Opinion
14559
November 3, 1937.
Before FEATHERSTONE, J., Sumter, May, 1937. Affirmed.
Actions by J.H. Strong and others as trustees under the will of John K. Crosswell, deceased, against the City of Sumter and another, and against B.C. Wallace as County Treasurer of Sumter County. The cases were heard together. From adverse orders plaintiffs appeal.
The order of Judge Featherstone requested to be reported, follows:
The two above cases, by consent, were heard before me together, as they involve the same question, which is entirely one of law.
The first case, which will be hereinafter designated as the "City Case," is an action for the recovery of $669.75 taxes paid on real estate in the City of Sumter, owned by the plaintiffs, the entire income from which is used exclusively for the maintenance and support of an orphanage founded and conducted under the terms of the will of the late John K. Crosswell, the pertinent parts of said will being set forth in the complaint. Said taxes were paid under protest and the action was commenced within the time allowed by law for the recovery thereof.
The defendants in the City case demurred to the complaint upon the grounds:
(1) That the real estate on which said taxes were paid does not consist of the buildings and grounds occupied by said orphanage, and therefore under Article 10, Section 4, of the Constitution of 1895 any Act of the General Assembly attempting to exempt property other than the lands and buildings actually occupied by the charitable institution conducted by the plaintiffs, is unconstitutional, null and void.
(2) That if it is within the power of the General Assembly to exempt said real estate of the plaintiffs from taxation, then the complaint does not affirmatively allege that a sufficient income is not derived from such real estate with which to pay said taxes, and therefore, under the Acts of 1932 and 1935 (Act April 6, 1932, 37 St. at Large, p. 1457, as amended by Act April 20, 1935, 39 St. at Large, p. 234), said property is taxable.
As to the case of plaintiffs Strong et al., etc., against B.C. Wallace, as County Treasurer, etc., hereinafter referred to as the "County Case," the complaint alleges substantially the same matters as are set out in the complaint in the City case, except that the amount sought to be recovered is the sum of $3,953.25.
The defendant answered in the County case, setting up that said taxes were paid under protest, but that they were lawfully due and payable and were lawfully collected.
An agreed statement of fact was entered into between counsel for the parties in the County case, admitting such facts as are alleged in the complaint as to payment of taxes on said real estate, that plaintiffs conduct a charitable institution under the will of Crosswell, that all of said real estate, save a small part thereof, to be fixed by the parties, brings in a sufficient income to pay the taxes assessed against the same. The agreed statement of fact and the pleadings in the County case raise, therefore, the identical issues presented under the demurrer in the City case, and a disposition of the one disposes of the other. There can be no doubt but that the J.K. Crosswell Home for Orphans, created under the terms of his will, is an asylum for indigent orphans, and real estate owned by such trust estate comes within the terms of Section 4, Article 10, of the Constitution. This section exempts from taxation real estate owned by the plaintiffs for such charitable purposes; this exemption, however, by the proviso appearing at the end of said section, prohibits any exemption of real estate beyond the grounds and buildings actually occupied by the same.
Plaintiffs contend that under Article 10, Section 1, general and broad power is given the General Assembly to exempt from taxes any and all property therein referred to, and contend that under Section 2578, Paragraph 10, of the Code of 1932, its property has been specifically exempted from taxation of any kind. They cite the case of Duke Power Co. v. Bell, 156 S.C. 299, 152 S.E., 865, 870, as authority for such position. Plaintiffs further contend that if such general power was not given to the General Assembly to exempt from taxation, then Section 1 of Article 10 would be meaningless.
However, as I construe Sections 1 and 4 of Article 10 they are not inconsistent. Section 4 prohibits any exemption from taxation beyond the actual grounds and building occupied; while Section 1 permits the General Assembly to exempt from taxation "property" of charitable institutions. This power of the General Assembly, referred to in Section 1, extends to stocks, bonds, mortgages, and many other classes of property which may be owned by charitable institutions, but as to the real estate, we have the clear prohibition against exemption which is found in the proviso of Section 4. The Duke Power Co. case, supra, seems to recognize the limitations upon the exempting power of the General Assembly, for the Court in that case says: "This provision of the Constitution [the reference being to Section 1, of Article 10], implies that the Legislature has the power to exempt property from taxation for [charitable] or other specified purposes, provided the exemption is not expressly or impliedly prohibited by other portions of the Constitution."
