Court Opinion

ID: 4135433
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:02:13.537616+00
Date Added: 2024-06-11T14:34:22.014985
License: Public Domain

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Mr. Jules Damiani, Jr e         Opinion No. C-27
Criminal Metrict Attorney
Galve~stonCounty                Re:   Whether the Moody House is
Galveston, Texas                      exempt from the payment of
                                      ad valorem taxes under the
Dear Mr. Damiani:                     stated facts.
        You have requested our opinion a8 to whether or not
the property set out in your statement of facts Is exempt
from ad valorem taxes. The following facts are copied from
your letter:
               “The property originally known as the
            Buccaneer Hotel, including the Buccaneer
            Cabanas and Pool was acquired by The
            Methodist Homes for Older People, a
            charitable corporation Incorporated
            under the laws of the State of Texas,
            on the 29th day of December, 1961, as
            a gift from The Moody Fogdation, and
            commenced operating it as a home for.
            older people on the 1st day of Januaryp
            1962 q

               “The Methodist Homes for Older People
            was required to take title to the property
            subject to any and all leases and rental
            contracts then in existence. There were
            three (3) outstanding leases for store or
            office space that are still in effect and
            from which the pres&it owner receives a
            small rental D All of the rent8 received
            ftiomthese three (3) tenants Is by action
            of the Board, befng plaoed In a special
            ‘Health Care Trust Fund’ and is used
            solely for health and welfare care of
            residents of Moody’ Abuse 0
               “One of the rental units la oocupled
            as a barber shop which Is being operated
            almost entirely for the convenience of
            the residents of Moody House. The other

                             -109-
Mr. Jules Damianl, Jr., Page 2 (No. C-27)

          rental units are a small gift shop and
          the OalveStOn MerchaantsAssociation, all
           of which have leases that were In effect
          at the time the property was acquired and
          as above stated, the .present owner was
          ~requlred to accept the title subject to
          these leases. The total reAta1 received
           from these units amounts to only $375.00
          per month.
             "This property la malntalAed aAd operated
          as a home for older people and offers full
          custodial and Aurslng care. Some of the
          present residents are Aot ln a financial
          posltlon to pay for their entlre care and
          maintenance which Is being subsidized from
          other fuAda. Moody House IA 1962, paid an
          average of approximately $l,OOO.OO per
          reslderatas subsldlzatlon. It will con-
          tinue to be the policy to accept residents
          at Moody House who will require some sub-
          sldlzatlon for thelr care and support.
              "Moody House has been licensed by the
           State Health Department for a nursing
          'home and this-service Is now being offered
           with ffve (5) nurses being provided. The
           care being offered to PesideAts of Noody
           House includes lodging, meals, medical
           and ~~rsl~g service.
             'The Nethodlst Homes for Older People
          1s incorporated under the Texas Nonptioflt
          Corporation Act for charitable and benevo-
          lent purposes, Moody .House,operated by
          said corporation, la a project of The Texas
          Conference of The Methodlst Church, and 1s
          operated by an admiAlstratOr aAd staff under
          the supervlslon of aA Executive Steering
          Committee appointed by the Board of Dlrec-
          tors of sald corporatloA aad approved by
          the Annual C6AfereAce of The Methodlst
          ChurchD
              "The AdmlAlStPRtOr and SteerlAg Commltt&e
           have attempted to determflaewhat It will cost
         : to operate Moody House. The charges being
           made to resldelntsare expected to underwrite
           the cost of furnlshlng the residents' living
           quarteras all meala, a complete staff lncludlng

                            '-B10-
Mr. Jules Damianl, Jr., Page 3 (No. C-27)

