Court Opinion

ID: 7133506
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:21:30.40765+00
Date Added: 2024-06-11T16:14:32.350974
License: Public Domain

JUDGE Du RELLE
delivered tile following dissenting opinion,
i'n. which Judges Guffy and White concurred:
We dissent from the opinion of the majority in these cases, and will state briefly the grounds of dissent.
The question for decision is whether real estate in the city of Louisville, owned by the appellant, is exempt from State, county and city taxation under the provisions of section 170 of the Constitution of Kentucky.
The other questions- made in argument were not passed on in the opinion of the court, and need not be considered here.
*494The exemption is claimed under section 170 of the present Constitution, which, so far as applicable to the question in this suit is as follows:
“Sec. 170. Property exempt. Cities may exempt manufactories. There shall be exempt from taxation public property used for public purposes; places actually used for religious worship, with the grounds attached thereto and used and appurtenant to the house of worship, not exceeding one-half acre in cities or towns, and not exceeding two acres in the country, places of burial not held for private or corporate profit, institutions of purely public charity, and institutions of education not used or employed for gain by any person or corporation, and the income of which is devoted solely to the- cause of education, public libraries, their endowments; and the income of such property as is used exclusively for their maintenance; all parsonages or residences owned by any religious society, and occupied as a home, and for no* other purpose, by the minister of any religion, with not exceeding one-half acre of ground in towns and cities and two acres of ground in the country appurtenant thereto.”
In connection with this section we must consider certain other sections of the Constitution in so far as they indicate the purpose of the instrument, and shed light upon the section under consideration. It should be remembered that there is nothing corresponding to this section in the Constitution of 1850. The same may be said of the provisions of section'3, which is as follows:
“Section 3. All men when they form a social com*495pact are equal; and no grant of exclusive, separate public emoluments or privileges shall be made to any man or set of men, except in consideration of public services; but no property shall be exempt from taxation, except as provided in this Constitution; and every .grant of a franchise, privilege or exemption shall remain subject to revocation, alteration or amendment.”
Section 5 contains this provision: “No preference ¡shall ever be given by law to any religious sect, society or denomination; nor to any particular creed, mode of worship or system of ecclesiastical polity; nor shall •any person be compelled to attend any place of worship, to contribute to the erection or maintenance of any such place, or to the salary or support of any minister of religion; nor shall any man be compelled to send his child to any school to which he may be conscientiously opposed.”
In this connection we quote 'the corresponding provision of the old Constitution, section 5, article 13 of the Bill of Bights of .the Constitution of 1850, as follows:
“Section 5. That all men have a natural and indefeasible right to worship Almighty God according to the dictates of their own consciences; that no man shall be compelled to attend, erect or support any place of worship, or to maintain any ministry against his consent; that no human authority ought, in any case, whatever, to control or interfere with the rights of conscience; and that no preference shall ever be given by law to .any religious societies, or modes of worship.” .
Section 171 of the present Constitution provides: *496* * * “Taxes shall be levied and collected for public purposes only. They shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax.” And section 174 contains the following: “All property, whether oAvned by natural persons or corporations, shall be taxed in proportion to its value, unless exempted by the Constitution.”
It is evident from the provisions quoted that the policy of the new instrument was intended to be different from that of the old in the matter of exemptions from taxation. The change is significant, when in connection with section 5, Ave consider the provision in section 3 that “no property shall be exempt from taxation except as provided in this Constitution;” the provision in section 171 that taxes shall be levied and collected for public purposes only and shall be uniform upon all property subject to taxation; and the provision of section 174 as to uniformity of taxation of corporate property with that of individuals.
The policy of the new* Constitution was to do away with exemptions. Out of deference to the supposed views of the religious element of the community, certain specific exceptions were made, and while we da not contend that these should necessarily be strictly construed, they should certainly not be extended by implication to any property not fairly within the meaning of the Constitution. Except in so far as the Constitution provides, nothing can be exempted from taxation which might not be supported by taxation. Un*497doubtedly the exemption of any property works an increase of the burden on property which is not exempted, and the placing of a burden upon property by taxing it to a greater extent in order to exempt other property is to that extent a taking of property without just compensation.
With these principles in mind, the construction of section 170 is simple. First, public property is exempted. Next, places actually used for religious worship with the ground attached, with a limitation upon the extent of the ground. Next, places of burial not held for private or corporate profit. Next, institutions of purely public charity, and then in the same clause, institutions of education not used or employed for gain by any person or corporation, and the income of which is devoted solely to the support of education. This case, in which the main opinion of the majority was rendered, turned upon the construction of this phrase, “institutions of purely public charity and institutions of education not used or employed for gain;” and the first question is, what is meant by “institutions?” Undoubtedly, in the latter part of the clause the word “institution” is used to denote the physical, corporeal property employed for the purpose of education, and it is a cardinal canon of construction that where, in one part of a clause of a statute, a word having two meanings is undoubtedly used in one sense, it will be construed to be used in the same sense in the other parts of the section, unless such construction is forbidden by the context.
