341 S.W.3d 777
Mo. Ct. App.2011Background
- Property located in Wentzville, Missouri, was used by a public school district for administrative offices.
- District leased the Property from the Harrises in 2004 with a plan to eventually purchase it for $1,200,000.
- To facilitate the purchase, a lease-trust arrangement was created: the District leased for 10 years and would obtain title at the end.
- The Harrises funded a Charitable Remainder Annuity Trust (the Trust) holding the Property, paying Harrises a 10% annuity of trust assets during the term.
- During the Trust term (through 2015), the District paid monthly rent to the Trust, which funded the Harrises’ annuity payments.
- In 2007-2008, the District used the Property exclusively for school purposes, and the Trustee sought a tax exemption under Sec. 137.100(5).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Property qualifies for exemption under Sec. 137.100(5) under the Franciscan test. | Rollings: property meets three Franciscan elements. | Shipman: property does not satisfy the Franciscan test. | Property qualifies under all Franciscan elements; exemption affirmed. |
| Whether the District is the equitable owner and uses the Property non-profit for public school purposes. | Rollings contends equitable ownership supports exemption. | Shipman argues ownership remains with Harrises and use is not non-profit. | District is the equitable owner and uses property non-profit for public schools; exemption upheld. |
Key Cases Cited
- Franciscan Tertiary Province of Missouri, Inc. v. State Tax Comm., 566 S.W.2d 213 (Mo. banc 1978) (three-part test for exemption under §137.100(5))
- Barnes Hosp. v. Leggett, 589 S.W.2d 241 (Mo. banc 1979) (dominant use must benefit indefinite number of people)
- State ex rel. City of St. Louis v. Baumann, 153 S.W.2d 31 (Mo. 1941) (equitable ownership can support exemption)
- First Union National Bank of Florida v. Ford, 636 So.2d 523 (Fla. Dist. Ct. App. 1993) (equitable ownership in lease-trust context supports exemption)
- Hammer v. Macgurn, 187 Mo. 238 (Mo. 1905) (distinguishable; profit incidental not fatal to exemption)