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ST. MARTIN LUTHERAN CHURCH V. SOUTH DAKOTA, 451 U. S. 772 - Volume 451 - 1981 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 451 > ST. MARTIN LUTHERAN CHURCH V. SOUTH DAKOTA, 451 U. S. 772 (1981) > Full Text
ST. MARTIN LUTHERAN CHURCH V. SOUTH DAKOTA, 451 U. S. 772 (1981)
Petitioners, St. Martin Evangelical Lutheran Church (St. Martin), at Watertown, S.D. and Northwestern Lutheran Academy (Academy), at Mobridge in that State, claim exemption with respect to their school employees from taxes imposed by the Federal Unemployment Tax Act (FUTA), 26 U.S.C. §§ 3301-3311 (1976 ed. and Supp. III), and by South Dakota's statutes complementary thereto, S.D.Codified Laws § 61-1-1 et seq. (1978 and Supp. 1980). The exemption is claimed on both statutory and First Amendment grounds. The provisions primarily at issue are FUTA's § 3309(b) [Footnote 1] and South Dakota's § 61-1-10.4. [Footnote 2]
Page 451 U. S. 775
This case concerns one of the more recent of those amendments, namely, that effected by § 115(b)(1) of the Unemployment Compensation Amendments of 1976, Pub.L. 94-566, 90 Stat. 2670. The Secretary of Labor has determined that this statute rendered nonprofit church-related primary and secondary schools subject to FUTA. The South Dakota authorities went along with that ruling in their interpretation of the State's amended statute. Petitioners are among those religiously affiliated schools so claimed to be required to pay the FUTA and South Dakota taxes. They contest this construction of the statutes. They argue also, however, that holding them subject to the taxes would violate both
Page 451 U. S. 776
Pub.L. 86-778, § 533, 74 Stat. 984. [Footnote 5] Under this definition, nonprofit church-related schools, of course, were exempt from the tax. A 1970 amendment, however, served to narrow that broad exemption of nonprofit organizations. [Footnote 6] See Employment Security Amendments of 1970, Pub.L. 91-373, § 104(b)(1), 84 Stat. 697. The amendment generally required state coverage of employees of nonprofit organizations, state hospitals, and institutions of higher education. Simultaneously, however,
Page 451 U. S. 777
Congress enacted a new and narrower exemption of nonprofit organizations and governmental entities. So far as pertinent to this case, that exemption was set forth in a new § 3309(b), which then provided:
In 1976, Congress again amended the Act. Unemployment Compensation Amendments of 1976, Pub.L. 9566, § 115(b)(1), 90 Stat. 2670. The effect of the 1976 amendment, so far as pertinent to this case, was to eliminate completely the theretofore existing subsection (b)(3). [Footnote 7] Subsections (b)(1) and (b)(2), dealing specifically with religious employment, remained unchanged. [Footnote 8]
Page 451 U. S. 778
The Secretary also ruled that neither § 3309(b)(1)(A) nor § 3309(b)(1)(B) was applicable to church-run schools. He notified the States, and they took steps for the collection of unemployment taxes from church-related schools. See Employment and Training Administration, U.S. Department of Labor, Unemployment Insurance Program Letter No. 3978 (May 30, 1978), reprinted in [1978 Transfer Binder] CCH Unemp.Ins.Rep. � 21,522.
Both St. Martin and the Academy are members of the Wisconsin Evangelical Lutheran Synod and, as such, are organizations exempt from federal income tax under 26 U.S.C. § 501(c)(3). St. Martin operates a state-certified elementary Christian day school at Watertown that offers kindergarten through eighth-grade education. The school, which is not a separate legal entity from the church, is controlled by a Board of Education elected from the local congregation. The congregation entirely finances the school's operation. The Academy is a state-certified 4-year secondary school at Mobridge, and is owned, supported, and controlled by the
Page 451 U. S. 779
Synod. It also is not separately incorporated. Approximately half of its students go on to become ministers within the Church. According to the record, all courses given at St. Martin and at the Academy are taught from a religious point of view based on the Synod's scriptural convictions.
