THEAITORNEYGENERAL 

FVILL WILSON 

AlTORNEYOENERAL 

Honorable Charles 

Criminal District 

J. Lleck 

Attorney 

of Bexar County 

County Courthouse 

San Antonio 5, Texas 

Opinion No. NW-1277 

Re: Exemption from ad valorem 

taxes of Mornlngs.lde Manor, 

mc . 

March 16, 1962 

Dear Mr. Lleck: 

In connection with your request for an opinion of this 

office on the above captioned matter, we have been advised of 

the following facts. Mornlngslde Manor, Inc., hereinafter 

referred to as the Home, 1s incorporated under the Texas Nonprofit Corporation Act for charitable and benevolent purposes. 

We quote the following excerpt from the brief which has been 

submitted by the attorneys for The Home In support of their : 

claim that ,the Home shotild be exempt from the ad valorem taxes 

on the basis of being a purely public charity; 

II flornlngslde Manor 1s a project of 

the’&n’Antonlo District o d the Methodist 

Church. Said district has a board on homes 

for older adults in Its organizational structure. 

This board 1s Incorporated as the San Antonio 

District Board on Methodist Homes for Older 

Adults and Is the parent corporation. 

“Morningside Manor, Inc. has purchased 20.325 

acres more fully described in the application 

for exemption, and has virtually completed 

construction of improvements thereon. Opening 

ceremonies and occupancy began In September 

1961. The improvements consist of one building designed to house 109 residents. 

“The present requirements for admission constitute the requirements under which all exls,tlng reoldents have been admitted. As quoted in 

sald Exhibit A of the application for exemption, 

seotlon five of the by-laws Is very olesr in 

stating that, 

“IThere 1s no admission fee, or fixed amount, 

for admisrlon to the Home, but those who are 

flnanolal,lg able to pay for the cost of their 
Honorable Charles J. Lieck, Page 2 Opinion No. WW-1277 

care shall be expected to do so on a basis 

determined by the Board of Directors. In any 

case admission will be a matter of negotiation 

and mutual agreement and each case will be 

considered on Its own merit.’ 

“No one Is declined admlaslon because of 

financial Inability to pay. The directors 

have attempted to determine what It will 

cost to operate the Home and have estimated 

a cost of $214.50 for one person in a single 

room, $182.38 each for two persons In a double 

room, and $194.75 each for two persons in a 

suite. These figures are expected to underwrite the cost of futinishlng their living 

quarters, all meals, ‘snd a complete staff, 

Including an administrator, a full time 

director of social activities, and four full 

time nurses plus one part-time nurse, all of 

whom are either registered nurses or licensed 

vocational nurses. Net every elderly person 

has need of such Facllltles, but for thoee 

who do, the Methodist Church feels their need 

to be equivalent to the need of orphans, unwed 

mothers, and the slok and needy who require 

hospital care. This Home is a sincere attempt 

to meet such need. All residents are asked to 

pay what they can, and because It Is non-profit, 

many can afford to pay the full cost of their 

care. It Is not expected that any person will 

be In such dire financial circumstances as to 

require full charity due to the fact that most 

people are eligible for old age assistance, 

social security, etc. However, should a case 

arise, the Home would not hesitate to provide 

a member with 100% dtiarlty. 

“The experience of other homes for older 

adults across the nation has shown that quite 

often emergency financial needs result In 

connection with the last Illness and death 

of its membere. Quite often these needs cannot 

be met by the member and even though they are 

not within the ecope of services furnished by 

the Home, the Home has little choice but to pay 

: 

for the necessary Items. Consequently, It’ has 

become a sound practioe in such homes to request 

payment in advance of a sum, when posslble,iD 

help lndemnify~the Home should it be caught In 

such a situation. If no financial burden is 

‘ 

, 

. 

