Whitelick Indiana Aerie 3702 Fraternal Order of Eagles, Inc. v. Hendricks County Property Tax Assessment Board of Appeals
2017 Ind. Tax LEXIS 31
| Ind. T.C. | 2017Background
- Whitelick Indiana Aerie 3207 (Aerie 3207) is a local subordinate lodge of the Fraternal Order of Eagles that owned a lodge and adjacent property in Plainfield for 2013–2014; uses included member social facilities, a banquet hall (rented to public ~8–10 times/year), bingo (open to public), and occasional charitable events.
- Aerie 3207 is a not‑for‑profit corporation; bylaws provide a small funeral benefit to qualifying members funded from local dues.
- Aerie 3207 sought property tax exemptions from the Hendricks County PTABOA under: (1) the fraternal benefit association exemption (I.C. § 6‑1.1‑10‑23) and (2) the charitable purposes exemption (I.C. § 6‑1.1‑10‑16(a)); PTABOA denied relief and the Indiana Board of Tax Review affirmed; Aerie 3207 appealed to the Indiana Tax Court.
- The Indiana Board found Aerie 3207 did not meet the statutory definition of a fraternal benefit association under I.C. § 27‑11‑1‑1 (because that provision applies to societies/supreme lodges, not subordinate lodges, and requires formal benefit contracts) and that Aerie 3207 failed to show predominant/exclusive charitable use under I.C. § 6‑1.1‑10‑36.3.
- The Tax Court affirmed, holding (a) art. 11 (Title 27) fraternal‑benefit status applies to societies/supreme lodges not subordinate lodges like Aerie 3207, (b) Aerie 3207 did not and could not rely on I.C. § 27‑11‑9‑4 to avoid art. 11 requirements, and (c) Aerie 3207 failed to carry its burden to document predominant/exclusive charitable use (no time/use logs or comparable data).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aerie 3207 qualifies as a "fraternal benefit association" under I.C. § 27‑11‑1‑1 (and thus is exempt under I.C. § 6‑1.1‑10‑23) | Aerie: Local lodge status + bylaws and a small death benefit satisfy the fraternal benefit definition; § 27‑11‑9‑4 limits art.11 review | Indiana Board: § 27‑11 applies to societies/supreme lodges; Aerie 3207 is a subordinate lodge and lacks required benefit contracts and other art.11 elements | Court: Aerie 3207 is a subordinate lodge, not a society; it does not meet art.11 definition and cannot evade art.11 requirements via § 27‑11‑9‑4. |
| Whether Aerie 3207’s funeral benefit qualifies as an insurance/contractual "benefit" under art.11 (I.C. § 27‑11‑6‑1 / § 27‑11‑6‑4) | Aerie: By‑laws and Grand Aerie authorization suffice for the death benefit | Indiana Board: Art.11 requires a Benefit Contract as defined in §§ 1‑3 and 6‑4; Aerie issues no such contracts | Court: Aerie failed to issue Benefit Contracts required by art.11; thus the payments are not qualifying benefits. |
| Whether the lodge property is predominantly or exclusively used for charitable purposes under I.C. § 6‑1.1‑10‑16(a) and § 6‑1.1‑10‑36.3 | Aerie: Hosts charitable events, donates space, and serves community — majority of uses are charitable/fraternal | Indiana Board: Record lacks usage logs or evidence quantifying exempt v. non‑exempt time; much activity is social/gambling/drinking | Court: Aerie failed to meet burden to show predominant/exclusive charitable use; absence of time/use comparison fatal to exemption claim. |
| Whether I.C. § 27‑11‑9‑4 shields Aerie 3207 from art.11 requirements | Aerie: § 9‑4 means art.11 technical requirements don’t apply to local lodges providing benefits through subordinate lodges | Indiana Board: § 9‑4 applies only where benefits are provided exclusively through subordinate lodges in the hierarchy; not met here | Court: § 9‑4 does not apply; even if it did, relying on it would undercut Aerie’s ability to invoke art.11 to prove fraternal status. |
Key Cases Cited
- Fraternal Order of Eagles #3988, Inc. v. Morgan Cnty. Property Tax Assessment Bd. of Appeals, 5 N.E.3d 1195 (Ind. Tax Ct. 2014) (discusses burden and need to show predominant charitable use; skepticism about social clubs qualifying as charitable)
- Fort Wayne Sport Club, Inc. v. State Bd. of Tax Comm'rs, 258 N.E.2d 874 (Ind. Ct. App. 1970) (interprets I.C. § 6‑1.1‑10‑23 to incorporate art.11 definition of fraternal benefit society)
- Tipton Cnty. Health Care Found. v. Tipton Cnty. Assessor, 961 N.E.2d 1048 (Ind. Tax Ct. 2012) (taxpayer bears burden of proving exemption)
- Long v. Wayne Twp. Assessor, 821 N.E.2d 466 (Ind. Tax Ct. 2005) (taxpayer must walk the Board through each statutory element to make prima facie case)
- Hamilton County Assessor v. Duke, 69 N.E.3d 567 (Ind. Tax Ct. 2017) (predominant‑use test requires usage logs or comparable evidence)
- Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Comm'rs, 251 N.E.2d 673 (Ind. Ct. App. 1969) (fraternal organization ownership does not automatically confer charitable exemption)