JIM MATTOX Attorney General

Supreme Court Building P. 0. BOX 12548 AUSTIN, TX.7871v254a 512,475-2501 TAX 9io/a74-1387 Teleco~ler 512/4750288

714 Jackson, Suite 700 Dallas. TX. 75202.4506 2141742.8944

4824 Alberta Ave., Suite la0 El Paso, TX. 79905.2793 9151533-3484

1001 Texas, Suite 700 Houston, TX. 77Oil2G3111 7i3223.5886

808 Broadway. Suite 312 Lubbock, TX. 79401.3479 8081747.5238

4309 N. Tenth, Suite S McAllen, TX. 78501-1685 5121882.4547

200 Main Plaza, Suite 400 San Antonio, TX. 782052797 51212254191

An Equal Opportunity/ Affirmative Action Employer 

# The Attorney General of Texas
A?:cil16, 1986

Booorable John B. DistrictAttoruay 201 Fauuin, Suite Houston, Texas 77002 1396-2.23A(E)(4),V.T.C.S.
Dear Mr. Holmes: 'L~lmes, Jr. OpinionNo. m-477 200 Re: Constructionof article

In your letteryou tell us that a reporter for the Houston Fact requested access to certain financial records of the Eethodist Hospital in Houston pursuant to article 1396-2.23A. V.T.C.S. The hospital refused the reporter's request, and the reporter asked your office to proseculx! the hospital pursuant to article 1396-2.238(D). You have asked our opinionabout the constructionof severaldifferent clauses in article 1396-2.23A. The TexasNon-l?sofit CorporationAct provides:
C. All records, books, and annual reports of the fimxcial activityof the corporationshallbe kept at the registered office or principal office of the corporation in this state for at least three yeaxs after the closing of each fiscalyear and sha1.l.

be available to the public for inspection and copying there during normal business hours. The corporationmay charge for the reasouable expanse of preparing a copy of a record or report.
D. A corporation that fails to maintain financial records, prepare an annual report, or make a f:lnancial

record or annualreport available to the :?nblicin the manner prescribed by this article :Ls

guiltyof a Class B misdemeanor.
Art. 1396-2.238(C), (D). however, Certain types of nonprofit corporations,

are excluded from the requirements of those provisions, includingreligiow institutionswhich shall be limited to

churches,ecclesiasticalor denominationalorganizations, or other establishedphysical places for

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worship at which religious services are the primary activity and such activitiesare regularly conducted.
Art. 1396-2.238(E)(4). Methodist Hospital relied on the exemption for religious institutions in refusing to grant the reporter's request for access to financialrecords. Inyour'opinion,Methodist Hospital is reading the exemption for religious institutions too broadly. Consequently, you ask what type of nonprc,fit corporations are exempt under that provision and whether Metbodist Hospital is within the scope of the 

### l xaxption. The language of the exemption for religicus institutiors raises problems of statutory construction. Religious institutions exempted under article 1396-2.238('S)(4),are limited to (1) churches; (2) ecclesiastical or dcnomiuat~.onalorganizations; and (3) other cstabllshed physical places fm worship at which religious services are theprimary activity and st.ch activitiessre regularlyconducted. The ordinary reading of the word "other" in the third category would require a construction o:Iboth "churches" and "ecclesiastical or denominational organizations" that would limit those categories to "establishedphysicalplacc!sforworship." That constructiondoes not create a particularproblem in regard to the category "churches." It does, however, put a troul~llesoma limitation ou the category "ecclesiasticalor denominationa3. organizations."
A brief submitted to us ou behalf of Methodist Hospital points out that sucha reading of "ecclesiasticalor denominationalorganizatious" would exclude the typical denominational organization. Webster's Ninth New CollegiateDictionary defines "denowinaticn~as a "religious organizationuniting in a single legal and administrative body a number of local congregations." Such au organization is usually not itself an "estrblishedphysicalplace forworship," but it usually'guides and supports worship services at other places. We think that by using the category "ecclesiastical or denominational organizations" the legislature clearly intended such organizations to coma within the scope of the exemption for religious institutions. The goal of statutory construction is to ascertain the inteotion of the legislature. State v. Terrell, 588 S.W.2d 784, 786 (Tex. 1979). To achieve the obvious legjyilative intent, the exemption for religious institutionsmust be give%.a construction somewhat broader than the one requiredby strictgramatical construction. See Statev. Terre11 (if legislative intent is clear, it must he fosed even .if the strict lauguage of the statute is not entirely consistentwith that intent).

