Youth Camps, Inc. v. Comfort Independent School Dist.

• Decision Date: 12 February 1986
• Docket Number: No. 04-83-00058-CV,04-83-00058-CV
• Citation: 705 S.W.2d 333
• Parties: 31 Ed. Law Rep. 287 YOUTH CAMPS, INC., Appellant, v. COMFORT INDEPENDENT SCHOOL DISTRICT, Appellee.
• Court: Texas Court of Appeals

Page 333

705 S.W.2d 333

31 Ed. Law Rep. 287

YOUTH CAMPS, INC., Appellant, v. COMFORT INDEPENDENT SCHOOL DISTRICT, Appellee.

No. 04-83-00058-CV.

Court of Appeals of Texas San Antonio.

Feb. 12, 1986.

Rehearing Denied March 12, 1986.

John E. Bevil, San Antonio, for appellant.

Robert M. Huey, McCreary, Huey & Veselka, C. Richard Fine, Austin, for appellee.

Before CADENA, C.J., and CANTU and REEVES, JJ.

OPINION

CADENA, Chief Justice.

This case involves the right of Comfort Independent School District (District) to collect taxes on land and personalty in Kerr County owned by Youth Camps, Inc. (Youth Camps). Youth Camps admits that the district is entitled to judgment for the taxes for the tax years 1976-81 both inclusive, unless Youth Camps established that the property is exempt from taxation because Youth Camps is a "youth development association." A jury resolved all factual issues in favor of Youth Camps, but the trial court granted District's motion for judgment n.o.v. and rendered judgment for the recovery of the delinquent taxes, penalties, interest, attorney's fees and costs.

District's motion alleged that Youth Camps was not entitled to the claimed exemption because it had not "exhausted its administrative remedies" because it failed to apply to the District's officers for an exemption and because there was no evidence to support the jury's answers to the special issues. The judgment purports to be based on the fact that Youth Camps failed to apply for an exemption.

On this appeal, Youth Camps presents a single point of error in which it attacks the judgment solely on the ground that the trial court erred in holding that an application for exemption was required.

Article VIII, § 2 of the Texas Constitution authorizes the Legislature to exempt from taxation land used exclusively and reasonably necessary "in conducting any association engaged in promoting the religious, educational and physical development of boys, girls, young men or young women, operating under a State or National Organization of like character." The authorized exemption was granted in 1937 by the enactment of TEX.REV.CIV.STAT.ANN. art. 7150, § 2a (Vernon 1960) (Repealed 1979), was in force during the tax years 1976-77-78-79. The claim of Youth Camps to exemption for the years 1980 and 1981 is governed by the current statute, TEX.TAX CODE ANN. § 11.19 (Vernon 1982). ¹

Section 2a of article 7150 (Vernon 1960) (Repealed 1979), exempted from taxation

... all property owned or used exclusively and reasonably necessary, in conducting any association engaged in the joint and threefold religious, education and physical development of boys and girls, young men and young women, operating under a State or National Organization of like character, and not leased or otherwise used with a view to profit other than for the purpose of maintaining the buildings and Association, and all endowment funds of the above mentioned religious institutions, not used with a view to profit but for the purpose of maintaining the Association and buildings in doing religious work and for the education or physical development of boys and girls, young men and young women ...

Prior to January 1, 1982, there was no statutory provision requiring the exemption claimant to apply to the taxing agency for an exemption as a youth development association. TEX.TAX CODE ANN. § 11.43 (Vernon 1982) which now provides that the exemption will be granted only if application for it is made at least one time, did not take effect until January 1, 1982, and has no application to this case which involves only years prior to 1982.

Whenever the legislature intended that an exemption should not be recognized until application for an exemption was made to administrative officials, it had no difficulty in expressing such intent. Thus, TEX.REV.CIV.STAT.ANN. art. 7150, § 1 (Vernon 1960) (Repealed 1979), as originally enacted in 1937, exempted from taxation the property of public school houses and churches, but expressly provided that schools and churches desiring the exemption "shall first" file an application for such exemption and, in explicit language, provided that all property not listed in such application would be subject to taxation. Since no such requirement was found in any statute applicable to the exemption which Youth Camps is claiming in this case prior to 1982, we do not feel free to read such a requirement into the statutes.

