Trustees of Wofford College v. City of Spartanburg

• Decision Date: 11 November 1942
• Docket Number: 15464.
• Parties: TRUSTEES OF WOFFORD COLLEGE v. CITY OF SPARTANBURG et al.
• Court: South Carolina Supreme Court

23 S.E.2d 9

201 S.C. 315

TRUSTEES OF WOFFORD COLLEGE v. CITY OF SPARTANBURG et al.

No. 15464.

Supreme Court of South Carolina

November 11, 1942

On Rehearing Dec. 8, 1942.

Appeal from Common Pleas Circuit Court, of Spartanburg County; E. H Henderson, Judge.

Action by the Trustees of Wofford College against the City of Spartanburg and others, to restrain defendants from attempting to collect taxes levied on certain properties because of statutory tax exemptions. From a decree for defendants, plaintiff appeals.

The decree of Judge Henderson follows:

The plaintiff, The Trustees of Wofford College, is an eleemosynary corporation chartered by an Act of the General Assembly of South Carolina; and it is operated without pecuniary profit for the education of young men.

It is the owner of an endowment fund, the income from which is used in the award of scholarships and for supplementing the income necessary for the operation of the College. Prior to 1929, a large part of the endowment fund was invested in first mortgages of real estate, most of which was located in the City of Spartanburg.

There are nine pieces of property involved in this action, all of which were acquired by the plaintiff prior to the commencement of this action, through foreclosure of real estate mortgages given to secure loans made from the endowment funds of the College. All of the properties are located in the City of Spartanburg. Some of them are improved and some of them are unimproved. In each case plaintiff alleges that the income from the property was not sufficient to pay the taxes. None of the property involved was ever occupied by the College. The purpose of this suit, among other things, is to adjudicate the claims of the plaintiff to the claimed tax exemptions. The sole legal question to be passed on by the Court at this time is the constitutionality and validity of certain acts of the General Assembly under which the tax exemptions are claimed and which are hereinafter considered.

The plaintiff contends that by reason of certain acts of the Legislature passed in 1932, 1935, and 1936, the properties involved in this action are exempt from taxation and asks that the City of Spartanburg, its agents and representatives be restrained from attempting to collect the taxes levied and assessed on account of the said properties because of the exemptions granted by said acts.

Plaintiff also asks for the injunction against a collection of said taxes upon other grounds which are not before the Court at the present time.

The defendants, in their answers, among other defenses contend that the acts of the Legislature are invalid and of no effect, for the reason that they violate Article X, Section 4, of the Constitution of 1895, in that they attempt to exempt from taxation real estate beyond the buildings and premises actually occupied by the College.

The cause now comes before me on an application for an injunction, at the Fall, 1941, term of the Court of Common Pleas and has been fully argued by able counsel for both sides.

In 1932, the General Assembly passed an act, which is as follows:

"No 839.

"An Act to exempt from taxation certain real estate belonging to eleemosynary institutions and educational institutions in the state.

"Section 1. Real Estate Owned by Orphanages and Educational Institutions Exempt from Taxes for Five Years.--Be it enacted by the General Assembly of the State of South Carolina: That all real estate owned, now or hereafter, by orphanages and educational institutions in this State acquired by gift devise, or under proceedings for the foreclosure of mortgages securing loans made by orphanages and educational institutions as an investment of their endowment funds and other trust funds, until such real estate can be disposed of, be, and the same is hereby, exempt from taxation, for a period of five years unless the income from said property during that period becomes sufficient to pay the taxes.

"§ 2. 1931 Taxes to be Abated.--That all taxes for the year 1931 charged against the real estate referred to in Section 1 of this Act shall be abated by proper authority.

"§ 3. That all Acts or parts of Acts inconsistent with this Act are hereby repealed.

"§ 4. This Act shall take effect upon its approval by the Governor.

"Approved the 6th day of April, 1932."

(Acts of 1932, page 1457.)

This act was amended in 1935, so as to make it more clear and definite. Acts of 1935, page 234.

Subsequently, in 1936, another act was passed by the Legislature, as follows:

"No. 900.___

"An Act to exempt from taxation certain real estate belonging to eleemosynary institutions and educational institutions in the state.

