South Dakota Ed. Ass'n v. Dromey

Citation188 N.W.2d 833,85 S.D. 630
Decision Date29 July 1971
Docket NumberNo. 10823,10823
PartiesSOUTH DAKOTA EDUCATION ASSOCIATION, Plaintiff-Appellant, v. Joe DROMEY, et al., Defendants-Respondents.
CourtSupreme Court of South Dakota

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 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 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 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.

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.'

While the record before this court would support the contention that the work of the South Dakota Education Association is, in some degree, beneficial to the students in the common schools of South Dakota, the question presently before this court is whether the appellant has sustained its burden of proving that primacy of purpose?

The trial court found:

'The property in question is not used exclusively for charitable, benevolent or religious purposes; and it is further found that the primary purpose of the S.D.E.A. is for the advancement of its members.'

The precise question then is whether, on the record made by the appellant alone, it must be said that this finding is 'clearly erroneous'? SDCL 15--6--52(a). In re Estate of Hobelsberger, S.D., 181 N.W.2d 455. The cited statutory rule also contains the provision 'and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.'

The application for exemption, prepared and filed by the Executive Secretary of the South Dakota Education Association, is on a printed form provided by the Commissioner of Revenue of the State of South Dakota. In line with the statutory provisions for exemption it lists 17 main and subclassifications. Among these are 'Educational Institution (Non-profit)' and under the main heading of 'Benevolent Society' it has a sub-classification of 'Educational Association'.

In point of fact, the application now before the court lists the applicant as an 'Educational Institution (Non-profit)' and although the Executive Secretary testified that this was probably the result of mistake and oversight on his part, no application to amend or change was made before the County Board of Equalization, the State Board of Equalization or the Circuit Court.

The appellant called but one witness, its Executive Secretary. The thrust of his testimony was toward establishment of the claim that the major objective of the South Dakota Education Association is improvement of the professional skills of its teacher members, redounding to the benefit of education. It is well illustrated in the following answer:

'Well, we feel that the purpose of our organization is to improve teachers and we feel that advancement or (sic) the causes of education has been stated in our By-Laws as the major objective and we feel that you cannot improve the quality of teachers without helping education or vice versa'.

Accepted at its face value this would appear to be no more than the work of 'Educational Institutions', an extension of the education courses in colleges and universities. There is no claim of direct contact with any common school student.

The Articles of Incorporation of the South Dakota Educational Association do nothing to support the present claim of the appellant. This incorporation was accomplished in 1907 using a printed form which is in no manner applicable to the aims and objects which are now claimed. This form was designed to be used by...

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  • Standing Rock Sioux Tribe v. Janklow
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    • U.S. District Court — District of South Dakota
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    ...expressly exempted by statute"); Appeal of Sioux Valley Hosp. Ass'n, 513 N.W.2d 562, 564 (1994) (same); South Dakota Educ. Ass'n v. Dromey, 85 S.D. 630, 188 N.W.2d 833 (1971) (same). The proration of the excise tax as adopted by the Department in its rules is not expressly authorized by sta......
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    ...tribunal [State Board of Equalization] shall exclude an appeal to the other. This court in the case of South Dakota Education Association v. Dromey, 85 S.D. 630, 188 N.W.2d 833 (1971), held that SDCL 10-11-42 is intended to prevent appeals to the State Board of Equalization following an app......
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