Case Title: Olmsted Falls Bd. of Edn. v. Tracy

Citation: 1997-Ohio-262

Docket Number: 19952453

State: ohio

Court: Ohio Supreme Court

Date: 1997-02-05T00:00:00Z

Document:
Olmsted Falls Board of Education, Appellant, v. Tracy, Tax Commr., et al., 
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Appellees. 
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[Cite as Olmsted Falls Bd. of Edn. v. Tracy (1997), ___ Ohio St.3d ___.] 
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Taxation -- Real property -- Park owned by fraternal, social 
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organization does not qualify for exemption when property is 
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not used exclusively for charitable purposes. 
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(No. 95-2453—Submitted September 19, 1996—Decided February 5, 
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1997.) 
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APPEAL from the Board of Tax Appeals, No. 93-P-1381. 
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The 
Donauschwaben 
German 
American 
Cultural 
Center 
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(“Donauschwaben”), appellee, owns approximately twenty acres of land in 
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Olmsted Township, which Donauschwaben has named Lenau Park.  Lenau 
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Park contains a small lake, several soccer fields, tennis courts, a picnic area, 
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playground, several service buildings, and a building that Donauschwaben 
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calls the Cultural Center.  The Cultural Center contains a bar and lounge, an 
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outside patio or beer garden, an assembly room with stage, several other 
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meeting rooms, a dance floor, a kitchen, offices, board room, restrooms, a 
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bowling alley, maintenance rooms, and an indoor soccer field with locker 
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rooms.  
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2 
 
Donauschwaben has organized many interest groups.  People can join 
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the Cultural Center itself or these various interest groups.  These groups 
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include the soccer club, the tennis club, the band, the orchestra, the German 
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language classes and an associated parent-teacher organization, the skiing 
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club, the dancing clubs, the youth culture clubs, the choir, the ladies 
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auxiliary, the bowlers’ club, and the senior group.  Members generally pay 
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nominal membership charges to join the Cultural Center and separate, 
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nominal charges to join these interest groups.  Generally, a person must be a 
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member of the particular interest group to participate in its activities.  The 
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interest groups, besides pursuing their interests, hold social events through 
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the year, usually dinners, to raise funds for each group and the center. 
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Donauschwaben limited the center’s membership to one thousand 
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persons during the tax year in question.  However, Donauschwaben’s 
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membership had not reached that figure as of December 31, 1992.  It has no 
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other restrictions on membership.  Furthermore, this membership limitation 
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does not apply to the various interest groups.  
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The center also raises funds by holding numerous public social 
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events.  It invites the public to an Octoberfest, a German Mardi Gras 
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3 
festival, and fish fries, among other events, through the year. 
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Donauschwaben also rents its banquet facilities for dinners and wedding 
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receptions, charging for the food it serves. 
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Occasionally, Donauschwaben permits local government agencies to 
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hold meetings and hearings in its center.  On one occasion, Donauschwaben 
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allowed the federal Immigration and Naturalization Service to advise 
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immigrants and process citizenship applications.  It also allows local fire 
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departments to test their equipment at its lake and the public to fish and race 
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model boats there. 
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Donauschwaben operates the indoor soccer field during the winter 
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months where area soccer teams may play.  It charges the teams $220; 
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however, the teams Donauschwaben sponsors pay only referee fees to play 
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in the leagues.  
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Overall, Donauschwaben had a profit of $110,102 in 1989, $97,217 
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in 1990, and $62,572 in 1991.  As of December 31, 1991, it reported a total 
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capital account of $1,301,671. 
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Donauschwaben applied for exemption for this property for tax year 
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1988.  It also filed an exemption application for tax year 1990 and for 
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remission for tax year 1989.  After the Tax Commissioner denied the 
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exemption for tax year 1988, the Board of Tax Appeals (“BTA”), on appeal, 
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issued a decision exempting the property for tax year 1988 on May 8, 1992.  
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The commissioner then dismissed the pending application for tax year 1990 
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because the property was thus on the exempt list.  
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The Olmsted Falls Board of Education (“BOE”), appellant, filed 
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complaints with the commissioner challenging the exemption for tax years 
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1989, 1990, 1991, and 1992.  We affirmed the commissioner’s dismissal of 
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the complaints for tax years 1989, 1990, and 1991 because the BOE had not 
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filed the complaints prior to December 31 of the tax years at issue.  Olmsted 
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Falls Bd. of Edn. v. Tracy (1996), 76 Ohio St.3d 386, 667 N.E.2d 1200.  
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The complaint for tax year 1992, which the BOE had filed timely, is at issue 
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here.  
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The commissioner, citing the BTA decision exempting the property 
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for tax year 1988, exempted all but the bar and beer garden from taxation 
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for tax year 1992.  The BOE appealed this order to the BTA, which 
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affirmed.  The BTA concluded that Donauschwaben is a charitable 
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institution and that the property was exempt under R.C. 5709.12 and 
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5709.121.   
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This cause is now before this court upon an appeal as of right. 
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___________________ 
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Kolick & Kondzer, Thomas A. Kondzer and John P. Desimone, for 
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appellant. 
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Betty D. Montgomery, Attorney General, and Janyce C. Katz, 
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Assistant Attorney General, for appellee Roger W. Tracy, Tax 
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Commissioner of Ohio. 
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Kelley, McCann & Livingstone, Robert A, Brindza and Carl A. 
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Murway, for appellee Donauschwaben’s German American Cultural Center, 
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Inc. 
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___________________ 
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Per Curiam.  We reverse the BTA’s ultimate factual conclusion that 
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Donauschwaben is a charitable institution.  SFZ Transp., Inc. v. Limbach 
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(1993), 66 Ohio St.3d 602, 604-605, 613 N.E.2d 1037, 1039-1040.  We 
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hold, instead, that Donauschwaben is not a charitable institution.  It is, as 
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the BOE argues, a fraternal, social organization.  Furthermore, we hold that 
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6 
Donauschwaben does not use this property exclusively for charitable 
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purposes. 
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R.C. 5709.12(B) states: 
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“*** Real *** property belonging to institutions that is used 
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exclusively for charitable purposes shall be exempt from taxation.”  
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Former R.C. 5709.121, during the 1992 tax year, stated: 
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“Real property *** belonging to a charitable *** institution ***, shall 
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be considered as used exclusively for charitable or public purposes by such 
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institution, the state, or political subdivision, if it is *** 
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“* * * 
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“(B)  Otherwise made available under the direction or control of such 
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institution, the state, or political subdivision for use in furtherance of or 
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incidental to its charitable, educational, or public purposes and not with the 
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view to profit.” (133 Ohio Laws, Part III, 2646.)  
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The BOE argues that Donauschwaben is a fraternal club that conducts 
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social, recreational, and athletic activities.  Thus, it argues, Donauschwaben 
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is not a charitable organization.  The BOE, next, conceding arguendo 
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Donauschwaben 
to 
be 
a 
charitable 
institution, 
maintains 
that 
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7 
Donauschwaben operates with a view to generating profit and, thus, does 
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not qualify under R.C. 5709.121.  Donauschwaben, to the contrary, 
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contends that it is a charitable institution, operating a community center, and 
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that it qualifies for exemption under R.C. 5709.121. 
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In Episcopal Parish v. Kinney (1979), 58 Ohio St.2d 199, 200-201, 
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12 O.O.3d 197, 198, 389 N.E.2d 847, 848, we approved of the concurring 
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opinion of Justice Stern in White Cross Hosp. Assn. v. Bd. of Tax Appeals 
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(1974), 38 Ohio St.2d 199, 203, 67 O.O.2d 224, 226, 311 N.E.2d 862, 864: 
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“‘Initially, it is important to observe that, although R.C. 5709.121 
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purports to define the words used exclusively for “charitable” or “public” 
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purposes, as those words are used in R.C. 5709.12, the definition is not all 
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encompassing.  R.C. 5709.12 states “* * * Real and tangible personal 
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property belonging to institutions that is used exclusively for charitable 
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purposes shall be exempt from taxation.”  Thus, any institution, irrespective 
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of its charitable or noncharitable character, may take advantage of a tax 
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exemption if it is making exclusive charitable use of its property.  See 
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Wehrle Foundation v. Evatt (1943), 141 Ohio St. 467 [26 O.O. 29], 49 N.E. 
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2d 52.  The legislative definition of exclusive charitable use found in R.C. 
18 
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5709.121, however, applies only to property “belonging to,” i.e., owned by, 
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a charitable or educational institution, or the state or political subdivision.  
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The net effect of this is that R.C. 5709.121 has no application to 
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noncharitable institutions seeking tax exemption under R.C. 5709.12.  
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Hence, the first inquiry must be directed to the nature of the institution 
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applying for an exemption.  ***’”  (Emphasis sic.) 
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According to this reasoning, any institution, whether charitable or 
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noncharitable, may receive exemption for its property if it uses the property 
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exclusively for charitable purposes.  See, e.g., Highland Park Owners, Inc. 
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v. Tracy (1994), 71 Ohio St.3d 405, 644 N.E.2d 284.  Further, property 
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belonging to a charitable or educational institution, or the state or a political 
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subdivision, may be exempt if it is used as set forth in R.C. 5709.121. 
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Thus, in deciding whether property is exempt under the charitable use 
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provisions of R.C. 5709.12 and 5709.121, tax authorities must first 
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determine whether the institution seeking exemption is a charitable or 
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noncharitable institution.  If the institution is noncharitable, its property may 
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be exempt if it uses the property exclusively for charitable purposes.  If the 
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institution is charitable, its property may be exempt if it uses the property 
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9 
exclusively for charitable purposes or it uses the property under the terms 
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set forth in R.C. 5709.121. 
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In answering these questions, we turn first to Planned Parenthood 
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Assn. v. Tax Commr. (1966), 5 Ohio St.2d 117, 34 O.O.2d 251, 214 N.E.2d 
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222, paragraph one of the syllabus, which states: 
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“In the absence of a legislative definition, ‘charity,’ in the legal sense, 
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is the attempt in good faith, spiritually, physically, intellectually, socially 
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and economically to advance and benefit mankind in general, or those in 
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need of advancement and benefit in particular, without regard to their ability 
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to supply that need from other sources, and without hope or expectation, if 
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not with positive abnegation, of gain or profit by the donor or by the 
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instrumentality of the charity.”  
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In Socialer Turnverein v. Bd. of Tax Appeals (1942), 139 Ohio St. 
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622, 23 O.O. 117, 41 N.E.2d 710, the court denied exemption for property 
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very similar in function and operation to Donauschwaben’s because its 
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social activities fell “*** far short of meeting the plain requirements of [the 
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predecessor to R.C. 5709.12].”  Id. at 623, 23 O.O. at 117, 41 N.E. 2d at 
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710. The building there contained a kitchen, rathskeller, dining room, locker 
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10 
rooms, auditorium, small rooms, pool and billiard room, bowling alleys, and 
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a large gymnasium.  Its members paid dues to it, and some children who 
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could not afford to join could participate in the gymnasium classes.  The 
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court denied exemption despite the open-membership policies of the 
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society. 
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Moreover, we reject Donauschwaben’s criticism of Socialer 
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Turnverein.  Donauschwaben claims that, under Galvin v. Masonic Toledo 
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Trust (1973), 34 Ohio St. 2d 157, 160, 63 O.O.2d 242, 244, 296 N.E.2d 542, 
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544, Socialer Turnverein is inconsistent with R.C. 5709.121 and must yield.  
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However, as we have earlier concluded in following Justice Stern’s words in 
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White Cross Hosp. Assn., the terms of R.C. 5709.121 are “not all 
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encompassing.”  This statute sets forth terms to exempt property belonging 
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to charitable institutions, which uses may not have qualified for exemption 
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under earlier decisions interpreting R.C. 5709.12.  “*** R.C. 5709.121 has 
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no application to noncharitable institutions seeking tax exemption under 
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R.C. 5709.12.”  White Cross Hosp. Assn., 38 Ohio St. 2d at 203, 67 O.O. 2d 
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at 226, 311 N.E.2d at 864.  That is, R.C. 5709.121 does not, nor does it 
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11 
purport to, exempt property belonging to noncharitable institutions claiming 
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exemption for such property as used exclusively for charitable purposes. 
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According to the evidence in this case, Donauschwaben does not 
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advance or benefit mankind in general or those in need of advancement or 
4 
benefit in particular; it benefits its members.  Participation in 
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Donauschwaben’s activities requires one to be a dues-paying member.  
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Isolated cases may exist where non-members participate in the activities; 
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however, these instances were rare.  Just as we did in Socialer Turnverein v. 
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Bd. of Tax Appeals; E. Cleveland Post No. 1500 v. Bd. of Tax Appeals 
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(1942), 139 Ohio St. 554, 23 O.O. 35, 41 N.E. 2d 242; and In re Application 
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of the Am. Legion (1949), 151 Ohio St. 404, 39 O.O. 236, 86 N.E. 2d 467, 
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we commend Donauschwaben for some of its charitable and civic activities 
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that it undertakes on the property.  Nevertheless, these activities do not 
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transform this social and fraternal organization into a charitable institution. 
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Second, reviewing the activities calendar, we see social and fraternal 
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events, such as dinners and dances, fish fries, carnivals, Octoberfests, and 
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balls.  Since Donauschwaben chiefly conducts its social and fraternal 
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activities on the property, it does not use the property exclusively for 
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12 
charitable purposes.  Thus, Donauschwaben does not satisfy R.C. 5709.12, 
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and we need not review R.C. 5709.121. 
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Accordingly, we reverse the decision of the BTA as to its finding that 
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Donauschwaben is a charitable institution and that the property qualifies for 
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exemption under R.C. 5709.121.  We hold, instead, that Donauschwaben is 
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not a charitable institution and that it does not use the property exclusively 
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for charitable purposes.  We affirm that portion of the decision that found 
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the bar and beer garden to be taxable. 
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Decision affirmed in part 
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and reversed in part. 
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MOYER, C.J., PFEIFER, COOK and LUNDBERG STRATTON, JJ., concur. 
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DOUGLAS, RESNICK and F.E. SWEENEY, JJ., dissent. 
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DOUGLAS, J., dissenting.     I respectfully dissent.  I would affirm the 
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decision of the BTA in its entirety. 
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RESNICK and F.E. SWEENEY, JJ., concur in the foregoing dissenting 
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opinion. 
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