Court Opinion

ID: 8196105
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:19:25.690908+00
Date Added: 2024-06-11T16:40:46.451287
License: Public Domain

Eschweiler, J.
{dissenting). I agree with so much of the majority opinion as declares that the transaction here involved is one where the controlling purpose was to permit an evasion by a private corporation of the burden of taxpaying sharing in the expenses of government. I refrain from any expression, one way or the other, concerning the suggestion in the majority opinion that the situation was “a matter of conscience.” I join with the majority in leaving untouched and unsolved many delicate questions presented when considering whether the regents get their title to this real property by way of gift (sec. 20.39 (8), Stats.), or by purchase, either under their general powers as a body corporate (sec. 36.03), or under the specific and extremely guarded purchasing power bestowed upon them by the legislature by sec. 11 of ch. 116 of the Laws of 1919, now sec. 36.065. This of course makes it unnecessary to now discuss among the many such questions, — if it be considered a purchase, as to the nature of the consideration passing from the Board of Regents as vendee to the University CoOperative Company as vendor; whether such purchase involves the pledging of the credit of the state; or any more than as hereinafter mentioned, whether, if such consideration be in whole or in part the lifting of the burden of paying taxes during the life of the lease, such is within any express or implied powers of the Board of Regents, and whether that body properly functions in so dispensing with or disposing of that which would otherwise be a fund coming to the state and the city of Madison as a general tax.
I cannot agree that it is within the express grant of *361jDower by the legislature by secs. 36.03, 36.06, 36.062, 36.065, and 36.08 et seq., Stats., or within any implied powers of the Board of Regents of the State University by presently taking mere record title, to thereby substitute their judgment or determination for that of the legislature so as to permit real property, devoted exclusively to the use of a profit-making, private corporation to be nevertheless as exempt from the wide-reaching scope of the primary, paramount legislative declaration found in sec. 70.07, infra, as real property, devoted to state or public use, is, by the legislature, expressly exempted.
Neither can I agree with the statement in the majority opinion that it is mere ownership and not the use to which this real property may be put which is the controlling factor in the determination of questions such as here presented, for I believe the exemption theory to be that it is because property is devoted to state use that it is exempt, and not because of mere formalities surrounding the title. I further believe that it is the property as distinguished from the title thereto that is the subject matter for taxation.
Neither can I agree with the proposition, in effect determined by the majority, that if the parties to a contract such as was here involved raise, as between themselves, no question as to its validity, that the taxing authorities of the state are thereby blindfolded and prevented from determining what the real situation is and what are the facts, which latter alone should determine all questions of tax exemption.
The majority opinion in effect now declares that by this agreement for tax-exemption purposes, a private corporation, that has present possession and right of possession, present use and present right of use of real estate, is elevated into a favored class and may continue such tax-free possession and use for thirty years subject only to the right in the University, by eminent domain (a power which it needs not this contract to give it), to terminate the same *362at its option, before the end of such period. Not until terminated as above or by subsequent agreement or the expiration of 'the thirty years could this real estate be lawfully subject to University purposes. If it can be done for thirty years, it may for ninety-nine or more.
It is being declared in three cases decided herewith: Tigerton Lumber Co. v. Tigerton, post, p. 377, 224 N. W. 124, that—
“The fundamental rule is that all property not exempted by law is subject to taxation and that all taxes must be paid in cash; the taxpayer who claims exemptions must find authority for that privilege in the statutes.”
In Nash Sales, Inc. v. Milwaukee, ante, p. 281, 224 N. W. 126, it is said:
“The universal rule of taxation is that ‘taxes shall be levied upon all property in this state except such as is exempted therefrom.’ ”
And again in Wis. Pub. Serv. Corp. v. Wis. Tax Comm., ante, p. 259, 224 N. W. 130:
“Such assessment — i. e. under sec. 76.02 (9) — may be in the name of the owner, the lessee, or the operating company ; but in whosesoever name it is assessed it shall include every interest therein.”
