Commonwealth v. Gray's Trustee

Opinion op the court by JUDGE O’REAR Affirming. Jennie (Jane) Gray, of the county of Boyle, devised the residuum of her estate, after certain specific bequests, in trust; the interest to be applied annually to the schooling of four poor children to be selected by the trustee. The fund was not a large one — probably five or six thousand dollars in the aggregate. Since her death, in 1858, it has been applied as directed. The trustee invested all but a thousand dollars of it in national bank stock. This proceeding was instituted by the auditor’s agent to require the listing of this fund for taxation for all the years since 1885, and for the penalties provided by statute for failure to list property by the person chargeable with that duty. The county court required the property to be listed. The circuit court reversed that judgment, and the matter is here on appeal for review. Section 170 of the Constitution provides that “there shall be exempt from taxation . . . institutions of education not used or employed for gain by any person or corporation and_the income of which is devoted solely to the cause of education.” If this fund is exempted from taxation, it is because it is included in the provision above quoted. But appellant contends that it is not sa embraced. [668] That it has been set apart and perpetually dedicated to the sole cause of education, without gain to any person, is not questioned. This court had occasion to consider and construe the meaning of the word “institution,” as used in the above section, in the case of Trustees of Kentucky Female Orphan School v. City of Louisville, 100 Ky., 470, 19 R., 1091, 36 S. W., 921, 40 L. R. A., 119. It was argued in that case for the city, claiming the right to tax certain property in which the endowment fund of the orphan school had been invested, that the word “institution” refers alone to the buildings and grounds used by the schools as a place employed for the purpose of accommodating the pupils and teachers. The court, however, rejected this narrow construction, and found that word embraced not alone the buildings and grounds so used, but that it included the endowment and other funds of the school or corporation which were dedicated solely to the cause of education. What the convention which framed the Constitution evidently had in mind was to exempt from taxation all property that was dedicated solely to the cause of education, and not used or employed for gain by any person or corporation, whether that property was buildings or money, or owned by natural or artificial persons. Buildings alone, and the grounds upon which they stand, are not adequate to provide education. In addition, money must be used to employ teachers, provide text-books, etc. -Indeed, the buildings, so far as ownership by the educator is concerned, could be dispensed with, but not the other means. Nor can we believe that it was the purpose of the convention to require those dedicating their property to this unselfish mode of education to use it in connection with real estate likewise owned and used, before the exemption should apply. It is not a complete definition to define “institution” as simply [669] a building or a plant or a body corporate. It may be all of these, but, more broadly speaking, it is that which is set np, provided, ordained, established, or set apart for a particular end, especially of a public character or affecting the community. So, when money or other property is set apart, the exclusive use and income of which is to be applied to the cause of education or pedagogy, the property impressed with that character becomes an institution, without regard to the particular form of its investment. When the dedicator, in his munificence, sets apart property or a fund to this end, the people, in a kindred spirit, have declared by their organic law that such property, when so used without gain or profit to the giver or owner, shall be exempt from taxation. It follows that the judgment of the circuit court should be affirmed.