Case Title: Metro. Gov. of Nashville v. Bd. of Equal.

Citation: 817 S.W.2d 953

Docket Number: 

State: tennessee

Court: Tennessee Supreme Court

Date: 1991-09-03T00:00:00Z

Document:
817 S.W.2d 953 (1991) The METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Plaintiff-Appellant, v. TENNESSEE STATE BOARD OF EQUALIZATION, et al, Defendants-Appellees. Supreme Court of Tennessee, at Nashville. September 3, 1991. Rehearing Denied October 28, 1991. Susan Short Jones, Stephen Nunn, Dept. of Law of the Metropolitan Government of Nashville and Davidson County, Nashville, for plaintiff-appellant. Charles W. Burson, Atty. Gen. and Reporter, William P. Sizer, Asst. Atty. Gen., Nashville, for defendant-appellee. REID, Chief Justice. This case presents a direct appeal, pursuant to § 16-4-108, Tennessee Code Annotated (T.C.A.), by the Metropolitan Government of Nashville and Davidson County from the decree of the chancery court holding that the 1984 amendment to T.C.A. § 67-5-212(a)(1), relating to the exemption from taxation of church parsonages, does not violate Article II, Section 28 of the Tennessee Constitution, which authorizes the legislature to exempt real and personal property "used purely and exclusively for religious, charitable, scientific or educational purposes." The language of the amendment and its purpose as confirmed by its legislative history require the determination that the amendment is unconstitutional. Metropolitan Government filed a complaint for declaratory judgment against the State Board of Equalization, which is a state agency charged with the duty to effect the assessment of taxes in Tennessee, and against approximately 140 corporations or unincorporated associations that own church parsonages within Davidson County. The complaint seeks a declaration that the 1984 amendment to T.C.A. § 67-5-212(a)(1), which provides that "a church parsonage shall be deemed to be property used purely and exclusively for religious purposes," violates Article II, Section 28 of the state constitution. Although Article II, Section 28 was amended in 1972 to become effective January 1, 1973, the provision material to the issue in this case has remained essentially the same since the adoption of the 1870 Constitution. As amended in 1972, the section provides: Article II, Section 28 is not self-executing, nor does it establish public policy regarding exemptions from taxation. Its purpose and effect were stated by the Court in City of Nashville v. State Board of Equalization, 210 Tenn. 587, 360 S.W.2d 458 (1962), as follows: 360 S.W.2d at 462. Since the adoption of the 1870 Constitution, the legislature has enacted legislation granting exemptions to certain property. Prior to the 1984 amendment, T.C.A. § 67-5-212(a)(1) was as follows: The 1984 amendment, the constitutionality of which is the issue before the Court, added the following sentence at the end of T.C.A. § 67-5-212(a)(1): (Emphasis added.) Section 67-5-212(b)(1), T.C.A., the validity of which is not attacked in this case, sets forth the procedure for claiming exemption from taxation. That section provides: The chancery court found that in adopting the 1984 amendment the legislature did not exceed its constitutional authority to grant property tax exemptions for property used for religious purposes. The chancellor's conclusion is set forth as follows: The issue is whether the legislature, in adopting the 1984 amendment to T.C.A. § 67-5-212(a)(1), exceeded its constitutional authority to grant property tax exemptions for property used for purely religious purposes. The responsibility for determining the meaning of a constitutional provision rests in the last analysis with the judiciary, but courts must give careful consideration to the interpretation placed upon the constitution by the legislature. LaFever v. Ware, 211 Tenn. 393, 365 S.W.2d 44 (1963). The approach used by courts in this state in construing a property tax exemption for a religious organization was stated by the Court in Mid-State Baptist Hospital, Inc. v. City of Nashville, 211 Tenn. 599, 366 S.W.2d 769 (1963), as follows: 366 S.W.2d at 773. Under our liberal construction of tax exemptions for religious organizations, the test for determining whether the use requirement of Article II, Section 28 and T.C.A. § 67-5-212(a)(1) is met is as stated in the Court's decision in Methodist Hospitals of Memphis v. Assessment Appeals Comm'n, 669 S.W.2d 305 (Tenn. 1984): 669 S.W.2d at 307. Pursuant to the application of the use requirement as described above, employee parking lots owned by non-profit hospitals, employee lunch rooms owned by non-profit corporations, and off-campus housing facilities owned by non-profit educational institutions have been found to be exempt from property taxation. See Vanderbilt v. Ferguson, 554 S.W.2d 128 (Tenn. App. 