Opinion
No. 29866
Decided June 7, 1944.
Taxation — Exemptions — Property must come squarely within statutory provisions — Graveyards and cemetery lands — Sections 5350 and 10093, General Code — Lands held for profit or speculative purposes, not exempt — Taxability dependent upon purpose for which property held, not title Cemetery association real estate not exempt, when — Number of lots held by persons for profit or speculation.
1. Taxation of property is the rule' and exemption the exception. Language which relieves from taxation is to be strictly construed, and property which is claimed to be exempt from the payment of taxes must come squarely within the exemption provisions of the law.
2. To be exempt from taxation under the provisions of Sections 5350 and 10093, General Code, lands must be used or held exclusively for the burial of the dead, and such lands held by anyone with a view to profit or for speculative purposes are not exempt from taxation.
3. When taxation or exemption from taxation is made to depend upon the purpose for which property is held, it is immaterial in whose name the title stands.
4. Where a cemetery association seeks to have exempted from taxation its real property laid out in cemetery lots, and a number of such lots are held by persons for profit or speculation, a decision of the Board of Tax Appeals denying exemption in toto is not unreasonable or unlawful, when no evidence is offered whereby it may be determined which portion of the cemetery lands is held for profit or speculation and which portion might be exempt from taxation under the law.
APPEAL from the Board of Tax Appeals.
On May 4, 1939, the Crown Hill Cemetery Association, an Ohio corporation not for profit, filed an application for the exemption of its real property from taxation. The application set forth that such property had been since November 15, 1937, "used exclusively as a graveyard and not held by a person, company or corporation with a view to profit." Attached to the application was the finding of the auditor of Summit county that the property should be exempt from taxation beginning with the duplicate year 1938.
The realty involved comprises some 245 acres near the village of Twinsburg in Summit county, adjacent to state route No. 91 as it runs between the cities of Cleveland and Akron.
On December 19, 1939, the Board of Tax Appeals conducted a hearing on such application and a decision was later rendered, denying exemption. A rehearing was granted and upon further consideration the application for exemption was again denied. The appeal taken to this court was from such later decision.
It appears from the transcript of the proceedings that in 1929 a nonprofit corporation known as Paradise Park, Inc., was formed for the purpose of acquiring land and establishing a cemetery for the burial of human remains. Thereafter, two changes were made in the corporate name. The Crown Hill Cemetery Association, the appellant herein, came into existence in 1937.
An individual named C.W. Beek was in active charge of affairs until the latter part of the year 1937 Several parcels of land were purchased between 1929 and 1934, and the cemetery laid out. Separate corporations acted as agents in selling the cemetery lots. Burials began on a limited scale in 1931. Operations in the disposal of lots were admittedly conducted on a wholesale and speculative basis. During Beek's connection with the project, some seven or eight thousand persons made purchases ranging from one grave to fifty lots. Approximately three-fourths of the cemetery acreage was disposed of in that way. The deeds as issued permitted unrestricted transfer. Any purchaser could resell at such price as he could obtain, and the cemetery association would be required to recognize the transaction.
In the fall of 1937, one Charles E. Silver assumed management of the cemetery and became president and a trustee of the Crown Hill Cemetery Association. At that time there were 21 companies which bore some kind of relationship to the association with respect to the sale of cemetery lots. Difficulties of one kind or another had developed and more than a hundred lawsuits were filed. It is also evident that financial troubles had arisen, and certain funds which should have been allocated to perpetual care were diverted to other uses.
At the time of the first hearing before the Board of Tax Appeals, slightly over 1,600 burials had been made in the cemetery. Most of these seem to have taken place in the improved front portion, although lots in the undeveloped rear had also been sold.
It is indicated from a reading of the transcript that since the fall of 1937, when the new management stepped in, the Crown Hill Cemetery Association has been conducted in a legitimate and business-like manner.