          an administrator, a full time Director of
          Social Activities, a resident doctor, a
          sufficient nursing staff which Includes
          registered nurse8 and licensed vocational
          nurses.
             “There la AO admission fee or a fixed
          amount for admission to Moody House. In
          each case the matter of the amount to be
          paid by the resident Is negotiated and a
          mutual agreement as to the amount to be
          paid by the Individual Is determined from
          his needs and ability to pay. It Is not
          expeoted that every person will underwrite
          the cost of his or her care, and It Is not
          expected that any person will be In such
          financial circumstances as to require full
          financial aid D All funds received from
          residents, rentals or otherwise, will be
          used for the care and maintenance of the
          residents, and that such funds will be
          from time to time supplemented by The
          Methodist Church.
             ‘With ‘referenceto paragraph three,
          you will note that there are vaPlous units
          rented o.utIn the Moody House to private
          lndlvlduals. Vernonts Annotated Civil Sta-
          tutes, Article 7150 aAd The Constitution
          of the State of Texas, Article 8--section 2,
          holds that to be an Institute of purely
          public charity no that its property may     i
          be exempt for taxation, the fnstftutlon
          must be one whose property la used wholly
          and exclusively for charitable purposes.
          In BPOE L.ode WoQ.151 vs City of Houston,
          44 SW2nd 48!, there Is a holding that where
          lndlvldual COACefB3fOA~ were leased Out t0
          lndfvfduala and were not used solely for
          the beneflt of the organlzatlon, -that said
          organlzatlon.would not be exempt from taxa-
          tion. It Is the wrlterqs opinion that the
          Moody House lu baslcally a charitable lnstl-
          tutlon, ‘howeverp under the holding herein
          before cited it would appear by leasing fOP
          a fee Its premises to lndfvfduals other than
          the resedents of the Institution and the
          allowance of the public to patronize and
          use these facllltles would result In the
          ruling that the Moody House was not a

                            -1X1-
Mr. Jules Dsmlanl, Jr., Page 4 (No. C-27)

           charitable organization and Is Aot exempt
           from taxation. Your 0plAibn la Pespect-
           fully Pequested."
        Under the facts stated, it appears that thd organization
owning this property described has complied with theeAeCessaPy
law and facts to make it a charitable fnatltution, aAd the pro-
perty would be exempt from ad valorem taies were it not for the
fact that certain parts of the property are being leased to
tenants as stated IA your request. This matter has been dls-
cussed at length IA opinions heretofore rendered by this depart-
ment, being OPIAIOAS Nos. WW-12 7 dated March 16, 1962, W-1424
dated August 24, 1962, and WY-1127aated August 30, 1962, copies
of which are enclosed herewith.
         In Morris v. Lone Star.Cha ter No. 6, Royal Arch
 Masons, 68 Fe   em   f, s w 519 d87     th f t      h  tha
 thebuilding &own ;s thi l&on&     Tej&e w:s ttei ~y'~lain~lff
 and other Masonic organizations to h6ld their meetings but that
 a part of the building was rented to'different pePsons, and
 plaintiff received a monthly rental for each of sald rooms
 rented amounting In the aggregate to about $15O,OO per month
 for all of the rooms in the ffrst and second stories In the
.bulldlng.
        The Court IA Its ?plnlon had the following to say:
               II
                D D D The burden of .showlngthat an
           exempt.loAfrom taxatlon exists9 rests upon
           the party who olafma It, o'D D and when the
           constrmctlon of~the law Is doubtful, the
           doubt will be resolved In favor of:the state,
           and against the exemption, D + * Applying
           these rmles, we conclude that the buildlAg
           In questlon %s not @used exclusively' by
           appellee'ln the sense gIveA to these words
           in the constitutf0A~ the exclusive me meant
           being the actual aAd direct use for the pur-
           poses of the assOclatfOA, and not a use by
           others fop reveAue, although that revenue
           may be exclusively appropslated for the
           'objects of the charity. The legislature
           IA exerclslng~the power CoAfePPed by the
           constitution seems to follow,the constrmc-
           tloA we have adopted, .aAd exempt ‘all
           buIldlAgs belOAglAg t0 1AStltutlOns Of
           purely public charlty;together with the
            1aAds belOnglAg to and occupfed.by such'.
            lnstlttitlons,~'Aotleaaed or othepwlse used
           wlth a view td prof+t,'aAd all moneys and
Mr. Jules Damlanl, Jr., Page 5 (No. c-27)

           credits appropriated solely to sustaining
           suoh Institutions,’ This means that a
           building leased for profit 1s not exempt
           although such profit may be appropriated
           solely to the purposes of the charity,
           and not to the private gain of Its pro-
           moters or stockholders. o e *”