*498It. is practically admitted in the opinion that the words used or employed “for gain” apply, and can apply only to the tangible property employed for the purpose, of education. We can conceive of mo reason for attributing to the phrase a different meaning when used as to institutions of purely public charity. If it had been intended to exempt the endowment of institutions of public charity and institutions of education, it may fairly be argued that the same phrase would have been used which is used in the succeeding clause as to public libraries whose endowments are exempted together with the income of such property as is used exclusively for their maintenance, and this is done as to libraries in express terms. So, in the next succeeding clause ®s to any parsonage or residence owned by a religious society, and occupied as a home, and for no other purpose by the minister of any religion. Further, the lands attached to places used for religious worship and the lands appurtenant to parsonages are limited in extent. But in this'case, institutions of purely public charity are construed to mean the corporations which conduct such institutions and all property belonging to such corporations is exempted from taxation. We can not assent to such a construction. Such a conclusion would lead not only to manifest injustice in the matter of placing burdens upon the other property in a community, but would lead corporations conducting such institutions to select for the purpose of investfent those cities and towns which had the highest tax rate, in order to benefit by the advantage thereby given *499in competition for tenants. For, just in proportion as the surrounding property is subjected to a greater tax, is a greater bonus given to the corporation which owns the exempted property, a part of which bonus it can (afford to give in the shape of a reduction of rent, whereby to entice tenants away from the owners of the surrounding property. Just in proportion to the increase of exempted property held bysuch corporations ina city or town, must the tax rate become higher, and the inducement greater to such corporations to invest their surplus there. And this leads to further injustice. The tenants of such a corporation, induced to become such by a reduction of rent, are thereby enabled to undersell their neighbors, who are compelled to contribute their just proportion toward bearing the burden of taxation placed upon the property they occupy. Is it conceivable that.the Constitution was intended to work such injustice?
It is matter of State history, which the court can and ought to take knowledge of, that the present Constitution was proclaimed to the people as putting a limit upon exemptions. Legislatures no longer were to work their will by exemptions in favor of the particular sect which the majority happened to favor, or to pool their issues in favor of a number of sects whose adherents might constitute a majority. Specific exemptions were made in favor of property devoted to certain uses, which were supposed to furnish an excuse, if not a reason, for relief from the common burden. With great ingenuity, limitations more apparent than real, *500were placed upon these exemptions, and the finished instrument was spread before the people as an enduring check upon the power of future legislatures to tax one man’s property for the purpose of exempting another’s. Mo ved by these and similar representations, the people voted by a majority of some hundred and forty thousand that this instrument should be their fundamental law. And with what result? To fasten upon their necks a burden of constitutional exemptions, which can only be removed by a new constitutional convention or a constitutional amendment; to place limitations not upon the legislative power to grant exemptions, but upon their own power to refuse, control, or repeal them. It is to no purpose to cite the language of the debates. Endlich says of the declarations of members of a convention: “They give us no light as to the views of the large majority who did not talk; much less of the mass of our fellow citizens whose votes at the polls give that instrument the force of fundamental law.” (Endlich In. Stat., p. 510.)
• And every one who knows anything of conventions and legislatures knows that the declarations of the speakers not only do not represent the convictions of those who do not speak, but frequently do not give the real views of the speakers themselves. Speeches in such bodies are not even supposed to be made for the mere purpose of declaring the views of the speakers, but for the purpose of influencing the votes of the listener. Hence, another than the real reason for the advocacy of a provision is often given, and another *501than the true interpretation of the language of a section is too often suggested in argument Members who are in the minority strive for the substitution of less definite language than that proposed by the majority, with the purpose of taking their chances in the courts. But it is not by the declarations, more or less sincere, of the individual members of the convention, nor the understanding of the majority, that the instrument obtains validity or its meaning is to be ascertained. It is the votes of the plain people which give it force and effect, and from this fact flows the wise rule of constitutional construction, universally acknowledged by the courts since the foundation of the government, though too often disregarded in practice, that the language of such an instrument is to be construed according to its ordinary and common meaning, and that sense is to be given its provisions which was understood by the people whose ballots made it organic law.
