PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Koontz,and 

Kinser, JJ. 

CITY OF RICHMOND 

 OPINION BY 

v. Record No. 980498 JUSTICE LAWRENCE L. KOONTZ, JR. 

January 8, 1999 

VIRGINIA UNITED METHODIST HOMES, INC. 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Melvin R. Hughes, Jr., Judge 

In this appeal, we consider whether the trial court erred 

in ruling that certain properties were exempt from the 

assessment of local real estate taxes because of their status as 

charitable “asylums.” 

BACKGROUND

Virginia United Methodist Homes, Inc. is a Virginia nonstock, non-profit corporation operating continuing care 

facilities for adults throughout the Commonwealth.1 Among these 

facilities are The Hermitage in Richmond and Snyder Memorial 

Home (collectively, the properties), both of which are located 

within the City of Richmond.2 Methodist Homes was chartered in 

1945 and acquired the properties in 1948. In 1976, the Via 

 

1

The corporation was originally incorporated in the name of 

Virginia Methodist Home for the Aged, Inc. In this opinion we 

will refer to the continuing corporation and its predecessor 

entity as Methodist Homes. 

2

Subsequent to the time relevant to this appeal, Methodist 

Homes sold the Snyder Memorial Home property. 
Health Care Center, a 115-bed nursing home facility, was added 

to The Hermitage in Richmond. The properties presently provide 

three levels of care: independent living, assisted living, and 

health care. Depending on the needs of an individual resident, 

these levels of care are available under continuing care 

contracts for the life of the resident or under monthly and 

daily leases. 

The 1945 articles of incorporation of Methodist Homes 

called for the establishment of “a home or homes for the aged 

and infirm and needy persons.” As a matter of policy, admission 

was limited initially to persons age 65 and older. Individual 

contracts of admission were negotiated with each prospective 

resident based upon the estimated cost of lifetime care and the 

individual’s available income and assets to pay that cost, 

generally in monthly installments. However, the ability of the 

resident to pay the full cost of care from personal income and 

assets was not a requisite factor in determining admission. 

Once admitted, no resident was expelled because of the inability 

to continue to pay the agreed upon installments. 

Over time, greater emphasis was placed on the ability of a 

prospective resident “to pay for their cost of care over their 

actuary life expectancy.” In 1961, the articles of 

incorporation were amended to reflect that the purpose of the 

corporation was to provide “a home or homes for aging persons.” 

2
As a result of this change in emphasis in the admission policy 

and corporate purpose, Methodist Homes began requiring that 

prior to admission there be an identified source of funds from 

“the individual, the government, family, church, [or] somebody” 

adequate to pay for the expected cost of lifetime care. 

In the 1980s, Methodist Homes established the “Samaritan 

fund,” a charitable account designed to provide “benevolent 

care” by funding the shortfall in future anticipated cost of 

care of prospective residents who lack sufficient income and 

assets to pay that cost at the time of admission. Currently 

Methodist Homes is “trying to develop the process where [it] can 

fund benevolent care” on a regular basis. However, funds 

available for benevolent care are limited and are first applied 

to the needs of residents already living in the properties. 

The majority of the current residents of the properties are 

parties to continuing care contracts that require them to pay an 

entrance fee and monthly fees thereafter. Under the fee 

schedule pertinent to such contracts, the entrance fees range 

from $24,750 to $175,500 depending on the type of accommodation 

acquired and the present and prospective health care needs of 

the resident. Similarly, the monthly fees range from $1,074 to 

$2,979. Continuing care residents who become unable to pay 

their monthly fees are nevertheless entitled to residence and 

care for life. At the time relevant to this appeal, 29 

3
continuing care residents were receiving this contract benefit. 

The deficit of their monthly fees is made up from charitable 

sources available to Methodist Homes, including the Samaritan 

fund. 

The remaining residents of the properties are monthly 

lessees in independent and assisted living units and daily 

lessees who require full nursing care. The monthly lease rates 

range from $665 to $2,279; daily rates range from $99 to $135. 

Daily and monthly residents who are unable to meet their lease 

obligations are not entitled to receive assistance from the 

Samaritan fund or other direct assistance from Methodist Homes 

and “are asked to relocate.” 

