2009 WI App 171
court of appeals of
published opinion
Case No.: |
2009AP202 |
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Complete Title of Case: |
†Petition for Review filed. |
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Plaintiff-Appellant,† v. City of Defendant-Respondent. |
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Opinion Filed: |
October 6, 2009 |
Submitted on Briefs: |
August 25, 2009 |
Oral Argument: |
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JUDGES: |
Curley, P.J., Kessler and Brennan, JJ. |
Concurred: |
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Dissented: |
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Appellant |
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ATTORNEYS: |
On behalf of the plaintiff-appellant, the cause was
submitted on the briefs of Thomas L.
Frenn of Petrie & Stocking S.C., |
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Respondent |
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ATTORNEYS: |
On behalf of the defendant-respondent, the cause was
submitted on the brief of William P. Dineen, of counsel, |
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2009 WI App 171
COURT OF APPEALS DECISION DATED AND FILED October 6, 2009 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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Appeal No. |
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STATE OF WISCONSIN |
IN COURT OF APPEALS |
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Plaintiff-Appellant, v. City of Defendant-Respondent. |
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APPEAL
from an order of the circuit court for
Before Curley, P.J., Kessler and Brennan, JJ.
¶1 BRENNAN, J.
Factual
Background
¶2 United Methodist appeals the 2007 taxes imposed on its
custodian’s residence. The facts are
undisputed. United Methodist owns the
building at
¶3 United Methodist and the residence were removed from the
City’s tax rolls in 1978. Since before
1982 until 1994, United Methodist’s associate
pastor lived in the residence. In 1994,
the custodian moved into the residence and has lived there since.
¶4 Recently, the City undertook a review of the tax-exempt property in the City. As part of that process, in August 2007, the City sent a letter to United Methodist, advising it that it must submit an application for tax exemption. United Methodist timely filed the application seeking tax-exempt status for the custodian’s residence and asked for a hearing before the Wauwatosa Common Council on its application. The City did not offer a public hearing and denied the application.
¶5 United Methodist filed a declaratory judgment complaint in Milwaukee County Circuit Court and a motion for summary judgment seeking a declaration of its entitlement to the tax exemption and a refund of its 2007 taxes for the property. The circuit court denied United Methodist’s motion for summary judgment and upheld the decision of the City’s tax assessor.[2] This appeal followed.
Standard
of Review
¶6 This case involves the application of Wis. Stat. § 70.11(4) to undisputed facts. This is a question of law that we review de novo. See Nelson v.
McLaughlin, 211
¶7 In
reviewing a claim for tax exemption, the burden of proving entitlement to the
exemption is on the one seeking the exemption.
“To be entitled to tax exemption the taxpayer must bring himself within
the exact terms of the exemption statute.”
Sisters of Saint Mary v. City
of
Discussion
¶8 United
Methodist argues that the church-owned residence of the church custodian should
be tax-exempt under Wis. Stat. § 70.11(4),
even though it admits that the church custodian is not one of the persons
listed in the statute as entitled to the exemption. United Methodist, citing language from Midtown Church of Christ, Inc. v. City of
Racine, 83
¶9 In
arguing for a new test, United Methodist maintains that prior case law has
recognized that the legislature did not intend the statutory list of exempt
persons to be exhaustive and that the purpose of the statute is to create
tax-exempt housing for those persons whose work is “integral to the functioning
of the church.” See Midtown, 83
¶10 Wisconsin Stat. § 70.11 provides
forty-four exemptions to the state tax laws.
One of those subsections, (4), applies to churches and housing for
church religious leaders. Section 70.11
states in pertinent part:
Property exempted from general property taxes is:
(4) … religious and
benevolent instututions…. Property owned and used exclusively by …
churches or religious … or benevolent associations … and also including
property owned and used for housing for pastors and their ordained assistants,
members of religious orders and communities, and ordained teachers.
Under the plain language of the statute, this particular exemption
depends on two things: (1) whether
the residence is “owned and used exclusively” by the church; and
(2) whether it is housing for any of four listed categories of persons,
namely, pastors, ordained assistants, members of religious orders and communities
or ordained teachers.
