Wisconsin Elec. Power Co. v. Department of Revenue

• Decision Date: 05 June 1973
• Docket Number: No. 182,182
• Citation: 59 Wis.2d 106,207 N.W.2d 841
• Parties: WISCONSIN ELECTRIC POWER CO., a Wis. corporation, Respondent, v. DEPARTMENT OF REVENUE, Appellant.
• Court: Wisconsin Supreme Court

Page 841

207 N.W.2d 841

59 Wis.2d 106

WISCONSIN ELECTRIC POWER CO., a Wis. corporation, Respondent, v. DEPARTMENT OF REVENUE, Appellant.

No. 182.

Supreme Court of Wisconsin.

June 5, 1973.

Robert W. Warren, Atty. Gen., E. Weston Wood and Allan P. Hubbard, Asst. Attys. Gen., Madison, for appellant.

A. William Finke, James D. Zakrajsheck and Carol A. Curran, Milwaukee, Robert H. Gorske, and Quarles, Herriott, Clemons, Teschner & Noelke, Milwaukee, of counsel, for respondent.

HEFFERNAN, Justice.

The recitation of the facts points out that, prior to the passage of ch. 206, Laws of 1969, property owners subject to the general property tax were exempt from assessment and taxation on certain air and water pollution-abatement property associated with the production of income. That exemption statute, sec. 70.11(21)(a), Stats., applied only to property subject to the general property tax, and not to public utilities, which are taxed on the basis of a special utilities tax imposed by ch. 76. Ch. 76, prior to 1969, therefore, did not afford the same exemptions to public utilities that were applicable to the owners of similar property under the general property tax laws. On November 16, 1969, sec. 76.02(10) was amended to incorporate by reference the exemption appearing in sec. 70.11(21)(a).

The narrowing question presented by this

The narrow question presented by this appeal is whether pollution-abatement equipment purchased and constructed by the Wisconsin Electric Power Company prior to 1969 under circumstances which would have afforded it an exemption from general property taxes, were they applicable, was exempt from public utility taxation for assessment periods subsequent to the passage of ch. 206, Laws of 1969. We conclude, following the plain and literal meaning of the two statutes, that the property in question qualified for that exemption and the exemption could be asserted upon the passage of ch. 206, Laws of 1969.

Tax exemptions are matters of legislative grace, and this court will not construe a statute to find an exemption where there is not clear evidence that such legislative grace was intended. It is the duty of one who would assert an exemption to bring himself within the terms of an exemption provision. Engineers & Scientists of Milwaukee, Inc., v. Milwaukee (1968), 38 Wis.2d 550, 553, 157 N.W.2d 572; Estate of Thomas (1957), 1 Wis.2d 402, 405, 84 N.W.2d 68. Taxation is the rule, and exemption from taxation is the exception which must be demonstrated by a clear expression of legislative intent. Alonzo Cudworth Post No. 23 v. Milwaukee (1969), 42 Wis.2d 1, 13, 165 N.W.2d 397; Evangelical Lutheran Church v. Shawano County (1949), 256 Wis. 196, 200, 40 N.W.2d 590. In Bethel Convalescent Home, Inc. v. Richfield (1961), 15 Wis.2d 1, 4, 111 N.W.2d 913, the court quoted with approval the following rule appearing in Madison Aerie No. 623 F.O.E. v. Madison (1957), 275 Wis. 472, 476, 82 N.W.2d 207, 210:

"Statutes exempting property from taxation are to be strictly construed and all doubts are resolved in favor of its taxability. To be entitled to tax exemption the taxpayer must bring himself within the exact terms of the exemption statute."

This court, nevertheless, has said in Columbia Hospital Asso. v. Milwaukee (1967), 35 Wis.2d 660, 668, 669, 151 N.W.2d 750, 754:

'However, a strict construction is nonetheless a construction, and an exemption statute need not be given an unreasonable construction or the narrowest possible construction. A 'strict but reasonable' construction seems to be the pithy and popular statement of the rule. . . . The difference between a liberal and a strict construction is best illustrated in those cases where the meaning of the language expressing the objective intent of the legislature is doubtful; in such cases, any doubt under the strict construction rule must be resolved against the exemption. Thus an exemption should be expressed in such clear language as to leave no doubt.' Accord: Engineers & Scientists, supra, 38 Wis.2d at page 553, 157 N.W.2d 572; Milwaukee Protestant Home v. Milwaukee (1969), 41 Wis.2d 284, 301, 164 N.W.2d 289.

Applying these principles, we are satisfied that a strict construction of the statute brings the pollution-abatement facilities of the Wisconsin Electric Power Company within the exemption. Sec. 76.02(10), Stats. excepts from taxation under sec. 76.13, 'treatment plant and pollution abatement equipment exempt under s. 70.11(21)(a).' Sec. 70.11(21)(a) provides that:

'All property purchased or constructed with the approval of the committee on water pollution, department of health and social services, a city council, a village board or county board pursuant to s. 59.07(53) or (85), for the purpose of abating or eliminating pollution of surface waters or the air, and all property purchased or constructed with the approval of the department of resource development or the department of natural resources . . . may be exempt under this provision.'

The exemption from tax purposes afforded by sec. 76.02(10), Stats., hinges upon satisfying the conditions imposed by sec. 70.11(21)(a). That section only requires that the property by purchased or constructed with the approval of one of the governmental agencies named therein. The stipulated facts reveal that the construction or purchase of the property in question was with the contemporaneous or prior approval of one of the agencies recognized by the statute. In respect to the Milwaukee County facility, approval was obtained from the Milwaukee County Department of Air Pollution Control. In the case of its Port Washington facility, approval was obtained from the City of Port Washington. These approvals were sufficient to trigger the eligibility of these properties to be exempt from future taxation upon the passage of ch. 206, Laws of 1969.

A literal reading of the statute places these properties squarely within the exemption afforded by law.

The Wisconsin Department of Revenue would, however, disagree with the literal meaning of the statute. It contends that the approval contemplated could only be an approval of a tax exempt status, and since the utility could not have the tax exempt status in respect to this property prior to 1969, the approval given before that time by the authorities recited in sec. 70.11(21)(a), Stats., was 'meaningless.' We do not agree.

The approvals authorized in sec. 70.11(21)(a), Stats., on their face, are not per se concerned with tax exemption. They are clearly approvals that are directed to effectuate 'the purpose of abating or eliminating pollution of surface waters or the air.' These approvals are designed to effectuate the public policy of assuring clean air and clean water. If that purpose is accomplished, the approved facility is awarded a tax exemption. The desired public purpose, however, of having proper anti-pollution facilities is accomplished upon the construction or purchase of the approved plant. The carrot of tax exemption is a subsequent reward bestowed as a matter of legislative grace upon those who have built or purchased approved facilities.

It should be borne in mind that the legislature is presumed to have known the contents of sec. 70.11(21)(a), Stats., when it incorporated it into the exemption for utility tax purposes. A plain reading of that incorporated statute reveals that one of the approving agencies was the Department of Resource...