Medicare and Medicaid benefits are not accepted from any 

resident to fulfill obligations under a continuing care contract 

or lease. The properties are not operated for profit and have 

never operated at a profit. Although financial gifts are 

regularly received from the United Methodist Church, Methodist 

Homes is neither operated nor controlled by the Church. 

Until 1996, the properties were listed on the tax 

assessment rolls of the City of Richmond as tax-exempt. In 

1996, and again in 1997, the City assessor determined that the 

properties were not eligible for tax-exempt status and assessed 

real estate taxes against them. Thereafter, Methodist Homes 

filed an application pursuant to Code § 58.1-3984 for relief 

4
from those tax assessments and to have the resulting taxes, 

previously paid, refunded.3 The City resisted the application. 

The City admitted that “it was incorrectly noted in the City 

Assessor’s records that the [p]roperties were asylums and 

therefore they were accorded non-tax status” and for that reason 

no taxes had been assessed on the properties prior to 1996. 

However, the City maintained that the properties had never been 

entitled to have tax-exempt status, thus the 1996 and 1997 

assessments were proper. 

Prior to trial, the City filed a motion to restrict the 

evidence of Methodist Homes to proof of the allegation in the 

application that the properties are entitled to tax exemption as 

“asylums” under the provisions of Code § 58.1-3606(A)(5). The 

trial court sustained this motion. 

At trial, Methodist Homes acknowledged that under the 

express provisions of Code § 58.1-3984 it had the burden to show 

that the 1996 and 1997 assessments are “illegal.” Toward that 

end, Methodist Homes maintained that the previously related 

facts established that the properties were originally exempt 

 

3

Methodist Homes filed its original application on July 26, 

1996 challenging the 1996 tax assessment. On October 17, 1997, 

it filed an amended application to include a challenge to the 

1997 tax assessment. Although in both instances Methodist Homes 

styled its application as a “motion for judgment,” specific 

reference was made to Code § 58.1-3984 which provides the right 

to challenge the assessments. 

5
from local taxation because the properties were conducted 

exclusively as charities and constituted “asylums” under the 

classification exemption provided in Section 183(e) of the 1902 

Constitution of Virginia. Continuing, Methodist Homes 

maintained that the properties remain tax-exempt under Code 

§ 58.1-3606(A)(5), which provides for the same exemption from 

local taxation for “asylums” as did Section 183(e) of the 1902 

Constitution. This is so, Methodist Homes asserted, because the 

“grandfather clause” of Article X, Section 6(f) of the 1971 

Constitution, and its codification in Code § 58.1-3606(B), 

requires the application of the rule of liberal construction to 

the exemption for “asylums,” as that exemption is provided in 

Code § 58.1-3606(A)(5), for entities in existence in 1971, 

rather than the rule of strict construction, as is required 

under Article X, Section 6(f) for tax exemptions generally. 

The City essentially took the opposite position and 

maintained that, under either rule of construction, the 

properties never operated as asylums as contemplated by the 

relevant statutory and constitutional provisions. In the 

alternative, the City asserted that even if the properties had 

been entitled to tax-exempt status in the past, the subsequent 

changes in Methodist Homes’ corporate purpose and its admission 

policies had removed them from tax-exempt status. Finally, the 

City maintained that even if a liberal construction of Code 

6
§ 58.1-3606(A)(5) is appropriate with regard to a portion of the 

properties, a strict construction was nonetheless required with 

regard to the Via Health Care Center wing of The Hermitage in 

Richmond, because that facility had not been constructed until 

1976. 

In its final order, the trial court expressly found that 

since their inception the properties had been “used exclusively 

as charities [and] as asylums under the law then applicable” 

and, thus, it was required by Code § 58.1-3606(B) to apply a 

liberal construction to the exemption by classification 

provisions of Code § 58.1-3606(A)(5). Applying that standard, 

the trial court further found that for the tax years in question 

the properties “were used as asylums for nonprofit purposes 

exclusively as charities and thus . . . the assessments of the 

two aforementioned properties for the year[s] 1996 and 1997 

[are] erroneous.” The trial court ordered the City to refund 

the taxes already paid, together with costs and interest. We 

awarded the City this appeal. 