"Whereas many schools, colleges, and other institutions of learning, and many charitable institutions in the nature of asylums for the infirm, deaf and dumb, blind, idiotic and indigent persons, and many orphanages, in this State having trust or endowment funds, have hitherto invested them in obligations secured by mortgages of real estate in this State; and,

"Whereas on account of economic conditions many of these institutions have been compelled to take title to such real estate; and,

"Whereas said trust or endowment funds were exempt from taxation under an expressed provision of the Constitution of this State as long as they were represented by obligations of indebtedness above referred to; and,

"Whereas in keeping with the spirit of the Constitution it is desirable that the exemption from taxation of such trust or endowment funds shall continue and shall apply to said property even though it may temporarily be represented by titles to real estate,

"Now, Therefore,

"Section 1. Certain Real Estate of Orphanages and Educational Institutions Exempt From Taxes.--Be it enacted by the General Assembly of the State of South Carolina: That all real estate owned, now or hereafter, by orphanages and educational institutions in this State, acquired under proceedings for the foreclosure of mortgages securing loans made by orphanages and educational institutions as investments of their endowment funds, and also trust funds, be and the same is hereby exempt from taxation, including taxes due at the time of foreclosure sale and now unpaid, for a period of five years, unless the income from said property during that period becomes sufficient to pay the taxes. Provided, That Cherokee County be exempted from the provisions of this bill.

"§ 2. All Acts or parts of Acts inconsistent with this Act are hereby repealed.

"§ 3. This Act shall take effect immediately upon its approval by the Governor.

"Approved the 6th day of June, 1936."

Acts of 1936, page 1652.

These Statutes, which were passed subsequent to the enactment of Section 2578, subdivision 4, of the Code, fully cover the facts of the present case, and so the question to be decided is: Are the acts constitutional and valid, or are they in conflict with the proviso of Article X, Section 4, of the Constitution?

That Section provides: "Section 4. There shall be exempted from taxation all county, township and municipal property used exclusively for public purposes and not for revenue, and the property of all schools, colleges and institutions of learning, all charitable institutions in the nature of asylums for the infirm, deaf and dumb, blind, idiotic and indigent persons, except where the profits of such institutions are applied to private uses; all public libraries, churches, parsonages and burying grounds; but property of associations and societies, although connected with charitable objects, shall not be exempt from State, County or municipal taxation: Provided, That as to real estate this exemption shall not extend beyond the buildings and premises actually occupied by such schools, colleges, institutions of learning, asylums, libraries, churches, parsonages and burial grounds, although connected with charitable objects."

In approaching this question we must keep in mind the well recognized principle that the Court should not declare an act of the General Assembly unconstitutional unless its invalidity appears beyond a reasonable doubt, and every presumption must be indulged in favor of its constitutionality. McKiever v. City of Sumter, 137 S.C. 266, 135 S.E. 60.

The legislative power of the people of the State of South Carolina is vested in the General Assembly. It is not a body of delegated power, as is the Congress, but its legislative power is supreme, unless limited by the Constitution itself.

The broad scope of this legislative power is very clearly set forth in the case of Duke Power Company v. Bell, where it is said: "The supreme legislative power of the State is vested in the General Assembly. State v. Aiken, 42 S.C. 222, 20 S.E. 221, 26 L.R.A. 345. The provisions of the State Constitution are not a grant but a limitation of legislative power, so that the Legislature may enact any law not expressly, or by clear implication, prohibited by the Constitution of the State or nation. Fripp v. Coburn, 101 S.C. 312, 85 S.E. 774. The power of taxation is a legislative power, and knows no limitations, except those imposed expressly or by plain implication in the State or Federal Constitution. 26 R. C.L. 86. 'The power to prescribe what property shall be taxed implies the power to prescribe what property shall be exempt, and, in the absence of a special constitutional provision to the contrary, the Legislature may exempt such classes of property from taxation as in its opinion the public policy of the State requires.' 26 R. C.L. 297, § 262; Gibbons v. District of Columbia, 116 U.S. 404, 6 S.Ct. 427, 29 L.Ed. 680; Duke Power Company v. Bell, 156 S.C. 299, 152 S.E. 865, 869.

The Legislature, then, having very great power to...