Wings as Eagles Ministries, Inc. v. Oglala Lakota County

#29280-a-MES
2021 S.D. 8

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

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WINGS AS EAGLES MINISTRIES, INC., Petitioner and Appellant,

v.

OGLALA LAKOTA COUNTY, Respondent and Appellee.

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APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
OGLALA LAKOTA COUNTY, SOUTH DAKOTA

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THE HONORABLE ROBERT GUSINSKY
Judge

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TERRY L. PECHOTA
Rapid City, South Dakota Attorney for petitioner and
appellant.

BRIAN T. AHRENDT
Oglala Lakota County
State’s Attorney
Hot Springs, South Dakota Attorneys for respondent and
appellee.

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CONSIDERED ON BRIEFS
NOVEMBER 16, 2020
OPINION FILED 02/10/21
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SALTER, Justice

[¶1.] Wings as Eagles Ministries, Inc. (Wings) applied for property tax

exempt status for the 2014 and 2015 tax years, payable in 2015 and 2016

respectively. Both applications were denied and became final determinations of the

property’s exempt status for the affected years. Wings subsequently filed a petition

with the Oglala Lakota County Commission (the Commission) seeking an

abatement of its property taxes for 2014 and 2015. The Commission denied the

petition, and Wings appealed to the circuit court, which affirmed the Commission’s

decision. Wings now appeals the abatement decision to this Court. We affirm.

Facts and Procedural History

[¶2.] Wings is a non-denominational Christian organization that operates on

the Pine Ridge Indian Reservation in Oglala Lakota County (the County). 1 Wings

was founded in 1995 by Pastors Gary and Lori McAfee. The McAfees work through

Wings to provide charitable assistance and religious instruction to community

members and youth in the area. For example, Wings provides temporary housing

for homeless and abused children and meals for members of the Reservation

community. Wings also hosts summer camps for visiting church groups and

conducts a discipleship program for children and adults in the surrounding

Reservation area. Wings’ mission and work have not fundamentally changed in the

years since its inception.

1. Wings is a 501(c)(3) non-profit corporation under the Internal Revenue Code
and is exempted from paying sales tax.

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[¶3.] The property at issue in this case is 80 acres of a 114-acre tract located

in the northwest part of the County. Since 2005, this property was annually

granted a property tax exemption by the County Board of Equalization (the Board).

However, for reasons that are not made clear in the record, the Board denied Wings’

application for property tax exemption for the 2014 tax year, payable in 2015. 2

Wings did not appeal this denial. 3

[¶4.] While awaiting the Board’s decision for the 2014 tax year, the deadline

passed for Wings to apply for an exemption for tax year 2015. 4 Lori testified that

she “was told” she should not apply for the 2015 exemption until the 2014 tax

exempt status had been determined, though she did not explain who provided the

advice or when and under what circumstances it was given. Lori ultimately filed

Wings’ application for the 2015 exemption, but because it was submitted after the

deadline, the Board denied it.

2. The denial itself is not included in the record, but Wings indicated in its
submissions to the circuit court that its application for exemption for tax year
2014 was denied on November 17, 2015.

3. This fact appears to be undisputed, though Wings argues that its subsequent
application for a property tax abatement to the Commission constituted an
appeal of the Board’s denial of its application for exempt status for the 2014
tax year. For the reasons explained below, we do not view the abatement
remedy and a taxpayer’s statutory right to appeal the denial of an application
for exemption to be interchangeable.

4. The provisions of SDCL 10-4-15 provide:

Any person, organization, corporation, or association claiming a
property tax exemption status for any property under §§ 10-4-8.1 to
10-4-14, inclusive, § 10-4-39, or as may otherwise be provided by
law, shall apply for such exemption to the county director of
equalization on forms prescribed by the secretary of revenue prior to
November first of the tax year.

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[¶5.] Wings appealed the 2015 exemption denial to the South Dakota Office

of Hearing Examiners whose hearing examiner affirmed the Board’s denial because

the application was not filed by the statutory deadline. Wings did not appeal the

hearing examiner’s decision to the circuit court, and instead filed an application in

December 2017, with the Commission for an abatement of its taxes for the 2014 and

2015 tax years, citing SDCL 10-18-1(3), which authorizes a county commission to

abate a tax if the property is exempt.

