CHAPTER IV

PROPERTY EXEMPT FROM TAXATION

General Explanation

The following section deals with the subject of exemptions and contains the pricipal provisions of the statutes relating thereto. It should be borne in mind, (1) that the exemptions prescribed by this section relate to the property tax only and have no application to income, inheritance occupation or other forms of taxation; (2) that all exemption statutes are to be strictly construed and that only such exemptions can be allowed as are clearly authorized by law. In other words, unless the person claiming the exemption brings himself clearly within the provisions of the statute the exemption should be denied. The supreme court of the United States early adopted the rule that "Exemptions from taxation are regarded as in derogation of the sovereign authority and of common right and therefore cannot be extended beyond the express terms of the language used." Bailey v. McGuire 22 Wallace 215; Phoenix Insurance Co. v Tenn. 161 U. S. 174; Vicksburg v. Dennis 116 U. S. 668.

The same rule has been adopted by the supreme court of this state. State ex rel. Bell v. Harshaw, 76 Wis. 240; Katzer v. City of Milwaukee, 104 Wis. 16; Agr. Assn. v. Douglas Co., 104 Wis. 429. In the case of Katzer v. Milwaukee, it is said that "statutes exempting property from taxation are to be strictly construed and if the meaning of such a statute is fairly ambiguous or uncertain as to a specific piece of property or owner, it is the duty of the court to resolve the doubt in favor of the taxability of the property." This is the universal rule where the effect of the exemption would be to relieve the property from taxation altogether.

When liberally construed. Where, however, a special method of taxation is prescribed as to any given item or class of property, and in consideration thereof it is exempted from taxation under the general law, a more liberal rule of construction prevails. Milwaukee E. R. & L. Co. v. Milwaukee, 95 Wis. 339; Duluth S. S. & A. Ry. Co. v. Douglas Co. 103 Wis. 75; Merrill R. & L. Co. v. Merrill, 119 Wis. 249. This rule was expressed in the last mentioned case as follows: "Where a statute in terms exempting property from general taxation is only a part of a general statutory scheme substituting a license fee or other impost in lieu of general taxation, such statute is to be construed liberally in favor of the person required to pay taxes in the substituted form." This latter rule applies to street and steam railroads and other similar property not subject to local assessment. As questions under the latter rule will seldom arise, local assessors are cautioned to resolve all doubts in favor of taxability and assess all property which does not come clearly within the terms of the exemptions contained in this section.

The statute is divided into 41 subsections, each dealing with a particular item or class of property, and the comments and explanations bearing on the subject are given under the subdivisions of the statute relating to the same.

Property exempt from taxation; enumeration of. SECTION 1038. The property in this section described is exempt from taxation, to wit: 1. That owned exclusively by the United States or by this state; but no lands contracted to be sold by the state shall be exempt.

(2) Lands owned or occupied free o frental exclusively by any county, city, village, town or school district, or by any free public library; also lands and personal property possessed, managed and controlled exclusively for the public use as park lands or grounds, or for the maintenance of parks, parkways, boulevards or pleasure drives by any city or village. But lands purchased by counties at tax sales shall be exempt only in cases provided in section 1191.

Amended by chap. 558, 1919.

Government lands. The state cannot tax lands while the title remains in the United States nor while it holds them as trustee of the United States. Tucker v. Ferguson, 22 Wall. 572; W. C. R. Co. v. Taylor Co. 42 Wis. 52. But as soon as the title has passed to a railroad company by its having earned the lands, whether patent has been issued or not, the land becomes subject to taxation. W. C. R. R. Co. v. Price Co. 133 U. S. 496; Farnham v. Sherry, 71 Wis. 568; W. C. R. R. Co. v. Comstock, 71 Wis. 88. A patent is prima facie evidence in respect to the time when the land became taxable. Eaton v. Lyman, 33 Wis. 34.

State lands. Lands owned by the state are not subject to taxation but lands conveyed to the state in trust to build railways are taxable after the trust is executed and the title has been vested in the company. Lands granted to this state for the Fox and Wisconsin river improvement did not become subject to taxation on being conditionally granted to the improvement company. Denniston v. Unknown Owners, 29 Wis. 351. As to lands mortgaged to the state see Reynolds v. Weiss, 27 Wis. 450.

