Court Opinion

ID: 4139166
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:44:32.282263+00
Date Added: 2024-06-11T14:33:55.971473
License: Public Domain

THE   ATIT~~NEY GENERAL
                     OF TEXAS

Hon. A. P. AlIison
County Attorney
Kerr~Countg
Kerrville, Texas
Dear Sir:             Opinion'Ho. O-7148
                      Re: Hospital tax exemption.
       We acknowledge receipt of your request for "an opinion
as to whether or not the real estate upor).
                                          which the Hal and
Charlle Peterson Foundation proposes to construct a hospital
will be exempt from county and state taxes."
       Attached to your request ape statements of fact and a
copy of the 'Charter of Hal and Charlie Peterson Foundation"
of Kerrvllle, Texas. The purpose for which said corporation
was formed reads:
       f,
        . . . the support of ang,charitable or educational
    undertaking as atithorlzedbg~subdivision 2 of Article ~'
    1302 or the Revised Civil Statutes of the State of Texas
    of 1925. Such purposes shall'alvags be limited to and.
    exclusively for public charitable or educational~purposes
    in the State of Texas, and no part of the earnings or
    assets of this corporation shall ever inure to the benefit
    of any private shareholder or individual, and no part of'.
    the activities of this corporation shall be to carry on
    propaganda, or otherwise to attempt to influence legisla-
    tion.
      Your statement of facts sets out:
      %a1 and Charlie Peterson have set up a trust for
   charitable purposes to which a substantial part of their
   income has been directed, and which will be further endowed
   by them and ultimately from their estate. It is contemplbt-
   ea that then, or at least as tbs first major Investment or
   activity on the apart of this charitable trust, ~111 be the
   construction, equipment, and operation of a hospital located
   In or adjacent to Kerrville.
       "The location of this hospltal on the old St.
    Charles hotel ,propertgIs under consideration. It
    is preferred to construct a building of several
Hon. A. P. Allison,   page 2       O-7148

    stories and to make it large enough to accomodate
    further need until probable expansion of the hospital.
    For a few years, one or possibly two, stories of the
    building will be available for rent.
       'The trust is Irrevocable, title to the property
    and all authority of operation is and will be In the
    trustee, all income from rents and otherwise will go to
    the trust and be used in the operation of the hospital.
    It is understood the hospital will not be self-support-
    ing, It will be operated by the trust fund, the ~income
    from pay patients, supplemented with income from in-
    vestments by the trust. Arrangement will be made to
    provide hospitalization, medical and surgical facili-
    ties, insofar as the trust Is capable of extending
    same to patients who are unable to pay, it is contem-
    plated of aourse as to charitable patients that the
    patients of this comnmnitg and section will be given
    preference.
       "With this statement of the conditions existing and
    contemplated the following question is state: 'Will the
    hospital property, when erected and operating on the basis
    above mentioned, renting a minor portion of the building
    for a time, but with all rents going to the hospital and
    used for the purposes above mentioned, be tax ,exemptunder
    thenprovisionsof subdivision 7, of Article 7150, Revised
    Texas Statutes, and other {rovislons of the Constitution
    and Statutes of the State.
       "Referring to your letter of January 30th, 1946 in con-
    nection with the proposed Peterson Charitable Hospital,
    I am enclosing herewith a copy of the charter, which I
    believe you ~111 find furnishes all the desired information.
       "Also, I take this opportunity to correct a statement
    in my previous letter of the conditions contemplated. My
    original letter of January 25, 1946 mentions that a minor
    part of the hospital is to be rented. I was in error in
    stating that it would at first be a minor part. I believe
    a four story building Is contemplated, with two upper
    stories for the hospital and two lower floors to rent.
    The building will, of course, be under the management of
    the trustees, and when it 1s found necessary the add;ttonal
    space will, of course, be utlllzed by the hospital.
       The purpose for which said corporation was incorporated
does not govern the matter of tax exemption of Its property,
but it is rather the use thereof.
...