In its decision of December 2, 1943, from which this appeal was taken, the board found "that a portion of the lots set forth in the application for exemption are owned by private individuals who acquired said lots for speculative purposes and with a view to profit; that these privately owned lots are included in this application and are not segregated from lots owned by the applicant and that this board is unable to determine from the evidence which lots are entitled to exemption by provisions of Sections 5350 and 10093 of the General Code as land used exclusively as a graveyard and not held by a person, company or corporation with a view to profit from those lots privately owned and acquired by such individuals for the purpose of reselling same at a profit. To grant the application for exemption of the property listed therein by the applicant would result in exempting lots from taxation which are owned and acquired by private individuals for speculation and therefore do not come within the provisions of Sections 5350 and 10093 of the General Code. For these reasons the Board of Tax Appeals orders that the application be, and the same hereby is, denied."
Messrs. Snyder, Seagrave, Roudebush Adrion, for appellant.
Mr. Thomas J. Herbert, attorney general, and Mr. Daronne R. Tate, for appellees.
In determining the ultimate question of whether the decision of the Board of Tax Appeals is unreasonable or unlawful, this court is required to consider certain provisions of the laws of Ohio and apply them to the facts of the case.
Section 2, Article XII of the Constitution of Ohio simply authorizes, inter alia, the passage of laws to exempt burying grounds from taxation.
Section 5350, General Code, provides:
"Lands used exclusively as graveyards, or grounds for burying the dead, except such as are held by a person, company or corporation with a view to profit, or for the purpose of speculating in the sale thereof, shall be exempt from taxation."
Section 10093, General Code, provides that a company or association incorporated for cemetery purposes may acquire and hold, not exceeding six hundred forty acres of land, which shall be exempt from taxation, if held exclusively for burial purposes, and in nowise with a view to profit.
Appellant's position is that its property, owned in fee simple, is laid out and dedicated exclusively for a cemetery and is being used strictly therefor on a nonprofit basis; hence, such property is exempt from taxation within the meaning and intent of the Ohio statutes. Appellant argues further that purchasers of burial lots secure no title to the land, but merely an easement, a license or a privilege therein, to bury human remains, and that if some of the purchasers of lots in appellant's cemetery acquired the same for future sale at a profit, this circumstance has no relationship to the taxability of appellant's property.
In their brief, the appellees concede that the property of the cemetery, containing lots wherein burials have been made and the part where lots have actually been sold for burial purposes, would probably be exempt from taxation; but since, under the evidence, lots of this character were not identified by the appellant and since it is apparent that numerous lots were purchased and are being held for speculation, the decision of the Board of Tax Appeals is correct.
In other words, the appellant contends that the purpose for which cemetery property is held and used by a cemetery association is the test of taxability or nontaxability, while the appellees contend that the purpose for which such property is possessed and held by any person determines taxability or nontaxability under the Ohio statutes.
In approaching a decision in this case, we are met by the well established principle that taxation is the rule and exemption the exception. Therefore, property which is claimed to be exempt from the payment of taxes must come squarely within exemption provisions, since language which relieves from taxation is to be strictly construed. 38 Ohio Jurisprudence, 852, Section 114; Cullitan, Pros. Atty., v. Cunningham Sanitarium, 134 Ohio St. 99, 16 N.E.2d 205. Compare, City of Lima v. Lima Cemetery Assn., 42 Ohio St. 128, 130, 51 Am.Rep., 809, 811.
Construing Sections 5350 and 10093, General Code, with the above rule in mind, they mean that if cemetery lands are held by anyone for profit or for speculation, they are taxable.
Interpreting laws similar to those with which we are dealing, the court said in the case of Ivy Hill Cemetery Company's Appeal, 102 Pa. Super. 340, 344, 183 A. 84, 85:
"* * * we are not concerned with a question as to whether the cemetery grounds were used for profit by the cemetery company, but are bound to consider whether such land was in fact used or held by any one for private or corporate profit."