On appeal, the Hughes County Circuit Court reversed, finding the Referee's decision clearly erroneous. App. to Pet. for Cert. A-25. The court ruled that both St. Martin and the Academy were exempt under § 61-1-10.4(1)(b); that the term "church" referred to "an organization of worshippers," rather than to a "house of worship"; and that the primary purpose of the schools was the propagation of the Synod's faith, a religious concern. App. to Pet. for Cert. A-30 to A-33. The South Dakota Supreme Court, by a divided vote, in turn reversed the judgment of the Circuit Court, and held petitioners subject to the unemployment
Page 451 U. S. 780
compensation taxes. [Footnote 9] In re Northwestern Lutheran Academy, 290 N.W.2d 845 (1980). Noting the growing number of conflicting federal and state decisions on this issue, [Footnote 10] we granted certiorari. 449 U.S. 950 (1980).
A statute, of course, is to be construed, if such a construction is fairly possible, to avoid raising doubts of its constitutionality. Crowell v. Benson, 285 U. S. 22, 285 U. S. 62 (1932); Machinists v. Street, 367 U. S. 740, 367 U. S. 79-750 (1961); United States v. Clark, 445 U. S. 23, 445 U. S. 27 (1980). Accordingly, we turn first to he federal statute itself. From our reading of the legislation and of its history, we conclude that the only reasonable construction of 26 U.S.C. § 3309(b)(1) is one
Page 451 U. S. 781
H.R.Rep. No. 91-612, p. 44 (1969).
Page 451 U. S. 782
The above quotation from the 1969 House Report and its Senate counterpart, however, are susceptible of a simpler and more reasonable explanation that corresponds directly with the language of the subsection. Congress drew a distinction between employees "of a church or convention or association of churches," § 3309(b)(1)(A), on the one hand, and employees of "separately incorporated" organizations, on the other. See H.R.Rep. No. 91-612, at 44. The former uniformly would be excluded from coverage by § 3309(b)(1)(A), while the latter would be eligible for exclusion under § 3309(b)(1)(B) only when the organization is "operated, supervised, controlled, or principally supported by a church or convention or association of churches." [Footnote 12] To hold, as respondent
Page 451 U. S. 783
would have us do, that "organization" in subsection (b)(1)(B) also includes a church school that is not separately incorporated would make (b)(1)(A) and (b)(1)(B) redundant.
The distinction between church schools integrated into a church's structure and those separately incorporated is given further credence by the statute's use of specific words. The Department of Labor would interpret the term "church" in § 3309(b)(1) as limited to the actual house of worship used by a congregation. See Brief for United States as Amicus Curiae 115. [Footnote 13] This reading, however, appears to us to deny several of FUTA's phrases their intended meaning. Section 3309(b), exempting "service performed -- (1) in the employ of (A) a church . . . ," is phrased entirely in terms of the nature of the employer, and not in terms of the work performed or the place at which the employee works. Congress further defined "employer" in § 3306(a) as "any person who -- . . . paid wages . . . or . . . employed at least one individual" (emphasis added). It defined "employee" as "any individual who, under the usual common law rules applicable in
Page 451 U. S. 784
determining the employer-employee relationship, has the status of an employee." §§ 3306(i) and 3121(d)(2). Thus, to hold "church" synonymous solely with a physical building that is a house of worship contradicts the phrasing of the statute. [Footnote 14] The word "church" in § 3309(b) must be construed, instead, to refer to the congregation or the hierarchy itself, that is, the church authorities who conduct the business of hiring, discharging, and directing church employees. [Footnote 15]
We conclude that, at the time of its enactment in 1970, § 3309(b)(1)(A) was meant to apply to schools, like petitioners', that have no separate legal existence from a church, or, as in the Academy's case, from a "convention or association of churches." As the Referee found, St. Martin directly finances, supervises, and controls its school's operations. The Synod similarly supports and controls the Academy. Only teachers trained and certified by the Synod may teach at either school, and, again as the Referee found, these teachers, both male and female, "receive a divine, life-long call" to the church. App. to Pet. for Cert. A-38. Male teachers ("teaching ministers") have equal status in the church and an equal vote on Synod matters, including matters of doctrine, with preaching ministers. Id. at A-37. Neither school has a separate legal existence. Thus, the employees
Page 451 U. S. 785
working within these schools plainly are "in the employ . . . of a church or convention or association of churches. . . ." [Footnote 16] § 3309(b)(1)(A).
