Woman's Club of Topeka v. Shawnee County, 68701

CourtUnited States State Supreme Court of Kansas
Citation853 P.2d 1157,253 Kan. 175
Docket NumberNo. 68701,68701
PartiesThe WOMAN'S CLUB OF TOPEKA, Kansas, Appellant, v. SHAWNEE COUNTY, Kansas, The Board of Shawnee County Commissioners, and The Shawnee County Appraiser, Appellees.
Decision Date28 May 1993

Syllabus by the Court

1. The rules of construction applicable in determining a claim for exemption from ad valorem taxation are stated and applied.

2. In an appeal by the Woman's Club of Topeka from the district court's order affirming the order of the Board of Tax Appeals, it is held: The district court did not err in finding (1) that there was substantial evidence to support BOTA's finding that the primary purpose of the Club is to provide social meetings and activities for the enjoyment of its members and that the principal use of the property is to benefit its members, (2) that such finding was not arbitrary or capricious, and (3) that the Club's application for exemption from ad valorem taxation pursuant to Art. 11, § 1(b) of the Kansas Constitution and K.S.A.1992 Supp. 79-201 Second was properly denied.

Gerald L. Goodell, of Goodell, Stratton, Edmonds & Palmer, Topeka, argued the cause, and Catherine M. Walberg, of the same firm, was with him on the briefs, for appellant.

Russell P. Wright, Asst. County Counselor, argued the cause, and Linda P. Jeffrey, County Counselor, was with him on the brief, for appellees.

ALLEGRUCCI, Justice:

The Woman's Club of Topeka (Club) appeals from the district court's decision which affirmed a Board of Tax Appeals (BOTA) order. BOTA denied the Club's application for exemption from ad valorem taxes pursuant to Art. 11, § 1(b) of the Kansas Constitution and K.S.A.1992 Supp. 79-201 Second. The appeal was transferred to this court from the Court of Appeals pursuant to K.S.A. 20-3018(c).

At various times in the past, the Club has been exempted from ad valorem taxes. The most recent order of exemption dates from April 9, 1974. At that time, BOTA ordered that Lots 278, 280, 282, 284, 286, 288, Topeka Ave., Topeka, "be not entered on the tax rolls of Shawnee County, Kansas, for 1974 and be exempt from taxation so long as it is owned by the applicant herein and used exclusively for charitable and/or benevolent purposes."

When the Club moved to a new building in 1982, exemption for the new building and real property was not sought. The Club asserts that it was "through inadvertence" that exemption was not sought. The Club added that "its volunteer board merely failed to realize the necessity for annually requesting exemption." There are no record references in the appellant's brief for these assertions. In the affidavit which appears to comprise the principal evidence submitted to BOTA, there is no explanation why exemption was not sought. In it the following explanation was offered for why the Club renewed its request: "Taxes in recent years have increased significantly such that they are a threat to the existence of the club. Thus, the Woman's Club of Topeka is again seeking to claim exemption for its real property from ad valorem taxation."

The Club now is located at 5221 S.W. West Drive, Topeka. In 1991, the Club filed an application for exemption from ad valorem taxes with BOTA. The statute which was identified as authorizing the requested exemption is 79-201 Second.

The statement of facts provided to BOTA by the Club included a joint affidavit of Gerald Goodell, attorney for the Club, and Mary Hafenstine, president of the Club, photocopies of the Club's annual brochures from the years 1987 through 1991 (referred to in the joint affidavit as 1988-1991 annual reports), and an affidavit of Adeline Towle, 1990-91 treasurer of the Club.

The following pertinent statements appear in the affidavit of Goodell and Hafenstine:

"15. As indicated by the 1988-1991 annual reports of the club (Exhibit D to Attachment A), the activities engaged in by the Woman's Club of Topeka are benevolent, charitable, literary or educational. The club makes significant monetary donations to scholarships as well as to the community in general. For example, the club donated $1,599.28 to Stormont-Vail School of Nursing, $1,242.54 to Washburn University, and $489.50 to other charitable and benevolent functions in 1989 through 1990.

"16. As indicated by the annual reports, the building has been used to promote music, literature, religion, benevolent and educational purposes programs. (Exhibit D to Attachment A.)

"17. For example, on May 2, 1991, Pastor Susan Candea-Kromm spoke to the club on 'Spiritual Growth.' On February 21, 1991, the Topeka High School madrigals performed at the club. In 1989 and 1990 and in 1991, the club made visits to hospitals and nursing homes....