Recently this court said in Schmidt v. Almon, 181 Wis. 244, 194 N. W. 168, that—
“It is the express policy of the state that no property which is assessable for taxation purposes shall escape taxation, and it will appear from the various statutes on the subject of taxation that it was the legislative intent, as far as reasonably possible, to carry out this policy.”
And in this last case, upon the above quotation as a foundation, it was held that standing timber, although treated as personal property by its separate sale, as between a vendee and the owner of the real property, should nevertheless be considered as real estate for tax purposes. In Mariner v. Milwaukee, 146 Wis. 605, 609, 131 N. W. 442, where *363one refrained for thirty-two years from asserting his ownership to a certain city lot to which the city asserted title and for that reason failed to assess it, it was said:
“Taxes are debts due to the government which a property owner has no more right to withhold than the most sacred debt of a private nature.”
In face of all these declarations, and many more might be cited, it is now held that a favored private corporation, one which may be but the forerunner of countless other possible friendly arrangements, is permitted, without express or implied legislative sanction, to continue as a private enterprise for profit to enjoy the exclusive possession of real estate, yet freed from tax burdens resting on all of its competitors.
That this private concern, University Co-Operative Company, enjoying the use and possession of this real property with a leasehold interest therein, can escape having such interest assessed under the all-embracing legislative mandate that all property, save such as comes within express exemptions, shall be subject to taxation, because of want of an express statement in the mere procedural statute, sec. 70.17, that a “leasehold” may be taxed, and especially so as that very section provides that it may be assessed “without any name,” seems to me to be placing a very narrow construction upon the imperative legislative mandate that all property except such as is exempted shall bear its share in the expenses of the government which protects and preserves it, and such holding presently exalts the privilege of exemption above the duty to pay taxes.
We have no such statutory situation here as was presented in Loomis v. Callahan, 196 Wis. 518, 220 N. W. 816, involving the leasing of university lands to non-profit corporations, because there the statute involved, sec. 36.06 (6), (being ch. 525, sec. 2, Laws of 1927), expressly provided: “and the leasehold interest in such lands, shall be *364exempt from taxation.” Such legislative declaration was superfluous because the present* holding is that .a leasehold is not subject to tax.
Though leaseholds may be technically denominated by sec. 230.05 as “chattels real,” yet that surely does not exclude such interests in real estate from the universally embracing phrase “all property,” as found in sec. 70.07, Stats., designating “What property taxable,” as follows: “Taxes shall be levied upon all property in this state except such as is exempted therefrom.”
This section is followed by secs. 70.08 and 70.09, defining, for the purposes of taxation, the terms “real property” and “land,” and “personal property;” the latter statutory definition concluding, “and all . . . chattels, and effects, of any nature or description, having any real or marketable value, and not included in the term ‘real property1 as above defined.”
I cannot conceive how the Board of Regents or this court can lightly brush aside the evident purpose of the three sections just above cited so as to exclude from taxation the substantial property interest which the University Co-Operative Company have by their exclusive right to the use and possession for private profit-making purposes of this real estate. That their property interest is separate and distinct from that assumed by the University under this contract would seem too plain to raise a question or require debate. Being a substantial property interest, with a real or marketable value, I think such interest, whether as real property as defined in sec. 70.08, supra, or as personal property as defined in sec. 70.09, supra, should be required to pay its proportionate share of taxes and not be treated, as it virtually is by the present majority holding, to be so much or so little of either “real property” or “personal property” as to be, for taxation purposes, neither, and thus to intrude *365upon or usurp the area or status heretofore exclusively occupied and maintained by the coffin of Mahommed.