The 1976 Amendments did not alter the scope of § 3309(b)(1), either directly or by implication. [Footnote 17] Congress, in eliminating the old § 3309(b)(3), made no change in § 3309(b)(1). It did not discuss churches or church schools, and it intimated that § 3309(b)(1) remained unchanged. See, e.g., H.R.Rep. No. 9755, pp. 23, 41, 55-56 (1975)(explaining the then-current coverage of § 3309(b) and the anticipated effect of the repeal, and containing no indication that the proposed amendments would alter § 3309(b)(1)).
Page 451 U. S. 786
These references are simply too general and too ambiguous to bear the weight respondent would assign to them. [Footnote 19] There is no indication that Congress, in these references, had in mind the scope of § 3309(b)(1) and religious organizations. Rather, all the evidence demonstrates that it was concerned solely with the then-existing § 3309(b)(3) and secular educational institutions, particularly the public schools. Furthermore, the reported comments implying total coverage of all educational institutions, as a result of the repeal of the former § 3309(b)(3), could not be taken as literally true, because the 1970 Report expressly had noted that a college
Page 451 U. S. 787
"devoted primarily to preparing students for the ministry," H.R.Rep. No. 91-612, at 44, would be exempt. All institutions of higher education had not been covered by the 1970 Amendments.
This legislative history does not reveal any clear intent to repeal § 3309(b)(1) or to alter its meaning. The Court has
Page 451 U. S. 788
had frequent occasion to note that such indefinite congressional expressions cannot negate plain statutory language and cannot work a repeal or amendment by implication.
The legislative history of the Unemployment Compensation Amendments of 1976, 90 Stat. 2667, persuades me that Congress did intend the repeal of 26 U.S.C. § 3309(b)(3) to remove the exemption from coverage under the Federal Unemployment Tax Act (FUTA) for all employees of private, nonprofit elementary and secondary schools. Not only do the Senate and House Committee Reports expressly so
Page 451 U. S. 789
state, [Footnote 2/1] but also the estimate contained in the Senate Report of the number of additional employees that would be covered by the FUTA as a result of the repeal of § 3309(b)(3) confirms the contemporaneous understanding of the draftsmen of the 1976 Amendments. [Footnote 2/2] Nothing in the 1976 Amendments
Page 451 U. S. 790
or the corresponding legislative history suggests that Congress believed the extension of FUTA coverage to nonprofit, private schools applied only to nonprofit, private, nonparochial schools. [Footnote 2/3]
Despite this legislative history, I agree with the Court's conclusion that FUTA coverage does not extend to persons employed in petitioners' schools. Although Congress' intention to cover such employees was, in my judgment, clear, the 1976 Amendments simply failed to give effect to that intention. By repealing § 3309(b)(3), Congress removed only one of the two statutory exemptions that, by their terms, applied to employees of parochial elementary and secondary schools. Congress left in place, and did not qualify the scope of, the separate exemption granted by § 3309(b)(1). The clear expressions of congressional intent that appear in the legislative history of the Act that repealed § 3309(b)(3)
Page 451 U. S. 791
cannot alter the clear statutory language of § 3309(b)(1). I agree with the Court that these church employees are exempt under the plain language of that provision. See also Alabama v. Marshall, 626 F.2d 366 (CA5 1980), cert. pending, No. 8922.
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