Vanderbilt University v. Cheney

• Decision Date: 31 March 1906
• Parties: VANDERBILT UNIVERSITY v. CHENEY, City Comptroller, et al.
• Court: Tennessee Supreme Court

94 S.W. 90

VANDERBILT UNIVERSITY v. CHENEY, City Comptroller, et al.

Supreme Court of Tennessee.

March 31, 1906.

Appeal from Chancery Court, Davidson County; John Allison, Chancellor.

Bill by the Vanderbilt University against H. J. Cheney, city comptroller, and others. From a decree dismissing the bill, complainant appeals. Reversed.

Stokes & Stokes and John J. Vertrees, for appellant. Hill McAlister, for appellee.

McALISTER, J.

This record involves a question of taxation and is presented to the court on a stipulation of agreed facts. The original bill herein was filed by the Vanderbilt University to enjoin the city authorities against the collection of taxes assessed against two pieces of property known as the "Vauxhall Flats" and the "Vanderbilt Law Building," owned by said educational corporation. On the hearing, the chancellor dismissed the bill and the university had appealed, assigning errors.

The material facts presented in the stipulation are:

(1) That the complainant, Vanderbilt University, is an educational institution, and the profits derived from both pieces of property sought to be assessed are applied solely to the purposes and needs of said University.

(2) The Vauxhall Flats is a building rented out by the Vanderbilt University to various tenants as living apartments, and that such tenants are of the same class and character of the tenants of other flat buildings and hotel buildings which are located in Nashville, and which pay ad valorem taxes to state, county and city. No portion of the university work is transacted in said building.

(3) The Vanderbilt Law Building is partially used for lecture rooms, library rooms, and as offices for the secretary of the faculty of the law school; but that the balance of said building constituting by far the major portion thereof, is rented out for offices and stores to various tenants, who transact therein their respective occupations, trades, and callings, and which said tenants are of the same class and kind as those who occupy various buildings owned by individuals and corporations in the city of Nashville. Only a portion of the value of the Vanderbilt Law Building is assessed for taxes, or so much thereof as is used for noneducational work.

(4) No question is made as to the regularity of either of said assessments, or that the amount levied is excessive.

The contention made on behalf of the university is: That upon the facts stipulated, the property assessed is used exclusively for educational purposes, and is therefore exempt from taxation, both by the Constitution and the statutory laws of the state. Article 2 § 28, of the Constitution of 1870, provides as follows: "All property, real, personal and mixed, shall be taxed, but the Legislature may except such as may be held by the state, by the counties, cities, and towns, and used exclusively for public or corporation purposes, and such as may be held and used for purposes purely religious, charitable, scientific, literary, or educational." Prior to the year 1899, the Legislature in the exercise of the power granted to it by the Constitution, exempted the following property from taxation, viz: "All property belonging to any religious, charitable, scientific, or educational institution, when used exclusively for the purposes for which said institution was created, or is unimproved and yields no income."

In State v. Fisk University, 87 Tenn. 234, 10 S. W. 284 it was laid down as a canon of construction that "statutes exempting property from taxation when held and used for purposes purely religious, charitable, scientific, literary, or educational, are less strictly construed than like statutes exempting property held and used for private gain, or individual profit." In that case it appeared that a portion of a lot belonging to Fisk University was cultivated; a crop of corn and vegetables being raised thereon. Stables and barns were also located on one corner of this lot; also one small frame building used for schoolrooms for students in the primary department; also another frame building for the intermediate department, built in 1887. Pupils in the college attended to the raising of corn, hay, and vegetables on this lot. Those so engaged received pay for their work in board and tuition. The corn and hay raised was fed to the cows and horses belonging to and connected with the college. The vegetables were used in the college messroom, in Jubilee Hall, used for college purposes merely.

It was held that this entire property was exempt from taxation under Acts 1893, p. 212, c. 105.

In University of the South v. Skidmore, 87 Tenn. 158, 9 S. W. 892, it was held that a charter exemption of realty under the Constitution of 1834 "from taxation so long as said land belongs to" an incorporated institution of learning, remains in force so long as title remains in the corporation. It does not depend upon the use made of the property. It was therefore held that the University did not so far renounce title as to defeat the exemption by giving leases thereof for terms of years, with renewal options to divers persons who built up a village thereon, the annual rent being reserved and devoted exclusively to the purposes of the university.

In M. E. Church South v. Hinton, 92 Tenn. 188, 21 S. W. 321, the provisions of our Constitution and statutory law exempting the property of religious and charitable institutions from taxation was considered. The exact question presented in that case was whether the personal property of the Methodist Publishing House, used in conducting its business, was exempt from ad valorem taxation. It appears that the corporation was placed by a charter under control of an unincorporated religious society or denomination, whose discipline provided that the entire net income arising from the business of the publishing house, consisting mainly of the publication and distribution of religious literature, should be applied exclusively to the benefit of the traveling supernumerary, superannuated, and worn-out preachers of such religious denomination, their wives, widows, and children. The court held that the publishing house was an institution created for both religious and charitable purposes; and that the ultimate use of its property...