It was determined in that case that the portion of the land of a cemetery company, occupied by a mausoleum company engaged in the sale of burial crypts for profit, was taxable.
The fact that the cemetery lots which have been sold may not be owned by the purchasers in fee simple is not controlling. They represent an integral part of the cemetery lands, and if held "with a view to profit, or for the purpose of speculating in the sale thereof," the right to exemption does not exist.
Where the use of property or the purpose for which it is held is made the test of exemption from taxation, it is immaterial in whose name the title stands. 2 Cooley on Taxation (4 Ed.), 1421, 1426, 1451, Sections 680, 682, 690. Compare, Cleveland Library Assn. v. Pelton, Treas., 36 Ohio St. 253; Benjamin Rose Institute v. Myers, Treas., 92 Ohio St. 252, 110 N.E. 924, L.R.A. 1916D, 1170; State, ex rel. Boss, v. Hess, Aud., 113 Ohio St. 52, 148 N.E. 347; Incorporated Trustees of the Gospel Worker Society v. Evatt, Tax Commr., 140 Ohio St. 185, 42 N.E.2d 900; Wehrle Foundation v. Evatt, Tax Commr., 141 Ohio St. 467, 49 N.E.2d 52.
The cases of Georgia Mausoleum Co. v. City of Dublin, 147 Ga. 652, 95 S.E. 233, and Metairie Cemetery Assn. v. Board of Assessors, 37 La. Ann., 32, would seem to contain statements contrary to the position adopted herein, but we think the sounder reasoning supports our conclusions. In short, the exemption of burial grounds from taxation is not intended to relieve from the payment of taxes any parts thereof held by anyone for gain and profit.
Upon the evidence presented, we are unable to say that the Board of Tax Appeals was unwarranted in finding that a considerable number of the lots in the Crown Hill Cemetery were acquired and are held not for utilization in burying the dead, but with the end in view of reselling them at a profit. And since the appellant herein, seeking exemption, failed to produce evidence by which its land held for speculative purposes and the part thereof which might fairly be subject to exemption could be separated, we cannot say that the decision of the Board of Tax Appeals denying exemption was unreasonable or unlawful, and such decision is therefore affirmed.
Decision affirmed.
WEYGANDT, C.J., MATTHIAS and TURNER, JJ., concur.
HART, BELL and WILLIAMS, JJ., dissent.
I am unable to agree with the conclusion reached by the majority. The factual situation as I construe the record is substantially as follows: In 1939, Crown Hill Cemetery Association made application for exemption from taxation of certain described property upon the ground that "the property described herein is used for cemetery purposes only. It is not operated for profit." The Board of Tax Appeals, on April 2, 1940, denied the application. A rehearing was granted and thereafter on December 2, 1943, the application was again denied.
In 1929, a nonprofit corporation was formed for the purpose of acquiring land and establishing a cemetery for the burial of human remains. That corporation was known as Paradise Park, Inc., and in 1937 the name was changed to Crown Hill Cemetery Association. The property was laid out in sections and the sections were divided into lots containing varying numbers of spaces for graves. Prior to 1937 the burial rights in the lots were sold in large quantities to individual purchasers, and some creditors accepted burial rights at a fixed price in payment of obligations due them. No such transactions were countenanced after 1937. There is no direct evidence that these lots or burial rights were held with a view to profit; however the instruments of conveyance permitted unrestricted transfer, permitting the holders thereof to sell such rights for the best price obtainable and the association was bound to recognize the sales.
The material portion of the finding of the Board of Tax Appeals is set forth in the majority opinion.
For the purpose of this case I shall assume that the General Assembly, under the grant of authority found in Section 2, Article XII of the Constitution, had authority in enacting Sections 5350 and 10093, General Code, to attach the condition that lands used exclusively as graveyards shall be exempt from taxation if not held "with a view to profit."
Those sections, in my judgment, mean that the person or corporation making the application must hold the lands or a part thereof for the purpose of speculating in the sale thereof or with a view to profit in order to render such lands taxable.