DISCUSSION

On appeal, as was the case at trial, one of the principal 

disputes between the parties is whether the provisions of Code 

§ 58.1-3606(A)(5) are to be construed with reference to the 

properties in question by applying a strict or liberal 

construction rule. The distinction between these rules of 

7
construction is found in Commonwealth v. Lynchburg Y.M.C.A., 115 

Va. 745, 80 S.E 589 (1914). There, with reference to the 1902 

Constitution, we stated: 

The general rule is that provisions 

exempting property of individuals or private 

corporations from taxation must be strictly 

construed, taxation of such property being 

the rule and exemption from taxation the 

exception. One of the reasons for this is 

that all such persons should bear their fair 

share of the burdens of taxation, and that 

lessening the burden of one increases the 

burdens of others. But as the policy of the 

State has always been to exempt property of 

the character mentioned and described in 

section 183 of the Constitution, it should 

not be construed with the same degree of 

strictness that applies to provisions making 

exemptions contrary to the policy of the 

State, since as to such property exemption 

is the rule and taxation the exception. 

Id. at 747-48, 80 S.E. at 590. 

Thus, it is apparent that the application of a liberal 

construction rule, that is, one in which exemption is the rule 

and taxation the exception, significantly facilitates Methodist 

Homes’ assertion that the properties come within the exemption 

granted by Code § 58.1-3606(A)(5). Stated alternately, if the 

properties do not qualify for this exemption under the rule of 

liberal construction, they necessarily would not qualify under 

the rule of strict construction, that is, where taxation is the 

rule and exemption the exception, because under that rule, 

“where there is any doubt, the doubt is resolved against the one 

8
claiming exemption.” Golden Skillet Corp. v. Commonwealth, 214 

Va. 276, 278, 199 S.E.2d 511, 513 (1973). 

This is the fourth instance in which we have been called on 

to review an organization’s claim of tax-exempt status by 

classification under Code § 58.1-3606. See Mariner’s Museum v. 

City of Newport News, 255 Va. 40, 495 S.E.2d 251 (1998); 

Children, Inc. v. City of Richmond, 251 Va. 62, 466 S.E.2d 99 

(1996); Westminster-Canterbury of Hampton Roads, Inc. v. City of 

Virginia Beach, 238 Va. 493, 385 S.E.2d 561 (1989). Although in 

each of these prior cases we focused primarily on the charitable 

status of the owner’s overall operations and the use of the 

property in question in furtherance of that charitable purpose, 

rather than the classification of the property itself, these 

cases, in large part, guide our resolution of the present 

appeal. In contrast, here we must first determine whether the 

trial court properly found that the properties are “asylums” 

within the classification for tax-exempt property provided in 

the applicable constitutional and statutory provisions before we 

reach the issue, if necessary, of whether they are operated 

exclusively as charities. Our resolution of the rule of 

construction to be applied in construing the exemption is 

critical to that determination. 

Section 183(e) of the 1902 Constitution provided a tax 

exemption for 

9
[r]eal estate belonging to, actually and exclusively 

occupied and used by, and personal property, including 

endowment funds, belonging to young men’s christian 

associations, and other similar religious 

associations, orphan or other asylums, reformatories, 

hospitals and nunneries, conducted not for profit, but 

exclusively as charities. 

(Emphasis added.) 

The 1971 Constitution eliminates this per se tax exemption, 

and instead provides in Article X, Section 6(a)(6) that 

“[p]roperty used by its owner for religious, charitable, 

patriotic, historical, benevolent, cultural, or public park and 

playground purposes,” is subject to tax-exemption through 

“classification or designation by a three-fourths vote of the 

members elected to each house of the General Assembly and 

subject to such restrictions and conditions as may be 

prescribed.” Under this authority, the tax exemptions of 

Section 183 of the 1902 Constitution, including those of 

subsection (e), were codified in substantially the same form 

first in former Code § 58-12, and subsequently in Code § 58.1-

3606. Subsection (A)(5) of the latter statute, applicable at 

the time the assessments in question were made, provides tax 

exemptions to property belonging in one of the following 

classes: 

Property belonging to and actually and 

exclusively occupied and used by the Young Men’s 

Christian Associations and similar religious 

associations, including religious mission boards and 

associations, orphan or other asylums, reformatories, 

10
hospitals and nunneries, conducted not for profit but 

exclusively as charities (which shall include 

hospitals operated by nonstock corporations not 

organized or conducted for profit but which may charge 

persons able to pay in whole or in part for their care 

and treatment). 

