Trustees of Hamline University v. Peacock
| Decision Date | 19 May 1944 |
| Docket Number | No. 33533.,No. 33531.,33531.,33533. |
| Citation | 14 N.W.2d 773,217 Minn. 399 |
| Parties | TRUSTEES OF HAMLINE UNIVERSITY v. PEACOCK et al. STATE v. TRUSTEES OF HAMLINE UNIVERSITY. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin and Ramsey Counties; E. A. Montgomery and Clayton A. Parks, Judges.
Application by the Trustees of Hamline University of Minnesota to register title to certain land in which H. I. Peacock, the State of Minnesota, and others were made defendants and proceedings by the State of Minnesota against the Trustees of Hamline University of Minnesota to enforce payment of taxes on real estate remaining delinquent January, 1939, 1940 and 1941. From the two judgments in favor of the Trustees of Hamline University, the State of Minnesota appeals.
Affirmed.
Michael J. Dillon, Co. Atty., Frank J. Williams, Asst. Co. Atty., and Karl W. Windhorst, Asst. Co. Atty., all of Minneapolis, James F. Lynch, County Attorney, and Andrew R. Bratter, Asst. Co. Atty., both of St. Paul, for appellant.
G. A. Youngquist and Donald E. Bridgman, both of Minneapolis, and W. P. Westfall, of St. Paul (John F. D. Meighen, of Albert Lea, James H. Hall, of Marshall, and F. W. Thomas and Fowler, Youngquist, Furber, Taney & Johnson, all of Minneapolis, of counsel), for respondent.
We have here appeals from two judgments rendered in and by the district courts of Hennepin and Ramsey counties sustaining the claim of Hamline University of Minnesota (hereinafter referred to as "Hamline") that certain real estate owned by it is immune to general taxation. Since both cases involve that determinative factor as the basis for decision, we proceed directly to that issue.
The properties sought to be taxed are not directly devoted to any of Hamline's educational functions. We are concerned here only with real estate owned by it devoted to commercial and other kindred activities for which it receives rental income from its tenants. All these properties represent investments from its endowment fund, which, with other income investments such as mortgages, bonds, and the like, now amount to approximately $2,000,000. The value of its educational plant and facilities is nearly $1,000,000, but that, of course, is not involved in this litigation. The income from the mentioned properties, including that derived from other investments of its endowment fund, is needed and necessarily required by Hamline in carrying on its educational functions.
Hamline's freedom from the general burden of taxation shared by other taxpayers has for its foundation the legislative grant of claimed immunity contained in the territorial charter creating Hamline "a body politic and corporate" for the stated purpose of affording "ample facilities to perfect the scholar." L. 1854, c. 43, §§ 1, 4.
The provisions and requirements of the act were promptly accepted on May 9, 1854, when Hamline's trustees held their first meeting. On July 12 they decided to establish a preparatory department, then considered an immediate necessity, since high schools within the territory of Minnesota were practically unknown. That department was opened in November with an enrollment of "18 ladies and 21 gentlemen." The college proper opened in 1857, and its courses included "Mental and Moral Sciences, Belles Lettres, Ancient Languages, Mathematics, Natural Sciences, Law, Biblical Literature, Music, and German." Thus it became, and until 1869 remained, the only institution of college rank in this state. The first college class was graduated in 1859. During the following years the number of its students ranged from 18 to 60 in the college department, and from 73 to 182 in the preparatory department.
Financial difficulties beset the trustees almost from the start. The 1857 panic visited this region, then undeveloped and sparsely settled, as it did the country at large. When the effects of that had somewhat subsided, the Civil War broke out, further complicating the already precarious financial condition of the new college. Thus, in the spring of 1869, debts and operating expenses had so far depleted its treasury and even its credit that the commencement exercises had to be held in March instead of in June.