With the prohibition contained in Section 5, Article and the historical background for this provision in mind, it seems to me that any attempt of the General Assembly to exempt from taxation real estate other than the grounds and buildings actually occupied by specified and named charities, is unconstitutional and void. This conclusion is borne out by the Act of the General Assembly found on page 1652, 39 St. at Large, of the Act of June 6, 1936. In the preamble thereof, the Legislature places its construction upon its powers under the Constitution to exempt such charities, as plaintiffs, from taxation, and says in effect that it has no such power. The Court feels that this construction by the General Assembly is a proper construction, and is in effect a declaration that Paragraph 10 of Section 2578, Code of 1932, did not apply, and could not apply to real estate other than the buildings and grounds actually occupied by such charities. The Court must give great weight to such a strong declaration of the General Assembly, and it is hard to see how the General Assembly could have spoken more positively in the matter.
Even though the section of the Code relied upon by plaintiffs for exemption of its real estate may attempt to exempt the same, it appears that the General Assembly has passed an Act in 1932, found at page 1457, and another shown as Act No. 168, Acts of 1935 (at page 234), which said Acts provide that no exemption shall be allowed unless the real estate owned by such charities as the one operated by plaintiffs fails to bring in a sufficient income to pay such taxes, and if such property brings in a sufficient income, then taxes must be paid. It is not alleged in the City case that plaintiffs do not derive a sufficient income from the real estate therein referred to, with which to pay taxes. This is a necessary allegation to secure exemption, under both the Act of 1932, and the Act of 1935, and failing so to allege, this ground of the demurrer must be sustained.
It is therefore ordered that the complaints herein be, and the same hereby are, dismissed.
Messrs. Epps Epps, for appellants, cite: Exemption from taxation: 70 S.C. 433; 50 S.E., 28; 156 S.C. 299; 152 S.E., 865. Power to tax limited only by Constitution: 4 S.C. 222; 20 S.E., 221; 26 L.R.A., 345; 101 S.C. 312; 85 S.E., 774; 26 R.C.L. 36; 26 R.C.L., 297; 116 U.S. 404; 29 L.Ed., 680; 19 L.R.A., 78; 122 S.C. 158; 115 S.E., 202.
Mr. L.E. Purdy, for respondent County of Sumter, and Mr. Shepard K. Nash, for respondent, City of Sumter, cite: Exemption from taxation: 13 R.C.L., 938; 156 S.C. 299; 152 S.E., 870; 26 R.C.L., 326; 174 S.C. 256; 177 S.E., 371; 143 N.E., 414; 34 A.L.R., 628. Construction of constitutional provision: 162 S.C. 218; 160 S.E., 602; 138 S.C. 445; 136 S.E., 757; 137 S.C. 496; 135 S.E., 538; 177 S.C. 144; 181 S.E., 10. Demurrer: 154 S.C. 201; 151 S.E., 472; 93 S.C. 365; 76 S.E., 988; 114 S.C. 491; 103 S.E., 889.
November 3, 1937. The opinion of the Court was delivered by
These two cases were heard together on circuit and were heard together, by consent, in this Court on appeal.
It appears from the agreed statement of facts, upon which they were heard, that the plaintiffs are trustees under the will of John K. Crosswell, deceased, and also trustees of the John K. Crosswell Home, which is an institution of purely public charity, and its property is used exclusively for its maintenance and support. The cases were heard by Hon. C.C. Featherstone, presiding in that circuit, who filed his order in the case against the city, with the statement that the issues in the two cases were identical, "and a disposition of the one disposes of the other." His order, which will be reported, states the issues and they need not be repeated here.
The issues in these two cases are practically identical with those heard and decided in the cases of Epworth Orphanage v. Wilson, and Epworth Orphanage v. Town of Manning, which cases were heard by Judge Featherstone, whose disposition of them was in accord with the views announced by him in the two cases here present. His decree and order in the other two cases were affirmed by this Court ( 193 S.E., 644), and the appeals in the two cases now on appeal are controlled by that opinion.
There is one issue presented here not present in the other two cases.
Exception IV charges the trial Judge with error in not referring the matter to ascertain the amount of land which does not bring in sufficient income to pay the taxes.
Nowhere in the complaint nor in the agreed statement of facts is there a suggestion that the income from any part of the taxed property is insufficient to pay the taxes assessed against it. It is for the failure to make such claim in the complaint that the demurrer on that ground was sustained.
No motion was made to have the case referred for the purpose named. It was stated in the printed argument of respondent's counsel, and not controverted, that counsel in the City case had an agreement that if any of the property of the Crosswell Home, which is within the city limits, is shown not to produce income enough to pay the taxes, the city will refund such taxes.
The exception is overruled.
The order of the Circuit Judge is affirmed as to both cases.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.