Case Title: IN THE MATTER OF THE ASSESSMENT OF REAL PROPERTY OF INTEGRIS REALTY CORPORATION

Citation: 

Docket Number: 96504

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2002-10-29T00:00:00Z

Document:
IN THE MATTER OF THE ASSESSMENT OF REAL PROPERTY OF INTEGRIS REALTY CORPORATION  IN THE MATTER OF THE ASSESSMENT OF REAL PROPERTY OF INTEGRIS REALTY CORPORATION 2002 OK 85 58 P.3d 200 Case Number: 96504 Decided: 10/29/2002 Modified: 11/07/2002 THE SUPREME COURT OF THE STATE OF OKLAHOMA IN THE MATTER OF THE ASSESSMENT OF REAL PROPERTY OF INTEGRIS REALTY CORPORATION, an Oklahoma not-for-profit corporation (Parcel Nos. 2847-14-225-0640); Integris Realty Corporation, an Oklahoma corporation; Integris Prohealth, Inc., an Oklahoma corporation; and Baptist Medical Plaza Associates, Ltd., an Oklahoma limited partnership, Appellees, v. Oklahoma County Board of Tax Roll Corrections and Mike Means, Oklahoma County Assessor, Appellants APPEAL FROM THE DISTRICT COURT, OKLAHOMA COUNTY HONORABLE KARL R. GRAY, TRIAL JUDGE ¶0 Appellees - claiming that a portion of a building used by Integris-related nonprofit, charitable entities was exempt from taxation under the provisions of Okla. Const. art.10, § 6 - sought a pro rata exemption from ad valorem taxes. Baptist Medical Plaza Associates, Ltd. [BMPA] paid all assessed taxes and then sought a refund. The Oklahoma County Board of Tax Roll Corrections denied the sought-after relief. Appellees appealed to the district court for a de novo trial and the district court allowed the exemption. Appellants [Oklahoma County Board of Tax Roll Corrections and the County Assessor Mike Means] appeal from the district court's summary judgment for the Integris-related entities. THE DISTRICT COURT'S JUDGMENT IS AFFIRMED. Robert L. Garbrecht and Drew D. Webb of McAfee & Taft, Oklahoma City, Oklahoma, for the appellees Gretchen Crawford, Assistant District Attorney for Oklahoma County, Oklahoma City, Oklahoma, for the appellants LAVENDER, J. ¶1 Today's cause requires the Court to determine whether earlier-recognized constitutional guidelines (for determining availability to a charity of an exemption from [ad valorem] taxation under the provisions of Okla.Const. art. 10, § 6 I FACTS AND PROCEDURAL HISTORY ¶2 Integris Prohealth, Inc. (a charitable corporation) is the owner of certain real estate which was leased to BMPA during all times relevant to the requested tax-exemption. BMPA constructed a multi-story office building containing 146,006 square feet of rentable space upon the leased acreage. BMPA leased 44,645 square feet to Integris Realty Corporation [Corporation] during the 1997 to 1999 tax years and 45,191 square feet during the 2000 tax year. Corporation sublet the leased space to various Integris nonprofit entities who used the space for charitable, educational and scientific purposes. Appellees contended below that the exclusive use of the leased facilities for charitable purposes qualified it for exemption from ad valorem taxation.3 " 'It is immaterial what name the institution, organization, or society may bear, or who may own the property in question. But it is the use to which the property is dedicated and devoted which constitutes the test as to whether it is exempt.' " [citing Beta Theta Pi Corp. v. Bd. of Com'rs, County asserts that when deciding Cox the Court focused on use alone without giving adequate consideration to the exclusivity of use required under the applicable constitutional provisions. ¶4 BMPA paid all assessed ad valorem taxes and then timely pursued a refund of the same. The Oklahoma County Board of Tax Roll Corrections denied the sought-after exemption and the Integris entities appealed the denial to the district court. Integris moved for summary judgment which was granted. County then brought today's appeal, over which we previously retained jurisdiction. II THE STANDARD OF REVIEW ¶5 Today the Court is called upon to review a trial court's grant of summary judgment. Such review is conducted de novo. ¶6 Today's cause also presents a question of law concerning the scope of the constitutionally-mandated exemption from ad valorem taxation for real property used by charities. Questions of law are reviewed de