      Hon. A. P. Allison, page         3           O-7148

             In the case of City of Longview v. Markham-McRee Hemor-~
      la1 Hospital, X52 S.W. 26 1112, in the opinion of Judge German,
      Commissioner, adopted by the Supreme Court, the Court said:
             'Defendant corporation is admittedly a charitable
         lnaltution, and is engaged in thenoperation of the
         hospital In question as a charitable enttirprlse. Items-
         is clearly such an Institution as comes w%hln the pro-
         visions'of Se&Ion 2,of-Artlt?l&8 of thenVernofi'sAnn.
         St. Constitution. The application of that provislan~~
         of the Constitution is itivolvedhere. For purpose of
         clear understanding, that constitutional p~ovlsion has
         been paraphrased by the Supreme Court, Santa.Rosa-In-
         firmary v. City,:: 2; A+ntonio,259 S.W. 926,,99, in
         this language:             But the Legislature may, by
         general~laws, exempt from taxation * l + all balldings
         used exclusively and owned by * * * Institutions of
         purely public charity."" Morris v. Masons, 68 Tex. 698,
         5 S.W. 519; City of Houstan v. Benevolent Ass'n, 111
Tex. 191, 230 S.W. 978.
             I,
              . . . . .
            Ill
              . . . the Constitution requrrea the property, aa a
         prerequisite to its right to exemption, to be exclusively
         used by the charitable institution, It is appaFent;   lf~~any
         part of it is rented out and the relation of landlord and
         tenant created, that very fact would necessarily destroy
         the exclusive use necessary to be retained by the owner to
         bring its property within the plain terms of the Conatitu-
         tion, and it has been therefore held, as it was in,that
         case, and tn State v. Settegast (Tex. Corn.Appi) 254 S.W.
925, that the leasing of all or any part of a charitable
         institution's property to those not themselves engaged ia
         a wholly charitable work, or the occupancy of even a‘part
         of the property by others under what amounts to an equiva-
         lent situation * l *, destroys the exempt character of the
         property, and it is-plain that in those cases there could
         have been no other holding.
          ~' ~~NtThe~donst'ituti'nsl'r~equlrem~nt
                                               1% two-fold;
          thg property liazatbe-ovned by-the ~organi@atIon '~'"
          claiiing'tiieeXemptIon';it muatbe~ escluiSvv‘dlyused
          bg ~the org&niziitj.tin,
                                &a dlstm~ish~-~6ie~h~'iia~t~al
         tlse~ by it   and a partial       mse by others,   whether   the
          others pay rent or not.'
             '"Thesequotations reflect the.'consistenthold+
          inga ,ofour courts. Morris v,,tiaona;~68 T&X. 698,
          703, 5 3.X. 519; City of Houston v. Scottish Rite
HOW‘.A. P. Allison, page 4           O-7148

  Ass'n,~lll Texa 191;~230 S.,W;978; State v. Settegast,
  Tex:,Corn..          3.W:.925: Benevolent & Protective ,
             App.. '254~:
  Grder.of Elka Lodge v. Cityof Houston, Tex, Civ. App.,
   44 3,W. 2d 488, writ refused."
                        ,/
      Also sesthe .Oase of Markham v. City of Longview, et al,
191
  S.X.  2a 695, error refused.                        t
       Iiiitlewofthe above-authorities and the facts stat@
in'your ,rHjuest'itinsthe.opin~1oi-i
                                 'of'thisdepartment'that'then .~
hospital property, when erectea'ana operating on the basis above
mentioned, wil.1not be ,taxexempt.
                                Yours very truly
                 .,.'
       .a, :,_,, ,~,,j       ATTORNRYGEWERAL   OF TEXAS
        " '~    :' :
  s,
                               By s/Jos. V; Frnka
                                    Jos.'K Frnka
                                    Asslstant
JVF:AMM:wc
                  ,~,
APPRO~MUR    22',1946    .':
s/GroverSellers:   "
ATTORNEYGENERALOF'TlSAS
         i
Approved Oplnlon Committee By s/BWB Chairman