
    COLLEGES — ENDOWMENT—TAXATION.
    [Greene (2nd) Circuit Court,
    March Term, 1904.]
    Sullivan, Wilson and Dustin, JJ.
    United Presbyterian Theological Seminary of Xenia v. Asa Little (Treas.).
    1. Institution foe Education of Young Men foe Ministry, a Purely Public ■ Charity.
    An institution for the education of young men for the gospel ministry, and open to all, is a “purely public charity,” within the meaning of Sec. 2, Art. 12 of the constitution of Ohio.
    2. Collegiate Endowment Funds Exempt from Taxation.
    The endowment fund of such institution, which is loaned, and the.interest used solely for the salaries of the professors and expenses neces-. sarily Incident to such educational work, is a “credit” within the meaning oi Sec. 2732 Rev. Stat., and is exempt from taxation.
    Appeal from court’of common pleas of Greene county.
    C. H. Kyle and C. C. Shearer, for plaintiff:
    Institutions of purely public charity may, by general laws, be exempted from taxation. Section 2, Art. 12, Const.
    Plaintiff is an institution of a purely public charity under Sec. 2732 Rev. Stat.; Gerke y. Purcell, 25 Ohio St. 229, 243; Humphries v. Sisters of the Poor, 29 Ohio St. 201, 205; Cleveland Library Assn. v. Pelton, 36 Ohio St. 253, 257.
    The endowment fund of plaintiff is exempt from taxation. Sections 2731-1 and 2732 Rev. Stat.; Gerke v. Purcell, 25 Ohio St. 229; Mannix v. Purcell, 46 Ohio St. 102 [19 N. E. Rep. 572; 2 L. R. A. 753; 15 Am. St. Rep. 562] ; Davis v. Camp Meeting Assn. 57’ Ohio St. 257 [49 N. E. Rep. 401).
    Charles Howard, for defendant:
    Taxation by uniform rule. See Sec. 2, Art. 12 of the constitution . of 1851.
    What property exempt from taxation. See Sec. 2732 Rev. Stat.
    As to what are institutions of purely public charity. See Gerke v. Purcell, 25 Ohio St. 229; Humphreys v. Little Sisters of the Poor, 29 Ohio St. 201; Morning Star Lodge v. Hayslip, 23 Ohio St. 144; Cleveland Library Assn. v. Pelton, 36 Ohio St. 253.
    A parsonage is not exempt from taxation. Gerke v. Purcell, 25 Ohio St. 229; Kendrick v. Farquhar, 8 Ohio 189; Cincinnati. College v. State, 19 Ohio 110.
    The question whether specific property is or is not subject to taxation, is not one to be determined by a county auditor, or county commissioners. State v. Montgomery Co. (Comrs.) 31 Ohio St. 271.
    Exemptions from taxation strictly construed. Cleveland Library Assn. v. Pelton, 36 Ohio St. 258.
    Every presumption is against it. A construction by the officer having the enforcement of the tax laws working an exemption in a particular ease, does not bind the successors of such officer, nor the state. Lee v. Sturges, 46 Ohio St. 158 [19 N. E. Rep. 560; 2 L. R. A. 556] ; German Evang. Prot. Cemetery v. Brooks, 4 Circ. Dee. 478 (8 R. ’439); Leonard v. Cassidy, 4 Circ. Dec." 450 (8 R. 529); see also Davis v. Camp Meeting Assn. 57 Ohio St. 257 [49 N. E. Rep. 401] ; Ohio State University (Tr.) v. Satterfield, 1 Circ. D.ee. 377 (2 R. 86) ; see note, Ludlow v. Brewster, 2 Circ. Dec. 47 (3 R. 82), under Sec. 2733 Rev. Stat.; Hamilton Co. (Comrs.) v. Mannix, 9,Re. 189 (11 Bull. 184) ; See. 2733 Rev. Stat.; Zumstein v. Coal & Mining Co. 54 Ohio St. 264 [43 N. E. Rep. 329] ; Scott v. Athens (Vil.), 1 Dec. 84 .(1 N. P. 94); Chapman v. Bank, 56 Ohio St. 310, 324 [47 N. E. Rep. 54] ; Sturges v. Carter, 5 O. F. D. 428 [114 U. S. 511; 5 Sup. Ct. Rep. 1014].
    It has been held in many well considered cases that an exemption, in general terms, of all the property of a college, or other institution, extends only to the property actually used for its legitimate purposes as fully as if the exemption were expressly limited to such property. State v. Elizabeth, 28 N. J. Law (4 Dutcher) 103; State v. Flavell, 24 N. J. Law (4 Zab.) 370, 383; State v. Mansfield, 23 N. J. Law (3 Zab.) 510, 512’[57 Am. Dec. 409] ; Burrows,• Taxation 130; Lee v. Sturges, 46 Ohio St. 153 [19 N. E. Rep. 560; 2 L. R. A. 556] ; German Evang. Prot. Cemetery v. Brooks, 4 Circ. Dec. 478 (8 R. 439) ; Davis v. Camp Meeting Assn., 57 Ohio St. 257 [49 N. E. Rep. 401]; Ludlow v. Brewster, 2 Circ. Dec. 47 (3 R. 82) ; Zumstein v. Coal & Mining Co. 54 Ohio St. 264 [43 N. E. Rep. 329]; Cincinnati College v. State, 19 Ohio 110; Chapel of the Good Shepherd v. Boston (City), 120 Mass. 212; Detroit Young Men’s Soc. v. Detroit, 3 Mich. 172; see Sec. 2731 Rev. Stat.
   DUSTIN, J.

