Opinion ID: 2019452
Heading Depth: 1
Heading Rank: 1

Heading: Effect of Sec. 182.032 (8), Stats. 1955 and 1957.

Text: Subs. (2) (a) and (8) of sec. 182.032, Stats. 1957, provide as follows: (2) (a) Nonprofit corporations, that is corporations formed without capital stock, operated not for profit and exclusively for the purposes in this section set forth, and which declare no dividend, benefit, or pecuniary profit, to be paid to or received by any of their members, directors, or officers. may be organized. under this section for the purpose of establishing, maintaining, and operating service plans, whereby hospital services may be provided to persons or groups of persons. subscribers to such plans, and their respective dependents, by hospitals with which such corporations may make a contract therefor. (8) Such corporation shall be governed by ch. 181, and unless express reference is made in this section, or unless expressly designated therein, no other law shall apply to such corporation. Every such corporation is hereby declared to be a charitable and benevolent corporation, and its property, real, personal and mixed, its income, and property transferred to it, shall be exempt from taxation as provided in secs. 70.11, 71.01 (3), 72.04, and 72.75 to 72.81, and its employees shall be excluded from the provisions of ch. 108 as provided in sec. 108.02. It is the position of the plaintiff that such sub. (8) expressly provides for the exemption of its property from the taxes sought to be imposed by the city. On the other hand, the city advances two reasons why this is not the case. First, it asserts that the plaintiff is not a charitable and benevolent corporation as a matter of fact, and, therefore, the legislature cannot by legislative fiat declare it to be such when it is not. Secondly, the city contends that, under the wording of such sub. (8), the test of whether there is to be an exemption of the plaintiff's property from real and personal-property taxes is that set forth in sec. 70.11, Stats., and the plaintiff does not meet such test. In support of its first contention the city points out that the plaintiff engages in no charitable or benevolent activities under the definitions of charitable and benevolent set forth in such decisions of this court as Riverview Hospital v. Tomahawk (1943), 243 Wis. 581, 11 N. W. (2d) 188; Prairie du Chien Sanitarium Co. v. Prairie du Chien (1943), 242 Wis. 262, 7 N. W. (2d) 832, 144 A. L. R. 1480; and M. E. Church Baraca Club v. Madison (1918), 167 Wis. 207, 167 N. W. 258. It is asserted that the plaintiff gives nothing away, but charges for the hospital service provided its subscribers, and that the plaintiff's activities do not relieve the state, or its political subdivisions, from expense for hospital care. These last-mentioned assertions by the city are not strictly true. The board of directors of the plaintiff consists of persons of great abilityhospital administrators, physicians, attorneys, labor leaders, business executives, and church officials. They donate the time which they devote to the operations and affairs of the plaintiff. There can be little doubt but that such donated time and effort result in better hospital service being rendered to the plaintiff's subscribers and their dependents, such as the insertion of more-advantageous provisions from time to time in the subscribers' contracts. Furthermore, before the advent of hospital-service prepayment plans, many people were unable to pay hospital bills who can now afford the modest monthly fees charged by the plaintiff. Nevertheless, the hospitals did not then turn such people from their doors but rendered service, and in many cases collected from local municipalities therefor on the basis that the patients were indigents. Without the coming and wide use of the plaintiff's Blue Cross coverage, the financial burden of the municipalities in providing hospital care for indigents would be greater than it is today. Some courts have adopted broad definitions of charitable and benevolent institutions which do not embody the idea of giving away something free. For example, in Rueda v. Union Pacific R. Co. (1946), 180 Or. 133, 169, 175 Pac. (2d) 778, 793, the Oregon court held that the Union Pacific Railway's hospitals and medical department were charitable in nature and declared: The test which determines whether such an enterprise is charitable or otherwise is its purpose. If its purpose is to make profit, it is not a charitable enterprise. If it is to heal the sick and relieve the suffering, without hope or purpose of getting gain from its operation, it is charitable. Tried by this test, the hospitals and medical department of this company are a great public charity. Furthermore, an Ohio court has expressly held that a nonprofit hospital-service association operating on the Blue Cross plan is in every sense of the term a charitable and benevolent institution. Cleveland Hospital Service Asso. v. Ebright (1942), 36 Ohio L. Abs. 600, 603, 45 N. E. (2d) 157, 160, affirmed in Cleveland Hospital Service Asso. v. Ebright (1943), 142 Ohio St. 51, 49 N. E. (2d) 929. The legislature in enacting sec. 182.032, Stats., was well cognizant of how Blue Cross hospital-service corporations do fulfil a public purpose which the legislature might well declare to be charitable and benevolent. This is manifested by the following declaration of policy appearing in sub. (1) of such statute: As a guide to the interpretation and application of this section, the public policy of this state is declared to be: To ease the burden of payment for hospital services, particularly in the low-income