(Emphasis added.) 

Article X, Section 6(f) of the 1971 Constitution provides 

that “[e]xemptions of property from taxation as established or 

authorized hereby shall be strictly construed; provided, 

however, that all property exempt from taxation on the effective 

date of this section shall continue to be exempt until otherwise 

provided by the General Assembly.” Thus, property that was 

entitled to tax-exempt status prior to July 1, 1971, the 

effective date of the 1971 Constitution, was “grandfathered” out 

of the requirement for strict construction until such time as 

the legislature acted to affirm or remove that status. 

As we discussed in Children, Inc., supra, under both the 

1902 Constitution and the grandfather clause of the 1971 

Constitution, the tax exemptions of Code § 58.1-3606 were 

liberally construed, whereas, following 1985 amendments to Code 

§ 58.1-3606(A), new property exemptions were created by the 

General Assembly that no longer required the organization 

seeking the exemption to have been in existence and to have 

acquired the property prior to July 1, 1971. Accordingly, we 

held that the General Assembly also thereby imposed a rule of 

11
strict construction upon these new tax exemption 

classifications. Children, Inc., 251 Va. at 65-66, 466 S.E.2d 

at 101-02. Noting that these amendments had the potential to 

disrupt the tax exemption that many organizations had previously 

enjoyed under the 1902 Constitution and the grandfather clause 

of the 1971 Constitution, we went on to observe that 

The General Assembly addressed this potential 

problem by adding subsection B to Code § 58.1-3606. 

That subsection provides: 

B. Property, belonging in one of the classes 

listed in subsection A of this section, 

which was exempt from taxation on July 1, 

1971, shall continue to be exempt from 

taxation under the rules of statutory 

construction applicable to exempt property 

prior to such date. 

Thus, the rule allowing liberal construction of 

exemptions was preserved under certain circumstances. 

Those circumstances are plainly and unambiguously set 

out, avoiding the uncertainty generated by the word 

“property” in the grandfather clause. Property, as 

used in subsection B, belongs “to a class”; it does 

not mean “a class of property.” Thus, the word 

property refers to a specific piece of real or 

personal property. 

Subsection B limits the use of liberal rules of 

construction to circumstances involving a specific 

piece of property that (i) belongs to one of the 

classes described in subsection A, and (ii) was exempt 

from taxation on July 1, 1971. Requiring a piece of 

property to be exempt on a specific date presumes that 

the property existed on that date. And, because tax 

exemptions do not run with property, see Code § 58.1-

3601, an organization must have owned the piece of 

property on July 1, 1971, to qualify for a tax 

exemption under the liberal construction allowed by 

subsection B. 

12
Children, Incorporated, 251 Va. at 67, 466 S.E.2d at 102 

(footnote omitted). 

Turning now to the circumstances of the present case, we 

think it is clear both that the properties were in existence and 

were owned by Methodist Homes prior to July 1, 1971.4 

Accordingly, we will initially apply a liberal construction to 

the exemption in question to determine whether the properties 

were “asylums” on or before that date. 

We have not previously defined the term “asylums” as used 

in Section 183(e) of the 1902 Constitution or Code § 58.1-3606 

and its predecessor statute. However, drawing on common 

definitions from the time of ratification of the 1902 

Constitution, the dissent in Westminster-Canterbury defined an 

“‘Asylum’ . . . as ‘a place of refuge and protection . . . a 

place of retreat and security: shelter . . . an institution for 

the protection or relief of some class of destitute, afflicted, 

or otherwise unfortunate persons.’” Westminster-Canterbury, 238 

Va. at 504-05, 385 S.E.2d at 568 (Russell, J., dissenting) 

 

4

The City did not apportion its assessment so as to assess 

the Via Health Care Center separately, and Methodist Homes 

maintains that the Center is an integral part of The Hermitage 

in Richmond. Neither party presented evidence at trial that 

would have required or permitted the trial court to consider the 

tax-exempt status of the Center independently. Therefore, any 

issue of apportionment is not properly presented in this appeal. 