novo which necessitates a plenary, independent and non-deferential examination of the trial court's legal rulings. III THE DISTRICT COURT CORRECTLY APPLIED OKLA.CONST. ART. 10, § 6's PROVISIONS IN DETERMINING APPELLEES' ENTITLEMENT TO SUMMARY JUDGMENT ¶7 County predicates its denial of an ad-valorem-tax exemption for the space leased to the Integris-related charitable entities upon the fact that BMPA (the building owner) is economically benefitted by the lease payments received. The Court's attention is further drawn to the fact that BMPA is leasing space in the same building to for-profit organizations. County's legal argument is that the (economic) use of rental space in BMPA's building for financial gain affronts art. 10, § 6's exclusive-use provision. ¶8 County does not refute that the Integris-related entities which are physically using the space (for which the exemption is claimed) are charitable.11 Rather in support of the tax-exemption denial County points to BMPA's (the building owner) legal status which is neither that of a 501(c)(3) organization under applicable Internal Revenue Code provisions nor that of a charitable entity under Oklahoma statutes. County asserts that under the provisions of 68 O.S.2001 § 2887(9)12 the latter facts disqualify BMPA from receiving the requested exemption. The essence of County's legal argument is that the term "used exclusively for religious and charitable purposes" (as employed in the art. 10, § 6 grant of a tax-exemption) should be re-defined to include both economic and physical use components and that both uses must be of a charitable character. To accomplish this County would have the Court overrule Cox v. Dillingham, 1947 OK 250, 184 P.2d 976 , which focuses solely on the physical use (for a constitutionally recognized exempt-purpose) of the property sought to be taxed. A THE CONSTITUTIONAL EXEMPTION FROM TAXATION HERE IN ISSUE IS PREMISED UPON THE EXCLUSIVE (PHYSICAL) USE OF THE SOUGHT-TO-BE-TAXED REAL PROPERTY FOR A CHARITABLE PURPOSE ¶9 Oklahoma's extant jurisprudence teaches that the proper interpretation [58 P.3d 203] of the words "used exclusively" in the constitutional provision in issue is "the use to which the property is dedicated and devoted."13 The Court in Autumn House v. State ex rel. Oklahoma Tax Com'n, 1991 OK 73, 814 P.2d 1036 , 1038, further clarified the framers' intent in crafting the art. 10, § 6 exemption, when it held that the phrase "used exclusively" was not to be viewed in the abstract but rather in the context of constitutionally- recognized exempt purposes. In Autumn House the Court also held that "use" denotes the application or employment of something for a purpose. Id. at 1039. Extant jurisprudence teaches that the absence or presence of pecuniary profit to the property's owner is not what determines whether or not a property is exempt from taxation. Rather the physical use to which the property is devoted is the determinative factor.14 ¶11 In seeking Cox's repudiation County is attempting to resurrect a construction of the pertinent art. 10, § 6 language which was earlier considered and rejected by the Court not in Cox v. Dillingham but rather in Oklahoma County v. Queen City Lodge No. 197, I.O.O.F., ¶12 The Court in Queen City Lodge succinctly stated the principles under which the Court would consider overruling longstanding precedent such as Cox, when it quoted Corpus Juris Secundum:[58 P.3d 204] It is generally held that a court will not as a rule inquire into the construction of a constitutional provision or the constitutionality of a statute or ordinance where this question has been passed on in previous decisions by a court of last resort . . . unless such previous decisions are manifestly erroneous, and there are cogent reasons for overruling them; and this is especially true where such decisions have been long relied on as authoritative, or where such decisions have become rules of property. . . .