Sunset Memorial Gardens, Inc. v. Idaho State Tax Commission

• Decision Date: 02 July 1958
• Docket Number: No. 8617,8617
• Citation: 80 Idaho 206,327 P.2d 766
• Parties: In the Matter of the Tax Exemption of SUNSET MEMORIAL GARDENS, Inc., a Corporation, Respondent and Cross-Appellant, v. IDAHO STATE TAX COMMISSION, Appellant and Cross-Respondent.
• Court: Idaho Supreme Court

Page 766

327 P.2d 766

80 Idaho 206

In the Matter of the Tax Exemption of SUNSET MEMORIAL GARDENS, Inc., a Corporation, Respondent and Cross-Appellant, v. IDAHO STATE TAX COMMISSION, Appellant and Cross-Respondent.

No. 8617.

Supreme Court of Idaho.

July 2, 1958.

Graydon W. Smith, Atty. Gen., Elbert E. Gass, Asst. Atty. Gen., Lloyd G. Martinson, Pros. Atty., Moscow, for appellant.

Felton & Bielenberg, Moscow, for respondent.

DUNLAP, District Judge.

Sunset Memorial Gardens, Inc., a Corporation, plaintiff in the court below, and hereinafter designated as corporation, is an Idaho corporation, existing under and pursuant to the general corporation laws of the state, also known as the Business Corporation Act [Chapter 1, Title 30, Idaho Code].

The corporation was organized on or about November 1, 1954; its purpose, as stated in its articles, are, inter alia:

1) To engage in the cemetery business and to carry on, conduct and operate a place for the receiving, placing and burial of the dead;

2) To construct, buy, build, or acquire such buildings as may be necessary or convenient in conducting such business, including the building and construction of monuments, mausoleums, markers, tombstones, chapels and cemeteries;

3) To establish and maintain trust funds for the purpose of providing endowment care of burial lots;

4) To lay out and plat lands into cemeteries;

5) To receive, acquire, hold, purchase, convey, mortgage and/or lease, real property, and to assign, transfer, mortgage, dispose of, sell or lease, rights, franchises, real or personal property of the corporation, and to hold, acquire, purchase, guarantee, hold, mortgage, own, vote, sell and pledge and deal in shares, bonds, securities, debentures, and other evidence of indebtedness of other corporations;

6) To issue shares and admit shareholders, and to sell their shares for the payment of assessments or installments;

7) To issue bonds, debentures or other securities, and to mortgage or otherwise encumber its real or personal property;

8) To conduct business in this and every other state.

The capital stock consists of 100 shares common voting stock, with no par value.

It thus appears the corporation was organized for the purpose of seeking pecuniary profits, and it was so stipulated.

By-laws and rules and regulations for carrying on the business were duly adopted, from which it appears that ownership, use, and transfer of lots is strictly for burial purposes, subject to the rules, regulations, and control of the corporation.

Interment rights can only be purchased or transferred with the written approval of the corporation's authorized officers.

All purchase agreements are to provide for a payment of 15 per cent of the purchase price of each lot for the corporation's endowment care fund, and the income earned from this fund is to be used for the general care, maintenance and embellishment of the cemetery, and the lots therein, and are to be applied in such manner as the corporation shall determine to be for the best interests of the cemetery generally.

Lot owners are vested with ownership only for interment purposes; general care of the cemetery grounds is assumed by the corporation under the provisions of the endowment fund trust agreement.

No persons other than officers and employees of the cemetery are allowed to perform any work on any grave or lot; only such memorials as are selected by the cemetery or approved by the cemetery may be placed on the lots; any memorials not purchased through the cemetery must, before being placed, have been analyzed by an independent laboratory, and an affidavit as to its composition furnished, and all memorials are to be installed by the cemetery on foundations built by the cemetery.

Installation and continual care charge are on a square inch basis; the cemetery's removal charges for a body are not less than $50, payable in advance. If it is necessary for remains to be temporarily placed in a receiving vault a cash deposit of not less than $125 is required; transfers of ownership in lots are subject to a $5 charge.

The corporation, on or about October 29, 1952, acquired for its purposes, 10, more or less, acres of land located in Latah County, and immediately thereafter and prior to January 1, 1955, proceeded to plat 5 acres into cemetery lots, roads and entrances; the remaining 5 acres has not been improved but is being held by the corporation for anticipated needs as a cemetery.