The plaintiff is an incorporated institution for the education and training of young men for the ministry of the gospel, open to persons of any sect or creed, but under the control and management of the synods of the United Presbyterian church of North America. It has an endowment fund of $77,550, which the auditor of said county placed upon the tax duplicate, and upon which the defendant, the treasurer, is threatening to collect the sum of $2,444 taxes.

Plaintiff! brought this action in the common pleas court to restrain the collection of said tax, alleging itself to be an institution of purely public charity, supported by the income of said fund, loaned for said purpose, and that no part thereof has been, or is, used for private profit; and that the placing of said sum upon said duplicate by the auditor was unlawful, and that the threatened collection of said illegal- tax by said treasurer would be a great and irreparable injury to said plaintiff.

To this petition the defendant filed a general demurrer, which was sustained by the court below, and the petition dismissed -with costs.

Plaintiff appealed, and the case is before us on the merits of the general demurrer.

Two questions arise:

First. Is the plaintiff, under its allegations of fact, as to its objects and purposes, really an “institution of purely public charity,” within the meaning of See. 2, Art. 12 of the constitution of Ohio?

This is conceded by 'counsel; but that concession not being conclusive of the law, we are cited to authorities which seem to settle the matter beyond controversy.

Gerke v. Purcell, 25 Ohio St. 229, holds that:

“A charity-, in a legal sense, includes not only gifts for the benefit of the poor, but endowments for the advancement of learning, * * * .
“Schools established by private donations, and which are carried on for the benefit of the public, and not with a view to profit, are ‘institutions of purely public charity’ within the meaning of the provision of the constitution which authorizes such institutions to be exempt from -taxation. ”

To the same effect are the holdings in Meyers v. Akins, 4 Circ. Dec. 425 (8 R. 228) ; Sowers v. Cyrenius, 39 Ohio St. 29 [48 Am. Rep. 418] ; Mannix v. Purcell, 46 Ohio St. 102 [19 N. E. Rep. 572; 2 L. R. A. 753; 15 Am. St. Rep. 562]; Davis v. Camp Meeting Assn. 57 Ohio St. 257 [49 N. E. Rep. 401] ; and McIntire Poor School v. Manufacturing Co. 9 Ohio 203 [34 Am. Dec. 436].

Second. Is this fund, the principal of which is not touched, but is loaned, and the interest only used for the purposes of the institution, exempt from taxation?

Upon this question issue is taken.

, Defendant claims that while the fund itself, if reduced to money and kept in the .treasury for use as needed, would not be taxable, the moment it is placed at interest and becomes a source of profit, it is analogous to the leasing of real estate for business purposes, and, following the doctrine of Cincinnati College v. State, 19 Ohio 110, it becomes taxable.

