Summary
In City of Biloxi v. Trustees of Mississippi Annual Conference Endowment Fund, 179 Miss. 47, 173 So. 797 (1937), the Fund, a corporate, religious body, for the benefit of retired Methodist preachers and their widows, asserted under its 1888 charter a tax exemption from City of Biloxi ad valorem taxes on its Seashore Campground.
Summary of this case from Mississippi College v. MayOpinion
No. 32698.
April 19, 1937. Suggestion of Error Overruled June 14, 1937.
1. APPEAL AND ERROR.
Contention that religious organization's charter, granted prior to adoption of Constitution in 1890, exempting property from taxation violated Constitution prohibiting passage of local, private, or special laws exempting property from taxation involved question of effect of amendment of organization's charter after adoption of Constitution (Laws 1888, chap. 439; Code 1906, secs. 899, 900; Const. sec. 90, subsec. (h)).
2. STATUTES. Taxation.
Where charter of religious organization, granted by special act prior to adoption of Constitution in 1890, exempted organization from taxation, amendment of charter after adoption of Constitution rendered organization subject to provision of Constitution prohibiting passage of local, private, or special laws exempting property from taxation and rendered the exemption originally granted to the organization void, notwithstanding amendment of organization's charter merely provided for extension of terms of office of trustees and officers and for filling of vacancies in such offices (Laws 1888, chap. 439; Code 1906, secs. 899, 900; Const., sec. 90, subsec. (h); secs. 179, 181, 279).
3. APPEAL AND ERROR.
Supreme Court could not determine whether organization was exempt from taxation under general law granting religious and charitable societies exemption from taxation where question was not considered or passed on in trial court and facts as to ownership and use of property were not sufficiently developed to enable Supreme Court to pass upon and fully determine such question.
APPEAL from the circuit court of Harrison county. HON.W.A. WHITE, Judge.
J.D. Stennis, Jr., of Biloxi, for appellant.
We respectfully submit that appellee, having failed to allege that application had been made for the assessment of said property to it as purchaser, and that it was the owner of said property at the time of the filing of said application for exemption, was not entitled to proceed on its petition for exemption, and said demurrer on the general grounds that no cause of action or right for relief was stated in the petition should have been sustained.
We respectfully submit to the court that it was manifest error of the trial court in overruling the demurrer for, as shown by the petition and exhibit thereto, appellee's charter, although the charter of said corporation was granted as a special act of the Legislature in 1888 before the adoption of the Constitution of 1890, the property of said corporation might have been exempted from taxation so long as the corporation continued to operate in the manner provided in its charter if it so operated at the time of the adoption of the Constitution of 1890, but after the Constitution was adopted and the Legislature passed general laws respecting corporations and how they might amend their charters, this corporation, taking advantage of the benefits of these laws, sections 899 and 900 of the Code of 1906, by having its charter amended in 1914, under the provisions of the general laws of the state respecting corporations, then by its said acts it conclusively agreed to and did and does hold its charter under the provisions of the Constitution of 1890 (section 179 of the Constitution). Section 182 of the Constitution of 1890 providing that the power to tax corporations and their property should never have been surrendered or abridged by contract or grant, etc., brings this corporation within the same class and category as individuals and other corporations whose property is prohibited to be by special act of the Legislature exempted from taxation. Section 90, paragraph (h), of the Constitution provides: "The Legislature shall not pass local, private or special laws in any of the following enumerated cases, but such matters shall be provided for only by general laws, viz. . . . (Paragraph H) Exemption of property from taxation or from levy or sale." So, regardless of the provisions of its original charter of 1888 which are altogether contrary to the provisions of the general laws of the state, those provisions having been vitiated and made utterly void by the acts of said corporation and said sections of the Constitution, this corporation could claim no rights other than those given under the general laws. Having no right to exemption under the general laws, it seeks to rely on the vitiated provisions of its original charter, which have been vitiated by its own acts in accepting the benefits of the provisions of the general laws of the state with reference to the amendment of its original charter. And, therefore, under subsection or paragraph (h) of section 90 of the Constitution of the State of Mississippi, the provisions of appellee's charter with reference to exemption are a nullity.