¶11 United
Methodist’s principal argument addresses the second of the above two
prerequisites: whether the housing is
for one of the four listed categories of persons. It is undisputed here that United Methodist’s
custodian is not a pastor, an ordained assistant, a member of a religious order
or an ordained teacher. It is undisputed
that the custodian’s function is maintenance, security and opening and closing
the buildings. Nonetheless, United
Methodist argues that the test for exempt church housing under Wis. Stat. § 70.11(4) should be
expanded to include housing for the custodian because he “is integral to the
functioning of the church,” relying on language from Midtown. See
id., 83
¶12 The
Wisconsin Supreme Court held in Midtown that the church-owned residence
occupied by the pastor’s widow was not tax-exempt under Wis. Stat. § 70.11(4), because she was not a member of
any of the listed groups in the statute entitled to the tax exemption. Midtown,
83
¶13 In rejecting the church’s claim, the
court ultimately concluded that the pastor’s widow did not fall within the
statutory exemption for “members of religious orders and communities” because
the plain words of the statute demonstrated an intent by the legislature to
limit the applicability of the exemption to only those “religious persons” with
“official leadership roles” in the church:
The limited scope of the
exemption granted by [Wis. Stat. §]
70.11(4) can similarly be seen in the words and phrases associated with the
phrase “members of religious orders and communities,” i.e., “pastors,” “their ordained assistants” and “ordained
teachers.” This list of religious persons whose housing is exempt includes only
those persons who have official leadership roles in the activities of the
congregation.
Midtown, 83
¶14 The court concluded that it would be contrary to the legislature’s intended limited scope of the Wis. Stat. § 70.11(4) tax exemption to permit members of a church to call themselves missionaries and by self-definition entitle themselves to the tax exemption for “members of religious orders and communities”:
For this court to extend the property tax exemption to a house occupied by a member of a religious group merely because a sect designates all its congregation “missionaries,” or designates all its congregation “members of a religious order and community,” would be inconsistent with the statutory purpose of exempting from property taxation housing occupied by that limited group of people whose employment is integral to the functioning of the church.
Midtown, 83
¶15 United Methodist cites the final phrase of this sentence,
“integral to the functioning of the church,” as support for its argument for a new
test for exemption. But United Methodist
takes the phrase out of context. The
court relies on the phrase “integral to the functioning of the church” to
define which “member of a religious group” the legislature intended to exempt
from taxes under Wis. Stat.
§ 70.11(4). See Midtown, 83
¶16 Here, United Methodist makes no claim that the church custodian
is a “member of a religious group” who fits within any of the four listed
exempt categories, nor could it. It is
not enough under Wis. Stat. § 70.11(4)
or Midtown
that the custodian’s employment serves the church. It is the church’s burden to show that the
custodian fits within “the exact terms
of the exemption statute,” and United Methodist has failed to meet that burden
here. See Sisters, 89
¶17 United
Methodist also argues that under the holding in Sisters its custodian’s residence should be tax-exempt because
the custodian’s residence, like the hospital chaplain’s residence in Sisters, was “used exclusively” by
the institution seeking the exemption and was therefore “reasonably necessary
to the efficient functioning of the … organization.” See id.
at 382 (citation omitted). United Methodist’s reliance on Sisters is misplaced because that
case is factually and procedurally distinguishable.
¶18 The court in Sisters was construing two
subsections of Wis. Stat. § 70.11: § 70.11(4), the subsection for churches
and benevolent associations, among others, and § 70.11(4m), which relates
to tax exemptions for nonprofit hospitals but which contains the same “used
exclusively” language as § 70.11(4).
At issue in Sisters was
whether the residence of the hospital’s chaplain, who was an ordained Roman
Catholic priest, was tax-exempt.
¶19 As
to the hospital’s first argument, the Wisconsin Supreme Court held in Sisters that the hospital chaplain
was included within the meaning of “pastor” in Wis. Stat. § 70.11(4), even though he was not a
traditional pastor of a permanent congregation, because he “performs
significant official religious functions for the sisters and patients at St.
Mary[], administering to their religious needs and providing spiritual guidance
when requested.” Sisters, 89
¶20 That part of the Sisters holding does not support
United Methodist’s claim for the exemption for the custodian, however, because,
as we have noted above, the church custodian performs no “significant official
religious function[]” at all. See id. He is neither a pastor nor any kind of
religious leader. He fits none of the
listed exemptions in Wis. Stat. § 70.11(4).
¶21 Neither
does the second part of the holding in Sisters
support United Methodist’s claim for the exemption. The supreme court noted with regard to Wis. Stat. § 70.11(4m) that “[t]o
be entitled to a tax exemption under this section, Sisters of St. Mary has the
burden of showing that the chaplain’s residence is property used exclusively for the purposes of St.