In that ease it appeared that the Cincinnati College borrowed money to improve its real estate, and, in order to obtain a revenue therefrom to repay the borrowed money, leased the lower floor of the building to business men for stoi-es; the purpose ultimately being, after payment of the debt, to use the revenue from the stores for the educational work of the college.

Under that state of facts the court held:

“The property of literary and scientific societies is only exempt from taxation when used exclusively for literary and scientific purposes. If used for other purposes it is liable to taxation, although the proceeds are in future to be applied for the promotion of'literature and science. ’ ’

Inasmuch as the rental of real estate only was involved, the case was necessarily decided upon a • construction of Sec. 3, Subdiv. 3 of the act then in force on the subject, (44 O. L. 86) which included in the property that should be exempt from taxation:

“All buildings belonging to scientific, literary or benevolent societies, used exclusively for scientific, literary or benevolent purposes, together with the land actually occupied by such institutions, not leased or otherwise used with a view to profit. ’ ’

Under that state of the law, and the admitted facts, the decision seems to 'have been highly just. But the learned judge who rendered the opinion, not satisfied with the undoubtedly correct conclusion to which the court had arrived as to Subdiv. 3 of the act in question, ventured to go beyond the single question then before that tribunal, and gave his individual views of what would be the construction of Subdiv. 4 of the act, which exempted “all moneys and credits belonging exclusively to universities, colleges, academies or public schools, of whatsoever name, or to religious, scientific, literary or benevolent societies, and appropriated solely to sustaining such institutions or societies,” and said, page 114:

“Whilst the money is in the fund of the institution, to be used solely to meet its expenditures, it is making nothing, it is withdrawn from the common business of life to be used solely to effect the object of such institution. But should the trustees of the society use such money in business, either investing it in property, or loaning it at interest, the property thus purchased, or the money thus loaned would be liable to taxation, as much as any other property or money at interest, 'no matter in whose hands it might be. As we have before intimated, the law applies to the property as it finds it in use, and not to what may, be done with its accumulations in future.” .

But this construction of Subdiv. 4 is a mere dictum, and wholly obiter, as is expressly conceded by the judge, since he had previously stated that Subdiv. 3 was “the only one that we think could be supposed to have any bearing on this case.”

We, therefore., are not bound by it as an expression of the law by the Supreme Court, and are free to give our own views upon the question, which are, that the word “credits,” in Subdiv. 6 of the statute now in force on the subject, and known as Sec. 2732 Rev. Stat., and providing for the exemption of “ail moneys and credits appropriated solely to sustain and, belonging exclusively to said institutions,” is broad enough to cover an endowment fund loaned to outside parties for the interest it may produce.

Such a fund when loaned cannot better be defined than to call it a “credit,” and such vro believe was the purpose of the legislature in so using it. '

Any other interpretation would seem to put a premium on unthrift, and would he in direct conflict with the teachings of the parable of the servant who hid his talent in the earth, instead of putting it to the exchangers, and was rebuked for his slothfulness and wickedness. (Matthew 25: 26.)

We also think it would he contrary to the policy of the state to hold otherwise.

The ordinance of 1787, announces as the policy of the 'northwest territory, that, “Religion, morality, and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall forever he encouraged.”

The constitution of 1802 reasserts this policy, and emphasizes it by introducing the word “essentially” before “necessary,” making ^it read, in Sec. 3, Art 8, “Religion, morality and knowledge being essentially necessary to good government. ’ ’

And the constitution of 1851, Sec. 7, Art:- 1, in similar, hut somewhat less felicitous language, makes the same announcement.

The consequence has been that a large number of educational institutions have been founded and liberally endowed, upon the faith of this wise state policy, and up to the present ease, no attempt has been made, so far as the court is aware, to place the burdens of taxation upon them, except as to real estate diverted from educational use.

Such a course would, in onr opinion, he suicidal, and has never been contemplated by the legislature. It would ruin one of the main aourees of onr power and influence as a state, and relegate the commonwealth to a less enlightened age.

Entertaining these views, therefore, as to the true construction of the statutes, and the policy of the state, the demurrer to the petition will he overruled.  