Court Opinion

ID: 5062649
Source: CourtListenerOpinion
Date Created: 2021-10-01 09:30:11.186963+00
Date Added: 2024-06-11T08:19:29.663110
License: Public Domain

DROWOTA, Justice,
dissenting.
I respectfully dissent.
The interpretation of these taxing statutes by the majority creates an exemption that is not provided for in the statutes themselves. This interpretation is contrary to the settled rules of statutory construction; specifically, “an exemption from taxation must positively appear in the statute and will not be implied.” Bob Arum Enterprises v. Tenn. Athletic Commission, 633 S.W.2d 307, 309 (Tenn.1982). It is not a proper function of this Court to carve out an exemption which is not expressly provided for in the statutes. If the Legislature intended to create an exemption and failed to include it in the statute, it is for the Legislature to correct and not the Court.
The majority places great emphasis on the fact that the financing statements here involved are for the purpose of securing an indebtedness of $40,493.00. Section 67-4-*18409(b) imposes a tax on the “public recordation of any instrument evidencing an indebtedness.” The rationale employed by the majority appears to read this statute as imposing a tax on the indebtedness. I disagree with this interpretation.
The tax is clearly levied on the privilege of recording the instrument. The amount of the indebtedness determines the amount of tax owed, but it is not the indebtedness itself which is taxed. “The payment of the privilege tax on filing financing statements is a condition precedent to filing,” American City Bank v. Western Auto Supply, 631 S.W.2d 410, 422 (Tenn.App.1981), it is not a condition precedent to entering into a debtor creditor relationship. A correct analysis of the issues should focus on the proper object of taxation, the privilege of recording the instrument. This is clearly necessary in order to understand what objects, or transaction as the case may be, the Legislature has seen fit, by and through the statutes, to exclude from the taxing statute.
The statutory scheme in the instant case is very clear. The general rule is that the “recording of any instrument evidencing an indebtedness” shall be a taxable transaction. T.C.A. § 67-4-409(b). The exception to the general rule is that
... the recording and re-recording of all instruments evidencing an indebtedness of any health and educational facility corporation formed pursuant to §§ 48-1901, et seq. shall ... be exempt from this section. T.C.A. § 67-4-409(f)(l).
Of the six financing statements involved in this case, three show that the Appellee is indebted to the trustee, Union Planters. Because the Appellee is a health and educational facility corporation formed pursuant to T.C.A. §§ 48-1901, et seq., the instruments evidencing that indebtedness clearly fall within the purview of the above quoted provision. The question remains whether the other three documents should be exempt.
Two of those instruments show that an assignment has taken place. St. Joseph Hospital is shown as the debtor and the obligation to pay rents under the Lease Agreement flows from St. Joseph to the Bank as Trustee. The Health and Educational Facilities Board is neither the holder nor the owner of the indebtedness nor is the Board the debtor.
The remaining document is the financing statement securing the Guaranty Agreement between St. Joseph Hospital and the Bank. On the face of this instrument, the indebtedness is that of the hospital and not the Health and Educational Facilities Board.
The settled rule of statutory construction requires that we construe taxing statutes liberally in favor of the taxpayer and strictly against the taxing authority. However, this rule does not apply when we seek to determine whether an exemption is available to the taxpayer. An exemption provision is construed strictly against the taxpayer, and the burden of establishing the exemption is on the taxpayer. Furthermore, the exemption must be expressed clearly in the statute so as to include the taxpayer. Bob Arum Enterprises v. Tennessee Athletic Commission, supra, at 309; Commercial Equities Corporation v. Tollett, 596 S.W.2d 801, 804 (Tenn.1980). However, the intent of the legislature is to be ascertained and given effect whenever possible and that intent should be derived from the entire statute as read within its statutory context. Bob Arum Enterprises v. Tennessee Athletic Center, supra.
As noted above, three of the documents show an indebtedness of St. Joseph Hospital East, Inc., which is not a health and educational facility corporation formed pursuant to §§ 48-1901 et seq. Absent any language in the statute expressly providing for an exemption for something other than a health and educational facility corporation formed pursuant to §§ 48-1901, et seq., it is my opinion that the financing statements showing an indebtedness of St. Joseph Hospital are not exempt from the tax imposed by T.C.A. § 67-4-409(b). I would reverse the judgment of the Chancellor and find in favor of the Appellant.