[Emphasis in original.] Queen City Lodge , 156 P.2d at 345 . County offers, and we see, no cogent reason why the Court's earlier construction of "used exclusively" should be changed. The Queen City Lodge Court's analysis is extensive and rings as true today as it did in 1945. The framers of Oklahoma's Constitution no doubt were mindful that charitable institutions such as the Integris-related entities provide services which relieve the State of burdens which it would otherwise have to bear and in crafting the art. 10, § 6 tax-exemption intended to foster such charitable acts. The record demonstrates that the non-profit Integris entities were given credits against rentals in the amounts of the tax exemptions allowed. This clearly comports with what the framers sought to accomplish. For these reasons we affirm our earlier precedent. B TO THE EXTENT THE PROVISIONS OF 68 O.S.2001 § 2887(9)17 IMPOSE A GREATER BURDEN UPON THE CONSTITUTIONAL TAX-EXEMPTION AUTHORIZED BY OKLA.CONST. ART. 10, § 6's TERMS THAN THE ORGANIC LAW ITSELF DOES, THE STATUTE IS CONSTITUTIONALLY INFIRM ¶13 Section 2887(9) sets as a precedent to entitlement to an art. 10, § 6 tax exemption that the property owner be either a § 501(c)(3) charitable institution or a § 501(c)(19) veterans organization under applicable federal law or that it charge no rent for the space leased or used by a charitable organization. The provisions of art. 10, § 6 do not condition receipt of a tax exemption upon such terms rather the constitutional language in issue simply requires that the property (for which the exemption is claimed) be used exclusively for religious and charitable purposes. ¶14 As discussed above it is the "use" to which property is dedicated and devoted which is determinative of entitlement to the art. 10, § 6 tax exemption. The above statutory restrictions focus upon (a) the property owner's legal and tax status and (b) how it will economically use the property for which the ad-valorem- tax-exemption is sought. The added statutory qualifications for receipt of the constitutionally-mandated exemption are not predicated upon how the property is physically used. The placement of the Court's imprimatur upon the contested statutory language would effect an abrogation of the framers' intent - as identified in Oklahoma's extant jurisprudence18 - in crafting a constitutional-based tax exemption. This we will not do. Hence, to the extent that the provisions of 68 O.S.2001 § 2887(9) impose greater burdens on entitlement to receipt of an art. 10, § 6 tax-exemption than Oklahoma's organic law itself requires, the same are disapproved. C THE DISTRICT COURT'S SUMMARY JUDGMENT FOR THE INTEGRIS-RELATED ENTITIES IS AFFIRMED ¶15 The evidentiary materials submitted by the Integris-related entities demonstrate [58 P.3d 205] there is no factual controversy since those seeking the constitutionally-mandated tax exemption do charitable work and were in fact physically using the leased space for charitable purposes. Also, it is not refuted that the Integris-related charitable entities under their sub-leases will be given the economic benefit of the sought-after ad valorem tax exemption. The district court properly applied the Court's holding in Cox which is an accurate and correct exposition of the entitlement-parameters for the art. 10, § 6 tax exemption. Hence, summary judgment is affirmed. IV CONCLUSION ¶16 County today questions the viability of extant jurisprudence which teaches that entitlement to a tax exemption - authorized under the terms of art. 10, § 6 - from ad valorem taxation is predicated solely upon the physical use to which the property is dedicated and devoted. Upon review we conclude that the Court's earlier pronouncements correctly state what the framers of Oklahoma's Constitution intended in crafting art. 10, § 6. In recognition of the burden on state government which is lifted by the charitable acts of others, the framers allow an exemption from taxation for property which is "used exclusively" - i.e., property which is physically dedicated and devoted - for charitable purposes. The statutory language employed in 68 O.S.2001 § 2887(9) to the extent that it creates a burden on entitlement to an art. 10, § 6 exemption in a way inconsistent with the constitutional provision's language is disapproved. THE DISTRICT COURT'S JUDGMENT IS AFFIRMED. ¶17 HARGRAVE, C.J., WATT, V.C.J., HODGES, LAVENDER, SUMMERS and WINCHESTER, JJ., concur. ¶18 OPALA, KAUGER and BOUDREAU, JJ., dissent. FOOT