Cf. City of Richmond v. United Givers Fund, 205 Va. 432, 439, 

137 S.E.2d 876, 881 (1964); see also Code § 58.1-3603. 

13
(quoting Webster’s Third New International Dictionary)(emphasis 

omitted). While we need not, and do not, adopt this as a 

comprehensive definition of this term for all purposes, we are 

satisfied that it is a commonly accepted definition and adequate 

for the resolution of this appeal. This is particularly so in 

the absence of any alternate definition offered by Methodist 

Homes and when this definition is applied in the context of a 

tax exemption that is given the benefit of a liberal 

construction. 

The original purpose of the properties as defined by the 

1945 articles of incorporation was to provide “a home or homes 

for the aged and infirm and needy persons.” In the context that 

tax exemption is the rule and taxation the exception, we discern 

no material distinction between such use of the properties and 

the use of property for the protection or relief of some class 

of destitute, afflicted, or otherwise unfortunate persons under 

the above definition of asylum. Accordingly, we are satisfied 

that the properties were exempt from taxation for many years 

after they were acquired by Methodist Homes in 1948 because 

during that time they came within the definitional 

classification of “asylums” in Section 183(e) of the 1902 

Constitution. 

However, the 1961 amendment of the articles of 

incorporation deleted the reference to “the aged and infirm and 

14
needy persons,” and replaced it with the term “aging persons.” 

This was a significant change in the purpose for which the 

properties would be used and requires that we determine whether 

as a result the properties continued to qualify for the 

exemption for asylums even under a liberal construction of that 

exemption. Cf. Mariner’s Museum, 255 Va. at 45, 495 S.E.2d at 

253-54 (change in use of property may render otherwise exempt 

property taxable). We conclude that they did not. 

The term “aging persons” does not necessarily include 

disabled or afflicted persons; nor is there any indication in 

the amended articles of incorporation that assisting those in 

financial need would continue to be a relevant consideration of 

the corporate purpose. Indeed, the current requirement that 

prospective residents have sufficient financial means from 

sources independent of Methodist Homes to meet the cost of care 

prior to admission and that daily and monthly lessees unable to 

meet their obligations are required to relocate refutes any 

notion that the properties are used to serve destitute or 

otherwise unfortunate persons. It may be true that many 

residents of the properties do suffer from disabilities and 

afflictions or ultimately become indirect beneficiaries of the 

charitable funds that may be applied to supplement a shortfall 

in payment of life care contract fees. However, if the express 

purpose of a given institution and the use of its property is to 

15
provide residence and care merely for “aging persons” without 

special regard for whether they are also “destitute, afflicted, 

or otherwise unfortunate persons,” that property cannot, even 

under a liberal construction, be termed an “asylum.” 

Accordingly, we hold that the trial court erred in ruling that 

on July 1, 1971 the properties were used as “asylums” and, thus, 

were entitled to tax exemption at that time and to continued 

tax-exempt status under a liberal construction of Code § 58.1-

3606. 

Because the properties continued to be utilized as “homes 

for aging persons” during the time relevant to this appeal, it 

is self-evident that they do not qualify as “asylums” under a 

strict construction of the exemption in question. Since the 

properties do not belong to the class of properties defined in 

Code § 58.1-3606(A)(5) and, thus, do not qualify for that tax 

exemption, we need not reach the issue of whether they are 

operated exclusively as charities.5

For these reasons, we will reverse the judgment of the 

trial court and enter final judgment for the City. 

Reversed and final judgment. 

 

5

Nothing in this opinion should be interpreted as 

restricting Methodist Homes from obtaining a legislative 

exemption from local taxes by designation under Code § 58.1-

3607. 

16