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?:cil 16, 1986 

Booorable John B. 

District Attoruay 

201 Fauuin, Suite 

Houston, Texas 77002 1396-2.23A(E)(4), V.T.C.S. 

Dear Mr. Holmes: 

'L~lmes, Jr. Opinion No. m-477 

200 Re: Construction of article 

In your letter you 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 opinion about the construction of several different 

clauses in article 1396-2.23A. 

The Texas Non-l?sofit Corporation Act provides: 

C. All records, books, and annual reports of 

the fimxcial activity of the corporation shall be 

kept at the registered office or principal office 

of the corporation in this state for at least 

three yeaxs after the closing of each fiscal year 

and sha1.l. be available to the public for inspection and copying there during normal business 

hours. The corporation may 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 annual report available 

to the :?nblic in the manner prescribed by this 

article :Ls guilty of a Class B misdemeanor. 

Art. 1396-2.238(C), (D). 

however, 

Certain types of nonprofit corporations, 

are excluded from the requirements of those provisions, 

including 

religiow institutions which shall be limited to 

churches, ecclesiastical or denominational organizations, or other established physical places for 

p. 2182 
Honorable John B. Holmes, Jr. - Page 2 (JM-477) 

worship at which religious services are the 

primary activity and such activities are 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 

financial records. In your' 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~.onal organizations; and (3) other cstabllshed physical places fm worship at which religious services are 

the primary activity and st.ch activities sre regularly conducted. The 

ordinary reading of the word "other" in the third category would 

require a construction o:I both "churches" and "ecclesiastical or 

denominational organizations" that would limit those categories to 

"established physical placc!s for worship." That construction does not 

create a particular problem in regard to the category "churches." It 

does, however, put a troul~llesoma limitation ou the category "ecclesiastical or denominationa3. organizations." 

A brief submitted to us ou behalf of Methodist Hospital points 

out that such a reading of "ecclesiastical or denominational organizatious" would exclude the typical denominational organization. 

Webster's Ninth New Collegiate Dictionary defines "denowinaticn~ as a 

"religious organization uniting in a single legal and administrative 

body a number of local congregations." Such au organization is 

usually not itself an "estrblished physical place for worship," 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 

institutions must be give%. a construction somewhat broader than the 

one required by strict gramatical construction. See State v. Terre11 

(if legislative intent is clear, it must he fosed even .if the 

strict lauguage of the statute is not entirely consistent with that 

intent). 

p. 2183 
-- Honorable John B. Holmes, Jr. - Page 3 (m-477) 

me brick submitted l'o us 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 legislature intended the exemption to be so broad. 

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 

entirety makes clear that the legislature intended the exenptiolr for 

religious institutions to te a narrow one. The phrase "ecclesiastical 

or denominatiooal organizations” appaars after the instruction that 

the definition of religioull institution "shall be limited to" certain 

things. The category "ecclesiastical or der;ominatior,sl organizations" 

is sandwiched between twz other categories that are limited tc 

nonprofit corporations whore primary function is to provide, guide, or 

further religious worship. In other words, those categories are 

limited tc entities whose primary function is spiritual. Tbe phrase 

"ecclesiastical or 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 

religious worship or promot,lng thr spiritual development or well-being 

of individuals"). 

Therefore, we think l%at the legislature intended the category 

"ecclesiastical or denominational organizations" to include only 

nonprofit corporations whoric: primary function is to provide, guide, or 

further religious worship e:ervices. The exemption was not intended 

for a nonprofit corporation that merely has an organizational connection with a religious institution, or that has a chapel on its 

premises if the main funci:ion of the nonprofit corporation is something other than providing, guiding, or furthering religious worship. 

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 

reporter asked for access 1:~~ the following information: 

all bank certif,Lcates of 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.d maturity of each CD . . . all 

land and equity transactions by The Methodist 

Flospital for t'Re last three years . . . all 

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

expenses paid fcr work performed on or in the 

homes and residences of private individuals which 

was paid for by The Methodist Hospital . . . all 

expenses related t,o the Delhomme Conference Center 

paid for by The Methodist Hospital for the last 

three years . . . all loans and advances to 

physicians made 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 

The Methodist Hospital. 

The relevant sections of article 1396-2.238 provide: 

A. A corporation shall maintain current true 

and accurate financial records with full and 

correct entries made with respect to all financial 

transactions of the corporation, including all 

income and expenditures, in accordance with 

generally accepted accounting practices. 

B. Based on these records, the board of 

directors or trustees shell annually prepare or 

approve a report of the financial activity of the 

corporation for the preceding year. The report 

must conform to accounting standards as promulgated by the American Institute of Certified 

Public Accountants and must include a statement of 

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 financial activity of the corporation shall be 

kept at the registered office or principal office 

of the corporation in this state for at least 

three years after the closing of each fiscal year 

and shall he awilable to the public for inspection and copying there during normal business 

hours. The corporation may 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 financial record or anrural report available 

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

to the public i,x the n-amer prescribed by this 

article is guilt) of a Class F tiedemeanor. 

These provisions make clear that a nonprofit corporation that is 

not exempt from the provisions of article 1396-2.23A must 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::nancial transactions. Whether particular 

portions of minutes constl.tute financial records is a fact question 

that we cannot answer. Aho, the reporter's request for records of 

all expenditures made for tbaritable medical care might pose problems. 

A hospital presumably pro\%des charitable medical care by providing 

treatment without expectation of payment. We cannot say whether 

generally accepted accountLng principles 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 

certain records 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 

to nonprofit corporations whose primary purpose is 

to provide, guide!, or further religibus worship. 

Very truly your , Ll hfdl2.w . 

w 

JIM MATTOX 

Attorney General of Texas 

JACK HIGHTOWER 

First Assistant Attorney Gtizvral 

MARY KELLER 

Executive Assistant Attonwy General 

ROBERT GRAY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee: 

Prepared by Sarah Woelk 

Assistant Attorney General 

p. 2186