MONT DEACONESS HOSPITAL v CASCADE

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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 Filed : APR 17 19% 17 1974 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. 4176, R.C.M. 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 841947. 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 Cons 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 property. 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 , munici 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 educat 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 wors 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 exc 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 purp 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 84202 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 significant 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. ever, may be distinguished. That case, how- 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 economic 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 . 93-401-15, 93-401-16, R.C.M. Sections 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 "ownership" 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 meani 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 patients 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 We c n u ; ) ocr.

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