. . 
Honorable Charles J. Lleck, Page 3 Opinion No. WW-1277 

Imposed on the Home, the resident or his 

estate.has a credit and right to receive fromthe Home an amount equal to the Initial payment. Morningside Manor has 'such a program 

and that portion of the contract applicable 

thereto is as follows: 

'ltOn this date the undersigned Member has 

paid Dollars ($ 1 

to the Manor to Drovlde analnst anv contlnaencv 

which may arise ihat would result in a per&%~y 

responsibility of the Member and which Is not 

otherwise disposed of. The Member agrees In 

advance to be bound by and hereby ratifies the 

decisions of the duly authorized person or 

persons acting for the Manor when It Is decided 

that a charge against said contingency should 

be made. Upon termination of residency, the 

Manor agrees to pay to the undersigned Member 

or his estate - - Dollars 

0 ) less any amounts withdrawn therefrom, 

If any. This payment shall be paid Into the 

general fund of the Manor, and amounts payable 

by the Manor under this provision shall be paid 

out of the general fund. It Is expressly understood that no fiduciary relation Is created 

thereby.' 

"The Methodist Church members have made contributions to help underwrite the cost of furnlehlng this facility and are going to continue to 

contribute to Its support. Except for these ~ 

contributions, the Home could not afford to 

operate. At the date of this writing, twentytwo persons have moved Into the Home. Of these; 

three such members (13.6$) are charity residents, 

I.e. they pay only a fractional part of the 

estimated cost for their care. As the Home continues to fill, It Is expected the percentagei of 

charity cases will Increase." 

There 18 no substantial disagreement between the taxing 

authorlt$es and the Home as to the facts. The brief submitted 

by the Criminal District Attorney In support of his position 

that Mornlngslde Manor Is not exempt from state and county ad 

valorem taxes contains a few facts In addition to those contained 

In the above The purchase price of the land 

Involved was ihe cost of the building, $912,501.56, 

totaling costs to the date of completion 

came from Individual oontributlons and the Issuance of bonds. 
Honorable Charles J. Lleck, Page 4 Opinion No. m-1277 

Hereafter the Home will be syRported from such contributions 

and the charges received from,those residing in the building. 

The entire 20.325 acres will be cleared and landscaped 

and the land, In addition to the building site and immediate 

bampus, will be used by the residents for recreation and for 

vegetable and flower gardens. Exemption has been requested 

for the entire tract of land. 

We have carefully examined the, briefs submitted In connection 

with your request, We have concluded th&t, with certain llmltatlons, the property In question Is exempt from taxation. 

Article VIII, Section 2 of the Constitution of the State 

of Texas has empowered the Legislature to exemp; from taxation 

certain enumerated properties, among which are Institutions 

of purely public charity". In pursuance to thls'p%3cular eonstltutlonal grant, the Legislature enacted Section 7 of Article 

7150, Vernon's Annotated Texas Statutes, which effectuates exemption to the extent of the exemptlve powers conferred by Article 

VIII, Section 2. Little Theatre of Dallas Inc. v. City of Dallas, 

124 S.W.2d 863 Clv.App. 1939) C lty f Wichita Falls v. Cooper, 

170 S.W.2d 777 Clv.App. 1943,;error zef )' D lcklson v. Woodmen 

of the World Life Insurance Co., 280 S.W:2;1 315 (Clv.App. 1955, 

error ref.). 

Section 7 of Article 7150 reads as follows: 

"Public charities. All buildings and 

personal property belonging to lnstltutlona 

of purely public charity, together with the 

lands belonging to and occupied by such 

Institutions not leased or otherwise used 

with a view to profit, unless such rents 

and profits and all moneys and credits are 

appropriated by such Institutions solely 

to sustain such Institutions and for the 

benefit of the sick and disabled members 

and their families and the burial of the 

same, or for the maintenance of persons when 

unable to provide for themselves, whether 

such persona are members of such lnstltutlona 

or not. An lnetitutlon of purely public 

charity under this article Is one which 

dispenses Its aid to Its members and others 

in sickness or distress, or at death, wlthout regard to poverty or riches of the 

recipient, also when the funds, property 

and assets of such Institutions are placed 

and bound by its Paw to relieve, aid and 
Honorable Charles J. Lleok, Page 5 Opinion No. WW-1277 

administer in any way to 'the relief of Its 

members when In want, sloknese and dietrees, 

and provide homes Sor its helpless and 

dependent member8 and to educate and maintain 

the orphans of Its deceased members or other 

pereons. ” 

It la clear that under the above section an InstLtutlon can 

gain exemption for Its "bulldlngr. , . together with the lands 

belonging to and occupied by such ln8tltutlons" only If it IS 

an "institution of purely public charity." 

