# HE *a **ORNF,Y** GENERAL OF%'EXAS

April 25, 1958
Hon. GeorgeR. Killam CountyAttorney scurry county Snyder,Texas

Dear Mr. Killam: OPINION NO. WW-420
Re: Whether oil, gas and mineral

properties

held in trust for Texas BaptistChildren's

Home for statea

purposes

are exempt from countyad valorem

taxes.
In your request for an opinionof this office on the above captioned

matter,

you have advisedus of the following facts. Dora E. Cunningham

devisedall of her right, title and interestIn and to the oil, gas and other mineralsin and under all of Section613 of Block 97 of the East part of Section653 In said Block 97, H. & T.C. Ry. Co. Survey in Scurry County, Texas, in trust for a statedperiod (which periodhas not expired) for the benefit of the Texas BaptistChildren's Home, located

at Round Rook, Texas.
We quote the following excerptfrom the will:
"11. The incomeand principal of the Trust estate shallbe administered

and distributed

as follows: "a) During the existence of the Trust, there &all be paid to or for the benefit of the TEXAS BAPTIST Cm's HOME, located at Round Rook, Texas, 80 much of the principal

or income of the Trust as the Trustees in the exeroiae

of their sole discretion shall determine. I hereby state that the primary purposesfor which this Trust Is established are "1) To providefunds for the erection and maintenance

of necessary

buildings

and the purchase

and maintenance

of necessary

equipment

for the operation

of said Texas BaptistChlldren'a Home; "Ii) To providefunds for the care and maintenance

of the grounds of said Texas Baptist Children"8

Home; "iii) To providefunds for the purchase of additional

grounds

needed In the operation of said Texas BaptistChildren's

Horns,-.. _

Hon. GeorgeR. Killam,page 2, (WW-420)

and I direct that the exercise of their discretion in this respect shallbe in conformity with the foregoing purposes. "b) Any funds which the Trusteesin their sole discretion

shall determine

are not necessary

for the purposes

expressed

in subparagraph

(a) of this paragraph 11 of this ARTICLE II may be paid by the Trusteesin their sole discretion to any one or mom of the Southern Baptistreligious, charitable,

sciantiffo,

literary

or educational

organizatfons

located in the State of Texas. "0) In limitation

of all provisions

contained

in this my Last Will and Testament with respect to the Tmat herein created, I expressly

direct that: "1) All funds,propertfss and assets of the Trust shallbe used for religious, oharita'ble,

solentifio, literary

or educational

purposes

or for the prevention of cruelty to children

and for no otherpurposes, provided,

however,

that all funds,properties and assets shall be used wfthin the Stats of Texas exoP~sivsly for such purposes. s ."

11

. . D "I.2 * The Trust heroin created shall tem!.nate on she date which is the tweniy-fLrst anniversaq of ,$he

death c~f the last survivor

of MAURINE

MYRTIS AWFAS,MATTE ROSS CONSLEY and DANIELM. GIBSON,and all prir,cipa: and undistributedincome then remainLugin Trust shallbe imnsdiately distributed to the Board of Trustees of the Texas Baptrst ChiL3refi's Home of Round Rook, Texas, for tie 'use by said Boar6 Yor the banefit of said Texas BaptistChildren's Home in conformity

wftii the purposes

hereinabove

expressed

in s¶graph {aj of paragraph

11 of this ARTICLE II.. If, on the date of such termination,

the said Texas BaptistChiLLron's Home fs no longer in sxistsnce, all principal

and undistribnted

income than remainingin Trust shallbe immediately distrsibuted

to the RAEIST FOUNDATION OF TEXAS, Dallas,Texas, to be used for such religious, oharftable,

scientific,

literary

**or** educational

purposes

within the State of Texas as the governing body of such BaptistFoundation of Texas shalldetermine." The trust propertyis presently produof~?

of1 and gas, and you ask whether the mineral Interest held by the Trustees,is exempt from countyM:'aloPem taxes.Hon. GeorgeR. Killam,page 3, (WW-420)

Article

VIII, Section 2 of the Constitution of the State of Texas, has empowered the Legislature

to exempt from taxation certain enumerated

properties,

among which are "-
. . institutfons of purely public charity." In pursuance to this particular

constitutional grant, the Legislature enactedSection 7 of Article 7150,V.C.S. Article 7150 reads, in part, as follows: "The following

propertyshallbe exempt from taxation, to-wit:

"7. Public charities. I All buildings

belonging

to institutions

of purelypublic 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 profitsand **all** moneys and credits aru appropriated by such institutions solelyto sustainsuch institutions and for the benefit of the sick and disabled membersand their families

and the burial of the same, or for the maintenance of persons

when unable to providefor themselves, whether such personsare members of such institutions or not. An institution

of purelypublic charity under this artiole is one which dispenses its aid to its membersand others in sickness

or distress,

or at death,

withoutregard to poverty or riches of the recipient, also when the funds,property and assets of such institutions are placed and bound by its laws to relieve, aid and administer in **any** way to the relief of its members when in want, sickness and distress, and provide

homes for its helpless snd dependent

membersand to educateand maintain the orphansof its deceased members or otherpersons."
It is clear that the charitable trust under consideration is an institution

of purelypublic charity wfthin the meaning of Section2 of Article VIII of the Texas Constitotion and Section 7 of Article 7150,V.C.S. State v. Settegast, 254 53-w.