....

"19. The club also uses and has used the property for bridge clubs, flea markets, and receptions. These activities do not prevent the club from obtaining an exemption because as shown by Exhibit D to Attachment A, these uses are minimal in scope and insubstantial in nature and are incidental to the exempt purposes of the club. K.S.A. [79-201] Second.

"20. The club allows the World Wide Church of God to use the club's building on Saturday and allows the Church of Jesus Christ of Latter Day Saints to use the building on Sundays. The churches use the property for religious purposes.

"21. That the club allows the churches to use space at the club's building does not render it ineligible for the exemption. The club does not allow such use as an investment; the club is merely being reimbursed for the actual expense incurred by the club in allowing the church to use the space for religious purposes. As indicated by the Affidavit of Adeline Towle, Treasurer, (Exhibit E to Attachment A), the churches use the building one-third of the time. The total annual cost for maintaining the building is $50,094.63. (Affidavit of Adeline Towle). One-third of $50,094.63 is $16,698.21. The churches pay only $15,055.00 of the expenses. The use of the property by the churches fits under K.S.A. 79-201 Second. The club is being reimbursed for the actual expense of using the property for tax exempt purposes."

Included in the Club's annual brochures are treasurers' reports. In the 1989-90 treasurer's report, for example, the disbursements totaled $65,415, with $179 for Gifts and Bequests, $3,331 for Scholarship Expense, and $409 for Charity and Benevolence.

Also included in the annual brochures are listings of "Special Days" and calendars of Club Programs. In the 1990-91 listing of "Special Days," for example, there are a number of card parties and duplicate bridge benefits, a style show, flea market, new and used sale, quilt show, hobby day, fine arts and open house memorial service, member recognition day, scholarship day, and Christmas charities day. The regular Club Programs for 1990-91 occurred on Thursdays, October through June. The calendar lists presentations by many musicians, scholars, and gardeners and by literary, religious, and political figures. The meetings begin at approximately mid-morning, sandwich a luncheon, and continue into the afternoon.

When the Club appealed BOTA's order to the district court, it added to the record a separate affidavit of Mary Hafenstine which lists "examples of educational, religious, and literary programs" which had been presented to members from 1985 through June 1992. The affidavit contains several affirmative statements of public participation in evening events. It does not appear from the record that public attendance is expected or encouraged for the Thursday programs.

Hafenstine's supplemental affidavit also contains the following information about charitable activities:

"2. The Woman's Club uses its property to make yearly donations to: Hospice, the Topeka Rescue Mission, the Kansas Children's Service League, the Salvation Army, Let's Help, the Capper Foundation, the Topeka State Hospital, TARC, Kansas Neurological Center, the Marian Clinic, the Better Business Bureau of Northeast Kansas, the Ronald McDonald House, Community Eye Care, KTWU Channel 11, Kansas State Historical Society, and YWCA. Club members volunteer for the Christmas Angel Tree and other volunteer activities.

"3. The Club started the Daisy Chain at Topeka High School and furnished clothes and shoes for students in the chain who could not afford clothing. The Club instigated traveling libraries and art galleries and donated monies to purchase pictures for school rooms. The Club donated funds to help purchase the Lincoln [statue] on the State grounds. The Club provided the seats for the State Capitol grounds. The Club helped refurbish Holbrook Hall, at Washburn College in Topeka.

"4. The Topeka Woman's Club has contributed $41,427.72 to the Woman's Club 1000 Scholarship Fund at Washburn University, $28,987.11 to the Woman's Club Scholarship Fund at Stormont-Vail School of Nursing, and $24,000 in direct scholarships to Stormont-Vail School of Nursing."

The affidavit of the Club's 1991-92 treasurer, Delores Mueller, also was added to the record in the district court. The information in it is the same as the information in p 21 of the affidavit of Goodell and Hafenstine and in the affidavit of Towle.

The decision of BOTA states in pertinent part:

"The Board finds that here, the applicant's primary purpose is to serve its members by providing a setting for social gatherings. The income derived from leasing the property to churches and club dues is used partially for the social enjoyment and benefit of members of the club. Under the principles set forth by the Kansas Supreme Court, the applicant's use of the property to promote the well being of its members fails to satisfy the exclusive use requirement of K.S.A. 79-201 Second. Furthermore, the literary, educational, benevolent and charitable uses are only incidental uses of the property. Again, the actual use of the property is for the benefit of the members. The Board, therefore, concludes that the request for exemption...

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