1976); Shared Hospital Services Corporation v. Ferguson, 673 S.W.2d 135 (Tenn. 1974); George Peabody College for Teachers v. State Board of Equalization, 219 Tenn. 123, 407 S.W.2d 443 (1966). Article II, Section 28 authorizes the legislature to exempt from taxation property that is "held and used for purposes purely religious, charitable, scientific, literary or educational," as that provision has been construed by court decisions. However, the legislature is not authorized to grant exemptions to property that does not meet that requirement, and it may not resort to the linguistic device of stating that certain property "shall be deemed" to qualify for a stated constitutional purpose without regard to whether such property in fact so qualifies. The legislative history of the 1984 amendment indicates that it was enacted in response to an opinion by the Attorney General. On December 6, 1983, the Attorney General issued Opinion No. 418, in which he stated that the "parsonage exemption" (and several other property tax exemptions) The Attorney General quoted the following language from the Court of Appeals' decision in Blackwood Brothers Evangelistic Association v. State Board of Equalization, 614 S.W.2d 364 (Tenn. Ct. App. 1980): 614 S.W.2d at 366. The amendment, Chapter No. 766 of Public Acts of 1984, was enacted in the session *956 of the legislature immediately following the issuance of the Attorney General's opinion No. 418. The legislative history of this statute confirms that it was intended to countermand opinion No. 418 and to provide that church parsonages, per se, are exempt from property taxation. The 1984 amendment directs that parsonages be treated as property satisfying the religious purpose requirement of article II, section 28 and the statute, without regard to whether particular parsonages in fact satisfy such use requirement. This legislative mandate cannot contravene the constitutional limitation. Holding that the 1984 amendment to T.C.A. § 67-5-212(a)(1) is unconstitutional is consistent with decisions by the Court. In State National Bank v. City of Memphis, 116 Tenn. 641, 94 S.W. 606 (1906), the Court dealt with a statute imposing a property tax on the outstanding capital stock of certain financial institutions. The statute provided that, in computing the assessable value of such stock, the value of certain Tennessee state bonds owned by the financial institution was to be deducted. The Court found that that provision constituted a property tax exemption that was not permitted by Article II, Section 28. The Court stated as follows: 116 Tenn. at 653-54, 94 S.W. 606. In Cumberland University v. Golladay, 152 Tenn. 82, 274 S.W. 536 (1924), the Court dealt with the constitutionality of a statute that granted an exemption from property taxation for bonds issued by non-profit educational corporations. The Court described the effect of the statute as follows: 152 Tenn. at 85, 274 S.W. 536. The Court in Cumberland University found that the legislature had exceeded its power under Article II, Section 28. It stated, 152 Tenn. at 86, 274 S.W. 536. The question whether the parsonages owned by the defendants qualify for exemption from property taxation under Article II, Section 28 of the Tennessee Constitution and T.C.A. § 67-5-212(a)(1) is not before the Court in this declaratory judgment action. However, they may qualify under the Tennessee Constitution and the statute (without regard to the 1984 amendment thereto, herein found to be invalid) if they are used purely and exclusively for religious purposes. In Blackwood Brothers, 614 S.W.2d at 364, the Court of Appeals held that the State Board of Equalization definition of a parsonage as the home of a full-time regular minister of a local church was not arbitrary or capricious. The result of that holding was that only parsonages which comport with that definition meet the constitutional requirement of use for purely religious purposes. The statute thus provides an exemption from taxation for a parsonage if the church owns the property in question, the church has not claimed an exemption for another parsonage, the property is not more than three acres, and the property is occupied by a full-time minister of that local church. The statute does not preclude inquiry by the taxing authority as to these factual issues. *957 In summary, the amendment made to T.C.A. § 67-5-212(a)(1) by Chapter No. 766 of Public Acts of 1984 is in violation of Article II, Section 28 of the Constitution of Tennessee and is, therefore, invalid. The remaining portion of T.C.A. § 67-5-212(a)(1) remains in effect. The order of the chancery court is reversed, and this case is remanded for any necessary proceedings consistent with this opinion. Costs are taxed to the appellees. O'BRIEN, DAUGHTREY and ANDERSON, JJ., and CANTRELL, Special Judge.