In this action the plaintiff seeks to recover from the defendant the sum of $483.08 representing taxes on real property levied by Stutsman County for the years 1954 and 1955 which the plaintiff paid under protest on November 27, 1956. Subsequent to the payment the plaintiff applied
The plaintiff is a nonprofit corporation organized for charitable purposes. Its income of about $80,000 per year is devoted to work in the field of physically handicapped children and adults. The general program and the limits within which the organization functions are determined by the executive committee of the board of directors which employes an executive director whose principal duties are administration, fund raising and the drafting of the overall program under which the society operates. It maintains a state headquarters with five permanent employees under the administration of the executive director. This headquarters has no physical connection with the residence in question and is located in a different part of the city.
The plaintiff contends that the residence in question is exempt from taxation because the plaintiff is an institution of public charity and the property is "used wholly or in part for public charity" and thus comes within the exemption provided by Section 57-0208, paragraph 8, NDRC 1943, which reads:
The defendant does not question plaintiff's assertion that it is an institution of public charity but contends that the use to which the property is put determines its taxability and that the use of the property as a residence for the executive director does not bring it within the exemption. No constitutional questions are presented. The issues involve only the construction and application of the statute.
The trial court decided that the plaintiff was a charitable institution but that the use to which the property was put did not justify its exemption from taxation under the statute and rendered judgment for the dismissal of plaintiff's action. The plaintiff has appealed from that judgment. The case is here for trial de novo.
The plaintiff was incorporated in 1947 and up to the present time has employed two successive executive directors both of whom have lived in residences furnished by the plaintiff. It is difficult to secure a competent director because few persons have experience in that field. It was difficult to find suitable housing in Jamestown and the plaintiff undertook to supply a residence as an inducement to competent persons to accept the position of director. At first the plaintiff rented a house for its director at $80 per month. When the rent was raised to $100 per month a committee was appointed to select and recommend the purchase of a residence, with the result that the property in controversy was purchased in 1954.
The plaintiff contends that the decision to purchase did not stem wholly from the raise in rent but that the executive committee considered that the ownership of a residence was a necessity in order to insure proper housing to applicants for the position of executive director and that therefore the ownership of a residence
As we approach the construction of our statute and its application to the facts of this case we bear in mind the rules that the burden is on the claimant of a tax exemption to establish the exempt status of his property and that the laws under which such an exemption is claimed will receive a strict construction against the claimant. Engstad v. Grand Forks County, 10 N.D. 54, 84 N.W. 577; In re McKee's Estate, 71 N.D. 545, 3 N.W.2d 797; Incorporated Trustees of Gospel Worker Society v. Evatt, 140 Ohio St. 185, 42 N.E.2d 900; City of Longview v. Markham-McRee Memorial Hospital, 137 Tex. 178, 152 S.W.2d 1112; Trinity Methodist Episcopal Church v. City of San Antonio, Tex.Civ. App., 201 S.W. 669; Cypress Lawn Cemetery Ass'n v. City and County of San Francisco, 211 Cal. 387, 295 P. 813; Walker v. State, 154 Cal.App.2d 838, 316 P.2d 998; People ex rel. Kelly v. Avery Coonley School, 12 Ill.2d 113, 145 N.E.2d 80; American Bridge Co. v. Smith, 352 Mo. 616, 179 S.W.2d 12, 157 A.L.R. 798 and Annotations.
In Boston Symphony Orchestra, Inc. v. Board of Assessors, 294 Mass. 248, 1 N.E.2d 6, 10, it was held that doubt as to whether property is used for charitable or benevolent purposes so as to exempt it from taxation must be resolved against the claimant and:
The plaintiff cites Cedars of Lebanon Hospital v. Los Angeles County, 35 Cal.2d 729, 221 P.2d 31, 35, 15 A.L.R.2d 1045 which included actions by five other hospitals. Several properties were claimed to be exempt as "property used exclusively for * * * hospital * * * purposes." In the opinion it is stated:
In sustaining the claims for exemption the court emphasizes the necessity of the ready availability of the personnel so housed in connection with the work of the hospitals. We infer from the opinion that these facilities were maintained in immediate connection with or in close proximity to the hospitals. The services performed for the plaintiff by its executive director bear little similarity to the services performed for a hospital by its nurses, interns and resident doctors. More similarity to the work of the director exists with respect to services performed for an educational institution by its administrators and instructors.