                of Houston v. Scottish Rite Benev. hss’n.,
                0 S.W. 978 (1921)-6f              the Ancient
and Accepted Scottish Rite of Fre&nasonry of the City of Houston
purchased certain property which was known as ScoMlsh Rite
Cathedral. The lot and bulldlng situated thereon was actually
used by members of the association, and no part of the same was
rented or used by any other person or instltutlon. The asso-
ciation owned no property used with a view tog;flt.    It had
no capital stock and declared no dlvldenda.         v”,f   was
used by the Masonic orders, Including San Jaclnto f&e
Perfection No. 6 and the Houston Chapter of Rose Croix No. 5,
each of which collected membership fees and dues whloh were
used for charitable purposes other than the bare neceseltles
for the lodge. No person received any salary or profit directly
from the lodge or lodges. The building was used pplncipally for
meetings of thn various Masonic orders.
        The facts further showed that the association was not
one that did nothing but dispense charity, but it did dispense
charity. The main purpose of the association was to provide a
lodge and place of meeting, and to look after and provide for
lndlvldual Masons and their families.
        The Court said in Its opinion:
              “By the very tinner and terms of this
           property’s acqulsltlon, It was required      __
           to be used9 as it was In fact used, by,.
           the two Masonic orders* ‘to enable them
           to pursue their work as Masonic lodges, I I.
           such work being, as agreed, only partly
           charitable.
              “To the extent that the property was
           used by ~aonlc organizations, whoae
           actlvltles Included other fields than
           charity, It was not, aAd could not be,
           used exclusively by an lnstltutlon of
           purely public charity. Not.belng used
           exclusively by an institution of purely
           public charity, the claim to exemption
           under the constltutlonal prOViSIOn fails,
or. Jules Damlanl, Jr., Page 6 (No. C-27)

           and our answer to the certified question
           Is that the property was subJect to tax-a-
           Mon."
        In the case of B.P.O.E., Lodge No. 151 v. City of
Houston, 44 S.W.2d 488 lTex.Civ.App. 1931, error ref.),.the
City    Houston sued the Elke Lodge for ad valorem tnxes on
the property occupied by the lodge. The facts showed that
the lodge dispensed charity but carried on other actlyitles
such as games, daACeS and othe'rSocial activities for the pur-
pose of entertaining its members and securing new members.
        The Court said that whether appellant Is a purely
charitable lnstltutloA 1s one of fact. There was within the
building a barbershop, the proprietor 6f which paid no rent
but kept all the money he took In from services rendered to
members of the lodge, a gymnasium IAstructor, and a restaurant
operator, none of whom paid any rent or money to the lodge.
        The Court said:
              "Under the law, for the property of
           appellant to be exempt from taxation, It
           must Aot only be owned, but also be used
           exclusively, by an lnstltutlon of purely
           public charity. Is It,so used here? The
           barbershop 1s operated by one who gets
           all the income. He pays no rent, but he
           gets free space'to operate his trade, aAd
           retains for himself all the income. The
           iaanwho ruAs the gymnasium Is a paid
           lAstructoP. He not only receives $200 a
           month as Instructor, b t he keeps in the
           :gymnaslumhis own sto,cI: of supplies and
           sells them 'to the membera, has free space9
           and,retalAs the whole of the Income for
           his own use. The man who rune the reStaU-
           rant also keeps aAd furAfShsS all his
           supplies aAd PetalAs all the Income. He
           shares fn the use of space free of rent.
           The marpwho gives electric batha furnishes
           the towels ana rubbing llnfmeaatsaAd keeps
           all the Income. e D 0
               11
                D e .
              "ExemptlOAB from taxation are not favored,
           and the law allowing exemptions should be
           given a strict Interpretation, It'Is then
           policy of the states aAd but justice between

                             -114-
Mr. Jules Dnmlanl, Jr., Page 7 (No. c-27)

             Its citizens, that all property should be
             taxed, and that no property shall escape
             this common burden, unlese It comes clearly
             within the exemption, and It wao Incumbent
             on the appellant to show that It comes
             within the exemption clauses of the Con-
             stitution and the statute. We do not
             think this has been shown."
        It is.our opinion that since portions of the Moody
House are rented to private lndlvlduals who pay rent to the
operators of Woody House, that in accordanoe with the decisions
above, this property is not uaed exclusively for oharltable pur-
poses and therefore does not meet the requlr’ementsto be exempt
from taxation.

                        SUMMARY
                        SUMMARY

                 Under the facts stated the property
         Involved In this opinion Is not used exclu-
         sively by an lnstltutlon of purely public
         charity and la therefore not exempt from ad
         valorem taxes.
                              Yours very truly,
                              WAQQONER CARR
                              Attorney General of Texas

JHB:pw                                        .

Enclosures
APPROVED:
OPINION COMMITTEE
W. V. Qeppert, Chairman
Joe R. Long
Brady Coleman
Albert P+uett
Jerry Brock
APPROVBD FOR ‘i’RE
                 ATTORNEY QENERAL
By: Stanton Stbne
                             -115-