Court Opinion

ID: 5096673
Source: CourtListenerOpinion
Date Created: 2021-10-01 17:28:15.57492+00
Date Added: 2024-06-11T08:20:50.053089
License: Public Domain

COOPER, Justice,
concurring in part and dissenting in part.
I concur with the majority opinion insofar as it holds that the Revenue Cabinet can collect the 2 1/2% hospital provider tax from hospitals which are not “institutions of purely public charity” as that phrase is used in Section 170 of the Constitution of Kentucky. However, I dissent insofar as the majority opinion holds that the tax can be collected from hospitals which are institutions of purely public charity.
Our present constitution was ratified in 1891. As initially adopted, Section 170 read as follows:
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 *589and cities and two acres of ground in the country appurtenant thereto; household goods and other personal property of a person with a family, not exceeding two hundred and fifty dollars in value; crops grown in the year in which the assessment is made, and in the hands of the producer; and all laws exempting or commuting property from taxation other than the property above mentioned shall be void. The General Assembly may authorize any incorporated city or town to exempt manufacturing establishments from municipal taxation, for a period not exceeding five years, as an inducement to their location. (Emphasis added.)
The majority holds in this ease that the exemption for institutions of purely public charity applies only to ad valorem taxes. This interpretation ignores the history of Section 170 as well as all of our previous cases interpreting the language in question.
The majority cites two excerpts from the 1890 constitutional debates as proof that Section 170 was intended to apply only to ad valorem taxes. However, the quoted portion of delegate Mackey’s speech was clearly intended only as a recitation of a general principle. Delegate Mackoy was arguing against the inclusion of any constitutionally sanctioned exemptions. 2 Proceedings and Debates of the Constitutional Convention of 1890 2427-31. The quoted portion of delegate Swango’s speech was obviously referring to what became Section 171, the general provision authorizing the levy of state taxes; for the crux of his address was an argument against any expansion of exemptions with respect to property owned by religious societies. Id. at 2538-41. While quoting these speeches out of context, the majority ignores the fact that delegate Caldwell offered an amendment which would have deleted the language “institutions of purely public charity” from Section 170 and substituted therefor the language “the property of institutions actually used exclusively for charitable purposes.” The proposed amendment was defeated. Id. at 2559.
Within five years of the adoption of the 1891 Constitution, our predecessor court was called upon to interpret the meaning of the term “institutions” as used in Section 170. In Trustees of Kentucky Female Orphan School v. City of Louisville, 100 Ky. 470, 36 S.W. 921 (1896), the taxing authority claimed that only that portion of the school’s property actually used for charitable or educational purposes fell within the exemption, and sought to tax a building owned by the school, but leased for the purpose of generating revenue to operate the school. It was held that the exemption applied to income-producing property when the income was used for the charitable purpose for which the institution was organized.
[U]pon the whole it would seem that, when the statute1 exempts the “institution” from taxation, and no qualifying words are used showing or tending to show that only the property “used” by the institution, or “connected” with the institution, is to be exempt, then the associated entity — the corporate being — with its estate as an entirety, is embraced by the word “institution.”
Id., 36 S.W. at 925.
In Commonwealth v. Young Men’s Christian Ass’n, 116 Ky. 711, 76 S.W. 522 (1903), the Court reaffirmed that the above-quoted paragraph in the Female Orphan School case correctly defined the term “institution” as used in Section 170. It then held that “[a]s the institutions are ones of purely public charity ... all their property is exempt from taxation.” Id., 76 S.W. at 524.
In Commonwealth v. Gray’s Trustee, 115 Ky. 665, 74 S.W. 702 (1903), the taxing authority sought to levy a tax on a trust fund created solely for educational purposes. The issue was whether the trust fund was an “institution of education” .and thus exempt under Section 170. In holding the fund exempt, the Court stated that “when money or other property is set apart, the exclusive use and income of which is to be applied to the cause of education or pedagogy, the property *590impressed with that character becomes an institution, without regard to the particular form of the investment Id. And in Commonwealth v. Board of Education of Methodist Episcopal Church, 166 Ky. 610, 179 S.W. 596, 597 (1915), it was held that the phrases “institutions of purely public charity” and “institutions of education” used in Section 170 embrace not only the buildings actually used in administering charity or education, but all of the property of such institutions wherever situated.
It was in the context of these existing precedents that our predecessor court in Corbin Young Men’s Christian Ass’n v. Commonwealth, 181 Ky. 384, 205 S.W. 388 (1918) first addressed whether Section 170 exempted an institution of purely public charity from payment of taxes other than ad valorem taxes. The taxing authority in that case sought to levy an occupational license tax on the YMCA’s operation of a restaurant on its property. In holding that the tax could not be levied, the Court first reiterated the now-familiar quote from Female Orphan School, supra, then held:
