Court Opinion

ID: 6777437
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:51:47.870173+00
Date Added: 2024-06-11T16:02:49.444530
License: Public Domain

Lundberg Stratton, J.,
dissenting. Because I would find that a plain reading of former R.C. 3921.40 (now R.C. 3921.24) exempts fraternal benefit societies from sales and use taxes, I respectfully dissent.
A fraternal benefit society operates for the social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious benefit of its. members. R.C. 3921.05. Because charitable organizations perform a valuable service to society that is to be encouraged, the General Assembly has expressly declared fraternal benefit societies to be charitable and benevolent institutions. R.C. 3921.24. The General Assembly, recognizing the unique nature of fraternal benefit societies and the services they provide to members, has enacted laws providing tax exemptions for these organizations in R.C. 3921.24 and, by implication, in R.C. 5739.02(B)(12).
R.C. 3921.24 (substantively the same as the statute at issue, former R.C. 3921.40) states two basic concepts:
“Every fraternal benefit society * * * is hereby declared to be a charitable and benevolent institution, and all of its funds are exempt from all* * * taxes other than franchise taxes and taxes on real estate.” (Emphasis added.)
First, the statute expressly exempts a fraternal benefit society from taxes (except franchise and real estate taxes) on “all of its funds.” Although the statute does not define “funds,” the word is commonly understood to broadly signify monies and assets. The American Heritage Dictionary of the English Language (3 Ed.1992) 735, defines “funds” as “[available money.” Black’s-Law Dictionary (6 Ed.1990) 673, states that “funds” includes “moneys and much more * * * and in broader meaning may include property of all kind.”
There is no language in the statute that limits the meaning of “funds.” Yet the BTA found it necessary to interpret the word. The majority affirmed the BTA’s finding that the term “funds” is restricted to “the fund or funds which are maintained and invested as prescribed by law to carry out the purposes of the society.” There is no reasonable or legal basis to narrowly define the word funds to limit the tax exemption that, I believe, the General Assembly conferred upon fraternal benefit societies. It is a well-settled principle of statutory construction that words used in a statute are to be given their plain and ordinary meaning unless otherwise indicated. Ohio Assn. of Pub. School Emp. v. Twin Valley Local School Dist. Bd. of Edn. (1983), 6 Ohio St.3d 178, 181, 6 OBR 235, 237, 451 N.E.2d 1211, 1213.
*338However, even if we accept such a narrow interpretation, a logical progression in the analysis is that United Transportation Union Insurance Association (“United”) uses its “funds” to make necessary purchases to carry out the purposes of the society. The funds are exempt from all taxes (except franchise and real estate taxes), and consequently, the use of the funds, including purchases made with the funds, should be likewise exempt from taxes. The purchases become other property and part of the exempt funds just as real estate would if purchased.
The majority labels the use tax as a “tax on United’s exercise of its privilege to use the items it purchased.” Yet, no matter how the tax is described, the consequence of the BTA’s finding is that United’s funds, in this case, funds used to purchase necessary items for the operation of the fraternal benefit society, are being taxed. This taxing policy serves only to discourage a fraternal benefit society from providing services and benefits to its members in order to avoid taxation on the use of the funds. Because the exemption applies to all taxes, with the exception of franchise and real estate taxes, I believe this interpretation violates the express terms of former R.C. 3921.40 and the intent of the General Assembly.
Second, the statute also states that the exemption applies to “all * * * taxes other than franchise taxes and taxes on real estate.” There is no express exclusion for sales and use taxes. I do not believe we should read additional exclusions into the statute. Had the General Assembly intended also to exclude sales and use taxes, it could have done so. The plain, ordinary meaning of the statute exempts fraternal benefit societies from all taxes other than those expressly excluded.
In addition, R.C. 5739.02(B)(12) also supports United’s position that the General Assembly intended fraternal benefit societies to be exempt from sales and use taxes. The BTA rejected United’s argument on the basis that the purposes of a fraternal benefit society are not included within the charitable purposes enumerated in the statute. Although fraternal benefit societies are not specifically identified in R.C. 5739.02(B)(12), many of the functions they perform are so delineated. But because the General Assembly has expressly designated fraternal benefit societies as charitable and benevolent institutions in R.C. 3921.40, no further inquiry need be made.
I believe the language in the statute reflects the General Assembly’s intent to exempt fraternal benefit societies from all taxes (except franchise and real estate taxes), including sales and use taxes. Therefore, I would reverse the decision of the BTA as being unreasonable and unlawful.
Pfeifer, J., concurs in the foregoing dissenting opinion.