Title: MONT DEACONESS HOSPITAL v CASCADE

State: montana

Issuer: Montana Supreme Court

Document:

No. 12599 I N T H E S U P R E M E C O U R T O F THE STATE O F M O N T A N A 1974 M O N T A N A D E A C O N E S S HOSPITAL, A NON-PROFIT CORPORATION, and PICKER CORPORATION, a New York Corpora t i o n , P l a i n t i f f s and Respondents, C A S C A D E COUNTY, a body p o l i t i c of t h e S t a t e of Montana e t a l . , Defendants and Appellants. Appeal from: District Court of t h e Eighth J u d i c i a l D i s t r i c t , Honorable R. J. Nelson, Judge presiding. Counsel of Record: For Appellants : J. Fred Bourdeau, County Attorney, Great F a l l s , Montana Michael T. Greely, Deputy County Attorney, argued, Great F a l l s , Montana For Respondents : Church, Harris, Johnson and Williams, Great F a l l s , Montana Earl J. Hanson argued, and Robert P. Goff argued, Great F a l l s , Montana For Amicus Curiae: Cure and Borer, Great F a l l s , Montana Submitted: March 20, 1974 Decided : APR 17 1974 Filed : APR 17 1 9 % M r . J u s t i c e Frank I. Haswell delivered t h e Opinion of t h e Court. This i s an a c t i o n t o recover t a x e s paid t o t h e defendant Cascade County on c e r t a i n personal property used exclusively f o r h o s p i t a l purposes under a l e a s e agreement between t h e p l a i n t i f f s . The Hon. R. J. Nelson, d i s t r i c t judge, granted p l a i n t i f f s ' motion f o r summary judgment. From t h i s judgment, t h e County appeals. P l a i n t i f f , Montana Deaconess Hospital, is a nonprofit h o s p i t a l i n Great F a l l s , Montana. The h o s p i t a l leased c e r t a i n X-ray equipment from t h e c o p l a i n t i f f , Picker Corporation, under an agreement f o r a s t i p u l a t e d monthly r e n t a l . I n a d d i t i o n t h e h o s p i t a l was required t o reimburse t h e Picker Corporation f o r any t a x e s assessed on t h e equipment. This X-ray equipment was used exclusively f o r h o s p i t a l purposes. O n March 29, 1972, t h e Cascade County t r e a s u r e r issued a personal property t a x statement f o r t h e year 1972 t o Picker Corporation i n t h e amount of $10,839.96. Included i n t h e s t a t e - ment was an amount of $8,004.62 assessed upon s a i d equipment leased by Picker Corporation t o t h e h o s p i t a l . Picker Corporation, believing s a i d taxes t o be due, paid t h e f u l l amount t o Cascade County. Subsequently they requested reimbursement from t h e hospi- t a l pursuant t o t h e t e r m s of t h e l e a s e . O n J u l y 12, 1972, both t h e h o s p i t a l and Picker Corporation p e t i t i o n e d t h e Cascade County commissioners f o r a refund of t h e t a x on t h e grounds t h a t t h e h o s p i t a l was a nonprofit corporation and t h e property was exempt from t a x a t i o n under s e c t i o n 84-202, R.C.M. 1947. The p e t i t i o n was f i l e d i n accord with s e c t i o n 84- 4176, R.C.M. 1947. The Board of County Commissioners denied t h e p e t i t i o n , and subsequently p l a i n t i f f s f i l e d t h i s complaint f o r refund i n d i s t r i c t c o u r t on October 4 , 1972. P l a i n t i f f s ' motion f o r summary judgment was granted on August 2 , 1973. From t h i s judgment t h e County has f i l e d t h i s appeal. I n addition t o t h e p a r t i e s t o t h i s appeal, t h e S i s t e r s of Charity of Providence of Montana, owners and operators of t h e Columbus Hospital i n Great F a l l s , appeared a s amicus c u r i a e by way of b r i e f and o r a l argument. The s o l e i s s u e presented f o r review is whether personal property leased by a nonprofit h o s p i t a l and used exclusively f o r h o s p i t a l purposes i s exempt from t a x a t i o n even though t h e l e s s o r , a p r i v a t e p r o f i t corporation, received a p r o f i t from s a i d lease. The p e r t i n e n t s t a t u t e involved i n t h i s a c t i o n i s s e c t i o n 84-202, R.C.M. 1947, which was enacted by t h e l e g i s l a t u r e pursuant t o a u t h o r i t y of A r t i c l e X I I , section 2 of t h e 1889 Montana Con- s t i t u t i o n , now A r t . V I I I , section 5 of t h e 1972 Constitution. Section 84-202 g r a n t s t a x exemptions f o r c e r t a i n c l a s s e s of prop- e r t y . That s e c t i o n s t a t e s i n p a r t : "The property of t h e United S t a t e s , t h e s t a t e , counties, c i t i e s , towns, school d i s t r i c t s , munic- i p a l corporations, public l i b r a r i e s , * * * such other property a s is used exclusively f o r a g r i - c u l t u r a l and h o r t i c u l t u r a l s o c i e t i e s , f o r educa- t i o n a l purposes, places of a c t u a l r e l i g i o u s wor- ship, h o s p i t a l s and places of b u r i a l not used o r held f o r p r i v a t e o r corporate p r o f i t * * * a r e exempt from taxation * * *." (Emphasis added.) The h o p s i t a l and Picker Corporation's argument is t h a t t h e s t a t u t e exempts, among o t h e r s , two c l a s s e s of property from taxation: property owned by c e r t a i n s p e c i f i e d e n t i t i e s and prop- e r t