[A]n institution of purely public charity ... is by our Constitution exempt, not only from the payment of ad valorem or property taxes, but also from the operation of any and every revenue-producing measure upon such of its activities as are confined to, and not inconsistent with, the charitable purposes for which it was organized....
Corbin YMCA, supra, 205 S.W. at 390.
The majority opinion dismisses Corbin YMCA as an “aberration” which should be ignored in deciding whether the Revenue Cabinet can impose the hospital provider tax on the incomes of institutions of purely public charity in this case. However, the principle announced in Corbin YMCA has been consistently reaffirmed in a number of later cases.
In City of Louisville v. Cromwell, 233 Ky. 828, 27 S.W.2d 377 (1930), Corbin YMCA was cited as authority for the proposition that Section 170 differentiates institutions of purely public charity and institutions of education from other entities enumerated in that Section, and that with respect to those other entities, the exemption applies only to taxes on real property. Id., 27 S.W.2d at 379-80.
In Gray v. Methodist Episcopal Church, etc., 272 Ky. 646, 114 S.W.2d 1141 (1938), the church objected to paying both a license fee charged for the registration of its motor vehicle and a use tax levied on the value of that vehicle. The Court specifically reaffirmed Corbin YMCA and Female Orphan School and held that with respect to an institution of purely public charity, it is the institution and not the property of the institution that is exempt from taxation. It then concluded that the vehicle registration fee was not a tax, but a valid exercise of police regulatory power. However, the use tax was found to be a purely revenue-raising measure. Thus, the church was required to pay the vehicle registration fee, but not the use tax.
In Board of Education of Kenton County v. Talbott, 286 Ky. 543, 151 S.W.2d 42 (1941), it was noted that Section 170 exempts public property only from ad valorem taxation, whereas institutions of purely public charity and institutions of education are exempted personally, i.e., Section 170 “frees them from the payment of licenses and taxes of every class.” Id., 151 S.W.2d at 45.
In City of Louisville v. Presbyterian Orphans Home Soc. of Louisville, 299 Ky. 566, 186 S.W.2d 194 (1945), it was again noted that Section 170 grants a broader exemption to institutions of purely public charity and institutions of education than it does to other entities, e.g., religious societies.
If the framers of the Constitution intended to alter the liberal policy long favored in this state [exempting charitable and educational institutions] by exempting only a portion of the property of such institutions, they surely would have said so in plain and unmistakable language. It is significant that when they dealt with religious societies they were specific and limited the exemptions ....
Id., 186 S.W.2d at 199.
See also Department of Revenue v. Louisville Children’s Theater, Inc., Ky.App., 565 S.W.2d 643, 647 (1978) (exempt from sales taxation); Department of Revenue v. Central Medical Laboratory, Inc., Ky.App., 555 S.W.2d 632, 634 (1977) (exempt from sales and use taxes). Interestingly, in the latter *591ease, Central Medical Laboratory, Inc., was held to be an institution of purely public charity because it was a non-profit corporation organized for the purpose of establishing a laboratory testing facility for three nonprofit hospitals.
Since 1955, the citizens of this Commonwealth have ratified six amendments of Section 170. Three of those amendments added or refined a homestead exemption for persons sixty-five years of age or older or disabled. Another amended the exemption for household goods. Yet another amended the exemptions for property owned by religious societies. Most recently, a 1998 amendment authorized the legislature to enact statutes exempting personal property from property taxes. None of these amendments purported to affect the exemption for institutions of purely public charity. “The general rule is, when an amendment is made to a provision in a constitution to which a certain construction has been given, it will be presumed its unchanged portions have the same meaning formerly given it by legislative or judicial construction.” Hodgkin v. Kentucky Chamber of Commerce, Ky., 246 S.W.2d 1014, 1016-17 (1952). Application of this principle to the history of Section 170 mandates a conclusion that not only is Corbin YMCA not an “aberration,” its interpretation of the exemption for institutions of purely public charity has attained constitutional stature. If there is an “aberration” in our interpretation of Section 170, it is the majority opinion in this case; for this is the first case ever to interpret Section 170 as not exempting institutions of purely public charity from a revenue-raising tax.
I conclude that the hospital provider tax is unconstitutional as applied to any hospital which is an institution of purely public charity. However, because the trial court never reached this issue, the record contains no findings of fact or conclusions of law as to whether any or all of the appellants in this case fall within that classification. Thus, I would remand this action to the Franklin Circuit Court with directions to receive evidence and make findings and conclusions regarding the charitable status of each hospital appellant, and to prohibit the Revenue Cabinet from collecting the hospital provider tax from any of them which are “institutions of purely public charity.”
GRAVES, J., joins this opinion, concurring in part and dissenting in part.

. The Court was discussing interpretations of statutes of other states containing language identical to that contained in Section 170.