Under a former statute it was held that lands in possession of a city under an option to purchase them, but without any obligation to pay the purchase price, were not exempt from taxation. Milwaukee v. Milwaukee Co. 95 Wis. 424.

Wisconsin Orphans' Home. Lands held in trust by the trustees of the Wisconsin Orphans Home "for the benefit of the children" were not owned exclusively by the state within the meaning of this subdivision so as to be exempt from taxation. Comstock v. Boyle 144 Wis. 180. Lands owned by one municipality and located within the boundaries of another such as stone quarries, power plants, etc. are exempt under this subdivision..

Municipal bonds. (2m). Any and all bonds issued by any county town, city, village, school district or board of school directors of any town organized under the township system of school government in this state, shall hereafter be exempt from taxation.

See note to subdivision 10 of this section, page 46.

Religious, scientific, literary, educational or benevolent associations. (3) Personal property owned by any religious, scientific, literary, educational or benevolent association, or by fraternal societies, orders, or associations operating under the lodge system, used exclusively for the purposes of such association, and the real property necessary for the location and convenience of the buildings of such association and embracing the same, not exceeding ten acres; provided such real or personal property is not leased or otherwise used for pecuniary profit; and the lands reserved for grounds of a chartered college or university, not exceeding forty acres; and parsonages, whether of local churches or districts, and whether occupied by the pastor permanently or rented for his benefit. The occasional leasing of such buildings for schools, public lectures or concerts, or the leasing of such parsonages, shall not render them liable to taxation. The endowment funds and real and personal estate of any public library association, organized under the laws of this state, which, or the income of which, shall be used or invested for the purposes of such association. The endowment funds and the real and personal estate of any corporation formed solely to encourage the fine arts, organized under the laws of this state, without capital stock, and paying no dividends or pecuniary profits to its members. Such real and personal estate comprised under any endowment or trust, or such proportion of the true value of such real or personal estate, as under the terms of such endowment or trust is specifically held for the benefit of the state historical society of Wisconsin organized under the act of the legislature, approved on the fourth day of March, one thousand eight hundred fifty-three.

Amended by chap. 560, 1919.

This is the most important subdivision of the exemption statute from an administrative standpoint. It was amended by Chapter 554, 1915, by adding "fraternal societies, orders or associations operating under the lodge system," and by Chapter 560, 1919, by adding the last sentence relating to exemption of property held in trust for the benefit of the State Historical Society. The effect of the amendment of 1915 was to establish the character of fraternal societies as charitable or benevolent associations, and thus entitle them to exemption subject to the conditions imposed on the other associations enumerated. These conditions are (1) that the association claiming the exemption is religious, scientific, educational or benevolent in fact; (2) that such association is the owner of the property claimed to be exempt except in the case of parsonages; (3) that the property is necessary for the convenience and used exclusively for the purposes of such association and (4) that such property is not used for pecuniary profit except through occasional leasing of the building thereon for schools, public lectures or concerts. All these conditions must exist to entitle such association to the exemption. If one of them is lacking the exemption cannot be allowed.

Church property. In the case of a vacant lot owned by a religious association in the city of Appleton the exemption was denied notwithstanding that a church building had been erected thereon between the time of assessment and the commencement of the action. It was intimated, however, that if the society had already commenced to build on such lot and the building was in progress of

completion it might be exempt. Outagamie Co., 76 Wis. 587.

Green Bay & Miss. Canal Co. v.

In the case of Katzer v. City of Milwaukee, 104 Wis. 16, it was held that land conveyed to an archbishop of the Roman Catholic Church by deed running to him as an individual was not exempt from taxation although it was shown that the land had been pur-. chased by the diocese as a residence for the archbishop; that it was actually occupied by him and that it was customary in such cases to take title in the name of the archbishop individually in trust for the diocese. These two cases establish the law that neither ownership without use nor use without ownership is sufficient to secure the exemption. Both ownership and use must concur.

A corporation organized under ch. 86, Stats., for benevolent and educational purposes, even though organized by a religious order of the same name as the corporation and incidentally conducting religious services in a hospital maintained by it, is not a "religious corporation." It seems that the term "religious corporation" means a corporation organized in connection with' a church under ch. 91, Stats. U. S. Natl. Bank v. The Poor Handmaids, 148 Wis. 613..

