Court Opinion

ID: 5024497
Source: CourtListenerOpinion
Date Created: 2021-10-01 04:38:06.575088+00
Date Added: 2024-06-11T08:17:53.110781
License: Public Domain

MONTGOMERY, Chief Justice.
The meaning and effect of Kentucky Constitution Section 170 were fully discussed in City of Louisville v. Presbyterian Orphans Home Society of Louisville, 299 Ky. 566, 186 S.W.2d 194, 199. Different types of charitable and educational institutions were involved in the nine appeals thereby decided. Judge Rees, speaking for the Court in that case, pointed out the liberal policy “long favored in this state” toward the exemptions so granted.
The basis for the tax exemption was expressed as:
“The exemption of property of charitable and educational institutions had always been favored in this state, and there is nothing in the constitutional debates tending to indicate that it was the purpose of the delegates to the convention to reverse or circumscribe the policy theretofore recognized other than to make the exemptions uniform and to limit them to institutions of purely public charity and institutions of education not used for private gain. These kinds of institutions engage in activities which relieve the state and municipalities of burdens which they otherwise would have to assume. As frequently stated by this court, 'both before and after the adoption of the present Constitution, they render what are properly public services, thus relieving the taxpayers of a portion of their burden and justly entitling the institutions to exemption from taxation.”
This relief is recognized in the majority opinion in the instant case.
The majority opinion would distinguish the Presbyterian case from the instant case on the basis of present and future enjoyment of benefits. It is pointed out in the majority opinion, as the basis for the decision therein, that the charitable or educational institution may not receive any monetary benefit until 1965, perhaps 1977, and possibly never. This ignores the fact that the charitable institution has legal title to the property for the sole benefit of the educational institution, and that with each payment on the indebtedness, there is a corresponding increase in the institution’s equity in the property whose value, so far as is shown, is convertible into cash at the present or at any future time. This is a present monetary benefit to the institution since it constitutes a progressive increase in the assets and endowment of the institution.
Returning to the purpose of the constitutional section, that is, the institutions render public service which relieve the taxpayers of a portion of their burden, by giving force to the exemption now would mean that the institution will receive a monetary benefit by 1965 which will assist in relieving the taxpayers of their burden. To hold the property taxable under the majority opinion means that such relief will be postponed until 1977. The incongruity of such a holding may be illustrated by saying that a baby is subject to the payment of taxes during the period of gestation but is exempt after birth.
In the Presbyterian case, the Court reaffirmed the definition of income and property included in the exemption, as set forth in Trustees of Kentucky Female Orphan School v. City of Louisville, 100 Ky. 470, 36 S.W. 921, 19 Ky.Law Rep. 1091, 40 L.R.A. 119, in the following language:
“The court concluded that the income of educational institutions 'devoted solely to the cause of education’ means ‘the income of the corporate *578body’ and not ‘income from the buildings, grounds, etc.’ The court then said: ‘We think, therefore, a proper construction of the language used in the section requires the exemption of the entire property of this institution, wherever situated, and in whatever form its investments may be found.’ ” [299 Ky. 566, 186 S.W.2d 196.]
The latter case was decided five years after this section of the constitution was adopted. The intent of the framers was fresh in the minds of the Court at that time. The effect of the majority opinion is to circumscribe the time-honored holding in the two cases cited, and many times approved.
For these reasons, I am compelled to dissent from the opinion of my able brethren.