NEY GENERAL 

0F TEXAS 

September 9, 1966 

Honorable Harold Vlttitoe Opinion No. C-75% 

County Attorney 

Brooks County Courthouse Re: Exemption from 

Falfurrias, Texas ad valorem taxes 

of properties 

belonging to The 

Dear Mr. Vlttitoe: Ed Rachal Foundation 

We have been furnished with several letters and briefs 

in connection with your request on the above captioned matter. 

We quote the following excerpt from one of these briefs. 

"The properties of the Foundation 

passed under the Last Will and Testament 

of Ed Rachal, Deceased, which has been 

duly probated In the County Court of 

Brooks County, Texas. The Foundation 

was chartered under the Won-Profit Corporation Act for the State of Texas on 

July 29, 1965. There have been no past 

charitable activities of th F a ti0n 

%I view of Its newness, howkeytte 

lsnned future activities of the Foundapublic library area of public charity, 

and although present plans of the Foundation are indefinite, they will be within 

The limits of its purposes as set forth 

In its Articles of Incorporation. A 

copy of its Articles of Incorporation is 

enclosed for your use, As indicated in 

the letter to the various taxing authorities The Ed Rachal Foundation has been 

held to be exempt from Federal Income 

Taxes under the provisions of Section 

501 a as a corporation described in Section 

501 11 c (3) of the Internal Revenue Code 

inasmuch as the corporation is organized 

and operated exclusively for charitable 

purposes. For the same reason the Office 

of the Comptroller of Public Accounts for 

the State of Texas has ruled The Ed Rachal 

Foundation exempt from Franchise Taxes as 

a p'urely public charity." (Emphasis Supplied.) 

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Honorable Harold Vittltoe, Page 2 (c-758), 

At the outset, the fact that The Foundation has been 

held to be exempt from federal income taxes and has been accorded an exemption from franchise taxes by the Comptroller, 

is not determinative of exemption from ad valorem taxes. 

Section 2 of Article VIII of the Constitution of the State of 

Texas empowers the Legislature to exempt; from taxation certain 

enumerated properties, among which are e .institutions of 

purely public charity." Section 7 of Article 7150, Vernon's 

Civil Staututes, which was enacted in pursuance to the foregoing Constitutional authorization, reads as follows: 

"Public charities. - 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 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 s&me, 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 article 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 

and dependent members and to educate and 

maintain the orphans of its deceased members 

or other persons." 

We have been furnished with considerable information 

about properties, both real and personal, located in Brooks, 

Cameron, and Webb Counties, Texas, as well as with certain 

arguments that the use to which said properties are presently 

being put justifies the allowance of charitable exemptions. 

Since we do not agree, we do not deem it necessary to take 

up the uses of said properties at this time, since, as stated 

in the above quoted portion from one of the briefs, there 

have been no charitable activities by the Foundation in view 

of its newness and, at the moment, there are only planned 

-3646- 
. 

Honorable Harold Vittitoe, Page 3 (c-758) 

future charitable activities, the precise nature of which 

have not been determined. 

Numerous decisions of our courts clearly establish 

the rule that in order to gain the exemption granted by Section 7 the charitable institution must not only own the property for which exemption is sought, but must, in addition, 

Numerous decisions of our courts clearly establish 

the rule that in order to gain the exemption granted by Section 7 the charitable institution must not only own the property for which exemption is sought, but must, in addition, 

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

for charitable purposes. Santa Rosa Infirmary Infirmary v. City of 

San Antonio, Antonio, 259 S.W. 926 (T 24). enevolent 

and P rotec&ve rotec&ve Order of Elksec: Elksec: CT?y oPfPiiouston: oPfPiouston: 84 S.W. 26 

(T CL A 1931 error ref )* Ci ty of Longview v. 

Markh~~cRe~'Me%ial Markh~~cRe~'Me%ial &pital, &pital, 137 Gex. 178 152 S W 26 

1112 (1941)' Markham Hospital v. City of LongGiew,~l$l'S.W. 

26 695 (Tex: mv. App. 1945, error ref.} 

The case of Hedgecroft v. City of Houston, 150 Tex. 