In City of Houston v. Scottish Rite Benev. AeerniC ;;3.eTex. 

191, 198, 230 S.W. 978 931 (1921) th 

Legislature might rea&ably concl:de 

t said th 

Fh?% ln8tltutlon was 

one of 'purely public charity' where: First, It made no gain 

or profit; second, It accompllehed ends wholly benevolent; and, 

third, It benefited persons, indefinite In numbers and In 

personalties, by preventing them, through absolute gratuity, 

from becoming burdens to society and to the state." 

Admittedly, the Home meets the first requirement slnce'lt 

makes no gain or profit. Does It accomplish ends wholly benevolent 

and will It benefit persons Indefinite In numbers by preventing 

them from becoming burdens to society and the State? 'In the 

brief submitted In support of the proposition that the property 

18 taxable, It Is argued that nineteen occupants are not faced 

with the probability that they will become a public charge since 

they are paying their room and board according to the schedule 

before quoted, that three are partially dolnfi so, that none are 

on a "full and exclusive charity basis. . and that "neither 

the Constitution or the courts have establikhed a percentage of 

charitable use as a basis for an exemption except 100 per cent." 

We think that these arguments are refuted by the decision In 

Santa Rosa Infirmary v. City of San Antonio, 259 S.W. 926 (Tex. 

om. pp., . 

In the Santa Rosa case, the City of San Antonio and the 

San Antonio Independent School District Instituted suit against 

the Sisters of Charity of the Incarnate Word, hereinafter 

referred to as Sisters of Charity, and the Santa Rosa Infirmary, 

hereinafter referred to as the Hospital, both Incorporated for 

charitable purposes, to recover taxes assessed against the real 

estate and improvements thereon owned by the Hospital. The 

Hospital was a subsidiary of the Sisters of Charity and was 

controlled by It in the management and operation of Its property. 

A Sister of Charity of the Incarnate Word became a member 

of the Hospital when she was assigned to duty there by the 

Congregation of Sisters of Charity. The Sisters had,no'lnterest 

: ..,, 4' 

. 
Honorable Charles J. Lleck, Page 6 Opinion No. W-1277 

In the corporation, received no compensation for their services 

except that room8 in the Hospital were furnished them when they 

became sick and that they received the expenses of their room, 

board, clothing and funeral expenses. 

All patients whose financial condition permitted them to 

pay for the hospital services did so. The money so received was 

used for the maintenance, upkeep and Improvements of the Hospital 

facilities, for the liquidation of Its debts, for the educatlan 

and maintenance of young Sisters, future members of the Hospital, 

for the support of sick and disabled members of the Hospital, and 

the balance went to a building fund. The Hospital had no other 

source of revenue than that which It derived from Its pay patients. 

The Sisters of the Hospital engaged In other charities and 

charitable works. They conducted St. Luke’s Free Clinic, fed 

and clothed the needy, aided unwed mothers -- all of these additional 

charities being performed from the general funds of Hospital. There 

was testimony to the effect that the large majority of patients 

were pay patients, that the applicants for charity were comparatively 

small In number, that the lnetltutlon was entirely self-sustained 

and In no way dependent on any outside charity or eollcltatlone 

from other organizations cOMeCted with the church. 

The court discusses the case of Morris v. Masons, 68 Tex. 

703, 5 S.W. 519 (1887) which held that a building owned by a 

Masonic body claiming to be a purely charitable organization was 

not entitled to exemption since the building was largely leased 

to tenants from whom rentals were collected. The court therefore 

did not decide whether the Masonic body was, In fact, a “purely 

public charity.” The court dletlngulshed the Morris case from 

the case under consideration on the ground thamough the 

constitutional provision authorizing exemption was still the 

same, the statutory provision Implementing the constitutional 

provision had been~ampllfled to imlude rents and profits when 

appropriated by charitable lnetltutlons solely to sustain such 

Institutions. The court stated that If the language of the then 

controlling statute was to be given effect, charitable lnetltutlons might use funds derived ‘as an Incident of the administration 

of their charities. ” (hphasls supplied) The court expressly 

rejected the contention that the Hospital lost its status as 

a purely public charity because the majority of the horns 

In the hospital wfts used to take care of pay patients and stated 

at page 932 that the mere fact that pay patients largely 

predominated over ihi dharlty patients, or that the lnatltutlon 

did not go out Into the highways and by-ways seeking out those 

to whom Its charitable offices might be extended, could not, 

under the great weight of authority, be said to so detract from 

Its charities as to disqualify it as an lnetltutlon of purely 

public charity.” 
. 

