No. 12599
I N T E SUPREME COURT O THE STATE O M N A A
H F F OTN
1974
M N A A DEACONESS HOSPITAL,
OTN
A NON-PROFIT CORPORATION, and
PICKER CORPORATION, a New York
Corpora t i o n ,
P l a i n t i f f s and Respondents,
CASCADE COUNTY, a body p o l i t i c o f
t h e S t a t e o f Montana e t a l . ,
Defendants and A p p e l l a n t s .
Appeal from: District Court o f t h e Eighth J u d i c i a l D i s t r i c t ,
Honorable R. J. Nelson, Judge p r e s i d i n g .
Counsel of Record:
For A p p e l l a n t s :
J. Fred Bourdeau, County A t t o r n e y , Great F a l l s , Montana
Michael T. G r e e l y , Deputy County A t t o r n e y , argued,
Great F a l l s , Montana
For Respondents :
Church, H a r r i s , Johnson and Williams, Great F a l l s ,
Montana
E a r l J. Hanson argued, and Robert P. Goff argued,
Great F a l l s , Montana
For Amicus C u r i a e :
Cure and Borer, Great F a l l s , Montana
Submitted: March 20, 1974
Decided :APR 17 1974
Filed : APR 17 19%
Mr. J u s t i c e Frank I . Haswell d e l i v e r e d t h e Opinion of t h e C o u r t .
T h i s i s an a c t i o n t o r e c o v e r t a x e s p a i d t o t h e d e f e n d a n t
Cascade County on c e r t a i n p e r s o n a l p r o p e r t y used e x c l u s i v e l y f o r
h o s p i t a l p u r p o s e s under a l e a s e agreement between t h e p l a i n t i f f s .
The Hon. R. J. Nelson, d i s t r i c t judge, g r a n t e d p l a i n t i f f s ' motion
f o r summary judgment. From t h i s judgment, t h e County a p p e a l s .
P l a i n t i f f , Montana Deaconess H o s p i t a l , i s a n o n p r o f i t
h o s p i t a l i n G r e a t F a l l s , Montana. The h o s p i t a l l e a s e d c e r t a i n
X-ray equipment from t h e c o p l a i n t i f f , P i c k e r C o r p o r a t i o n , under
a n agreement f o r a s t i p u l a t e d monthly r e n t a l . In addition the
h o s p i t a l was r e q u i r e d t o r e i m b u r s e t h e P i c k e r C o r p o r a t i o n f o r any
t a x e s a s s e s s e d on t h e equipment. T h i s X-ray equipment was used
exclusively f o r h o s p i t a l purposes.
On March 29, 1972, t h e Cascade County t r e a s u r e r i s s u e d
a p e r s o n a l p r o p e r t y t a x s t a t e m e n t f o r t h e y e a r 1972 t o P i c k e r
C o r p o r a t i o n i n t h e amount of $10,839.96. Included i n t h e s t a t e -
ment was an amount of $8,004.62 a s s e s s e d upon s a i d equipment
l e a s e d by P i c k e r C o r p o r a t i o n t o t h e h o s p i t a l . Picker Corporation,
b e l i e v i n g s a i d t a x e s t o b e d u e , p a i d t h e f u l l amount t o Cascade
County. S u b s e q u e n t l y t h e y r e q u e s t e d reimbursement from t h e h o s p i -
t a l p u r s u a n t t o t h e t e r m s of t h e l e a s e .
On J u l y 1 2 , 1972, b o t h t h e h o s p i t a l and P i c k e r C o r p o r a t i o n
p e t i t i o n e d t h e Cascade County commissioners f o r a r e f u n d of t h e
t a x on t h e grounds t h a t t h e h o s p i t a l was a n o n p r o f i t c o r p o r a t i o n
and t h e p r o p e r t y was exempt from t a x a t i o n under s e c t i o n 84-202,
R.C.M. 1947. The p e t i t i o n was f i l e d i n a c c o r d w i t h s e c t i o n 84-
4176, R.C.M. 1947.
The Board of County Commissioners d e n i e d t h e p e t i t i o n ,
and s u b s e q u e n t l y p l a i n t i f f s f i l e d t h i s c o m p l a i n t f o r r e f u n d i n
d i s t r i c t c o u r t on October 4 , 1972. P l a i n t i f f s ' motion f o r summary
judgment was g r a n t e d on August 2 , 1973. From t h i s judgment t h e
County h a s f i l e d t h i s a p p e a l .