We do not find any case which has been before this Honorable Court and which is directly in point where section 179 of the Constitution of 1890 has been construed, but the wording of said section is plain and unambiguous, and expressly provides that the taking of any benefit or advantage from any legislation respecting . . . the alteration or amendment of corporate charter then existing or any general or special laws for the benefit of such corporations . . . shall be conclusively held an agreement by such corporation to thereafter hold its charter and franchise under the provisions of said Constitution.
The court in the case of Adams v. Railroad Co., 77 Miss. 194, 24 So. 200, in the construction of section 181 of the Constitution, held that the meaning of section 181 was that "if corporations organized and existing at the date of adoption of the Constitution should retain the precise corporate existence they then had, such exemptions as they legally had should continue whilst their corporate organizations remained as they were," and that the consolidation of corporations cut off the exemption previously enjoyed by the consolidated corporations.
Section 4169 of the Mississippi Code of 1930 enumerates the kind and amount of property which may be owned or held at any one place by any religious society, ecclesiastical body and/or any congregation thereof. The property described in appellant's petition for exemption from taxation by the City of Biloxi is not alleged to be such property as is entitled to be exempt under section 3108 of the Mississippi Code of 1930, nor is the same described as being property which said religious organization, the Conference Endowment Fund of the Mississippi Annual Conference of the Methodist Episcopal Church, South, had any right to own or hold.
On this latter proposition, which is not raised by the demurrer except under the general assignment that no cause of action is stated by the petition, the court has held in the case of Gunter v. Jackson, 130 Miss. 686, 94 So. 842, 27 A.L.R. 1043, that property owned by a church is not exempt when the church has no right to own it. The same proposition is presented by the case at bar. We respectfully submit that the appellee could not seriously contend that it is entitled to any exemption under the statute. We, therefore, respectfully submit that the court committed manifest error in overruling appellant's demurrer to appellee's petition for the exemption of the property described therein, first, because it is obvious that the appellee did not allege that it was the owner of the property, and if for the sake of argument we may say that its petition inferred that it was the owner thereof, it failed to allege any right of ownership thereof, and from a description of the property contained in the petition itself it is obvious that said property is not such property as religious organizations are, under the statutes, permitted to own, and, therefore, such as is not exempt from taxation; secondly, because by the acts of said corporation in amending its charter after the adoption of the Constitution of 1890, the provisions of the charter of said corporation, which are contrary to the provisions of the general laws and to the Constitution, have been vitiated by said acts drawing said corporation under the provisions of the Constitution, and the provisions of said charter being inhibited by paragraph (h) section 90 of the Constitution of 1890; and thirdly, because the property sought to be exempt is not alleged to be such property as is exempt under the statutes.
Taking up the third assignment of error, we respectfully submit to the court that the trial court committed manifest error in setting aside the assignment made by the City of Biloxi against Seashore Methodist Assembly of the Methodist Conference, and holding the same erroneous, for the assessment roll of the City of Biloxi for the years 1934 and 1935 as well as those for the year 1936 show that this property was assessed to Seashore Methodist Assembly of the Methodist Conference long prior to the filing by appellees of its petition for the exemption of said property from taxation, and there is nothing in the record to show that any application was ever made to the City of Biloxi by any person interested in said property or any other person for the change in said assessment, nor does the petition of the appellee allege that appellee is the owner of said property.
As much as we may desire to favor religious organizations and societies, the law looks with disfavor upon the exemption of property from taxation regardless of who may be the owner.
Knox v. Dantzler Lbr. Co., 148 Miss. 834, 114 So. 873.
No irregularity of the assessment could be raised on the appeal on the grounds of exemption.
Adams v. National Box Co., 125 Miss. 598, 88 So. 168.
Stevens Stevens and W.E. Morse, all of Jackson, for appellee.
The contention that the 1914 amendment to appellee's charter rendered its special exemption null and void and of no further force and effect brings into review sections 179, 180, 181 and 279 of the Constitution of 1890.