654, 244 S.W. 26 632 (1952) demonstrates what facts are sufficient to constitute 'actual use.' The court was there concerned with the following facts. The Hedgecroft Corporation 

had acquired title to the propert 

$ 

in question through gift 

and conveyance on December 30, 19 8. Before that time 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 beginning with the week ending July 7, 1948, and 

continuing until December 29, 1948, the construction company 

had been pre aring plans for repairs and alterations. From 

August 1, 19 ft 8, through December 27, 1948, a blue print company 

had furnished numerous blue prints concerning the ccntemplated 

repairs. Prior to the corporation's acquisition of the property in question and immediately thereafter including January 

1, 1949, the corporation was engaged in planning and making the 

necessary repairs. The remodeling was completed on May 13, 

1949, to an extent which allowed the clinic to move on to the 

premises; and the clinic had since been continuously in operation there. The City of Houston and the Houston Independent School District instituted a suit for taxes for the yerr 

1949. 

In holding that the property in question was exempt, 

the court reviewed decisions in other States in which exemption had bean accorded on the basis that if the subsequent use 

of the premises created a tax exempt situation then a use 

which was confined to readying them for such purpose established a right to exemption. 

At page 636 the court said: 

-3647- 
Honorable Harold Vittltoe, Page 4 (C-758) 

I, The work proceeded until it was compieied on May 13, 1949, and since that time 

the hospital and clinic have been operated 

as a public charity. The facts alleged 

show, In our opinion, an actual and direct 

use of the property on and prior to January 

1949 9 f or the charitable purpose." (Emphasis 

1, 

. __ 

suppliZE)- 

The most recent case involving the exemption of properties belonging to a charitable foundation is David Graham 

Hall Foundation v. Highland Park, et al. 371 S.W. 2d '(62 

(T Ci A 1963 

co~~erne~'wi~~'the 

f I The court was' 

f~lE~:~~g'~a~~s",~'~;,Ced at page 765 of 

the opinion: 

"The David Graham Hall Foundation was 

established in 1940. Its corporate charter 

recites that it was created for the 'support 

of any benevolent, charitable, educational 

or missionary undertaking.' Over the years 

it has engaged In many laudable activities, 

among them the study, prevention and cure 

of communicable diseases, the establishment 

of blood banks, etc. 

"The Foundation is sole owner of the 

property in question, Lot 16 of Block 87, 

Highland Park 4th Installment. The dimensions of the lot are 250' by 250'. On it 

four buildings are located: a main building and three residences. 

"The main building houses the Foundation's administrative offices and laboratories. This building also houses the administrative offices of the David Graham 

Hall Trust, a related but separate organization. The Trust owns many properties 

the revenue from which is devoted to the 

support of the Foundation. 

. . . 

"Of the three residences on the property, 

two of. them are rent houses, the revenues from 

which are devoted to the Foundation's actiirities. The third residence Is known as the 

caretaker's house. This house has also been 

rented form indet,ermina+e period for the 

sum of $50.00 per month. During World War 

-3648- 
Honorable Harold Vittltoe, Page 5 (C-758) 

II these houses were occupied ~j.n part at 

least at a nominal rental by war refugees 

who performed services for the Foundation.” 

The court held that the property of the charitable 

organization was not exempt from the payment of ad valorem 

taxae since the particular property in question had not 

been used exclmeively for charitable purpoeee. At page 764, 

the court stated: - 

“As was pointed out by our Supreme 

Court recently it will not suffice for 

one to show that he cornea within the 

statutory proviaiona for tax exemption 

if the facts do not bring his caea within the requirements for tax exemption 

aa laid down in Art, VIII, Sac. 2 of 

our State Constitution. River Oak8 

Garden Club v. City of Houston, Tex. 

370 S.U. 26 851. . . . 

. . . 

n 

is two-f&r 

The aonrtitutional requirement 

the property must be owned 

by the organization alaiming the examption; and it muat be exclurmively used 

by the organization, ae distinguished 

from a partial uaa by it and a partial 

use by others whether the others pay 

rent or not. A th itiee, omitted -7 

. . . (J&ha6is”th%e) 

It is our opinion that under the decisions above cited 

none of the properties belonging to the Foundation are now 

exempt from ad valorem taxes, because said properties are 

not presently being devoted to the actual, direct and exclusive charitable use requisite to exemption. 

SUMMARY 

The properties belonging to The 

Ed Rachal Foundation are not now 

exempt from ad valorem taxes because said properties are not 

presently being devoted to the 

-3649- 
Honorable Harold Vittitoe, Page 6 (C-758) 

actual, direct and exclusive 

charitable use requisite to exemption. 

Yours very turly, 

WAGGONRRCARR 

Attorney General of Texas 

MMcGP:lr 

APmOVED: 

OPINION COMMITTEE 

W. V. Geppert, Chairman 

Arthur Sandlin 

Jack Goodman 

John Pettit 

Pat Bailey 

APPROVED FOR THE ATTORNEX GENERAL 

BY: T. B. Wright 

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