Summary
In Trustees of the Church of God of Cleveland v. Board of Tax Appeals (1953), 159 Ohio St. 517, the court adhered to the entity principle saying that (page 520) "the word, `entity,' used in the statute means something that has a real and separate existence," referring to Cincinnati College v. Yeatman, Aud., 30 Ohio St. 276, that for the purposes of taxation a building may be divided perpendicularly as well as horizontally, where there are separate and distinct tenements in the same building.
Summary of this case from Church v. Board of T. A.Opinion
No. 33334
Decided May 27, 1953.
Taxation — Real property — Building used for religious, charitable and residential purposes — Split listing for tax exemption — Section 5560, General Code — Separate floors constituting separate entities.
Where certain floors of a building constitute separate entities thereof and are used exclusively for religious or charitable purposes, although other floors of the same building are not so used, the former are exempt from real estate taxes under the provisions of Section 5560, General Code.
APPEAL from the Board of Tax Appeals.
The Church of God owns a two-story building located in Cleveland. In the basement of the building are three rooms, one of which is used as a Sunday-school room, another as a baptistry and the third as a furnace room with a hot-water tank and laundry tubs. The first floor of the building is occupied by an auditorium where public worship is held and two rooms used for Sunday-school purposes. On the second floor of the building are two suites of rooms, one of which is occupied by the janitor of the building and his family, and the other by the church minister and his family.
On May 6, 1952, an application was filed with the Board of Tax Appeals to declare exempt from taxation the above-described church property. After a hearing on the application, the board denied exemption on the ground that the provisions of Section 5349, General Code, are not applicable in that "more than a fifty per cent use of the building is for private residential purposes and there is no evidence showing that it is necessary for the pastor and his family and the janitor and his family to reside in the said building."
An appeal was taken to this court.
Mr. Edward L. Sepessy, for appellant.
Mr. C. William O'Neill, attorney general, Mr. Hugh A. Sherer and Mr. E.H. Krueger, Jr., for appellee Board of Tax Appeals.
The questions presented are whether the church property is used exclusively for public worship within the contemplation of Section 5349, General Code, and if not, whether under the provisions of Section 5560, General Code, that portion of the property used for public worship and religious purposes is exempt from taxation.
Section 5349, General Code, under which exemption of the entire property is claimed, provides as follows:
"Public school houses and houses used exclusively for public worship, the books and furniture therein and the ground attached to such buildings necessary for the proper occupancy, use and enjoyment thereof and not leased or otherwise used with a view to profit * * * shall be exempt from taxation."
The Board of Tax Appeals, in denying exemption from taxation as to the entire property, found that it is not used exclusively for public worship but is partly used by the minister and janitor and their families for residence purposes, and that there was no evidence that such use is necessary for the care of the building.
The Board of Tax Appeals in making such finding relied on the case of Mussio v. Glander, Tax Commr. (1948), 149 Ohio St. 423, 79 N.E.2d 133, which holds that where a portion of a building is occupied as a residence and the remainder used for public worship, such latter use is not exclusive and no part of the property therefore is entitled to exemption from taxes. The dissenting opinion also cites the case of Welfare Federation of Cleveland v. Glander, Tax Commr., 146 Ohio St. 146, 64 N.E.2d 813, as controlling.
Since the decision of those cases, the pertinent part of Section 5560, General Code, was amended effective October 29, 1949, and provides as follows:
"* * * But where a separate parcel of real property, improved or unimproved, having a single ownership, is so used, that part thereof, if a separate entity, would be exempt from taxation, and the balance thereof would not be exempt from taxation, the listing thereof shall be split and the part thereof used exclusively for an exempt purpose or purposes shall be regarded as a separate entity and be listed as exempt, and the balance thereof used for a purpose or purposes not exempt, shall, with the approaches thereto, be listed at its true value in money and taxed accordingly." (Italics supplied.)
It is true that this court in the case of Goldman, a Taxpayer, v. L.B. Harrison (Club), 158 Ohio St. 181, 184, 107 N.E.2d 530, held that Section 5560, General Code, does not authorize for tax-exemption purposes the division of property on a percentage basis into that used for charitable purposes and that used for noncharitable purposes. However, under the amendment of the statute above quoted, where a separate entity of property is used exclusively for religious or charitable purposes such entity is entitled to exemption from taxation.
It is our view that the first floor of the building used as a church auditorium and the two rooms in the basement used as a Sunday school and baptistry are used exclusively for tax-exempt purposes, and, under the provisions of the statute, may be set off as exempt from taxation, not on a percentage basis but by a split valuation of the separate entities of the property.
The word, "entity," used in the statute means something that has a real and separate existence. In the early case of Cincinnati College v. Yeatman, Aud., 30 Ohio St. 276, this court held that for the purposes of taxation, a building may be divided perpendicularly as well as horizontally, where there are separate and distinct tenements in the same building. See, also, Cleveland Library Assn. v. Pelton, Treas., 36 Ohio St. 253; Board of Home Missions and Church Extension of Methodist Episcopal Church v. Philadelphia, 266 Pa. 405, 109 A. 664; Young Men's Christian Assn. v. Lancaster County, 106 Neb. 105, 182 N.W. 593, 34 A.L.R., 1060; Masonic Temple Craft, Trustee, v. Board of Equalization, 129 Neb. 293, 261 N.W. 569.
