Opinion ID: 2544670
Heading Depth: 1
Heading Rank: 4

Heading: 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

Text: ¶ 9 Oklahoma's extant jurisprudence teaches that the proper interpretation 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] ¶ 10 In Cox v. Dillingham land owners leased real property to Cox to build a school. While rent was minimal during the first years of the lease term, it increased from a flat rate to an additional amount equal to five percent of the Cox's gross operating receipts. The lessee was given credit against lease payments for taxes and insurance. In allowing the exemption the Court rejected Dillingham's [Washington County Treasurer] argument that the exemption should be denied because the land owner profited from Cox's lease payments. The Court instead focused upon the purpose to which Cox devoted the leased premisesi.e., a schoolas determinative of entitlement to the ad-valorem-tax exemption. [15] The Cox Court emphasized that for a use to qualify property for exemption, it must be exclusive, i.e., the land for which the exempt status is sought must be used exclusively for a constitutionally recognized purpose. ¶ 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., 1945 OK 55, 156 P.2d 340. There the International Order of Oddfellows [Lodge] purchased a twelve story building in Oklahoma City. Lodge [a charitable organization] physically occupied and used the twelfth floor and leased the remaining eleven floors to various for-profit businesses and shops. It sought an exemption from ad valorem taxes for the entire building on the basis that it used the rental income received to support its charitable purposes. The Court rejected the Lodge's analysis deciding that entitlement to a constitutionally permitted exemption was predicated not upon how the building owner used the rents from the leased premises but rather upon consideration of the purpose to which the property was physically dedicated and devoted. In Queen City Lodge the Court [for the first time] held that real property could be taxed in proportion to its respective uses, i.e., pro rata. The Court held Lodge was entitled to an exemption for the twelfth floor which was devotedi.e., physically usedfor the promotion of its charitable purposes but not for the remaining floors which were physically used for purposes other than those constitutionally recognized as bases for entitlement to a tax exemption. In its holding the Court overruled Board of Commissioners of Garfield County v. Phillips University, 1930 OK 310, 289 P. 720, to the extent that it held that mere use of income from property could alone be applied as the test of the use of the property itself in determining tax exemption under the constitutional provision [art. 10, § 6] here considered. Queen City Lodge, 156 P.2d at 348. In sum, the Court rejected the idea that how a building's owner economically uses income from a property is a factor in determining entitlement to an art. 10, § 6 ad-valorem-tax exemption. ¶ 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: 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. [16]