Parsonages. A different construction was given to the clause relating to parsonages. In the case of Gray v. Lafayette Co. 65 Wis.> 567, it was held that the word "rented" as used in this subdivision applied to a residence owned by a layman and rented to a church association as lessee for the use of its pastor, and that the word "leasing" applied to parsonages owned by the church and leased to other persons.

Benevolent associations. In case of St. Joseph's Hospital v. Ashland Co. 92 Wis. 636, it was held that property used for hospital purposes owned by sisters of a religious order organized without capital stock and paying no dividends or pecuniary profit to the individual members, in which destitute patients were received without charge, was exempt from taxation as a benevolent association, notwithstanding that a charge was made against patients who were able to pay, the proceeds after paying expenses being loaned without interest to build other hospitals or similar property.

On the authority of this and similar cases in other jurisdictions it is believed that property owned by Young Men's Christian Associations, Salvation Army posts and like organizations used exclusively for the purposes of such organization and not conducted for pecuniary profit come within the exemption. Commonwealth v. Y. M. C. A., 116 Ky. 711; Auburn v. Y. M. C. A., 86 Main 244, 37 Cyc. 945.

Educational Associations. The property of all educational associations to the extent prescribed by the statute is exempt from taxation when exclusively used for the purpose of such association and not conducted for pecuniary profit. While the authorities are not uniform on the subject the general rule is that the exemption extends to buildings erected by colleges or academies on their lands as residences for instructors. Harvard College v. Cambridge Assessors 175 Mass. 145; Ramsay County v. McAllister College v. St. 46 Iowa 275. The exemption does not extend to commercial colleges and other similar institutions conducted for pecuniary profit.

Agricultural societies. (4) Personal property owned and used exclusively by the state or any county agricultural society, and the lands owned and used by any such society exclusively for fairgrounds

The exemption conferred by this subdivision is limited to property owned and used exclusively by agricultural societies. Lands occupied by county agricultural societies as lessee are not entitled to the exemption: Agricultural Society v. Douglas Co. 104 Wis. 429.

Fire companies. (5) Fire engines and other implements used for extinguishing fires, owned or used by any organized fire company, and the buildings and necessary ground connected therewith owned by such company, and used exclusively for its proper purposes.

Indians. (6) The property of Indians who are not citizens, except lands held by them by purchase.

It will be observed that the exemption granted by subdivision 6 is limited to Indians who are not citizens and is confined to lands acquired by purchase.. Property owned by Indians who have severed their tribal relation and are citizens of the United States is subject to taxation. Sec. 12 of Chapter 5 of the Statutes defines three classes of Indians who are citizens: (1) Persons of Indian blood who have been declared citizens of the United States by act of Congress; (2) civilized persons of Indian descent not members of any tribe; (3) civilized descendents of Indian tribes residing in this state outside of reservations who have relinquished all tribal relations and receive no aid from the United States. Neither property belonging to Indians within a reservation nor property which the government of the United States holds in trust for Indians or over which it exercises guardianship is taxable under state law. Farrington v. Wilson, 29 Wis. 383; U. S. v. Rickard, 188 U. S. 432; Wisconsin v. Hitchcock, 201 U. S. 202.

Under the Dawes Act Indians become citizens when they have received their allotments of land. In re Heff, 197 U. S. 488; U. S. v. Thurston Co., 143 Federal 287.

Cemetery associations. (7) Lands owned by any cemetery association used exclusively as public burial grounds and tombs and monuments to the dead therein; including lands adjoining such burial grounds, and greenhouses and other buildings and outbuildings thereon, owned and occupied exclusively by such cemetery association for cemetery purposes; all articles of personal property owned by any cemetery association necessarily used in the care and management of such burial grounds, and all funds exclusively devoted to such purposes; all flowers and ornamental plants and shrubs raised for the decoration of such burial grounds, and which may be sold in the manner and for the purposes mentioned in section 1449; also all property held by donation, bequest or in trust for cemetery associations under the provisions of section 1447.

(8) Pensions receivable from the United States.

Under Sec. 776 the electors of a town have power to raise money by taxation for cemetery purposes notwithstanding the provisions of Sec. 1440 devoting to that purpose the proceeds from the sale of land. Hixon v. Oneida Co., 82 Wis. 515.

Corporate stock. (9) Stock in any corporation in this state which is required to pay taxes upon its property in the same manner as individuals.