The decision of the Board of Tax Appeals is reversed and the cause is remanded to that board for further proceedings in accordance with the views expressed in this opinion.
Decision reversed.
MIDDLETON, TAFT and STEWART, JJ., concur.
WEYGANDT, C.J., MATTHIAS and ZIMMERMAN, JJ., dissent.
At the outset, let it be noted that we who dissent from the majority opinion are not opposed to the exemption of property from taxation where a clear legal right to exemption is shown. But, as we view the matter, the majority opinion goes too far and applies Section 5560, General Code, beyond its intended and constitutional limits.
We can not read out of Section 2, Article XII of the Constitution, the all important word, "exclusively," and we can not ignore the basic rule that statutes exempting property from taxation are to be strictly construed.
Disregard of that principle can not help but to create great uncertainty and confusion, and the majority opinion will result in the exemption list of property in every county being measurably increased beyond that which is authorized by the Constitution.
The evidence shows that the land here involved has a 50-foot frontage and is 138.87 feet deep, and that two structures stand thereon — a two-story frame building, 36 by 48 feet, with a basement, and a garage. The second story of the building is wholly occupied as living quarters by the pastor of the church and his family of four and by the janitor of the church and his family of two — eight persons in all. The first story is used for public worship and one part of the basement is used for a laundry by the two families mentioned and the other part for conducting Sunday school. The church pastor uses the garage to house his automobile. It is therefore apparent to us that the building is occupied primarily as a residence.
Section 5349, General Code, provides in part:
"* * * houses used exclusively for public worship * * * shall be exempt from taxation." (Emphasis supplied.)
This section was applied in Mussio v. Glander, Tax Commr., 149 Ohio St. 423, 79 N.E.2d 233, wherein it was held that where the first floor of a building is used for a church chapel and a sacristy and the two upper floors are used as a place of residence by those engaged in pursuits connected with church affairs, "the real property * * * is not used exclusively for public worship or does not belong to an institution used exclusively for a charitable purpose" and, hence, is not entitled to exemption from taxation. Compare In re Bond Hill-Roselawn Hebrew School, 151 Ohio St. 70, 76, 77, 84 N.E.2d 270, 273, 274.
In 1949, the General Assembly enacted Section 5560, General Code, the pertinent part of which is quoted in the majority opinion and will not be repeated. That statute must be interpreted in connection with Section 2, Article XII of the Ohio Constitution, which permits the passage of general laws exempting from taxation " houses used exclusively for public worship, institutions used exclusively for charitable purposes." (Emphasis supplied.)
It is well established that "Section 2, Article XII of the Constitution of Ohio, is a limitation upon the legislative power to enact laws exempting property from taxation; therefore the General Assembly, in the enactment of general laws for such purpose, may not exceed the limitations provided in the Constitution." Paragraph one of the syllabus in Youngstown Metropolitan Housing Authority v. Evatt, Tax Commr., 143 Ohio St. 268, 55 N.E.2d 122. See, also, Zangerle, Aud., v. City of Cleveland, 145 Ohio St. 347, 61 N.E.2d 720.
In view of the constitutional provision referred to, we can hardly conceive that Section 5560, General Code, was designed or intended to apply to a parcel of real property where, as here, the structure thereon is substantially devoted to a purpose or purposes which render it amenable to taxation.
Less than a year ago this court decided the case of Goldman, a Taxpayer, v. L.B. Harrison (Club), 158 Ohio St. 181, 107 N.E.2d 530. In the per curiam opinion it was held that Section 5560, General Code, has reference only to "separate entities," and that where a building is used for both charitable and non-charitable activities, a division for taxation purposes on a percentage basis of the uses to which it is put is not proper or authorized and that "the entire property * * * must be held nonexempt from taxation."
This declaration was concurred in by Weygandt, C. J., and Zimmerman, Middleton, Matthias and Hart, JJ.
We are unable to reconcile the majority opinion in the instant case with the judgment of this court in the Harrison case.
Under the decision in the Harrison case, and bearing in mind the provisions of Section 2, Article XII of the Constitution, a single building used for both religious and nonreligious purposes does not answer the description of a "separate entity" within the contemplation of Section 5560, General Code.
It seems to us that the majority of this court has departed from the sound position heretofore taken and has adopted a rule which in our judgment will produce considerable chaos in the field of taxation.
Cited in the majority opinion are Cincinnati College v. Yeatman, Aud., 30 Ohio St. 276, and Cleveland Library Assn. v. Pelton, Treas., 36 Ohio St. 253, as supporting the conclusion that a single building devoted to religious and nonreligious uses may be divided so that one part is exempt from taxation and the other part is subject to taxation. The first cited case has nothing to do with tax exemption and is hardly a precedent for the instant case, and the latter was badly battered and virtually overruled in the much later case of Welfare Federation of Cleveland v. Glander, Tax Commr., 146 Ohio St. 146, 64 N.E.2d 813.
We would confine the operation of Section 5560, General Code, within constitutional limits and would affirm the decision of the Board of Tax Appeals.
WEYGANDT, C.J., and MATTHIAS, J., concur in the foregoing dissenting opinion.