It is fundamental that grants of corporate franchises are contractual and that a grant to a corporation of valuable rights and immunities cannot be abrogated by the state. The continuance of an exemption from taxation granted in charters prior to the Constitution of 1890 has been passed upon by this court and by the Supreme Court of the United States in the case of Adams v. Y. M.V.R.R. Co., 79 Miss. 194, 24 So. 200, 180 U.S. 1, 45 L.Ed. 395, where several railroad corporations which had existed by virtue of special charters consolidated in the year 1892, and this court held that the consolidation extinguished the corporate existence of the corporations under their special charters, and that the agreement of merger and consolidation brought into existence a new corporation, created under the general laws of the state subsequent to the adoption of the Code of 1890, and that consequently the exemption from taxation granted in the special charters cease to be of any force and effect.
We have no such situation in this case for the reason that there is no consolidation or merger or liquidation of the corporation involved. We are only dealing with one corporation, to-wit: "The Trustees of the Conference Endowment Fund of the Mississippi Annual Conference of the Methodist Episcopal Church South," a corporation by virtue of the charter granted to it by the Legislature by chapter 439, Laws of 1888, which act has never been repealed or amended. The charter expressly provided that the Legislature may, at any time, repeal the act. There is no question here of a perpetual exemption from taxation and the contention of counsel that by obtaining an amendment to the charter, section 3 thereof became repealed is unsound for the reason that, as said by the court in Adams v. Railroad Company, supra, the precise corporate existence continued. The Constitution prohibits the Legislature from altering or amending the charter of any corporation then existing and likewise prohibits the Legislature from passing any general or special law for the benefit of such corporation. There has been no general or special law passed for the benefit of this corporation and it cannot be said that by obtaining an amendment respecting the terms of office of the members of the corporation it hereby accepted a general law passed for its benefit and that its charter stands repealed because of such act. An implied repeal is never favored, and when taken in connection with the provisions of sections 181 and 279 of the Constitution it is clear that the constitutional convention did not intend to disturb the corporate charters and franchises of existing corporations.
The mere amendment of a charter or articles of incorporation does not create a new corporation or otherwise effect the identity of the corporation, or its existing rights of action, property rights, or liabilities.
14 C.J. 197.
It is our contention that the only way section 3 of the charter could be repealed is by legislative act, or by the adoption of an amendment to section 3 materially affecting its scope, or by an amendment adopting a new charter and reorganizing the corporation under a new charter and subject to the general laws of the state.
Counsel appears to contend that relief should have been sought under section 2586, Code of 1930, providing for changes in assessment already made, which section is entirely inapplicable to this controversy, as this is an appeal duly perfected from an assessment by the municipal authorities in the manner provided by law.
In presenting this cause to the lower court appellant's entire case was presented on the theory that the charter violated and was repealed by section 90 of the Constitution, and that the appellee corporation was only entitled to such exemption as were allowed by the general laws of the state to charitable and benevolent organizations, and that since its petition for exemption did not claim any exemption under the general laws that it thereby failed to state any ground for exemption by arguing the motion and the demurrer to the court the contentions of appellant were fully and fairly submitted to and heard by the court, and the court consistently adhered to its ruling that the Constitution of 1890 did not affect this special charter and that consequently the appellee was entitled to the exemption. Appellant completely ignored section 181 of the Constitution, reading in part as follows: "Exemptions from taxation to which corporations are legally entitled at the adoption of this Constitution shall remain in full force and effect for the time of such exemption as expressed in their respective charters or by general laws, unless sooner repealed by the Legislature."
The appellant's charter grants it the right to own property both real and personal and without limitation in amount and a determination of this appeal does not necessarily involve section 4169, Code of 1930, defining the property which may be owned by a religious society, or section 3108, a general law exempting certain property from taxation. The appellee's petition for exemption did not claim an exemption under the general laws and its right to such exemption is immaterial to this case because it is entitled to the exemption under its charter. Although the petition did not claim an exemption under the general laws this circumstance is immaterial for the petition itself was unnecessary for the presentation of appellee's cause to the city counsel (Rawlings v. City of Hattiesburg, 157 So. 254) and on a trial de novo the appellee had the right to present any defense it could or cause why the assessment should be set aside. The burden of proceeding was never placed upon appellee because the city presented its motion to dismiss, demurrer, and pleas without ever making formal proof of the assessment, the pleas including even a denial of the assessment under the plea of the general issue.
