Trustees of St. Paul Methodist Episcopal Church South v. District of Columbia, 212 F.2d 244 (D.C. Cir. 1954)

The petitioner, the Trustees of St. Paul Methodist Episcopal Church South, a body corporate, has long been the owner of two adjoining parcels of ground on which are located a church edifice and a parsonage. After its acquisition by the church in 1928, the property was classified each year as exempt from ad valorem taxation under the exemption statute,¹  until the assessing authorities of the District of Columbia included it in the list of equalized valuations of all taxable real estate which was approved by the Commissioners of the District prior to July 1, 1952. Thus the property was held to be subject to taxation for the fiscal year which began that day, and the Assessor mailed a tax bill to the church on August 28, 1952, for the then current fiscal year.

In addition to listing the St. Paul property for taxation for the year beginning July 1, 1952, an attempt was made to subject it to taxation retroactively for the years which began July 1, 1950, and 1951. Being of the opinion that the property had not been used after 1949 for purposes which would produce exemption, the Corporation Counsel on May 28, 1952, recommended to the Commissioners of the District that the church and parsonage "be restored to the tax list as of July 1, 1950." On June 5, 1952, the Commissioners entered an order pursuant to their counsel's recommendation²  and, in obedience thereto, the Assessor on June 20, 1952, mailed to the church tax bills for the fiscal years which began July 1, 1950, and 1951.

On September 18, 1952, the St. Paul Church petitioned the District of Columbia Tax Court to set aside these actions and to hold its property exempt from taxation for the three fiscal years mentioned above. After a hearing, the Tax Court found that in 1949 the St. Paul congregation began to hold its services in a new church in nearby Maryland. About the same time the pastor abandoned the parsonage involved here and occupied a residence near the Maryland church. Since September 1, 1951, the old parsonage has been rented for use as a private residence.

The Court found the church edifice was not used for religious services after 1949 with these exceptions: (a) Services were held in the old church every night during three weeks in November, 1950, and on every Sunday for three months, beginning August 3, 1951, but has not been used by the St. Paul congregation since October 28, 1951. (b) The church edifice was leased to Young Peoples Synagogue, Inc., for religious services held on September 30 and on four days in October, 1951. With those dates excluded, St. Paul leased the old church to Christ Temple Church on a month-to-month basis beginning September 1, 1951, at $250 per month, but reserved the right to use the building for religious services each Sunday from 10:45 a.m. to 12:30 p.m. (c) On November 1, 1951, the building was leased of one year to the First Church of the Nazarene for religious services at $300 per month, except that St. Paul reserved the right to hold services at times which would not conflict with those of the Nazarene. This arrangement was in effect when the Tax Court made its findings of fact January 16, 1953. The Tax Court held that the taxes for the three fiscal years involved were validly assessed. The church appeals.

The first question is whether the District Commissioners acted within their power in ordering on June 5, 1952, that the property be retroactively taxed for the years beginning July 1, 1950, and 1951. We find no statutory authority for retroactive assessment and taxation other than the Code provision — § 47-712 — which deals with omitted property.³  Unless the Commissioners' action of June 5, 1952, was authorized by that section, and was in exact compliance with it, the assessment and taxation of the church property for the first two fiscal years in question must be set aside as invalid. We said in Tumulty v. District of Columbia, 1939, 69 App.D.C. 390, 400, 102 F.2d 254, 264:

"A tax to be valid depends upon a particular statute creating liability and upon the proper procedural steps being taken by the taxing authorities. It is fundamental that an assessment must be validly made before tax liability can possibly accrue to the taxpayer. * * *"

There is a serious question whether realty which has been duly determined to be exempt may later be assessed as omitted property; for it was not overlooked by the authorities who made the original assessment of all taxable property, and was not omitted from that assessment through oversight or clerical error. We do not stop to consider the question, however, because we hold the Commissioners of the District had no authority to enter the order of June 5, 1952.

We held in Congregational Home of District of Columbia v. District of Columbia, 1953, 92 U.S.App.D.C. 73, 202 F.2d 808, that when the Commissioners of the District of Columbia have approved before July 1 the equalized valuations of realty subject to taxation which have been submitted to them, taxability has been finally determined, assessment has been completed, and the Commissioners have no further function except to fix a tax rate which will raise the required revenue.

It is also true that they have no function with respect to the procedure prescribed by § 712 for the retroactive assessment of omitted property. The only officials who have a duty in that process are the members of the Board of Assistant Assessors, who make the retroactive assessment, and the Assessor, who notifies the taxpayer of the assessment by sending him a tax bill. Within ninety days after such notice, the taxpayer may appeal to the Tax Court from the action of the Board of Assistant Assessors. That Board's assessment of omitted property is not required to be submitted to or to be approved by the Board of Equalization and Review or the Commissioners of the District, and is not subject to administrative review except in the Tax Court.

An assessment can be made only by an official or board designated by law to make it. An attempted assessment by any other person or board is void. Atchison, T. & S. F. Ry. Co. v. Elephant Butte Irr. Dist., 10 Cir., 1940, 110 F.2d 767, 773; 3 Cooley, Taxation (4th ed. 1924) § 1046. Section 712 authorizes only the Board of Assistant Assessors to assess omitted property. In this case that Board took no action whatever toward making a retroactive assessment. The Commissioners simply decided the property should have been taxed and presumably directed the Assessor to fix valuations, to compute the taxes, and to prepare and send tax bills. The result is the determination of taxability (the first step in assessment)⁴  was made by the Commissioners instead of by the Board of Assistant Assessors, which alone was authorized to make it; and the determination of valuation (the second step in assessment) was made by the Assessor⁵  instead of by the Board, which alone is authorized to make it. The property was valued by one man instead of by the six men charged with the duty of fixing value.

The action of the Commissioners and the Assessor in assessing the property was wholly unauthorized. For that reason, the judgment of the Tax Court as to the first two of the three fiscal years involved must be reversed.

With respect to the taxes for the fiscal year beginning July 1, 1952, we affirm the decision of the Tax Court. In that instance the property was included in the list of realty subject to taxation which was approved by the Commissioners before July 1. The Court correctly held the property was not exempt from taxation for that year under subsections (m) and (o) of § 801a. The church building had not been "primarily and regularly used by its congregation for public religious worship" during 1950 and 1951.⁶  (Emphasis supplied.) The pastoral residence had not actually been occupied as such by the pastor of the St. Paul Church since 1949.

Affirmed in part, reversed in part, and remanded to the Tax Court for entry of an order in accordance with this opinion.