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me brick submitted l'ous on behalf of Methodist Bospital encourages a construction XE the exemption for "ecclesiastical or denominational organizatime" that would include any nonprofit corporation "relating to" a religious institution. We do cot think that the legislatureintended the exemption tobe sobroad. All the words in a provision should be considered in attempting to ascertain legislative Yntent. State v. Terrell, 588 S.W.2d 784 (Tex. 1979). Although the phrase-ecclesiastical or de=ou&mtional organizations"Is vague, a reading of article 1396-2.238(E)(4)in its entiretymakes clear that the legislature intended the exenptiolrfor religious institutionsto te a narrow one. The phrase "ecclesiastical or denominatiooal organizations” appaars after the instruction that the definition of religioullinstitution "shall be limited to" certain things. The category "ecclesiasticalor der;ominatior,sl organizations" is sandwiched between twz other categories that are limited tc nonprofit corporationswhore primary function is toprovide, guide, or further religious worship. In other words, those categories are limited tc entities whose primary function is spiritual. Tbe phrase "ecclesiasticalor denominilt:ional organizaclons"must be read in that context. Cf. Tax Code 511.20 (defining "religious organization" as one "organized and operated primarily for the purpose of engaging in religiousworship orpromot,lng thr spiritualdevelopmentorwell-being of individuals"). Therefore, we think l%at the legislature intended the category "ecclesiastical or denominational organizations" to include only nonprofit corporationswhoric: primary function is toprovide, guide, or further religious worship e:ervices. The exemption was not intended for a nonprofit corporationthatmerely has an organizationalconnection with a religious institution, or that has a chapel on its premises if the main funci:ionof the nonprofit corporation is something other than providing, guiding, or furtheringreligiousworship. Whether any particular nonprofit corporation comes within the exemption in article 1396-2.23A(!E)(4) is a question of fact, which we are unable to decide, but it j..s highly unlikely that a hospital would be within the exemption.
Your second questio:l is whether the records the reporter requested are available to the public under article 1396-2.23A. The reporterasked for access 1:~~ the followinginformation: all bank certif,Lcatesof deposit purchased and sold by The Methodist Eospital in the last three years [including] the name of the bank where the CD's were bought, the date purchased, and the interest rate ar.dmaturity of each CD
. . . all land and equity transactions by The Methodist Flospital for t'Re last three years . . . all

p. 2184Honorable John B. Holmes, Jr. - Page 4 (~~-477)

expenses paid fcr work performed on or in the homes and residences of private individualswhich was paid for by The Methodist Hospital
. . . all expensesrelated **t,o**theDelhomme ConferenceCenter paid for by The Methodist Hospital for the last three years . . . all loans and advances to physiciansmade by The Methodist Hospital for the last three years [including] the terms of the loans and advances
. . . all minutes of hoard meetings regarding the financial activity of The Methodist Hospital for the last three years . . . [and1 all expenditures made by The Methodist Bospital for char,itable medical care performed at TheMethodistHospital.
The relevant sectionsof article 1396-2.238provide:

A. A corporation shall maintain current true and accurate financial records with full and correct entriesmade with respect to all financial transactions of the corporation, including all income and expenditures, in accordance with generallyaccepted accountingpractices.
B. Based on these records, the board of directors or trustees shell annually prepare or approve a report of the financialactivity of the corporation for the preceding year. The report must conform to accounting standards as promulgated by the American Institute of Certified PublicAccountants **and** must includea statementof support,revenue, and expenses and changes in fund balances, a statement of functional expenses, and balance sheets for all funds.
C. All records;,books, and annual reports of the financialactivityof **the** corporationshallbe kept at the registered office or principal office of the corporation in this state for at least three years after the closing of each fiscalyear and shall he awilable to the public for inspection and copying there during normal business hours. The corporationmay charge for the reasonable expense of preparing a copy of a record or report.
D. A corporation that fails to maintain financial record:%,prepare an annual report, or make a financialrecord or anrural report available

p. 2185Honorable John B. Holmes, L'r. -.Page 5 (JM-477)

to the public i,xthe n-amer prescribed by this article is guilt) of a Class F tiedemeanor. These provisionsmake clear that a nonprofit corporation that is not exempt from theprovisionsof article 1396-2.23Amust keep records of all its financial transxtions and that it must make those records available to the public. Most of the records the reporter requested are clearly records of f::nancialtransactions. Whether particular portions of minutes constl.tutefinancial records is a fact question that we cannot answer. Aho, the reporter's request for records of all expendituresmade for tbaritablemedical caremightpose problems. A hospital presumably pro\%des charitable medical care by providing treatment without expectation of payment. We cannot say whether generally accepted accountLngprinciples would require a hospital to keep a finaccial record of any such transaction. That is a question of fact, which we cannot answer. Also, we do not address potential conflicts that might arise between this certainrecords confidentic.1. statute and la& m&lug

SUMNARY The ~exemption,for religious institutions in article 1396-2.23A(E)(4),V.T.C.S., applies only tononprofit corporationswhose primary purpose is to provide, guide!, or furtherreligibusworship.

Very trulyyour , 

# Ll hfdl2.w

. w JIM MATTOX Attorney General of Texas
JACKHIGHTOWER FirstAssistantAttorney Gtizvral
MARY KELLER ExecutiveAssistant Attonwy General
ROBERT GRAY Special Assistant Attorney General
RICK GILPIN Chairman,Opinion Committee: Preparedby SarahWoelk AssistantAttorney General

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