HE *a ORNF,Y GENERAL 

OF%'EXAS 

April 25, 1958 

Hon. George R. Killam 

County Attorney 

scurry county 

Snyder, Texas 

Dear Mr. Killam: 

OPINION NO. WW-420 

Re: Whether oil, gas and 

mineral properties held 

in trust for Texas 

Baptist Children's Home 

for statea purposes are 

exempt from county ad 

valorem taxes. 

In your request for an opinion of this office on the above 

captioned matter, you have advised us of the following facts. Dora 

E. Cunningham devised all of her right, title and interest In and 

to the oil, gas and other minerals in and under all of Section 613 

of Block 97 of the East part of Section 653 In said Block 97, 

H. & T.C. Ry. Co. Survey in Scurry County, Texas, in trust for a 

stated period (which period has not expired) for the benefit of 

the Texas Baptist Children's Home, located at Round Rook, Texas. 

We quote the following excerpt from the will: 

"11. The income and principal of the Trust estate shall be 

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 purposes for which this 

Trust Is established are 

"1) To provide funds for the erection and 

maintenance of necessary buildings and the purchase and 

maintenance of necessary equipment for the operation of 

said Texas Baptist Chlldren'a Home; 

"Ii) To provide funds for the care and 

maintenance of the grounds of said Texas Baptist 

Children"8 Home; 

"iii) To provide funds for the purchase of 

additional grounds needed In the operation of said Texas 

Baptist Children's Horns, 
-.. _ 

Hon. George R. Killam, page 2, (WW-420) 

and I direct that the exercise of their discretion in 

this respect shall be in conformity with the foregoing 

purposes. 

"b) Any funds which the Trustees in 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 Trustees in 

their sole discretion to any one or mom of the Southern 

Baptist religious, 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 shall be used for religious, oharita'ble, solentifio, literary or educational purposes or for the prevention of cruelty to children and for no other purposes, 

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 DANIEL M. GIBSON, and all prir,cipa: and undistributed income then remainLug in Trust shall be 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 Baptist Children'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 Baptist ChiLLron's Home fs no 

longer in sxistsnce, all principal and undistribnted income 

than remaining in Trust shall be 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 Baptist Foundation of Texas shall determine." 

The trust property is presently produof~? of1 and gas, and you 

ask whether the mineral Interest held by the Trustees,is exempt from 

county M:'aloPem taxes. 
Hon. George R. 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 enacted Section 7 of Article 7150, V.C.S. 

Article 7150 reads, in part, as follows: 

"The following property shall be exempt from taxation, to-wit: 

"7. Public charities. I All buildings belonging to 

institutions 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 aru 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 persons are members of such institutions or not. An 

institution of purely public charity under this artiole is 

one which dispenses its aid to its members and others in 

sickness or distress, or at death, without regard 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 members and 

to educate and maintain the orphans of its deceased members 

or other persons." 

It is clear that the charitable trust under consideration is 

an institution of purely public charity wfthin the meaning of 

Section 2 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 property in 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 court held that under Section 2 of Article VIII of 

the Constitution, the bgislature could exempt from taxation the 

buildings of "institutions of purely public charity" but that such 

authorization extended only to such buildings aud grounds as were 

used exolusively and owned by such institutions and that exclusive 

use meant the actual and direct use for the purposes of the charitable association. 
- ^. 

Hon. George R. Killam, page 4, (WW-420) 

In the S&t= case, 

_ -. ^ supra, the court held 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 purpose of building and maintaining a charitable hospital. The 

trustees were conducting the business of -aging the property and 

constructing the hospital under the name of the H-nu Hospftal 

Estate. The property in question Involved six rent houses; and all 

rents and income therefrom were to be uasd solely to support and 

maintain the Hornann Hospital. The court pointed out that the 

hospital itself was to be built on other property and that the 

property in question was not being used directly in connection 

with the bulldi ng and operation of the hospital 'but orIn 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'Corporation had acquired title to the property in 

question through gift and oonveyar~cs on December 30, 1948. Before 

that tfme the corporation had agreed with a construction company 

to make the necessary alterations and repairs of the property to 

fit It for the operation of a hospital, clinic and training school; 

and beginnfng with the week ending July 7, 1948, and oontlnulng 

until December 29, 1948, the construction company had been preparing 

plans for repairs and alterations. From August 1, 1948, through 

December 27, 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 Housrrx ant the B:onston Independent School Dis,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 

reviewed the 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. Lodge No. 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 holding that tna property in qUeStlOU was exempt, the court 

reviewed decisions in other States in which exemption had been 

accorded on the basis that if the subsequent use of the premises 
1 . - 

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 clinio have 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 favored and should be 

strictly construed, but stated that a construction of the acts 

alleged in the petition a8 not amounting to uee would be unreasonably strict and narrow. 

We think it evident from these decisions that the exemption 

accorded to charitable instltutlons extends only to the buildings 

and grounds used in the actual conduct of the charitable purppses 

for which the institution Is operated. We therefore have concluded 

that the property in question is not exempt from county ad 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 county ad 

valorem taxes. 

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