.

Some slight contention is made that Ch. 316, Laws of 1967, now SDCL 10--4--15 through 22, is unconstitutional in that it delegates powers and functions to the County Board of Equalization without sufficient guides or standards. There is no merit in this claim.

SDCL 10--4--1 makes all property in this state subject to taxation unless expressly excepted by statute. SDCL 10--4--9 [85 S.D. 632] is the only exemption statute which could possibly apply to the property here involved. The appellant has made its claim under that statute. SDCL 10--11--29 requires the County Board of Equalization to place property which may have been omitted through error or oversight on the tax books. The only effect of Ch. 316, Laws of 1967, is to call attention to specific properties claiming exemption and require the County Board of Equalization to perform the duty of determining whether each of such properties comes within the statutes granting exemption. It seems rather pointless to contend that the very statute under which the appellant seeks exemption is unconstitutional. In such case the property would clearly be taxable under SDCL 10--4--1.

It is urged that the appellant is, by virtue of the provisions of SDCL 10--4--9, a 'benevolent society' and is therefore entitled to exemption of its property. The applicable portions of this statute read:

'All property belonging to any charitable, benevolent, or religious society and used exclusively for charitable, benevolent, or religious purposes, shall be exempt from taxation. * * * The term 'benevolent society' as used herein shall include all * * * educational associations * * * operating without profit and devoting their resources to the promotion of virtue by * * * educational * * * methods.'

Examination of this statute discloses that it does not purport to grant exemption to all property of all educational associations operating without profit and devoting their resources to the promotion of virtue by educational methods. Organizations which satisfy that portion of the statute are merely entitled to be classified as 'benevolent' societies. Again, mere ownership of property by a 'benevolent society' is not the criterion for tax exemption. It is only property which is 'used exclusively for * * * benevolent * * * purposes'.

In South Dakota State Medical Association v. Jones, 82 S.D. 374, 146 N.W.2d 725, this court recognized that the several[85 S.D. 633] limitations above enumerated are contained in this statute and said:

'Whether the property in question was devoted to benevolent purposes is a question of fact and the burden of proof is on the association to show that the specific property for which exemption is claimed is within the contemplation of the statute.'

Inclusion of the words 'used exclusively' would support the conclusion that any use whatever for purposes other than benevolent would require denial of exempt status. However, in State ex rel. Eveland v. Erickson, 44 S.D. 63, 182 N.W. 315, this court, predicating its opinion somewhat upon the provisions of Art. 8, § 1 of the South Dakota Constitution, determined that a strict construction must be a reasonable construction. This was adhered to in National College of Business v. Pennington County, 82 S.D. 391, 146 N.W.2d 731.

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The phrase 'used exclusively for * * * benevolent * * * purposes' prompted this court to say in South Dakota State Medical Association v. Jones, supra, that the test is the 'purpose of the use'. In that opinion, in amplification of the test, this court quoted from Massachusetts Medical Soc. v. Assessors of Boston, 340 Mass. 327, 164 N.W.2d 325:

'An institution will be classed as charitable if the dominant purpose of its work is for the public good and the work done for its members is but the means adopted for this purpose. But if the dominant purpose of its work is to benefit its members or a limited class of persons it will not be so classed, even though the public will derive an incidental benefit from such work.'

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