[¶6.] The Commission denied Wings’ request for abatement, 5 and Wings

appealed to the circuit court, which affirmed the Commission’s decision after

conducting a court trial. The court concluded that Wings was unable to meet the

threshold eligibility element for an abatement under SDCL 10-18-1(3) because the

decisions denying exempt status were final and had conclusively established that

Wings was not, in fact, exempt for the 2014 and 2015 tax years. 6

5. The Commission did not rely upon the finality of the Board’s prior
determinations of the exemption applications and, instead, reviewed the
abatement request on its merits, offering eight reasons it believed justified its
decision to deny the abatement.

6. The parties and the circuit court have all recounted a similar procedural
history and agree that the 2014 and 2015 tax years, payable in 2015 and
2016, are at issue in this appeal. However, several references in the limited
record give us some pause to wonder if that is the case, or whether this
appeal actually concerns tax years 2015 and 2016. For instance, Wings’
application for abatement indicates it is for 2015 and 2016, and the hearing
examiner considered the untimely 2015 application for exemption to be for
the 2016 tax year, not 2015. Adding to the confusion is Lori’s testimony that
Wings’ property reacquired tax exempt status in 2016. Nevertheless, given
the sparse nature of the record and the fact that our legal analysis is not
impacted in either event, we will accept the consensus view of the parties and
the circuit court that this case implicates the 2014 and 2015 tax years.

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[¶7.] Wings appeals the circuit court’s decision, raising two issues, which we

restate as follows:

1. Whether the circuit court erred by upholding the
Commission’s denial of a tax abatement.

2. Whether the Commission was estopped from denying
Wings’ request for abatement for the 2015 tax year.

Standard of Review

[¶8.] The circuit court concluded it was acting in a quasi-judicial role when

it reviewed the Commission’s decision to deny Wings’ application for an abatement.

See State, Dep’t of Game, Fish, & Parks v. Troy Twp., 2017 S.D. 50, ¶ 21, 900

N.W.2d 840, 849; Carmody v. Lake Cnty. Bd. of Comm’rs., 2020 S.D. 3, ¶ 17, 938

N.W.2d 433, 438. Neither party has challenged this conclusion, nor have they

argued that the court incorrectly determined the facts. Indeed, we believe that the

relevant facts on which the court made its decision are not disputed and that,

regardless of its standard of review, the court’s analysis turned on its construction

and application of SDCL 10-18-1(3). Therefore, we confront a purely legal question

here, which we review de novo. In re Tr. Fund created under terms of Last Will &

Testament of Baumgart, 2015 S.D. 65, ¶ 26, 868 N.W.2d 568, 575.

Analysis and Decision

Abatement under SDCL 10-18-1(3)

[¶9.] The South Dakota Constitution authorizes tax exemptions for, among

other things, “property used exclusively for . . . religious . . . and charitable

purposes[.]” S.D. Const. art. XI, § 6. However, this constitutional provision is not

self-executing and requires the Legislature to animate its text “by general law[.]”

Id. See also In the Matter of Hunt Companies, Inc., 2019 S.D. 26, ¶ 22, 927 N.W.2d
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894, 899 (contrasting private property with public property of the United States,

which is automatically exempt from taxation under Article XI, § 5 of the South

Dakota Constitution).

[¶10.] The Legislature has, accordingly, enacted statutes establishing a

procedure by which religious and charitable organizations can obtain exempt status

for their property. These procedures require organizations to annually submit an

application for exemption “prior to November first of the tax year.” SDCL 10-4-15.

The application prompts the director of equalization to conduct an initial

examination before making a recommendation of “a taxable status or an exempt

status” to the board of equalization. SDCL 10-4-16.

[¶11.] Applicants have an opportunity to be heard and submit additional

information to the board of equalization “if the [board] makes a preliminary

determination that all or any part of the property listed in the application has a

taxable status[.]” SDCL 10-4-17. Applicants also have statutory rights to seek

review of adverse determinations “in the same manner and under the same

procedure as provided by law from any other actions of the county board of

equalization.” SDCL 10-4-18. The applicant can either: (1) appeal to the Office of

Hearing Examiners and then subsequently seek review in the circuit court; or (2)

appeal directly to the circuit court. SDCL 10-11-42 to -44.

[¶12.] Separate and apart from these specific statutory provisions, which

relate directly to a religious or charitable organization’s application for property tax

exemption, the Legislature has also provided for two exclusive methods by which a

taxpayer can seek to recover property taxes previously paid. Agar Sch. Dist. No. 58-

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1 v. McGee, 1997 S.D. 31, ¶ 14, 561 N.W.2d 318, 322. The first is the pay and

protest method provided in SDCL 10-27-2. Id. As its moniker suggests, taxpayers

invoking this method must pay the tax and act within 30 days to commence an

action to challenge its legality. SDCL 10-27-2.

[¶13.] The second method for recovering taxes is the abatement procedure

described in SDCL 10-18-1, which is at issue in this appeal. The statute provides,

as is relevant here, that a county commission may abate or refund property taxes

where a taxpayer “claims that the assessment or tax . . . is invalid” because the

“property is exempt from the tax[.]” SDCL 10-18-1(3). Applications for abatement

can be filed up to four years after the tax would have become delinquent. See SDCL

10-18-1.1 (stating that an abatement application must be “filed no later than the

first day of November of the fourth year after which such taxes would have become

delinquent”). Because abatement requests can be made long after the taxing

authority has collected and expended the tax dollars, the circumstances under

which relief may be obtained under SDCL 10-18-1 are narrower than the grounds

for which relief may be obtained under the pay and protest method:

Title 10 provides two avenues of relief when a tax is improperly
levied against a person or entity—pay and protest (SDCL 10-27-
2) and abatement of an erroneous tax assessment (SDCL 10-18-
1). The pay-and-protest provisions afford taxpayers broad relief
within a limited window (thirty days), while the erroneous tax
assessment statute provides much narrower relief over a longer
time period (four years). Reading these provisions in context
indicates the Legislature intended SDCL 10-18-1 to be construed
narrowly, applying only to the situations listed therein in light
of the longer period for recovery. A narrow reading is justified
because SDCL 10-27-2 provides taxpayers with broader grounds
for relief, albeit for a shorter period of time.

Hunt Companies, 2019 S.D. 26, ¶ 24, 927 N.W.2d at 900.

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[¶14.] The resolution of the principal issue in this appeal turns on our

construction of SDCL 10-18-1(3). The circuit court held that obtaining exempt

status is an essential predicate to establishing eligibility for a tax abatement

because the tax can only be considered “invalid” if it was assessed on property

which is, in fact, “exempt from the tax.” If the property has not been determined to

be exempt at the time of the application for abatement, the court reasoned, the

request for abatement falls outside the scope of SDCL 10-18-1.

[¶15.] We believe the circuit court correctly applied the text of SDCL 10-18-

1(3). By the time the Commission and the court considered Wings’ abatement

request for the 2014 and 2015 tax years, the exempt status for each tax year had

already been denied and finally determined. Regarding Wings’ 2014 exempt status,

Wings timely applied for a tax exemption, but the Board denied the application, and

Wings never appealed the Board’s decision. As to Wings’ 2015 exempt status, the

Board denied Wings’ application because it was not timely filed. Although Wings

did appeal this determination to the Office of Hearing Examiners, it did not prevail.

In both instances the decisions were final, leading to the inescapable conclusion

that Wings’ property was not “exempt from the tax” when the Commission and the

circuit court considered Wings’ abatement request. SDCL 10-18-1(3). The circuit

court correctly reached the same conclusion:

As a threshold matter, an abatement pursuant to SDCL 10-18-
1(3) requires a showing that Wings’ property was exempt from
property taxes for tax years 2014 and 2015, and not merely that
it should have been exempt or that it is now exempt.

[¶16.] Wings reads the relevant text of SDCL 10-18-1(3) differently and

argues that the statute authorizes it to litigate anew the exempt status issue in

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connection with its claim “that the assessment or tax . . . is invalid[.]” However,

this argument does little to address when the determination of exempt status must

be made—before or after the abatement application. We believe the plain text of

SDCL 10-18-1(3) resolves this question with its requirement that the existing

exempt status of the property, not its putative exempt status, must form the basis

for a claim that the tax is invalid. Accepting Wings’ interpretation would

significantly alter the meaning of the statute. In that event, SDCL 10-18-1(3)

would provide that a county commission can abate or refund taxes where a taxpayer

alleges the tax is invalid because the taxpayer believes the property should be

exempt.

