Court Opinion

ID: 9763909
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:00:42.726371+00
Date Added: 2024-06-11T07:29:51.054589
License: Public Domain

Jim Johnson, Associate Justice, dissenting. After a careful study of the case at bar, I find it impossible to agree with the majority view. Harding College is a private school. This Court held unequivocally in Phillips County v. Sister Estelle, 42 Ark. 536, that private and public schools are on a parity insofar as tax exemption is concerned. My research reveals that not only are the public colleges of this State granted the tax exemptions here asked for by Harding, but in addition more than $600 per student is provided from State funds to support these public institutions. The question that comes to my mind is, if the majority opinion is allowed to stand, where will the line be drawn? Will it be contended in the future that the mere fact that a college provides housing for the faculty and dormitories for the students that it is in competition with the hotels, motels, rooming and apartment houses, with the real estate companies, etc., and should be taxable? Will it be contended .that the fact that the college operates a cafeteria that it is in competition with the public restaurants and cafeterias and therefore should be taxable for this activity? Will it be contended that the college athletic program, the stadiums and gymnasiums, which are built to provide the general public, along with the students, proper seating facilities; and the concession stands which are used to provide the general public and the students refreshments, all of which services must be paid for by the public or the students, are in such competition with public recreational facilities such as pool halls and bowling alleys, that they too should be taxable? Just where will the line be drawn? In my view, the majority opinion is saying, in effect, that the above enumerated examples, in addition to the printing press, dairy and laundry apparatus, claimed by Harding as tax exempt, do not fall within Article 16, Section 5 of the Arkansas Constitution, as school buildings and apparatus, libraries and grounds used exclusively for school purposes. My research reveals that there are no Arkansas cases directly touching the question now before the Court, but there are cases involving the “public purpose” and the “public charity” exemptions which are pertinent. With respect to properties devoted to “public purposes” and “public charity,” the language of Article 16, Section 5 of the Constitution is as follows: “Public property used exclusively for public purposes, and “Buildings and grounds used exclusively for public charity. ’ ’ It will be observed that in all three exemptions the phrase “used exclusively” appears, so necessarily the interpretation of that phrase as applied to public purpose and charitable property should be controlling in this case. The case of Hot Springs School District v. Sisters of Mercy, 84 Ark. 497, 106 S. W. 954, is in point. The hospital was maintained by the Sisters of Mercy as a charitable institution. It contained rooms used exclusively by charitable patients, but it also had some rooms which were occupied by paying patients. A drug store was maintained in the hospital, and those who were able to pay were charged for their prescriptions. The hospital also maintained a school for nurses, employed a teacher, and employed girls who gave nursing services to patients while taking nurse’s training. All moneys received went to the hospital and no funds were diverted to any other institution. From the opinion: “The judgment appealed from exempts only the ground upon which the hospital building is situate and the building thereon; and the sole question in the case is, whether or not they are used exclusively for public charity. “. . . It is not denied that the whole object of the institution of appellee is one of public charity but appellant claims that it is not exclusively so used because pay patients are received, and because those able to pay are charged for prescriptions. “. . . The fact of receiving money from some of the patients does not, we think, at all impair the character of the charity, so long as the money thus received is devoted altogether to the charitable object which the institution is intended to further. “In the case of County of Henepin v. Brotherhood of Gethsemane, 27 Minn. 460, the court said: ‘A hospital with the necessary grounds, free to all who are not pecuniarily able, and supported partly by private contributions and partly by fees from patients, but producing no profit, is a purely public charity.’ “In the case of Penn. Hospital of Delaware Co., 169 Pa. St. 305, the court said: ‘Property which is used directly for the purpose and in the operation of the charity is exempt, though it may also be used in a manner to yield some return and thereby reduce the expenses.’ “We think the property meets the constitution requirement of being ‘buildings and grounds and materials used exclusively for public charity.’ ” In Brodie v. Fitzgerald, 57 Ark. 445, 22 S. W. 29, it appeared that the Sisters of Charity and Mercy who operated a public charity also owned real property which was rented for income purposes. Taxes were levied against this rental property. It was contended that as the rental ultimately was used for charitable purposes, the property was exempt. This contention was rejected, this Court saying: “Under our constitution the rule stated by 1 Desty on Taxation, p. 119, applies. It is as follows: ‘The fact that the rents and revenues of a property owned by a charitable corporation are devoted to the purposes for which the corporation was organized, will not exempt such property from taxation. It is only when the property itself is actually and directly used for charitable purposes that the law exempts it from taxation.’ ” This case is without application here for the simple reason that Harding College does not rent any of its properties for rental income. It actually and directly uses all of the property it owns for educational purposes. The operation of the press, the laundry and the dairy are carried on primarily for educational purposes and the receipt of revenue from a few outside customers is just as incidental as was the receipt by the Sisters of Mercy of payments from those patients who could afford to pay for the use of the hospital’s facilities. In pointing out why the rental property was held to be taxable in Brodie v. Fitzgerald, supra, this Court in Robinson v. Indiana & Ark. Lumber & Manufacturing Co., 128 Ark. 550, 194 S. W. 870 remarked: ‘ ‘ The reason is that under our constitution it is only when the property itself is actually and directly used for public charity that the law exempts it from taxation.” Yoes v. City of Fort Smith, 207 Ark. 694, 182 S. W. 2d 683, involved a “public purpose” exemption. The City of Fort Smith issued revenue bonds and constructed a waterworks system. A reservoir was constructed in Crawford County some twenty-five miles from Fort Smith. The tax officials of Crawford County levied taxes against this property. They contended that all of appellee’s property in Crawford County was not being used “exclusively for public purposes,” and in their brief said : “ ‘In order to secure its water supply, appellee constructed its dam and plant in the northern part of Crawford County, more than twenty-five miles from the city. This, we concede, it had a right to do, but only for one purpose, and that was supplying its citizens water within the corporate limits. When it went beyond this, it was no longer using the property exclusively for the public purpose for which the waterworks was designed. True, this and other courts have held that in connection with this purpose, mere surplus water may be disposed of, but it has never been held that the municipality can spread out into the general utility field and then escape liability . . .’ (i.e., liability of taxation on the property). Appellants thus concede, in this section of their argument, that appellee’s property would be exempt from the taxation here sought to be imposed except for the contracts to furnish water to (a) Alma, (b) Van Burén, and (c) Camp Chaffee.” This Court answered: “A city may sell surplus water without losing its right to tax exemption as public property used exclusively for public use. In 3 A. L. ft. 1445, there is an annotation on whether public property is taxable where income is received incidental to public use; and the rule is stated: 1 As a general rule, it may be said that where the primary and principal use to which the property is put is public, the mere fact that income is incidentally derived from its use does not affect its character as property devoted to public use.’ The annotation is supplemented in 129 A. L. R. 485, and also in 101 A. L. R. 790, where the case of Hope v. Dodson, 166 Ark. 236, 266 S. W. 68 is cited to sustain the above quoted rule.” “Appellants say in their brief: ‘After the construction of the dam, under a "WPA grant, a large swimming pool and large bath house were constructed upon a tract of land which appellee had acquired wholly below the dam; admission fees were charged to swim in the pool, and other charges were made in connection with the use of the bath house, towels, etc.; cold drinks, sandwiches, and such articles, were sold at the bath house and about the swimming pool; a coin-operated music machine was operated. It is apparent that all of these things were separate and apart from, and had no relation to, the supplying of water. In addition to these things, a number of cottages have been erected upon the land below the dam, and title thereto is in Fort Smith . . “All the area below the dam was placed under the control of the Parks Board of the City of Fort Smith and has all the time been handled as a public park. The facilities are open to the public at large, and are patronized by the people of Crawford County, as well as by people from elsewhere. A small admission charge is made for the use of the swimming pool, in order to defray towel expense, etc.; cold drinks and sandwiches are sold by a concession; but from all of the admission charges and concession money, the City of Ft. Smith has never made any profit; in fact, it still lacks several hundred dollars of receiving back its original outlay for towels. If any profit should ever be received, it will go back into maintenance, etc.” The Court quoted this from Hannon v. Waterbury, 106 Conn. 13, 136 A. 876: “The charge of a small fee covering a part of the cost of the maintenance of the pool in paying a supervisor, instructors, janitors, and the like, while the municipality furnished the buildings, the swimming pool, the apparatus and equipment in connection therewith, the coal, electricity, water chemicals, and other necessaries for the maintenance of the pool from the rule of governmental immunity. The city was not deriving a profit from this small fee, the charge was a mere incident to the public service rendered in the performance of a governmental duty.” And then added: ‘ ‘ Without lengthening this opinion by the citation of other authorities, we conclude that the use of the property below the dam, as a swimming pool, bath house, and public park, did not destroy the status as tax-exempt property under Article 16, Section 5, of our Constitution.” If an incidental charging for swimming, towels, cold drinks, sandwiches, coin machines, and the rental of cottages does not impair the “exclusive use” for public purposes, it follows that school property is used “exclusively for school purposes,” even though a small amount of surplus products and services may incidentally be sold to outsiders who are not solicited. The above case certainly should be controlling in the case at bar. I can think of no excuse to give a different meaning to the same words used in the same section of the Constitution simply because in one instance the property of one of the finest private schools in this Nation is involved. If the majority is compelled to deviate from the rule set out in Hot Springs School District v. Sisters of Mercy, and Yoes v. City of Fort Smith, supra, it seems to me the least this Court could do would be to take the equitable approach to this situation by allowing a pro-rata tax exemption for that amount of the property here involved which is admitted to be used in the strictest sense exclusively for the school. For the reaáons stated above, I respectfully dissent.