It was stipulated that the land so acquired is a place, an area of ground set apart for the burial of human dead and is open pursuant to the corporation's articles, by-laws, and rules, to the use of the public for that purpose, and was so used during the calendar year 1955, and that the 5 acres not platted held in reserve for anticipated future needs is so held in good faith for use as a cemetery, subject to the terms and conditions of its articles, by-laws, rules and regulations, and is not disproportionate in extent to the population of the community to be served, and a reasonable expectation of the service to be rendered.

This 5-acre tract will be hereinafter referred to as the easterly 5 acres, and the platted portion will be hereinafter referred to as the westerly 5 acres.

The County Assessor assessed the 10-acre tract for the year 1955 and levied a tax thereon in the sum of $143 which was paid by the corporation under protest, and it filed a claim with the County Board of Equalization on the ground that the property

'* * * is a place and an area of ground, set apart for the burial of the human dead, and is open, under reasonable regulations, to the use of the public for the burial of the human dead, and was during the calendar year 1955, used as such by the public at large.

'* * * is used, owned, and held by said corporation as a public cemetery; that the above described premises and the ownership thereof by said corporation is in all respects a public cemetery, as the phrase, 'all public cemeteries' is used in Section 63-105, subdivision 14, as amended in 1949, Idaho Code; and that said premises and said corporation are exempt from the aforesaid taxation for the year 1955 and thereafter.'

The claim was disallowed by the County Board from which the appeal was taken to the State Tax Commission, which after hearing, entered its order sustaining the assessment.

Appeal was taken to the District Court, and the court ordered, adjudged and decreed to effect, that

'* * * Latah County's action in assessing, levying and collecting general property taxes' against the five (5) acres that had been platted and used for cemetery purposes is illegal and void, and said lower court ordered Latah County to refund one-half of the general property taxes paid by the respondent.

'The lower court also ordered, adjudged and decreed that 'Latah County's action in assessing, levying and collecting general property taxes' against the five (5) acres not platted and not used for cemetery purposes was legal and valid.'

The commission appeals from the order in the first paragraph of the decree set out above, and the corporation from the order in the second paragraph.

Appellant and cross-respondent hereinafter referred to as the commission, alleges the following assignments of error:

In adjudging and decreeing that the assessment and taxes levied against the five (5) acres of land platted and used for cemetery purposes was illegal and void.

In adjudging and decreeing that Latah County refund one-half (1/2) of the general property taxes paid by respondent.

On the cross-appeal the corporation as cross-appellant also alleges two assignments of error on the part of the trial court.

'In adjudging and decreeing that the assessment and taxes levied against the five acres of land not platted and used for cemetery purposes was legal and valid.'

'In adjudging and decreeing (at least by inference) that the westerly five acres of respondent's described real property is not used for cemetery purposes.'

Therefore, there are two issues or questions for our determination.

1) Is the respondent, a corporation organized under the Business Corporation Act [Chapter 1, Title 30, Idaho Code], and formed for the express purpose of profit, a 'public' cemetery within the intent and meaning of Section 63-105(14), Idaho Code, so as to entitle it as a matter of legislative grace to an exemption from ad valorem taxation?

2) If the first issue is answered affirmatively, then a second question necessarily must be answered: Are all of the respondent's lands exempt from taxation, or only such lands as have been platted and from which burial lots have been sold and in which bodies have been interred?

So far as we have been able to ascertain, the precise questions involved here have never been considered by this court, and it is so conceded by the parties.

The corporation bases its claim for exemption on Section 63-105, Idaho Code, the pertinent portion of which reads as follows:

'63-105. Property exempt from taxation.--The following property is exempt from taxation: * * *

* * *

* * *

'14. All public cemeteries. * * *.'

Thus it clearly appears under this section 'public' cemeteries are exempt from taxation and the prime question here is, was respondent a public cemetery within the intent and meaning of the legislative enactment.

The corporation, in support of its claim of exemption, cites the following cases: City of Wichita v. Schwertner, 130 Kan. 397, 286 P. 266; Parker v. Fidelity Union Trust Co., 2 N.J.Super. 362, 63 A.2d 902; Davie v. Rochester Cemetery Ass'n, 91 N.H. 494, 23 A.2d 377; Smith & Gaston Funeral Directors v. Wilson, 262 Ala. 401, 79 So.2d 48; Mountain View Cemetery Co. v. Massey, 109 W.Va. 473, 155 S.E. 547; Suttles v. Hill Crest Cemetery, 87 Ga.App. 343, 73 S.E.2d 760; State v. Crystal Lake Cemetery Ass'n, 155 Minn. 187, 193 N.W. 170; In re Mountain State College, Inc., Assessment, 117 W.Va. 819, 188 S.E. 480; State v. Browning, 192 Minn. 25...