y used f o r c e r t a i n s p e c i f i c purposes. I n t h e f i r s t c l a s s of exemptions a l l property owned by governmental e n t i t i e s is exempt from taxation, regardless of t h e manner of its use. The second c l a s s of property exempted by t h e s t a t u t e i s property used ex- c l u s i v e l y f o r s p e c i f i c purposes, including use f o r h o s p i t a l pur- poses by nonprofit h o s p i t a l s . They argue t h a t t h e s t a t u t o r y exemp- t i o n i s not dependent upon ownership but exempts a l l property used exclusively f o r h o s p i t a l purposes by a nonprofit h o s p i t a l . It is the County's contention that every claim for' exemption from taxation should be denied unless the exemption is granted so clearly as to leave no room for any fair doubt. Cruse v. Fischl, 55 Mont. 258, 175 P. 878. The County argues that the language of section 84-202, R.C.M. 1947 is not clear and could be subject to several interpretations. The County contends that while the nonprofit hospitals themselves are clearly exempt from taxation, nothing contained in section 84- 202 exempts all property used exclusively for hospital purposes regardless of the commercial profit that may be derived from such property. The County argues that in the instant case Picker Corporation owns the property in question and derives a signifi- cant profit from the property. The County further contends that section 84-202 contains a strong legislative intent to prohibit exemptions where corporate or private profit is realized; thus, said X-ray equipment under lease to the hospital is a taxable interest in personal property. Allen v. Multnomah County, 179 Or. 548, 173 P.2d 475; Ross v. City of Long Beach, 24 Cal.2d 258, 148 P.2d 649. This same question was under consideration in N.W. Imp. Co. v. Rosebud Co., 129 Mont. 412, 288 P.2d 657. There this Court discussed the various views on the subject matter and demonstrated the split of authority throughout the country. That case, how- ever, may be distinguished. In N.W. Imp. Co., unlike the instant case, the Court found that the private company that was leasing property to the exempt school district was not deriving any econ- omic advantage from the lease of the building. The rental on the lease agreement was so adjusted that at the end of its estimated life the private company would have returned to it only the actual cost of construction without any interest. Although N.W. Imp. Co. is thus distinguishable, the reasoning used i n t h a t case may be extended t o exempt from taxation t h e property i n question here. This w e believe t o be i n accord with t h e l e g i s l a t i v e i n t e n t of s e c t i o n 84-202, R.C.M. 1947. It i s a w e l l accepted p r i n c i p l e of s t a t u t o r y construction t h a t t h e function of t h e Court is t o i n t e r p r e t t h e i n t e n t i o n of t h e l e g i s l a t u r e , i f a t a l l possible, from t h e p l a i n meaning of t h e words used, and i f t h e meaning of t h e s t a t u t e can be deter- mined from t h e language used, the Court i s not a t l i b e r t y t o add o r d e t r a c t language from t h e s t a t u t e i n question. Sections 93-401-15, 93-401-16, R.C.M. 1947; Nice v. S t a t e Board of Equal- i z a t i o n , 161 Mont. 448, 507 P.2d 527, 30 St.Rep. 284. The f a c t t h a t t h e s t a t u t e c r e a t e s several c l a s s e s of exemptions, based i n one case on "ownership" and i n t h e o t h e r c a s e upon "use", reveals a c l e a r l e g i s l a t i v e i n t e n t t o exclude "owner- ship" of property a s a c r i t e r i o n i n determining t h e a p p l i c a b i l i t y of t h e exemption t o property "used exclusively f o r h o s p i t a l s " . To r e q u i r e t h a t h o s p i t a l s own t h e property, i n addition t o t h e require- ment t h a t they use t h e property only f o r h o s p i t a l purposes, would n e c e s s i t a t e i n s e r t i n g t h e words "owned by" o r words of s i m i l a r import, so t h a t t h e r e l e v a n t clause would read "property owned by and used exclusively f o r * * * h o s p i t a l purposes." To i n s e r t these suggested words i n t o t h i s s t a t u t e would give t o it an added mean- i n g not t o be found i n the p l a i n and unambiguous language of t h e s t a t u t e . See Ross v. City of Long Beach, 24 Cal.2d 258, 148 P.2d 649; S c o t t v. Society of Russian I s r a e l i t e s , 59 Neb. 571, 81 N.W. 624. The l e g i s l a t i v e purpose i n c r e a t i n g t h e t a x exemption appears t o be lower c o s t s of h o s p i t a l c a r e , which i n t u r n means lesser expenses f o r p a t i e n t s . To deny t h e exemption here would add an additional expense t o t h e r e n t a l p r i c e already paid f o r the equipment. If the equipment here is taxable to Picker Cor- poration it is reimbursable to them by the hospital whose pa- tients would bear the taxes in the form of increased hospital charges. This would be directly contrary to the purpose of the exemption. For these reasons the judgment of the district court is affirmed. Justice We c o n c u r ; . )