The more recent case of People ex rel. Kelly v. Avery Coonley School, 12 Ill.2d 113, 145 N.E.2d 80, 82, involved the exemption of a building on a tract that afforded the only means of ingress and egress to the principal school building. The land was held exempt and the building not exempt. It is a two-story common brick building containing two small apartments with a garage attached. The first floor apartment is occupied as a residence by the headmistress of the school who also used the garage. The second floor apartment is occupied as a residence by the principal custodian of the school buildings and grounds. The use of the apartments is a part of the compensation of the headmistress and the custodian. Neither of them pays rent. In an attempt to sustain the exemption, apparently on the ground of special benefit to the institution, it was pointed out that the residence there of the headmistress permits her to be available for conferences before and after school hours and on Saturdays, Sundays and holidays. With respect to the custodian it was claimed that because he lives on the school grounds it is unnecessary to employ a watchman. After citing a number of cases the court said:
It was held that the building was not property used exclusively for school purposes and therefore was not exempt.
In President, etc. of Williams College v. Assessors of Williamstown, 167 Mass. 505, 46 N.E. 394, 395, the court considered a statute exempting from taxation the real estate of a college when occupied by it or by its officers for the purposes for which it was incorporated as applied to lots with dwelling houses on them owned by the college in the vicinity of the institution. They were occupied by the superintendent of college buildings, the librarian, the registrar, the director of the gymnasium and by professors in the college. The residences were occupied under a parole agreement whereby each occupant received a stated salary per month and the use of the residence while in the service of the college but the value of the occupation of each residence was determined and deducted from the monthly salary of the occupant. In holding that the residences were not occupied by the college or by its officers for the purposes for which it was incorporated the court said:
The plaintiff cites Scottish Rite Temple Association v. Board of Com'rs of Yankton County, 62 S.D. 204, 252 N.W. 626, as being most in point. The opinion in that case follows the decision in State ex rel. Eveland v. Erickson, 44 S.D. 63, 182 N.W. 315, 13 A.L.R. 1189. In the A.L.R. Annotation following that case it is indicated as being representative of a minority rule. See 13 A.L.R. p. 1203.
In the case involving the Scottish Rite Temple Association the court construed and applied a statute exempting "all property belonging to any charitable, benevolent or religious society and used exclusively for charitable, benevolent or religious purposes." [Laws 1929, c. 243.] The court upheld the exemption of a dwelling house erected for and used exclusively as the place of residence for the secretary of the Consistory. The house was on property adjoining other property of the Consistory and was furnished as a residence for the secretary as a part of his salary. The court followed State ex rel. Eveland v. Erickson, supra, saying:
"In other words, under the Eveland Case it is not the mere use of the property that controls, but the `purpose of the use.' Thus, `the purpose of the use' of this property, so far as the owner is concerned, is not to shelter its secretary, but to promote the primary objects of the organization, which are stipulated to be benevolent and charitable."
Our statute does not use the term "purposes" but requires that the exempt property be "used wholly or in part for public charity."
The wording of our exemption does not lend itself to the construction placed upon the South Dakota statute. We hold that the use contemplated by our statute is one that results in a benefit that has at least some direct and primary connection with the public charitable activities of the institution. A monetary saving or a mere convenience is not such a benefit. In this case the property is exclusively residential. Its location with respect to the plaintiff's charitable activities is remote. While there may be an economical advantage and an administrative convenience in ownership, the connection between that ownership and the charitable activities of the plaintiff is nebulous and not of sufficient substance to support the claim of exemption. The judgment appealed from is affirmed.
SATHRE, C. J., and BURKE, J., concur.