Mary[’]s Hospital [Medical] Center.” Sisters, 89
¶22 Applying the Columbia Hospital test, the court in
Sisters found that the
hospital’s purpose included both the spiritual, as well as the physical, care
of the staff and patients.
¶23 United
Methodist’s argument, that the custodian’s residence is “used exclusively” for
the purposes of the church, fails. The
purpose of a church is spiritual formation and guidance. It cannot be said that the church custodian
is reasonably necessary to the functioning of the church. The custodian has nothing to do with the
mission or function of the church. It is
undisputed that he is not a religious leader of any kind. Although he indirectly serves the church, his
main work is not integral or necessary to the functioning of the church in its
primary purpose, which is spiritual guidance and formation. His role is distinguishable in that regard
from that of the hospital chaplain whose spiritual ministrations are a
reasonable and necessary part of the care of the sick. Accordingly, United Methodist has failed to
meet its burden of showing that the residence of the church custodian is
“used exclusively” for the purposes of
the church.
¶24 United
Methodist raises two final issues, alleging procedural failures of the City
that United Methodist claims entitles the church to the tax exemption. First, United Methodist argues that in order
to tax the custodian’s residence, the City is required under Wis. Stat. § 70.11 to present
proof that the use of the church custodian’s residence changed from 2006 to
2007. Because the City did not present
such proof, United Methodist argues that it is entitled to the tax
exemption. United Methodist relies on
the introductory sentence of § 70.11: “Property
exempted from taxation. The property
described in this section is exempted from general property taxes … if it was
exempt for the previous year and its use, occupancy or ownership did not change
in a way that makes it taxable.” The City argues that § 70.11 does not
require it to show that the use of the property changed, but rather that the use
for the tax year in question, 2007, was not exempt. We agree with the City.
¶25 “To
be entitled to tax exemption,” under Wis.
Stat. § 70.11, “the taxpayer must bring himself within the exact
terms of the exemption statute.” See Sisters, 89
¶26 We
note that it is undisputed here that the City took this property off the tax
rolls in 1978. Until 1994, the associate
pastor lived in the residence. The City
learned that the custodian lived in the property when United Methodist applied
for the 2007 tax exemption as part of the City’s three-year review of
tax-exempt property. Wisconsin Stat. § 70.11, in the
context of this case, does not foreclose the City from requiring an application
for tax exemption for tax-year 2007 and requiring United Methodist to meet its
burden under the law by showing that it was entitled to the tax exemption.
¶27 Finally,
United Methodist argues that Wis. Stat. § 74.35
requires the City to hold a public hearing with its common council for
determination of a tax exemption claim.
United Methodist argues that because the City did not hold a public
hearing, this matter should be remanded for a hearing. The City responds that the issue is waived
because it was not argued before the circuit court and because the statute does
not require a hearing before the common council on a claim for tax
exemption. As the City correctly points
out, § 74.35 is the exclusive procedure a taxpayer may use for obtaining a
return of tax money paid to the
City. It is not a required procedure for
the City to follow in determining whether to grant or deny an exemption.
¶28 Wisconsin Stat. § 74.35 is
entitled, “Recovery of unlawful taxes.”
Section 74.35(2) clearly states that “[a] person aggrieved by the levy
and collection of an unlawful tax … may file a claim to recover the unlawful
tax.” It is obvious from this language
that a prerequisite to the claim is the actual payment of the tax. We conclude that § 74.35 does not
require the City to hold a public hearing on the issue of whether the church
custodian’s residence should be tax-exempt.
¶29 For
all of the foregoing reasons, United Methodist has not met its burden of
showing that it is entitled to the tax exemption for the church-owned residence
of the church custodian under Wis. Stat.
§ 70.11(4). Accordingly, we
affirm the order of the circuit court.
By the Court.—Order affirmed.
[1] All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[2] The City did not file a summary judgment motion but filed a brief and affidavit in opposition to United Methodist’s summary judgment motion. In denying United Methodist’s summary judgment motion and upholding the City tax assessor’s decision, the circuit court must have implicitly been relying on Wis. Stat. § 802.08(6), Judgment for opponent, although it does not explicitly say so. This is consistent with United Methodist’s statement of the facts in its appellate brief, which refers to the circuit court’s order as a grant of summary judgment to the City.