During the fall of 1869, because of the financial difficulties facing them, the trustees were in a dilemma. The new state had gone through the trying days of the Civil War and the Indian uprisings and had suffered generally from grasshopper and other insect plagues. With a depleted treasury and no credit upon which to lean, the trustees concluded to suspend the activities of the institution for the time being. However, they met officially many times and by various means sought to reopen the college, never surrendering their determination to make the institution a going concern. As a matter of fact, committees were appointed to get various cities in the state to make propositions of financial help in consideration of having Hamline moved from Red Wing, where it was originally built, to one of these new locations. The creation of an endowment fund was sought. Proposals came from Red Wing, Faribault, and Rochester. In 1871 the legislature passed Sp.Laws 1871, c. 112, at the solicitation of the trustees, giving them authority to locate Hamline at such place as they might select, with certain conditions and limitations not important here. St. Paul and Minneapolis, now generally referred to as the "Twin Cities," then had a combined population of about 40,000 inhabitants. It was thought that this would afford Hamline a more satisfactory location than any of the other places we have mentioned. St. Paul offered to donate 80 acres of land (Hamline's present site), of the estimated value of $28,800. That proposal was accepted and the land conveyed. The money to meet this and other obligations came principally from these two cities, St. Paul raising $15,943 and Minneapolis $28,761. These sums, however, were made up mostly of pledges, many of which were never paid.
A campaign for an endowment fund was begun in 1871, and total pledges of about $104,000 were secured, but many of these were not paid. After an 11-year, uphill fight for existence, the brave and persistent men who founded the institution finally succeeded in reopening both the preparatory and college departments on September 22, 1880. Ever since then its educational functions have been steadily going forward. As an institution of higher learning it is now safely on the highway of financial stability. The services it has rendered for nearly 90 years and those which it may safely be expected to render for an indefinite time in the future greatly exceed the amount of taxes now or which are likely to be involved in the foreseeable future.
Such, briefly, are the facts. To arrive at the heart of the problem before us, it may be helpful briefly to review constitutional limitations, as well as certain state and federal legislation having a reasonably direct relation thereto. These, in the order of their respective dates of passage or when they became operative, are as follows: The organic act creating Minnesota's territorial status was passed by congress March 3, 1849. Section 4 thereof provided: "* * * the legislative power and authority of said Territory shall be vested in the governor and a legislative assembly."
The powers thus granted are found in § 6 and so far as here material provided: "And be it further enacted, That the legislative power of the Territory shall extend to all rightful subjects of legislation, consistent with the Constitution of the United States and the provisions of this act; but no law shall be passed interfering with the primary disposal of the soil; no tax shall be imposed upon the property of the United States; nor shall the lands or other property of non-residents be taxed higher than the lands or other property of residents"; and all legislation passed pursuant thereto "shall be submitted to the Congress," and, if by it "disapproved shall be * * * of no effect." (Italics supplied.)
The territorial act giving rise to Hamline's claim of immunity to or exemption from taxation is found in L.1854, c. 43, § 11, and as far as here material reads: "all corporate property belonging to the institution, both real and personal is, and shall be free from taxation."
On February 26, 1857, congress passed an act authorizing "the inhabitants of that portion of the territory of Minnesota which is embraced within" the limits therein fixed "to form for themselves a constitution and state government, by the name of the state of Minnesota, and to come into the Union on an equal footing with the original states, according to the federal constitution." Pub.St.1849-1858, p. xli, § 1. In conformity therewith, our constitution was framed and later duly adopted by the electors of the territory. Art. IX, § 3, thereof provided (Id. p. lvii): "Laws shall be passed taxing all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise, and also all real and personal property, according to its true value in money; but * * * academies, colleges, universities, and all seminaries of learning * * * shall, by general laws, be exempt from taxation." Under the heading "Schedule" (p. lxii) it was provided:
On May 11, 1858, congress enacted (p. lxx): "That the state of Minnesota shall be one, and is hereby declared to be one of the United States of America, and admitted into the Union on an equal...
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