We take sharp issue with the statement that appellee could not seriously contend that it was entitled to exemption under the general laws of the state, our contention being that the appellee is entitled to an exemption under either view by virtue of its charter or by virtue of the general laws of the state, and that since this corporation can only hold property for a public trust it comes within the exemption granted by the general laws of the state. The charter speaks for itself, and under the charter the appellee corporation is operating a public trust for the benefit of the widows and orphans under sixteen years of age and superannuate preachers of the Mississippi Conference.
5 R.C.L. 291.
The appellee corporation is operating a trust which constitutes a public charity, not for profit, and is entitled to an exemption under the general laws.
We respectfully submit that regardless of the procedure of the City in interposing its demurrer, the same was properly overruled and the court committed no error in overruling the demurrer.
Argued orally by J.D. Stennis, Jr., for appellant, and by John Morgan Stevens, Jr., for appellee.
For the year 1936, the tax assessor of the City of Biloxi assessed certain property, known as the Seashore Camp Ground, to the Seashore Methodist Assembly. After publication of notice to the taxpayers of the filing of the assessment roll, the appellee, a body corporate under and by virtue of a charter granted by chapter 439 of the Acts of the Legislature of 1888, filed a petition alleging that, in recognition of its character as a religious organization for the benefit of superannuated Methodist preachers and their widows and orphans under the age of 16 years, the Legislature, under its charter, exempted it from ad valorem taxes on all property owned by it, and that the property in question had been conveyed to it by deed dated December 28, 1935, and praying that its charter exemption of said property be recognized and the exemption thereof from taxation be granted. A copy of its charter, being chapter 439, Laws of 1888, with an amendment thereof granted and approved under the general laws providing for amendment of charters of incorporation, was filed as an exhibit to the petition.
After a full hearing of this petition, the Mayor and Board of Councilmen of the City of Biloxi entered an order rejecting the petition and request for exemption, and declaring the property to be subject to taxation; and after the entry of a subsequent order approving the assessment of this property at a valuation of $5,000, appellee perfected an appeal to the circuit court. In the circuit court the city first filed a motion to docket and dismiss, which was overruled, and then a demurrer was filed to the petition on the ground, among others, that "The provision in appellee's charter with reference to its ability to hold property free from taxation is in contravention of subsection (h), section 90 of the Constitution of the State of Mississippi, which section prohibits the passage by the legislature of the state of any local, private or special laws exempting property from taxation or from levy and sale."
This demurrer was also overruled, and there were subsequent proceedings which resulted in a final judgment adjudging the property, known as the Seashore Camp Ground property, to be exempt from taxes, and from this judgment appellant prosecuted this appeal assigning as error, among others, the action of the court in overruling its demurrer to appellee's petition for exemption from taxation.
The exemption from taxation which the appellee by its petition claims, was granted by a special act of the Legislature in 1888, prior to the adoption of the Constitution in 1890, but in the year 1914, the appellee applied for and secured an amendment of its charter, under the general laws of the state, sections 899 and 900, Code of 1906, providing for the amendment of charters of incorporation, granted under such general laws or by a special act of the Legislature, and it is the contention of the appellant that, by reason of the amendment of its charter, appellee thereafter held its charter and franchises subject to the provisions of the Constitution of 1890; and consequently its validity should be measured by the provisions of that Constitution.
On the part of appellee, it is contended that this point was not presented in the court below, and should therefore be disregarded here, but we do not think this contention is well founded. The second ground of the demurrer was that the asserted exemption from taxation by a private and special act of the Legislature was in contravention of subsection (h) of section 90 of the Constitution of 1890, and this ground of demurrer necessarily brought into review the question of whether or not the corporation had, by virtue of the amendment, brought its charter rights within the provisions of that Constitution. Section 181 of the Constitution of 1890 expressly reserved to corporations then existing the exemptions to which they were legally entitled at that time, and if by the amendment of its charter under the general laws enacted in pursuance of the Constitution of 1890, the appellee did not, by virtue of the provisions of section 179 of the Constitution, bring its charter under the provisions of the Constitution, section 90 thereof could, of course, have no application, and the contention that the charter violated section 90 of the Constitution necessarily involved the consideration of the effect of the amendment of its charter.