I n addition t o t h e p a r t i e s t o t h i s appeal, t h e S i s t e r s
o f C h a r i t y o f P r o v i d e n c e of Montana, owners and o p e r a t o r s of t h e
Columbus H o s p i t a l i n G r e a t F a l l s , a p p e a r e d a s amicus c u r i a e by
way o f b r i e f and o r a l argument.
The s o l e i s s u e p r e s e n t e d f o r r e v i e w i s whether p e r s o n a l
p r o p e r t y l e a s e d by a n o n p r o f i t h o s p i t a l and used e x c l u s i v e l y f o r
h o s p i t a l p u r p o s e s i s exempt from t a x a t i o n even though t h e l e s s o r ,
a p r i v a t e p r o f i t c o r p o r a t i o n , r e c e i v e d a p r o f i t from s a i d l e a s e .
The p e r t i n e n t s t a t u t e i n v o l v e d i n t h i s a c t i o n i s s e c t i o n
84-202, R.C.M. 1947, which was e n a c t e d by t h e l e g i s l a t u r e p u r s u a n t
t o a u t h o r i t y of A r t i c l e X I I , s e c t i o n 2 o f t h e 1889 Montana Con-
s t i t u t i o n , now A r t . V I I I , s e c t i o n 5 o f t h e 1972 C o n s t i t u t i o n .
S e c t i o n 84-202 g r a n t s t a x exemptions f o r c e r t a i n c l a s s e s o f prop-
erty. That s e c t i o n s t a t e s i n p a r t :
"The p r o p e r t y of t h e United S t a t e s , t h e s t a t e ,
c o u n t i e s , c i t i e s , towns, s c h o o l d i s t r i c t s , munic-
i p a l c o r p o r a t i o n s , p u b l i c l i b r a r i e s , * * * such
o t h e r p r o p e r t y a s i s used e x c l u s i v e l y f o r a g r i -
c u l t u r a l and h o r t i c u l t u r a l s o c i e t i e s , f o r educa-
t i o n a l p u r p o s e s , p l a c e s of a c t u a l r e l i g i o u s wor-
s h i p , h o s p i t a l s and p l a c e s of b u r i a l n o t used o r
held f o r p r i v a t e o r corporate p r o f i t * * * a r e
exempt from t a x a t i o n * * *." (Emphasis a d d e d . )
The h o p s i t a l and P i c k e r C o r p o r a t i o n ' s argument i s t h a t t h e
s t a t u t e exempts, among o t h e r s , two c l a s s e s o f p r o p e r t y from
taxation: p r o p e r t y owned by c e r t a i n s p e c i f i e d e n t i t i e s and prop-
e r t y used f o r c e r t a i n s p e c i f i c p u r p o s e s . I n t h e f i r s t c l a s s of
exemptions a l l p r o p e r t y owned by governmental e n t i t i e s i s exempt
from t a x a t i o n , r e g a r d l e s s o f t h e manner of i t s u s e . The second
c l a s s of p r o p e r t y exempted by t h e s t a t u t e i s p r o p e r t y used ex-
c l u s i v e l y f o r s p e c i f i c p u r p o s e s , i n c l u d i n g u s e f o r h o s p i t a l pur-
p o s e s by n o n p r o f i t h o s p i t a l s . They a r g u e t h a t t h e s t a t u t o r y exemp-
t i o n i s n o t dependent upon ownership b u t exempts a l l p r o p e r t y used
e x c l u s i v e l y f o r h o s p i t a l p u r p o s e s by a n o n p r o f i t h o s p i t a l .
It is the County's contention that every claim for'
exemption from taxation should be denied unless the exemption
is granted so clearly as to leave no room for any fair doubt.
Cruse v. Fischl, 55 Mont. 258, 175 P. 878. The County argues
that the language of section 84-202, R.C.M. 1947 is not clear
and could be subject to several interpretations. The County
contends that while the nonprofit hospitals themselves are
clearly exempt from taxation, nothing contained in section 84-
202 exempts all property used exclusively for hospital purposes
regardless of the commercial profit that may be derived from such
property. The County argues that in the instant case Picker
Corporation owns the property in question and derives a signifi-
cant profit from the property. The County further contends that
section 84-202 contains a strong legislative intent to prohibit
exemptions where corporate or private profit is realized; thus,
said X-ray equipment under lease to the hospital is a taxable
interest in personal property. Allen v. Multnomah County, 179
Or. 548, 173 P.2d 475; Ross v. City of Long Beach, 24 Cal.2d 258,
148 P.2d 649.
This same question was under consideration in N.W. Imp.
