Lovelace Center for the Health Sciences v. Beach , 93 N.M. 793 ( 1980 )

OPINION

WOOD, Chief Judge.

Plaintiff sought a refund of property taxes paid for 1976 and 1977 on the basis that the property involved was constitutionally exempt from taxation. Plaintiff also asked that defendants be enjoined from assessing, collecting or attempting to collect real property tax against the property involved in future years so long as the constitutional exemption applied. The trial court ordered a refund for the 1977 tax year and granted the injunction. Defendants appeal this ruling. The trial court denied a refund for 1976 on the basis that the refund claim was untimely; plaintiff appeals this ruling. We discuss: (1) the finding that the property was constitutionally exempt; (2) the statutory procedure as to constitutionally exempt property; and (3) the authority for claiming a refund of property taxes paid on constitutionally exempt property.

The Finding that the Property was Constitutionally Exempt

The trial court found that the property involved “is operated as part of a hospital,” “is and has been used for charitable and educational purposes,” and “is and should be exempt from New Mexico property tax under Article VIII, Section 3 of the Constitution of the State of New Mexico.”

These findings are the basis for the trial court’s ruling in favor of plaintiff, that plaintiff was entitled to a refund of the 1977 taxes and that plaintiff was entitled to an injunction in connection with future tax years. Defendants’ claim on appeal is that plaintiff is not a charitable institution within the meaning of the constitutional provision. One answer to this contention is that defendants did not (nor did plaintiff) submit requested findings of fact or conclusions of law. Consequently, defendants are not entitled to a review for determining whether substantial evidence supports the findings made by the trial court. McNabb v. Warren, 83 N.M. 247, 490 P.2d 964 (1971).

However, because this appeal involves procedures in connection with property constitutionally exempt from taxation, we have reviewed the evidence. The trial court’s finding that the property involved is operated as a hospital, and used for charitable and educational purposes, has substantial evidentiary support. The trial court properly concluded that the property was exempt under N.M.Const. art. VIII, § 3, which exempts from taxation “property used for educational or charitable purposes * * See Santa Fe Lodge No. 460 v. Employment Security Com’n, 49 N.M. 149, 159 P.2d 312 (1945); Retirement Ranch, Inc. v. Curry Cty. Val. Protest Bd., 89 N.M. 42, 546 P.2d 1199 (Ct.App.1976).

The Statutory Procedure as to Constitutionally Exempt Property

Defendants do not challenge the propriety of the injunction if, in fact, the property was constitutionally exempt from taxation. We discuss the statutes pertaining to constitutionally exempt property because they bear on the refund procedure, discussed under the following issue.

If the property involved was subject to valuation for tax purposes, it was to be reported to the county assessor. Sue § 7— 38-8(B), (D) and (E), N.M.S.A.1978. If subject to valuation for tax purposes, the county assessor was responsible for the valuation. Section 7-36-2(A), N.M.S.A.1978.

Section 7-36-7(B)(l), N.M.S.A.1978 states that property exempt from property taxation under the state Constitution “is not subject to valuation for property tax purposes * * Being constitutionally exempt from taxation under N.M.Const., art. VIII, § 3, the property involved was not required to be reported and the assessor had no authority to value the property. This legislative intent is illustrated by the fact that § 7-38-17, N.M.S.A.1978 contains provisions for claiming a veteran or head of household exemption and by the fact that there are no statutory provisions for claiming a constitutional exemption.

The foregoing raises the practical question of how the assessor will learn when property is no longer constitutionally exempt. Section 7-38-8, supra, provides in Paragraph (D) that if the property is subject to valuation it is to be reported. Civil and criminal penalties are provided in Paragraphs (F) and (G) of § 7-38-8, supra, for non-reporting. Whether these provisions are sufficient administratively is a matter for the Legislature.

Refund of Property Taxes Paid on Constitutionally Exempt Property

Our starting point in determining the authority to refund the taxes paid by plaintiff is: 1) the property involved was constitutionally exempt from taxation for both 1976 and 1977, and 2) in addition to being exempt from taxation, the property was not to be valued for tax purposes. The trial court granted a refund for the 1977 taxes but refused to grant a refund for 1976 taxes. The different rulings came about because the trial court was of the view that the time provisions of § 7-38-40, N.M.S.A. 1978 were applicable; that the refund claim for 1977 was timely and the refund claim for 1976 taxes was not timely. Section 7-38 — 40, supra, was not applicable to either of the refund claims.

In re Blatt, 41 N.M. 269, 67 P.2d 293, 110 A.L.R. 656 (1937) distinguishes between an erroneous or illegal assessment and an excessive assessment. An erroneous assessment includes an assessment of property that is exempt from taxation. An error of judgment in valuing property that is subject to taxation is not an erroneous assessment but an excessive assessment. In re Blatt, supra; Sandia Savings and Loan Association v. Kleinheim, 74 N.M. 95, 391 P.2d 324 (1964).

If a statutory procedure exists either for recovery of taxes collected erroneously or for disputing an excessive assessment, that procedure must be followed. In re Blatt, supra; Lougee v. New Mexico Bureau of Revenue Commissioner, 42 N.M. 115, 76 P.2d 6 (1937).

