Union College v. Board of Equalization

Boslaugh, J. These cases involve the question of whether real property owned by Union College is exempt from taxation. The trial court held the property to be not exempt and Union College has appealed. The cases have been consolidated in this court for briefing, hearing, and decision upon the stipulation of the parties. Union College is a nonprofit, liberal arts college operated by the Seventh-Day Adventist Church at Lincoln, Nebraska. It has been in operation for 75 years and has an enrollment of approximately 1,100 students. The evidence shows that approximately 80 percent of the students at Union College have some part-time employment. Although Union College does not require that its students be employed, the students are encouraged to engage in work while enrolled at the college. It is a part of the philosophy of the college that each student should: “* * * ‘gain a proper regard for the dignity of labor and participate in character building work experiences.’ The college believes that a joint study and work effort will help accomplish this objec [581] tive.” Employment also furnishes financial assistance for many students. About 10 percent of the students at Union College have off-campus employment. Of the 70 percent which have work on the campus, about 30 percent work in 5 industries operated by the college. These are known as the, Bookbindery, Broom and Mop Works, Furniture Manufacturers, Press, and Laundry. The college claims that the property used for the operation of these industries should be exempt. The industries are not operated to provide vocational education as such. The students receive no scholastic credit for the work which they perform, but their work is rated and a record is kept of that information. The students who are employed in the industries receive a normal wage which is credited to the student’s account at the central office. The industries also employ nonstudent labor and salesmen. The managers of the industries are members of the faculty but do not teach any subjects at this time. During the 10-year period ending in 1965 the industries had total sales of more than $9,250,000 of which about 4 percent represented intracampus sales. During this same period the industries produced a net operating gain of approximately $256,000, but some $816,000 was reinvested in the industries. The Legislature has exempted: “Property owned and used exclusively for educational, religious, charitable, or cemetery purposes, when such property is not owned or used for financial gain or profit to either the owner or user.” § 77-202 (1) (c), R. R. S. 1943. The question in these cases is whether the property used in the operation of the industries is “used exclusively for educational * * * purposes.” The primary or dominant use, and not an incidental use, is controlling in determining whether property is exempt from taxation. Doane College v. County of Saline, 173 Neb. 8, 112 N. W. 2d 248. A use which is not [582] direct, but remote, will not qualify for exemption. In Nebraska Conf. Assn. Seventh Day Adventists v. Board of Equalization, 179 Neb. 326, 138 N. W. 2d 455, this court said: “The use of land to increase the income to a school, or for the sole purpose of providing compensable work for students, is an incidental use of property that does not bring it within the terms of the Constitution and statutes providing for exemption from taxation as property owned and used exclusively for educational, religious, charitable, or cemetery purposes, even though such property is not used for private financial gain or profit.” See, also, Hilger v. Harding College, 231 Ark. 686, 331 S. W. 2d 851. The evidence in these cases establishes that the industries are operated and maintained primarily for the purpose of providing student employment. This purpose, although laudable, is an incidental and not direct use of property for educational purposes. The judgment of the district court in each case holding the property to be not exempt is correct and is affirmed. Affirmed.