, 

Honorable Charles J. Lleck, Page 7 

At page 935, the court said: 

Opinion No. WW-1277 

“The theory upon whloh institutions of 

thie character are exempted from taxation 

is that they serve the government by rellevlng it to some extent of what would otherwise 

be a public duty or governmental function to 

care for the indigent sick and afflicted, and 

It Is the assumption by such institutions of 

this burden which compensate8 the government 

for the exemption granted them from the 

general obligation resting upon all citizens 

to pay taxes. It is therefore essentially 

to the general public Interest that the 

facllltlee of these institutions to carry 

on this burden be extended by additions, new 

structures, and building funds, looking to 

that end and keeping pace with a growing 

population and Its necessarily increasing 

demands for charitable dispensations.” 

Both the State and Federal Qovernments are devoting attention 

to the ever Increasing problem of the aged who constitute an ever 

lncreaslng percentage of our population. We think It is selfevident that an aged person need not be wholly without financial 

means in order to become a public charge. The Home serves the 

Qovernment by relieving it to some extent from what would otherwise be a public duty or governmental function to care for the 

aged, and may be deemed, therefore, an Institution of “purely 

public charity” a8 those words are used in our Constitution. 

Numerous decisions of our courts clearly establish the rule 

that in order to gain the exemption granted by Section 7 the 

“Institution of purely public charity” muet not only own the 

property for which exemption is sought, but must, in addition, 

make an actual, direct and exclusive use of said property for 

charitable purposes. City of Longvlew~ v. Markham-McRee- Memorial 

Hoa ltal 

c-tk 

137 Tex. 178, 152 S W 26 1112 (1941) . 

Santa R 

of Longview, 191 S.W.id’695 (Clv.App. 

M arkham Hospital 

& , error ref )* 

OS8 Infirmary, supra; Benevolent and Protectlv&,Order Gf’ 

Elks v. City of Houston, 44 S.W 2d 4Utl (Cl ~.APP. 1945 

ref.) I th bif submitted ii support of the propo&l%rthat 

the Homenl.s etaxibfe It Is argued that the requisite of “exclusive 

use” Is not met in Chls case since some of the rooms will be 

rented. We do not think that this fact la determinative of the 

“exclualve uee” requirement but rather that that requirement is 

met by the fact that the property will be used exclusively for 

the oharltable: ptipose ,of- caring ‘f0tr .the aged. We are unable to 

distinguish the occupancy of the Home by those aged persons who 

pay for their expenrer and the occupancy of hospitals by pay 
. 

Honorable Charles J. Lleck, Page 8 Opinion No. WW-1277 

patients. Of course, any change in the existing factual 

altuatlon which prevents the Home from meeting the threefold 

requirements of (1) ownership of the property, (2) bona fide 

charitable purpose as evidenced by actual charitable work, 

and (3) exclusive use of the property by the charltabie.lnstltutlon itself would result In a loss of the exemption accorded 

by Section 7. The determination of these controlling facts 

must always be made by the proper loos1 authorities In deciding 

whether exemption will be accorded. 

SUMMARY 

Under submitted facts, Morningside 

Manor, Inc., a charitable corporation 

operating a Home for older adults In San 

Antonio, la an Institution of pureiy public 

charity and Is exempt from ad valorem taxes. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

Assistant 

MMP:cm 

APPROVED : 

OPINION COMMITTEE: 

W. V. Qeppert, Chairman 

J. C. Davis 

Marvin Thomas 

Bob Flowers 

Elmer McVey 

FEWED FOR THE ATTORNEY GENERAL 

: Houghton Brovmlee, Jr.