groups, where with the advance of scientific methods the payment for adequate hospital services is a pressing problem with grave social ramifications, nonprofit hospital-service corporations, based on the tested experience in many parts of the United States, economically sound and socially beneficent, are needed. While in no way changing the present status of voluntary hospitals in the state, these corporations will enable a larger number to procure for themselves adequate hospital services and leave the use of the free and part-free services given by the hospitals to those whose economic status makes self-procurement of such services impossible. Without imposing the burden on the public treasury and free from any motive of profit, these corporations will contribute to the solution of a pressing social and economic problem in the state and merit the support of the citizens. However, let us suppose that no basis existed under the definitions of charitable and benevolent set forth in the dictionaries or court decisions for the application of such adjectives to hospital-service corporations. Would that present any legal barrier to our legislature's declaring such corporations to be charitable and benevolent? We think not. We know of no constitutional provisions which would be violated thereby, and none are pointed out by the city. The few cases in which acts of a legislative body, that have declared some institution to be something that it is not under all prior concepts, have been held void are typified by Frost v. Railroad Comm. (1926), 271 U. S. 583, 46 Sup. Ct. 605, 70 L. Ed. 1101, 47 A. L. R. 457, and Michigan Public Utilities Comm. v. Duke (1925), 266 U. S. 570, 45 Sup. Ct. 191, 69 L. Ed. 445, 36 A. L. R. 1105. In such two cases the attacked legislative acts had declared private carriers to be common carriers thereby rendering them subject to regulation as common carriers. It was the result of rendering such private carriers subject to regulation as common carriers that afforded the basis for declaring such acts void as violating the due-process clause of the Fourteenth amendment. In the instant case neither the plaintiff nor the city claim any denial of due process. The city does contend, that the result of the legislature's declaring nonprofit hospital-service corporations to be charitable and benevolent, is to violate the uniformity-of-taxation provision of the state constitution and the equal-protection-of-the-laws clause of the Fourteenth amendment. However, this argument goes to the reasonableness of the classification as it affects tax exemption, and not to the validity of the declared definition itself. The legislature, if it had seen fit to do so, simply could have granted tax exemption to the property of nonprofit hospital-service corporations without labeling them as charitable and benevolent. Lawrence University v. Outagamie County (1912), 150 Wis. 244, 246, 136 N. W. 619, 2 A. L. R. 465. The validity of such exemption would then depend upon whether any reasonable basis existed for exempting the property of such corporations and not that of some other corporations whose property is taxed. To argue, that the act of attaching the label of charitable and benevolent in itself renders the entire exemption statute void, apart from the issue of reasonable classification, seems to us to be but a confusion of the issue. We find no merit in such contention. The city further contends that the employment of the words of sub. (8) of sec. 182.032, Stats. 1955 and 1957, as provided in secs. 70.11, 71.01 (3), 72.04, and 72.75 to 72.81 must be interpreted as meaning that the tests of exemption, in so far as real and personal-property taxes are concerned, are those set forth in sec. 70.11. The learned trial court rejected such interpretation and so do we. There would be no purpose for the legislature to declare that a nonprofit hospital-service corporation is a charitable and benevolent corporation and tax exempt in sub. (8) of sec. 182.032, Stats. 1955 and 1957, if it already qualifies for exemption under sec. 70.11. On the other hand, if such corporation did not qualify for exemption under sec. 70.11, it also would be a meaningless gesture to declare in such sub. (8) that it was a charitable and benevolent corporation and tax exempt, if the ultimate tests of exemption are those prescribed by sec. 70.11. In interpreting statutes they must be construed, if possible, so as to avoid inconsistency and conflict and to give effect to every part. State v. Berres (1955), 270 Wis. 103, 107, 70 N. W. (2d) 197. Furthermore, it should not be presumed that any part of a statute is superfluous. 50 Am. Jur., Statutes, p. 365, sec. 359. We have already noted that the enactment of sec. 182.032, Stats., was part of a nationwide movement to enact enabling legislation so that Blue Cross plans of providing hospital service could be made available in the various states. Both the 1934 New York statute, and the model enabling act sponsored by the American Hospital Association, employed the device of declaring nonprofit hospital-service corporations to be charitable and benevolent institutions as part of the statutory provision for tax exemption. In view of this background, we are of the opinion that the draftsmen of sub. (8) of sec. 182.032, Stats. 1955 and 1957, and the legislature, intended to confer tax exemption on such nonprofit hospital service associations. The reference therein to secs. 70.11, 71.01 (3), 72.04, and 72.75 to 72.81 was merely for the purpose of indicating the types of taxes to which the exemption applied, i.e., real and personal, income, inheritance, and gift taxes.