I think the definition given by the majority opinion to the phrase in the exemption statute, sec. 70.11 (1), asserted here, namely, “owned exclusively,” is not the definition that was intended by the legislature and clearly contrary' to the prior decisions of this court, particularly Comstock v. Boyle, 144 Wis. 180, 128 N. W. 870, where such particular phrase was being considered, and it was there expressly stated (p. 186) that such phrase necessarily meant “ownership free from any kind of legal or equitable interests in any one else.” And in Milwaukee v. Milwaukee County, 95 Wis. 424, 69 N. W. 819, where the plaintiff, the city, was in possession of real estate under an option to purchase, yet nevertheless that situation, far stronger than that occupied by the Board of Regents here, could not (p. 427) exempt such property from taxation by the state.
There has never heretofore been found any difficulty in treating as subject to taxation as real estate that which, in other regards, would be considered personal property. So as to a leasehold in a situation quite similar to that here presented in Jetton v. University of the South, 208 U. S. 489, 28 Sup. Ct. 375, where it is said (p. 500):
“As long as different interests may exist in the same land, we think it plain that an exemption granted to the owner of the land in fee does not extend to an exemption from taxation of an interest in the same land, granted by the owner of the fee to another person as a lessee for a term of years. The two interests are totally distinct, and the exemption of one from taxation plainly does not thereby exempt the other,”—
which case is followed in Millsaps College v. Jackson, 275 U. S. 129, 48 Sup. Ct. 94. Such interests as that of mortgagor and mortgagee in the same real estate may be separately assessed and each regarded as real estate, as in Chi*366cago & N. W. R. Co. v. State, 128 Wis. 553, 637, 639, 646, 108 N. W. 557; State ex rel. Heyl v. Hinkel, 139 Wis. 41, 43, 119 N. W. 815; Savings & Loan Soc. v. Multnomah County, 169 U. S. 421, 425, 427, 428, 18 Sup. Ct. 392. A partner’s interest in a partnership property, though some of such be real estate, may be taxed as personal property (Blodgett v. Silberman, 277 U. S. 1, 12, 48 Sup. Ct. 410), and so, by statute and decisions, may be the real estate used by railroads. Rails and track materials in Langlade v. Crocker Chair Co. 190 Wis. 226, 229, 208 N. W. 799, and factory machinery in State ex rel. Gisholt M. Co. v. Norseman, 168 Wis. 442, 445, 169 N. W. 429, were taxable as real estate.
Manifestly under the majority opinion it is now rendered possible for the Board of Regents to permit all manners and forms of private enterprise from beauty shoppes to butcher shops by similar profitable arrangements to come within the tax-exemption aura of the State University. It permits that body to substitute its judgment for that of the legislature in determining that certain real estate, however much it may be in the full possession and control of private enterprise, shall nevertheless be relieved from its share of the expenses of government to which all other general taxpayers must submit. It creates a new tax-exemption creator.
The legislature, the body with the exclusive powers over taxation and exemption (secs. 1 and 5, art. VIII, and sec. 17, art. I, Const.), and charged with the duty of providing for the support of the University (sec. 6, art. X, Const.), has heretofore been recognized as the proper source from which to obtain the necessary appropriations for the maintenance and growth of the University and cannot well be charged with being lax or niggardly in that regard. The legislature has carefully made express provision by law for the acquisition of property by and for the support of the University (see sec. 20.39, Basic Appropriations; sec. 20.41, *367Appropriations, etc.), and as discussed in Loomis v. Callahan, supra, it has, and but recently, expressly provided for certain specified building projects involving leasehold interests and expressly exempting such interests from taxation. Under the present decision the Board of Regents may now assume that special legislative function of granting exemptions without any express authority. It may well be questioned if the restrictions, so carefully provided for the purchase of full title in fee only of land within the University area as made by the legislature (sec. 11, ch. 116, Laws, of 1919, sec. 36.065, Stats.), are now anything more than mildly permissive.
For these reasons I think the court below was right.
A motion for a rehearing was denied, with $25 costs, on June 4, 1929, and the following opinion was filed July 8, 1929: