c . 

Mr. Jules Damiani, Jr e 

Criminal Metrict Attorney 

Galve~ston County 

Galveston, Texas 

Opinion No. C-27 

Re: Whether the Moody House is 

exempt from the payment of 

ad valorem taxes under the 

Dear Mr. Damiani: stated facts. 

You have requested our opinion a8 to whether or not 

the property set out in your statement of facts Is exempt 

from ad valorem taxes. The following facts are copied from 

your letter: 

“The property originally known as the 

Buccaneer Hotel, including the Buccaneer 

Cabanas and Pool was acquired by The 

Methodist Homes for Older People, a 

charitable corporation Incorporated 

under the laws of the State of Texas, 

on the 29th day of December, 1961, as 

a gift from The Moody Fogdation, and 

commenced operating it as a home for. 

older people on the 1st day of Januaryp 

1962 q 

“The Methodist Homes for Older People 

was required to take title to the property 

subject to any and all leases and rental 

contracts then in existence. There were 

three (3) outstanding leases for store or 

office space that are still in effect and 

from which the pres&it owner receives a 

small rental D All of the rent8 received 

ftiom these three (3) tenants Is by action 

of the Board, befng plaoed In a special 

‘Health Care Trust Fund’ and is used 

solely for health and welfare care of 

residents of Moody’ Abuse 0 

“One of the rental units la oocupled 

as a barber shop which Is being operated 

almost entirely for the convenience of 

the residents of Moody House. The other 

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Mr. Jules Damianl, Jr., Page 2 (No. C-27) 

rental units are a small gift shop and 

the OalveStOn Merchaants Association, all 

of which have leases that were In effect 

at the time the property was acquired and 

as above stated, the .present owner was 

~requlred to accept the title subject to 

these leases. The total reAta1 received 

from these units amounts to only $375.00 

per month. 

"This property la malntalAed aAd operated 

as a home for older people and offers full 

custodial and Aurslng care. Some of the 

present residents are Aot ln a financial 

posltlon to pay for their entlre care and 

maintenance which Is being subsidized from 

other fuAda. Moody House IA 1962, paid an 

average of approximately $l,OOO.OO per 

reslderat as subsldlzatlon. It will continue to be the policy to accept residents 

at Moody House who will require some subsldlzatlon for thelr care and support. 

"Moody House has been licensed by the 

State Health Department for a nursing 

'home and this-service Is now being offered 

with ffve (5) nurses being provided. The 

care being offered to PesideAts of Noody 

House includes lodging, meals, medical 

and ~~rsl~g service. 

'The Nethodlst Homes for Older People 

1s incorporated under the Texas Nonptioflt 

Corporation Act for charitable and benevolent purposes, Moody .House, operated by 

said corporation, la a project of The Texas 

Conference of The Methodlst Church, and 1s 

operated by an admiAlstratOr aAd staff under 

the supervlslon of aA Executive Steering 

Committee appointed by the Board of Dlrectors of sald corporatloA aad approved by 

the Annual C6AfereAce of The Methodlst 

Church D 

"The AdmlAlStPRtOr and SteerlAg Commltt&e 

have attempted to determflae what It will cost 

: to operate Moody House. The charges being 

made to resldelnts are expected to underwrite 

the cost of furnlshlng the residents' living 

quarteras all meala, a complete staff lncludlng 

'-B10- 
Mr. Jules Damianl, Jr., Page 3 (No. C-27) 

an administrator, a full time Director of 

Social Activities, a resident doctor, a 

sufficient nursing staff which Includes 

registered nurse8 and licensed vocational 

nurses. 

“There la AO admission fee or a fixed 

amount for admission to Moody House. In 

each case the matter of the amount to be 

paid by the resident Is negotiated and a 

mutual agreement as to the amount to be 

paid by the Individual Is determined from 

his needs and ability to pay. It Is not 

expeoted that every person will underwrite 

the cost of his or her care, and It Is not 

expected that any person will be In such 

financial circumstances as to require full 

financial aid D All funds received from 

residents, rentals or otherwise, will be 

used for the care and maintenance of the 

residents, and that such funds will be 

from time to time supplemented by The 

Methodist Church. 

‘With ‘reference to paragraph three, 

you will note that there are vaPlous units 

rented o.ut In the Moody House to private 

lndlvlduals. Vernonts Annotated Civil Statutes, Article 7150 aAd The Constitution 

of the State of Texas, Article 8--section 2, 

holds that to be an Institute of purely 

public charity no that its property may i 

be exempt for taxation, the fnstftutlon 

must be one whose property la used wholly 

and exclusively for charitable purposes. 

In BPOE L.od e WoQ. 151 vs City of Houston, 

44 SW2nd 48!, there Is a holding that where 

lndlvldual COACefB3fOA~ were leased Out t0 

lndfvfduala and were not used solely for 

the beneflt of the organlzatlon, -that said 

organlzatlon. would not be exempt from taxation. It Is the wrlterqs opinion that the 

Moody House lu baslcally a charitable lnstltutlon, ‘howeverp under the holding herein 

before cited it would appear by leasing fOP 

a fee Its premises to lndfvfduals other than 

the resedents of the Institution and the 

allowance of the public to patronize and 

use these facllltles would result In the 

ruling that the Moody House was not a 

-1X1- 
Mr. Jules Dsmlanl, Jr., Page 4 (No. C-27) 

charitable organization and Is Aot exempt 

from taxation. Your 0plAibn la Pespectfully Pequested." 

Under the facts stated, it appears that thd organization 

owning this property described has complied with theeAeCessaPy 

law and facts to make it a charitable fnatltution, aAd the property would be exempt from ad valorem taies were it not for the 

fact that certain parts of the property are being leased to 

tenants as stated IA your request. This matter has been dlscussed at length IA opinions heretofore rendered by this department, being OPIAIOAS Nos. WW-12 7 dated March 16, 1962, W-1424 

dated August 24, 1962, and WY-1 1 27aated August 30, 1962, copies 

of which are enclosed herewith. 

In Morris v. Lone Star.Cha ter No. 6, Royal Arch 

Masons, 68 Fe em f, s w 519 d87 

thebuilding &own ;s thi l&on& 

th f t h tha 

Tej&e w:s ttei ~y'~lain~lff 

and other Masonic organizations to h6ld their meetings but that 

a part of the building was rented to'different pePsons, and 

plaintiff received a monthly rental for each of sald rooms 

rented amounting In the aggregate to about $15O,OO per month 

for all of the rooms in the ffrst and second stories In the 

.bulldlng. 

The Court IA Its ?plnlon had the following to say: 

II D D D The burden of .showlng that an 

exempt.loA from taxatlon exists9 rests upon 

the party who olafma It, o' D D and when the 

constrmctlon of~the law Is doubtful, the 

doubt will be resolved In favor of:the state, 

and against the exemption, D + * Applying 

these rmles, we conclude that the buildlAg 

In questlon %s not @used exclusively' by 

appellee'ln the sense gIveA to these words 

in the constitutf0A~ the exclusive me meant 

being the actual aAd direct use for the purposes of the assOclatfOA, and not a use by 

others fop reveAue, although that revenue 

may be exclusively appropslated for the 

'objects of the charity. The legislature 

IA exerclslng~ the power CoAfePPed by the 

constitution seems to follow,the constrmctloA we have adopted, .aAd exempt ‘all 

buIldlAgs belOAglAg t0 1AStltutlOns Of 

purely public charlty;together with the 

1aAds belOnglAg to and occupfed.by such'. 

lnstlttitlons, ~'Aot leaaed or othepwlse used 

wlth a view td prof+t,' aAd all moneys and 
Mr. Jules Damlanl, Jr., Page 5 (No. c-27) 

credits appropriated solely to sustaining 

suoh Institutions,’ This means that a 

building leased for profit 1s not exempt 

although such profit may be appropriated 

solely to the purposes of the charity, 

and not to the private gain of Its promoters or stockholders. o e *” 

of Houston v. Scottish Rite Benev. hss’n., 

0 S.W. 978 (19 21)-6f th e Ancient 

and Accepted Scottish Rite of Fre&nasonry of the City of Houston 

purchased certain property which was known as ScoMlsh Rite 

Cathedral. The lot and bulldlng situated thereon was actually 

used by members of the association, and no part of the same was 

rented or used by any other person or instltutlon. The association owned no property used with a view tog;flt. It had 

no capital stock and declared no dlvldenda. 

used by the Masonic orders, Including San Jaclnto f&e 

v”,f was 

Perfection No. 6 and the Houston Chapter of Rose Croix No. 5, 

each of which collected membership fees and dues whloh were 

used for charitable purposes other than the bare neceseltles 

for the lodge. No person received any salary or profit directly 

from the lodge or lodges. The building was used pplncipally for 

meetings of thn various Masonic orders. 

The facts further showed that the association was not 

one that did nothing but dispense charity, but it did dispense 

charity. The main purpose of the association was to provide a 

lodge and place of meeting, and to look after and provide for 

lndlvldual Masons and their families. 

The Court said in Its opinion: 

“By the very tinner and terms of this 

property’s acqulsltlon, It was required __ 

to be used9 as it was In fact used, by,. 

the two Masonic orders* ‘to enable them 

to pursue their work as Masonic lodges, I I. 

such work being, as agreed, only partly 

charitable. 

“To the extent that the property was 

used by ~aonlc organizations, whoae 

actlvltles Included other fields than 

charity, It was not, aAd could not be, 

used exclusively by an lnstltutlon of 

purely public charity. Not.belng used 

exclusively by an institution of purely 

public charity, the claim to exemption 

under the constltutlonal prOViSIOn fails, 
or. Jules Damlanl, Jr., Page 6 (No. C-27) 

and our answer to the certified question 

Is that the property was subJect to tax-aMon." 

In the case of B.P.O.E., Lodge No. 151 v. City of 

Houston, 44 S.W.2d 488 lTex.Civ.App. 1931 , error ref.),. the 

City Houston sued the Elke Lodge for ad valorem tnxes on 

the property occupied by the lodge. The facts showed that 

the lodge dispensed charity but carried on other actlyitles 

such as games, daACeS and othe'r Social activities for the purpose of entertaining its members and securing new members. 

The Court said that whether appellant Is a purely 

charitable lnstltutloA 1s one of fact. There was within the 

building a barbershop, the proprietor 6f which paid no rent 

but kept all the money he took In from services rendered to 

members of the lodge, a gymnasium IAstructor, and a restaurant 

operator, none of whom paid any rent or money to the lodge. 

The Court said: 

"Under the law, for the property of 

appellant to be exempt from taxation, It 

must Aot only be owned, but also be used 

exclusively, by an lnstltutlon of purely 

public charity. Is It, so used here? The 

barbershop 1s operated by one who gets 

all the income. He pays no rent, but he 

gets free space' to operate his trade, aAd 

retains for himself all the income. The 

iaan who ruAs the gymnasium Is a paid 

lAstructoP. He not only receives $200 a 

month as Instructor, b t 

I: 

he keeps in the 

:gymnaslum his own sto,c of supplies and 

sells them 'to the membera, has free space9 

and,retalAs the whole of the Income for 

his own use. The man who rune the reStaUrant also keeps aAd furAfShsS all his 

supplies aAd PetalAs all the Income. He 

shares fn the use of space free of rent. 

The marp who gives electric batha furnishes 

the towels ana rubbing llnfmeaats aAd keeps 

all the Income. e D 0 

11 D e . 

"ExemptlOAB from taxation are not favored, 

and the law allowing exemptions should be 

given a strict Interpretation, It' Is then 

policy of the states aAd but justice between 

-114- 
Mr. Jules Dnmlanl, Jr., Page 7 (No. c-27) 

Its citizens, that all property should be 

taxed, and that no property shall escape 

this common burden, unlese It comes clearly 

within the exemption, and It wao Incumbent 

on the appellant to show that It comes 

within the exemption clauses of the Constitution and the statute. We do not 

think this has been shown." 

It is.our opinion that since portions of the Moody 

House are rented to private lndlvlduals who pay rent to the 

operators of Woody House, that in accordanoe with the decisions 

above, this property is not uaed exclusively for oharltable purposes and therefore does not meet the requlr’ements to be exempt 

from taxation. 

SUMMARY SUMMARY 

Under the facts stated the property 

Involved In this opinion Is not used exclusively by an lnstltutlon of purely public 

charity and la therefore not exempt from ad 

valorem taxes. 

Under the facts stated the property 

Involved In this opinion Is not used exclusively by an lnstltutlon of purely public 

charity and la therefore not exempt from ad 

valorem taxes. 

Yours very truly, 

WAQQONER CARR 

Attorney General of Texas 

JHB: pw 

Enclosures 

APPROVED: 

OPINION COMMITTEE 

W. V. Qeppert, Chairman 

Joe R. Long 

Brady Coleman 

Albert P+uett 

Jerry Brock 

APPROVBD FOR ‘i’RE ATTORNEY QENERAL 

By: Stanton St bne 

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