The construction placed upon the statutes by the majority makes the approval or denial of the application dependent upon the intentions or actions of third persons in nowise connected with the cemetery association.
The conclusion of the majority would seem to be bottomed upon the case of Ivy Hill Cemetery Company's Appeal, 120 Pa. Super. 340, 183 A. 84.
Section 2, Article XII of the Ohio Constitution and Section 1, Article IX of the Pennsylvania Constitution are similar in language and purport.
The question in that case was whether the land and a mausoleum constructed thereon, within the cemetery, were tax exempt. The facts were that Ivy Hill Mausoleum Company (a copartnership) entered into a written contract with Ivy Hill Cemetery Company by the terms of which the mausoleum company paid the cemetery company the sum of $10,000 for the use of a parcel of land containing approximately 7,000 square feet and also paid $15,000 to be retained as an endowment fund, the income to be used in the maintenance and repair of the building. The mausoleum company had no interest in the land or building except that it retained the right to sell crypts at its price.
It was virtually admitted that the mausoleum company expected to clear $145,000 profit. At the time the assessment was made a large number of the crypts were still unsold.
The Superior Court of Pennsylvania upon that state of facts held that the land and building were not exempt from taxation. However the court carefully pointed out that a different situation would arise after all the crypts were sold.
The Supreme Court of Georgia, in the case of Georgia Mausoleum Co. v. City of Dublin, 147 Ga. 652, 95 S.E. 233, held:
"2. While the private corporation was engaged in acquiring cemetery lots, and constructing mausoleums thereon for the purpose of pecuniary gain and profit to be derived from such business, the mausoleums, when constructed, were not used for purposes of private or corporate profit or income, but were used solely for the purpose of burying the dead. It is the use made of the property, and not the purchase and sale thereof, which determines the matter of taxation. See Trustees v. Bohler, 80 Ga. 159, 164 ( 7 S.E. 633); Metairie Cemetery Assn. v. Board of Assessors, 37 La. Ann., 32; 37 Cyc., 945, and note."
The Constitution of Louisiana at the time of the decision in the case of Metairie Cemetery Association v. Board of Assessors, 37 La. Ann., 32, expressly exempted from taxation "all places of burial, provided such exempted property be not used or leased for purposes of private or corporate profit or income."
At page 36 the court used this language:
"In establishing this exemption, the law concerns itself exclusively with the quality and use of the property, and not at all with its ownership or disposition. So long as it retains the character of a 'place of burial,' it matters not who owns it, how often it may change hands nor at what prices — as a 'place of burial,' it remains exempt. The sale of property is not an use of it within any signification, technical or general, of that word.
"Every cemetery belongs to some owner; and the lots therein are not usually given away, but are sold to persons desiring to acquire them for purposes of interment. If the law had intended to exempt such places of burial,' only on condition that they should not be sold, it would have said so. Under such construction, the unoccupied lots of perhaps every cemetery in New Orleans, would be equally liable to taxation with those of plaintiff. Indeed, churches, hospitals, orphan asylums and other exempt property are equally subject to be sold at the will of the owners, and on the same theory might lose their exemption. Possible profits on such sales are not matters of judicial concern."
That the property here in question as a whole and in all its parts is a cemetery is beyond cavil.
It was dedicated and is used solely for the purpose of burial of the dead. The use being the basis of the. exemption, the sale of the burial rights, either as single units or in large quantities, does not affect the use, and possible profits upon such sales do not destroy the exemption.
There is no evidence in this record that any lot or burial right was sold at a profit or that any of the holders intended such a result.
From the fact that some persons bought these burial rights in considerable number, the Board of Tax Appeals inferred that such burial rights were held "with a view to profit" and therefore denied the application for exemption. Such a conclusion in my judgment was unreasonable and the order should be reversed.
HART and WILLIAMS, JJ., concur in the foregoing dissenting opinion.