In Re the Appeal of the Atlantic Coast Conference

Judge McCRODDEN

dissenting.

I respectfully dissent from the majority’s conclusion that the property owned by the Atlantic Coast Conference (ACC), if its expenditure of administrative funds does not violate N.C. Gen. *12Stat. § 105-278.4(a)(2) (1992), is tax exempt. Before turning to my analysis of the governing statute, I would like to join the majority in its chastising of a representative of the University of North Carolina who evaded a request by Guilford County for ACC financial data pertinent to its decision in this matter. Both the University of North Carolina and North Carolina State University, members of the ACC, are public institutions and are subject to the Public Records Law, N.C. Gen. Stat. §§ 132-1 to -9 (1991). They may not avoid their responsibilities in disclosing records which are deemed public under the law or, for that matter, to accomplish indirectly any other prohibited act by virtue of their membership in the ACC. The University representative’s actions were, at best, disappointing.

I reject the majority’s conclusions (1) that the member institutions own the subject property; (2) that the ACC is not operated for profit; (3) that the activities of the ACC are “[o]f a kind commonly employed in the performance of those activities naturally and properly5 incident to the operation of an educational institution such as the owner;” and (4) that the owner uses the property wholly and exclusively for educational purposes.

First, as an unincorporated association, the ACC may and does hold the Landmark property in its own name. N.C. Gen. Stat. § 39-24 (1984) states:

Voluntary organizations and associations of individuals organized for charitable, fraternal, religious, social or patriotic purposes, when organized for the purposes which are not prohibited by law, are hereby authorized and empowered to acquire real estate and to hold the same in their common or corporate names and may sue and be sued in their common or corporate names concerning real estate so held: Provided, that voluntary organizations and associations of individuals, within the meaning of this Article, shall not include associations, partnerships or copartnerships which are organized to engage in any business, trade, or profession.

The ACC is a voluntary organization of member institutions united to maximize the proceeds they can derive from athletic events and can apply, at least in part, to educational goals. The Supreme Court has defined charitable institutions to include educational institutions. See, e.g., Reynolds Foundation v. Trustees of Wake Forest College, 227 N.C. 500, 42 S.E.2d 910 (1947).

*13The statute does not define the word individual. I do not, however, believe that the use of this term excludes the member institutions of the ACC. Indeed, Venus Lodge No. 62 v. Acme Benevolent Ass’n., 231 N.C. 522, 58 S.E.2d 109 (1950), the case cited by the ACC and relied upon by the majority for the proposition that property titled in the name of an unincorporated association belongs to its members, defined an unincorporated association as “merely a body of individuals acting together, without a corporate charter, but upon the methods and forms used by incorporated bodies, for the prosecution of some common enterprise.” Id. at 526, 58 S.E.2d at 112 (emphasis added).

Venus, which repeated the common law principle that an unincorporated association “is not an entity, and has no existence independent of its members . . . [and] has no capacity at common law to contract; or to take, hold, or transfer property; or to sue or be sued,” involved a transfer of property occurring in 1937, two years before the enactment of N.C.G.S. § 39-24. Id. (citations omitted). It is not, therefore, dispositive of the ownership question. For purposes of real property, N.C.G.S. § 39-24 establishes an unincorporated association as an entity in and of itself.

I would further point out that Venus is distinguishable on other grounds as well. Venus involved the transfer of property to which all members of the unincorporated association agreed. In the case under review, since a majority of member institutions could oust other members, that same majority could, in essence, transfer the subject property. This fact belies the concept that all member institutions own the property and underscores the fact that the ACC is a separate entity possessing some powers which supersede those of its members. Since the educational institutions do not own the subject property, Guilford County may properly subject it to taxation.

Second, I also disagree with the majority in its application of that part of N.C.G.S. § 105-278.4(a)(2) which requires that the owner of exempt property not be organized or operated for profit. Black’s Law Dictionary defines the word profit to be “the gross proceeds of a business transaction, less the costs of the transaction .... Gain realized from business or investment over and above expenditures.” Black’s Law Dictionary 1211 (6th ed. 1991). There is no question but that the ACC operates for profit. Indeed, one of its purposes is to pool its resources so as to maximize *14profits. The fact that it returns part of that profit to the member institutions, and they in turn apply a portion to non-athletic pursuits, does not, in light of Rockingham County v. Elon College, alter this:

The fact that a commercial enterprise devotes its entire profits to a charitable or other laudable purpose does not change the character of its business nor the purpose for which it is held. It is still a commercial enterprise, and is held as such. ... So, when an educational institution sees fit to engage in an outside competitive business for the purpose of increasing its revenues, the trade part of its business falls into the category of a commercial undertaking.

219 N.C. 342, 346-47, 13 S.E.2d 618, 621 (1941). As a profit-making enterprise, the ACC is not exempt from paying property taxes.

Third, I also reject the majority’s determination that the property is “[o]f a kind commonly employed in the performance of those activities naturally and properly incident to the operation of an educational institution such as the owner.” N.C.G.S. § 105-278.4(a)(3). In its broadest sense, education comprehends the whole course of training — moral, mental and physical, 71 Am. Jur. 2d State and Local Taxation § 382 (1973), and, to be sure, athletics are geared toward development of a student’s physical well-being. To extend this truism to encompass the ACC and “today’s climate of national broadcasting and ESPN, mega-million dollar contracts for basketball and football coverage” is a perversion of education in the classic sense. The ACC’s quest for exemption from property tax fails on this requirement as well.

Finally and logically following from the foregoing analysis, the ACC’s activities on the Landmark Center property are not wholly and exclusively for educational purposes. In this case there can be little doubt that the marketing of broadcast rights for sporting events is a commercial enterprise. Collegiate sports programming competes directly with commercially produced entertainment programming. It matters not that the proceeds are eventually dedicated, in part, to the educational purpose of athletics at the schools. See Rockingham County v. Elon College, 219 N.C. 342, 13 S.E.2d 618.

In light of the ACC’s failure to meet any of the requirements to exempt its property from taxation, I would vote to reverse the decision of the North Carolina Property Tax Commission and to hold the ACC accountable for taxes on the Landmark Center.