925 (Comm. APP. 1923)

0 We, therefore,

pass to a consider&&m of whether exemption

may be accorded

the propertyin qusstlon under the facts in this case.
In Morris v. Lone Star Ch. Ro. 6, R.A.M., 68 Tex. 697, 5 S.W., 519 (1887)the courtheld that under Section2 of Article VIII of the Constitution,

the bgislature could exempt from taxation the buildings

of "institutions

of purelypublic charity" but that such authorization

extendedonly to such buildings aud groundsas were used exolusively

and owned by such institutions and that exclusive use meant the actual and directuse for the purposes of the charitable association.- ^.

Hon. GeorgeR. Killam,page 4, (WW-420)

In the S&t= case,

_ -. ^ supra,the courtheld that the trustees owea tax08 on oertaln properties

which wore a psrt of the Hermsnn Hospital

Estate. In that case the will had established e. trust far the purposeof building and maintaining

a charitable

hospital. The trustees

were conducting

the businessof -aging the property and constructing

the hospital

under the name of the H-nu Hospftal Estate. The propertyin questionInvolvedsix rent houses;and all rents and incometherefrom were to be uasd solelyto support and maintainthe Hornann Hospital. The courtpointed out that the hospital itself

was to be built on other property and that the property in question was not being used directlyin connection ng and operation

of the hospital 'but orwith the bulldi In Its maintenance.
In Hedgecroft

v. City of Houston,150 Tex. 654, 244 S.W. 2d 612 (1952).

the court was concerned wl,th ,ths Pollowina

facts. The H~dg&~ft'Corporationhad acquired title to the propertyin question

through

gift and oonveyar~cs on December

30, 1948. Before that tfme the corporation had agreedwith a construction company to make the necessary alterations

and repairs of the property to fit It for the operation of a hospital,

clinicand training school; and beginnfng

with the week endingJuly 7, 1948, and oontlnulng until December29, 1948, the construction company

had been preparing plans for repairsand alterations. From August 1, 1948, through December27, 1948, a blue print compav had farnfshed numinous blue prints concerning the contemplated

repairs. Prior to the corporation's

acquisition

of tha prapperty

fn ques-',jcln

and immediately thereafter

includl.ug

January I, lpkp, the corporation was engaged in planning

and znaklng

the necessary

repaira. The remodsliag was
to move on to the p&:2:: completed

ou May L3 to an extent whit!! &lowed tbs clinic ; and tts ollnit:

had since 'been.

o~~ntfnuously in operation

there. The Cii;y

of Housrrxant the B:onstonIndependentSchoolDis,triot Instituted

a suit for taxes for t&e year 1949.
It wa8 contended

that there was no actual use of the premises within the meaning of the oonst:ftation Secanse ,the

bu:lding

was not then actually

being used for charitable purposes, The court reviewedthe following Texas cases deal.l.ng ,#it.h the requzrement of exolusive

use: State v. Settegast, 254 S.W. 923 (Conrm. App. 1% Morris v. Lone St& Chapter No. 6 Royal Arch Masons, 68 Tex. 698, ;8Sg.;T 519; B.P.O.E.LodgeNo. 151 v, City of Houston, 44 S.W. 2d ex. Civ. App., 1g319error re%), and distinguished these on the ground that in each case third parties we're occupying

all or a portion of the premises.
In holdingthat tna propertyin qUeStlOU was exempt, the court reviewed

decisions

in other States in which exemption had been accordedon the basis that if the subsequent use of the premises1

. -

Hon. George

R. Killam,page 5, (w-420)

created

a tax exempt situation then & uee which wae confined to readying them for such purpose established **a** right to exemption.
At page 636 the court said: ,I

. . D The work proceeded until it **wa.8** completed on May 13, 1949, and since that time the hospital and cliniohave been operated

a8 8. public charity. The facts alleged show, in
(Emphasis

supplied.) The court in allowing the exemption

recognized

the well settled rule that exemptions from taxation

are not favoredand should be strictly

construed,

but stated that a construction of the acts alleged in the petition a8 not amounting

to uee would be unreasonably

strictand narrow.
We think it evidentfrom these decisions that the exemption accordedto charitable instltutlons

extendsonly to the buildings and groundsused in the actual conductof the charitable purppses for which the institution Is operated. We therefore have concluded that the property in questionis not exempt from countyad valorem tsxee; and you are accordingly so advised." SUMMARY Oil, gas and mineral interests held in trust for the Texas Baptist Chlldrenss Home and for other charitable

purposes

aze not exempt from countyad valoremtaxes. Yo;lrs very truly
WILL WITSON Attorney

Geaercsl

of Texas
MMP/bn APPROVED: OPINION COMMITTEE George Pi Blackburn, Chairman 8. ~&lark

ticLaughlin &gYFyg~r RJJVCEWED

FOR T@.ATTORNEY GENERAL > hy~ W.~:v,

Lieppert