Co. v. Rosebud Co., 129 Mont. 412, 288 P.2d 657. There this Court
discussed the various views on the subject matter and demonstrated
the split of authority throughout the country. That case, how-
ever, may be distinguished. In N.W. Imp. Co., unlike the instant
case, the Court found that the private company that was leasing
property to the exempt school district was not deriving any econ-
omic advantage from the lease of the building. The rental on the
lease agreement was so adjusted that at the end of its estimated
life the private company would have returned to it only the actual
cost of construction without any interest.
Although N.W. Imp. Co. is thus distinguishable, the
r e a s o n i n g used i n t h a t c a s e may be e x t e n d e d t o exempt from
taxation t h e property i n question here. T h i s w e b e l i e v e t o be
i n a c c o r d w i t h t h e l e g i s l a t i v e i n t e n t o f s e c t i o n 84-202, R.C.M.
1947.
I t i s a w e l l a c c e p t e d p r i n c i p l e of s t a t u t o r y c o n s t r u c t i o n
t h a t t h e f u n c t i o n of t h e C o u r t i s t o i n t e r p r e t t h e i n t e n t i o n of
t h e l e g i s l a t u r e , i f a t a l l p o s s i b l e , from t h e p l a i n meaning of
t h e words u s e d , and i f t h e meaning of t h e s t a t u t e c a n be d e t e r -
mined from t h e language u s e d , t h e C o u r t i s n o t a t l i b e r t y t o add
o r d e t r a c t language from t h e s t a t u t e i n q u e s t i o n . Sections
93-401-15, 93-401-16, R.C.M. 1947; Nice v. S t a t e Board o f Equal-
i z a t i o n , 1 6 1 Mont. 448, 507 P.2d 527, 30 St.Rep. 284.
The f a c t t h a t t h e s t a t u t e c r e a t e s s e v e r a l c l a s s e s o f
exemptions, based i n one c a s e on "ownership" and i n t h e o t h e r c a s e
upon " u s e " , r e v e a l s a c l e a r l e g i s l a t i v e i n t e n t t o e x c l u d e "owner-
ship" of property a s a c r i t e r i o n i n determining t h e a p p l i c a b i l i t y
o f t h e exemption t o p r o p e r t y "used e x c l u s i v e l y f o r h o s p i t a l s " . To
r e q u i r e t h a t h o s p i t a l s own t h e p r o p e r t y , i n a d d i t i o n t o t h e r e q u i r e -
ment t h a t t h e y u s e t h e p r o p e r t y o n l y f o r h o s p i t a l p u r p o s e s , would
n e c e s s i t a t e i n s e r t i n g t h e words "owned by" o r words o f s i m i l a r
i m p o r t , s o t h a t t h e r e l e v a n t c l a u s e would r e a d " p r o p e r t y owned by
and used e x c l u s i v e l y f o r * * * h o s p i t a l purposes." To i n s e r t t h e s e
s u g g e s t e d words i n t o t h i s s t a t u t e would g i v e t o i t an added mean-
i n g n o t t o be found i n t h e p l a i n and unambiguous language o f t h e
statute. See Ross v . C i t y of Long Beach, 24 Cal.2d 258, 148 P.2d
649; S c o t t v. S o c i e t y of Russian I s r a e l i t e s , 59 Neb. 571, 8 1 N.W.
624.
The l e g i s l a t i v e p u r p o s e i n c r e a t i n g t h e t a x exemption
a p p e a r s t o be lower c o s t s of h o s p i t a l c a r e , which i n t u r n means
lesser e x p e n s e s f o r p a t i e n t s . To deny t h e exemption h e r e would
add an a d d i t i o n a l expense t o t h e r e n t a l p r i c e a l r e a d y p a i d f o r
the equipment. If the equipment here is taxable to Picker Cor-
poration it is reimbursable to them by the hospital whose pa-
tients would bear the taxes in the form of increased hospital
charges. This would be directly contrary to the purpose of the
exemption.
For these reasons the judgment of the district court is
affirmed.
Justice
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