Applying this test to the provision in question, we find a sectarian charity school, operated by a corporation created by a special act which provided “that the institution shall be located in the town of Midway, in the county of Woodford.” It comes to this court claiming exemption from taxation upon property situated in Louisville which is leased to tenants for various purposes, and the rents from which are applied to carrying on the institution at Midway. Waiving tbe question whether the charity thus provided for is purely public, about which there is grave doubt, the *502question arises how many Kentucky voters had an idea that they were authorizing the exemption of houses in Louisville, the rents of which were used to carry on an institution at Midway? That the word “institution” in this section was understood by the people to denote the physical property used for the charitable or educational object, there can be little doubt Not one voter in a thousand would imagine that in speaking of an institution not used or employed for gain by' a person or corporation, the word “institution” was used to mean a corporation. It would instantly occur to the average man that the words used could not have been intended to provide for the case of a corporation not used for gain by a corporation, and that the thing meant by institution was the land and house and appurtenances used for the conduct of the charity, or for the educational purpose. If it was not so meant by the framers of the instrument, it must have been intended to deceive the people. So the income of an institution of education must be limited to the income which is derived from tuition fees. Authority is abundant in favor of the construction here stated.
“Property from which a revenue is derived is not exempt Property used exclusively as a general dispensary is exempted; but lots and buildings thereon, when an investment, the income of which is to be applied to the purposes of the dispensary, and stocks and public securities held by it, are subjects of taxation.
“The fact that the rents and revenues of a property owned by a charitable corporation are devoted to the *503charitable purposes for which the corporation was organized, will not exempt such property from taxation.
“It is only when the property itself is actually and directly used for charitable purposes that the law exempts it from taxation.” Desty on Taxation, Yol. 1, 119. And again:
“A building of a benevolent society is liable to taxation to the extent of the value of the rental received.
“The building of a benevolent society leased for pecuniary profit is taxable, although built with funds that were exempt, and into which the rents are paid.
“Where the property of a benevolent society was leased, for business purposes, and an income derived therefrom, its status as taxable property is thereby fixed.” (Desty on Taxation, Yol. 1,120.)
“Where a statute exempts from taxation property devoted to religious, educational, or other purposes, or exempts the property of a corporation, the exemption will be confined in the former case to property used exclusively for such purposes; in the latter, to property necessary to the objects of the company’s corporation.” (Am. & Eng. Ency. Law, Vol. XXV, 162.)
“Unless the terms of the statute are explicit to the contrary, a general exemption of the property of the educational institution will be confined to property actually and exclusively used by the institution for its legitimate purposes. If the property is used for other purposes, the fact that the proceeds of such use are devoted to carrying out objects of the institution is immaterial.” (Ibid, pp. 165, 166, 167.)
*504(And see Washburn v. Commissioners, 8 Kan., 350, and Commissioners v. Colorado, 12 Col., 497.)
An exemption to one is a tax upon others, and the language of the Constitution should not be strained to authorize such an act of injustice. This court has said i
“As a general rule, the test of the right to exempt property is the existence of the right to levy a tax to foster such property. The levy of a direct tax upon the whole people of the State, to be paid to this corporation to forward the objects stated in their charter, would be declared at first blush unconstitutional, and yet that is what is indirectly done by the exemption. If the same power exercised by this corporation had been conferred upon a designated individual, it would strike any one as palpably beyond legislative authority. But there is no difference in principle between the corporation and an individual. If there is the power to exempt the one, there is unquestionably the power to exempt the other.” (Barbour, &c. v. Louisville Board of Trade, 82 Ivy., 654.)
It would be unprofitable to discuss the many collateral questions which have been urged or suggested. The claim of contract exemption seems to us to have little merit, and is not relied on in the opinion of the majority. The question whether a corporation would be exempt under section 170, which was created for the purpose of education to be imparted by the corporators, with a provision devoting the surplus revenue to charity, after providing a liberal salary for the corporators, does not properly arise in this case.
*505It may be mentioned that the reasoning of the opinion in Burd Orphan Asylum v. Upper Darby School District, 90 Pa., 21, much relied on in support of the •opinion of the majority upon the question of what is a purely public charity, has been questioned by the same court in Philadelphia v. Masonic Home, 160 Pa., 572 and 23 L. R. A., 545; the reasoning of the later case being in direct conflict with that of the former.
The importance of the main question in this case can scarcely be over estimated. It is not a mere question •of the taxes sought to be collected upon Louisville property belonging to the female orphan school as the most -casual glance at the statistics given in the census reports will show. Behind the little Midway school stalk great sectarian corporations, “rich beyond the dreams of avarice;” directed, no doubt by honest and devoted men, but, as corporations, demanding, as of right, from the State, and the municipality, privileges which no good citizen ought to ask for himself. The result is to be deplored, not only as it works an increase of the, burden of taxation already sufficiently onerous, upon the masses of the people, but in the inevitable reaction against corporations formed for worthy objects, but which seek to profit by injustice.