The amendment of appellee's charter under the general laws, which was granted in the year 1914, merely provided for the extension of the terms of office of the trustees and officers of the Conference Endowment Fund from one year to four years, and for the filling of vacancies in such offices, and it seems to be the contention of appellee that, after this amendment, its precise corporation existence continued, or, in other words, that there was no such fundamental change in its corporate powers or existence as would bring into play the provisions of section 179 of the Constitution of 1890.
Section 279 of the Constitution of 1890 provides that all rights of bodies corporate, and all charters of incorporation, shall continue, while section 181 of said Constitution provides that "exemptions from taxation to which corporations are legally entitled at the adoption of this Constitution, shall remain in full force and effect for the time of such exemption as expressed in their respective charters, or by general laws, unless sooner repealed by the legislature."
Section 179 of said Constitution provided that, "The legislature shall never remit the forfeiture of the franchise of any corporation now existing, nor alter nor amend the charter thereof, nor pass any general or special law for the benefit of such corporation, except upon the condition that such corporation shall thereafter hold its charter and franchises subject to the provisions of this Constitution; and the reception by any corporation of any provision of any such laws, or the taking of any benefit or advantage from the same, shall be conclusively held an agreement by such corporation to hold thereafter its charter and franchises under the provisions hereof."
Sections 181 and 279 of the Constitution were considered in the case of Adams v. R.R. Co., 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L.R.A. 33, and it was there held that they preserved to corporations such exemptions as they legally had, so long as they maintained their precise previous corporate existence, but in that case there was involved, not a mere amendment of an existing charter, but rather a consolidation of two corporations and the creation of a new corporation. But section 179 of the Constitution quoted above permits the Legislature to alter or amend any existing charter only on the condition that such corporation shall thereafter hold its charter and franchises subject to the provisions of the Constitution of 1890, and provides that the acceptance by a corporation of any of the provisions of the general laws of the state passed for its benefit, or the taking of any advantage or benefit thereunder, shall bind the corporation to thereafter hold its charter and franchises under the provisions of that Constitution. There is nothing in the language of this section that limits the requirement that, after amendment of its charter under general laws enacted for the benefit of corporations, a corporation shall hold its charter and franchises under the provisions of said Constitution, so that it will apply only in the case of such amendments as work a material and fundamental change in the powers, duties, or obligations of the corporation. It covers any amendment, or the acceptance of any benefit or advantage, under general laws enacted for the benefit of corporations, and upon amendment of its charter under these general laws authorizing such amendment, the appellee thereafter held its charter and franchises under and subject to the provisions of the Constitution of 1890.
Subsection (h) of section 90 of the Constitution of 1890 provides that exemptions of property from taxation, or from levy or sale, shall not be granted by the Legislature by local, private, or special laws, but such matters shall be provided for only by general laws. In its petition for exemption from taxation, the appellee sought exemption solely on the ground that the exemption had been granted to it by the private and special Act of the Legislature of 1888, and by appellant's demurrer to the petition the question of whether or not the provisions of appellee's charter exempting its property from taxation were violative of subsection (h) of section 90 was presented. That this asserted exemption granted by private and special act of the Legislature violates this section is at once apparent. It is in direct contravention of this section of the Constitution and is therefore void, and the demurrer to the petition should have been sustained.
The record apparently discloses, and the brief of counsel for the appellee seems to admit, that the only question considered in the court below was whether or not, under its charter, the appellee was entitled to have its property exempt from taxation, but it is suggested in appellee's brief that if the exemption granted in its charter is void, nevertheless it is entitled to the exemption under the general law granting religious and charitable societies exemption from taxation on property used exclusively for such purposes and not for profit, and not to exceed the amount of land which such religious or charitable societies may own as provided for in the chapter on corporations. In addition to the fact that this question does not appear to have been considered or passed upon in the court below, the facts as to ownership and use of the property in question are not sufficiently developed to enable this court to pass upon and fully determine that question. Consequently the judgment of the court below will be reversed, and the cause remanded.
Reversed and remanded.