[¶17.] Neither party has suggested that SDCL 10-18-1(3) contains an

ambiguity, but even if we were to look beyond the text, we believe our interpretation

is supported by broader legal considerations. Chief among them is the idea that

Wings’ argument implicitly allows for collateral attacks on final determinations of

property tax exemption applications. Wings has not cited any authority which

would permit such a belated challenge on a final administrative determination, and

our own research has not revealed any. In addition, allowing real-time relitigation

of exempt status as part of an abatement request would effectively displace the

other, more specific statutes described above, which govern the application process

for religious and charitable organizations seeking exemption. See Martinmaas v.

Engelmann, 2000 S.D. 85, ¶ 49, 612 N.W.2d 600, 611 (“When the question is which

of two enactments the legislature intended to apply to a particular situation, terms

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of a statute relating to a particular subject will prevail over the general terms of

another statute.”).

[¶18.] As illustrated by the facts here, the procedural statutes in SDCL

chapter 10-4 produce a final resolution of an applicant’s exempt status sooner,

rather than later, which, in turn, serves the salutary purpose of settling the

expectations of taxpayers and taxing authorities. See Hunt Companies, 2019 S.D.

26, ¶ 25, 927 N.W.2d at 900 (recognizing that the narrower circumstances under

which relief is available under SDCL 10-18-1 is supported by the fact that “the

State possesses a strong interest in ensuring the timely collection of taxes, finality

in assessments, and the regular functioning of counties”); see also Agar Sch. Dist.,

1997 S.D. 31, ¶ 23, 561 N.W.2d at 324 (“The purpose for the strict limitations on tax

refunds is ‘to permit taxing districts which have made levies for their needs to

receive the contemplated revenue whereby they will not be crippled in operation . . .

.’”). Indeed, these considerations lie at the heart of our cases recognizing the

“narrow” grounds for relief under the statutory abatement procedure.

[¶19.] Whether the determinations of Wings’ exempt status for the 2014 and

2015 tax years were right or wrong when they were made is no more before this

Court than it was before the circuit court. The decisions denying the exemption

requests were unquestionably final by the time Wings submitted its application for

abatement. Consequently, the circuit court did not err when it concluded Wings did

not qualify for an abatement under SDCL 10-18-1(3).

Estoppel by a Public Official

[¶20.] As it relates to the 2015 tax year, Wings argues on appeal that the

circuit court should have overlooked its late application for exemption because Lori
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acted on advice from a County official who told her not to file the application until

the 2014 request had been determined. This argument is not sustainable for two

principal reasons.

[¶21.] First, Wings did not present an estoppel theory to the circuit court, and

the court’s memorandum opinion makes clear that it did not perceive such a request

being before it. We generally do not address arguments, particularly ones that are

fact intensive like an estoppel claim, for the first time on appeal, and we decline to

do so here. See Sunflour R.R., Inc. v. Paulson, 2003 S.D. 122, ¶ 21, 670 N.W.2d 518,

523 (“This Court does not decide issues which are raised for the first time on

appeal.”).

[¶22.] Even if the argument had been presented to the circuit court, however,

Wings could not prevail on its estoppel claim for the additional reason that it was

not sufficiently developed during the court trial. Although Lori testified she “was

told” not to file the 2015 application for exempt status, there is no additional

testimony or evidence describing who advised her, when, or even whether the

person was a County official.

[¶23.] In its appellate brief, Wings attempts to account for some of this

missing information by using inferential logic to allege that the source of the advice

must have been a County official. However, we think the effort cannot take the

place of a properly developed trial record establishing the factual details necessary

to support such a claim. See Toben v. Jeske, 2006 S.D. 57, ¶ 11, 718 N.W.2d 32, 35

(“Our review is restricted to facts contained within the settled record. . . . ‘[A]ll

parties are obligated to see that the settled record contains all matters necessary for

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the disposition of the issues raised on appeal, [and] the ultimate responsibility for

presenting an adequate record on appeal falls upon the appellant.’”) (second

alteration in original).

Conclusion

[¶24.] The circuit court correctly recognized that Wings was not exempt from

property taxes for 2014 and 2015, and therefore, the Commission lacked authority

to consider an abatement under SDCL 10-18-1(3). Moreover, Wings’ estoppel

argument is unreviewable because it was raised for the first time on appeal and is

otherwise not sufficiently developed in the record. We affirm.

[¶25.] JENSEN, Chief Justice, and KERN and DEVANEY, Justices, and

GILBERTSON, Retired Chief Justice, concur.

[¶26.] MYREN, Justice, not having been a member of the Court at the time

this action was submitted to the Court, did not participate.

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