There are cases rejecting a claim of exemption in situations where no previous application for exemption had been made. But in such cases the statute or constitutional provision granting the exemption expressly required the prior presentation of a written application for exemption. See, e.g., Gragg v. Cayuga Independent School District, 539 S.W.2d 861, 869-70 (Tex.1976), cert. denied, 429 U.S. 973, 97 S.Ct. 478, 50 L.Ed.2d 581 (1977) and Moore v. White, 569 S.W.2d 533, 535 (Tex.Civ.App.--Corpus Christi 1978, writ ref'd n.r.e.), which involved the "exemption" granted to lands used for agricultural purposes in TEX. CONST. art. VIII, § 1-d. That constitutional provision expressly requires the filing of an application with administrative officials.

District argues that the exemption defense is not available to Youth Camps because TEX.REV.CIV.STAT.ANN. art. 7329 (Vernon 1960) (Repealed 1979), which was in effect during all years relevant to this case, expressly limited the defenses in a suit for the collection of taxes to those asserting (1) that the defendant was not the owner of the land at the time the suit was filed; (2) that the taxes sued for have been paid; or (3) that the taxes are in excess of the limit allowed by law. The defense of excessiveness applies only to the excess. The fact that the property is exempt from taxation is not listed as a permissible defense in a suit for the collection of taxes.

District admits that the courts have recognized defenses other than those enumerated in TEX.REV.CIV.STAT.ANN. art. 7329 (Vernon 1960) (Repealed 1979), but contends that in all such cases the defense involved the assertion of rights guaranteed by the Constitution itself, as opposed to rights resting solely on legislative grant. Examples are the defense of deprivation of property without due process of law and lack of equality and uniformity in taxation. See, e.g., Town of Pleasanton v. Vance, 277 S.W. 89 (Tex.Comm'n App.1925, judgmt. adopted), and Aycock v. City of Fort Worth, 371 S.W.2d 712, 715 (Tex.Civ.App.--Fort Worth 1963, writ ref'd n.r.e.). District also points out that cases, such as Stein v. Lewisville Independent School District, 481 S.W.2d 436 (Tex.Civ.App.-- Fort Worth 1972, writ dism'd), cert. denied, 414 U.S. 948, 94 S.Ct. 272, 38 L.Ed.2d 203 (1973), which recognized exemption as a defense, involve exemptions granted by self-executing provisions of the Texas Constitution, such as the agricultural use "exemption" and are, therefore, "constitutionally mandated," as opposed to the exemption on which Youth Camps relies, which is merely authorized by the Constitution and became effective only after legislative action.

Acceptance of District's argument would create some difficulty. It would make the statutory requirement that churches and schools apply for exemption somewhat meaningless in cases where the application was denied by the taxing agency, since the statute totally excludes the defense of exemption and contains no language permitting assertion of the exemption defense where proper application has been made. If the statute means what it says, there is no way of reading into it a provision adding the defense of exemption in cases where timely application for exemption has been made.

In the case before us, the taxing agencies of this state lacked the power, in view of the exemption statute, to tax the exempt property by any procedure. If the failure to follow the prescribed procedure invalidates a tax on property which is subject to taxation, ² an attempt to tax property which is beyond the power of the taxing agency to tax must also be declared invalid, and the defense that the property in question is not subject to taxation cannot be taken away by mere legislative fiat. It cannot be held, without raising serious constitutional questions, that the legislature may deprive a citizen of the right to question the power of a taxing agency to tax his property.

TEX.REV.CIV.STAT.ANN. art. 7329 (Vernon 1960) (Repealed 1979) did not deprive the taxpayer in this case of the right to assert that its property was not subject to taxation.

District further asserts that Youth Camps is estopped from relying on the exemption because it waited until the tax assessments were made, the tax rolls prepared, and a suit to collect the delinquent taxes had been filed before asserting its claim of exemption. According to District, it is administratively impracticable to recognize exemptions "literally years after the tax rolls have been prepared, tax rates adopted and budgets formulated" on the basis of assumed taxable values. We reject this argument as well. District was aware of Youth Camps' contention that its property was exempt years before the taxes involved in this case were levied. This claim was persistently presented to District orally for several years. The fact that District was unresponsive to the claim does not mean that it was lulled into anything resembling a sense of security by ignorance of the claim of exemption. District was aware of all of the facts at all times and there was no failure by Youth Camps to make its position known.

Even if we were inclined to read into the applicable exemption statute a requirement of a prior administrative request for...