The 1976 and 1977 property taxes paid by plaintiff were based on erroneous assessments because the property was constitutionally exempt from taxation. Until the repeal of § 72-5-4, N.M.S.A.1953 (Repl. 1961, 1975 Supp.) by Laws 1973, ch. 258, § 156, there was a statutory procedure for obtaining a refund of property taxes “erroneously or illegally charged.” Since the repeal of § 72-5-4, supra, our statutes have not specifically referred to refunds of erroneous or illegally charged taxes. Are erroneous or illegally charged taxes included within other statutory language?

The refund procedures of § 7-1-26, N.M. S.A.1978 are not applicable to real property taxes. Section 7-1-2, N.M.S.A.1978.

The district court action authorized by § 7-38-78, N.M.S.A.1978 is limited to changes in the property tax schedule and does not apply to refunds.

Sections 7-38-22 and 7-38-24, N.M.S.A. 1978 authorize property owner protests of “value determined.” These provisions are not applicable in this case because constitutionally exempt property is not subject to valuation for property tax purposes. Section 7 — 36—7(B)(1), supra.

Although § 7-38-38(B), N.M.S.A.1978 refers to an “erroneous payment,” the context is clear that the reference is to a refund of excess tax payments where the property is subject to taxation.

Defendants claim that §§ 7-38-39 through 7-38-41, N.M.S.A.1978 provide a statutory procedure for the refund of property taxes paid on constitutionally exempt property. They particularly rely on § 7-38-40, supra, which states time requirements for the bringing of a refund suit. Their position, with which the trial court agreed, was that plaintiff’s refund claim for 1977 property taxes was timely under § 7-38-40, supra, but untimely for 1976 property taxes. We do not agree.

Section 7-38-39, supra, refers to a protest of “the value determined * * .” Section 7-38-40, supra, refers to “a civil action in the district court for the county in which the valuation was determined * Both of these statutes require property that is subject to valuation; property constitutionally exempt from property taxes is not to be valued for property tax purposes. Section 7-36-7(B)(l), supra. That neither § 7-38-39 nor § 7-38-40, supra, refers to constitutionally exempt property is made clear by § 7-38-41, supra. Section 7-38-41, supra, authorizes refunds only when the “property taxes are reduced as a result of a decrease in value of the property taxed or a change in the allocation of the value of the property to a particular governmental unit * * This wording does not authorize a refund of property taxes paid on property that was constitutionally exempt from taxation and, under the statute, was not to be valued for property tax purposes.

Under our present statutes, there is no procedure for the refund of property taxes paid on constitutionally exempt property. Sisters of Charity, Etc. v. County of Bernalillo, 93 N.M. 42, 596 P.2d 255 (1979), on which defendants rely, does not support the defendants. Sisters involved the refund procedure of § 72-5-4, supra; that procedure is not applicable in this case because § 72-5—4, supra, has been repealed.

There being no statutory procedure for the refund of the property taxes involved in this case, on what basis may plaintiff’s suit be maintained? A district court may order the refund of the taxes paid on erroneously assessed property if the taxes were paid involuntarily. Jaynes v. Heron, 46 N.M. 431, 130 P.2d 29, 142 A.L.R. 1191 (1942); Johnson v. Greiner, 44 N.M. 230, 101 P.2d 183 (1940); See In re Blatt, supra; Lougee v. New Mexico Bureau of Revenue Commissioner, supra.

In the trial court, plaintiff contended that taxing of the property involved came about because of a ruling of the Property Tax Department, that plaintiff attempted to obtain a change in this ruling and did not pay the taxes until its attempts were unsuccessful. These contentions presented an is-, sue as to whether the property taxes were paid voluntarily. Compare Jaynes v. Heron, supra; Johnson v. Greiner, supra. The trial court made no determination of the voluntariness of the payments.

Defendants’ position, throughout, as to the 1977 property taxes, was that the property was not exempt from taxation; defendants never challenged the propriety of a refund of the 1977 taxes on any other ground. Defendants may not change their theory on appeal. Southwestern Public Service Co. v. Chaves County, 85 N.M. 313, 512 P.2d 73 (1973). Inasmuch as the property was constitutionally exempt, the order that the 1977 taxes be refunded is affirmed.

The only contest of the injunction was also on the ground that the property was not exempt. Inasmuch as the property was constitutionally exempt, the injunction against defendants from assessing, collecting or attempting to collect real property tax against the property “in the absence of a substantial change in the use of the property” is affirmed.

The order denying a refund for the 1976 property taxes is vacated. As to the 1976 taxes, the cause is remanded for a determination by the trial court as to whether the 1976 property taxes were paid involuntarily. If the taxes were paid involuntarily, plaintiff is entitled to a refund; if paid voluntarily, plaintiff is not entitled to a refund.

To the extent permitted by law, plaintiff is to recover its costs on appeal. See Addis v. Santa Fe Cty. Valuation Protests Bd., 91 N.M. 165, 571 P.2d 822 (Ct.App.1977).

IT IS SO ORDERED.

WALTERS, J., concurs. SUTIN, J., concurs in part and dissents in part.