Court Opinion

ID: 4135702
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:05:16.086004+00
Date Added: 2024-06-11T14:36:53.547439
License: Public Domain

THEAITORNEYGENERAL

  FVILL     WILSON
AlTORNEYOENERAL

                               March 16,   1962

   Honorable Charles J. Lleck           Opinion No. NW-1277
   Criminal District Attorney
     of Bexar County                    Re: Exemption from ad valorem
   County Courthouse                        taxes of Mornlngs.ldeManor,
   San Antonio 5, Texas                     mc .
   Dear Mr. Lleck:
        In connectionwith your request for an opinion of this
   office on the above captionedmatter, we have been advised of
   the following facts. MornlngsldeManor, Inc., hereinafter
   referred to as the Home, 1s incorporatedunder the Texas Non-
   profit CorporationAct for charitableand benevolentpurposes.
   We quote the following excerpt from the brief which has been
   submitted by the attorneys for The Home In support of their :
   claim that ,theHome shotildbe exempt from the ad valorem taxes
   on the basis of being a purely public charity;
              II     flornlngsldeManor 1s a project of
            the’&n’Antonlo District od the Methodist
            Church. Said district has a board on homes
            for older adults in Its organizationalstructure.
            This board 1s Incorporatedas the San Antonio
            District Board on Methodist Homes for Older
            Adults and Is the parent corporation.
                    “MorningsideManor, Inc. has purchased 20.325
                  acres more fully described in the application
                  for exemption, and has virtually completed
                  constructionof improvementsthereon. Opening
                  ceremonies and occupancy began In September
                  1961. The improvementsconsist of one build-
                  ing designed to house 109 residents.
                    “The present requirementsfor admission  con-
                  stitute the requirementsunder which all exls,t-
                  lng reoldents have been admitted. As quoted in
                  sald Exhibit A of the application for exemption,
                  seotlon five of the by-laws Is very olesr in
                  stating that,
                    “IThere 1s no admission fee, or fixed amount,
                  for admisrlon to the Home, but those who are
                  flnanolal,lgable to pay for the cost of their
                                                             ‘

Honorable Charles J. Lieck, Page 2     Opinion No. WW-1277
                                                                      ,

         care shall be expected to do so on a basis
         determinedby the Board of Directors. In any
         case admission will be a matter of negotiation
         and mutual agreement and each case will be
         consideredon Its own merit.’
          “No one Is declined admlaslon because of
        financial Inability to pay. The directors
        have attempted to determine what It will
        cost to operate the Home and have estimated
        a cost of $214.50 for one person in a single
        room, $182.38 each for two persons In a double           .
        room, and $194.75 each for two persons in a
        suite. These figures are expected to under-
        write the cost of futinishlngtheir living
        quarters, all meals, ‘snda complete staff,
        Including an administrator,a full time
        director of social activities, and four full
        time nurses plus one part-time nurse, all of
        whom are either registered nurses or licensed
        vocational nurses. Netevery elderly person
        has need of such Facllltles,but for thoee
        who do, the Methodist Church feels their need
        to be equivalent to the need of orphans, unwed
        mothers, and the slok and needy who require
        hospital care. This Home is a sincere attempt
        to meet such need. All residents are asked to
        pay what they can, and because It Is non-profit,
        many can afford to pay the full cost of their
        care. It Is not expected that any person will
        be In such dire financial circumstancesas to
        require full charity due to the fact that most
        people are eligible for old age assistance,
        social security, etc. However, should a case
        arise, the Home would not hesitate to provide
        a member with 100% dtiarlty.
          “The experience of other homes for older               ..
        adults across the nation has shown that quite
        often emergency financial needs result In
        connectionwith the last Illness and death
        of its membere. Quite often these needs cannot
        be met by the member and even though they are
        not within the ecope of services furnished by :
        the Home, the Home has little choice but to pay
        for the necessary Items. Consequently,It’has
        become a sound practioe in such homes to request
        payment in advance of a sum, when posslble,iD
        help lndemnify~theHome should it be caught In
        such a situation. If no financial burden is
Honorable Charles J. Lleck, Page 3      Opinion No. WW-1277

         Imposed on the Home, the resident or his
         estate.has a credit and right to receive from-
         the Home an amount equal to the Initial pay-
         ment. MorningsideManor has 'sucha program
         and that portion of the contract applicable
         thereto is as follows:
           'ltOnthis date the undersignedMember has
         paid                       Dollars ($      1
         to the Manor to Drovlde analnst anv contlnaencv
         which may arise ihat would result in a per&%~y
         responsibilityof the Member and which Is not
         otherwise disposed of. The Member agrees In
         advance to be bound by and hereby ratifies the
         decisions of the duly authorizedperson or
         persons acting for the Manor when It Is decided
         that a charge against said contingencyshould
         be made. Upon terminationof residency, the
         Manor agrees to pay to the undersignedMember
         or his estate - -                      Dollars
         0        ) less any amounts withdrawn therefrom,
         If any. This payment shall be paid Into the
         general fund of the Manor, and amounts payable
         by the Manor under this provision shall be paid
         out of the general fund. It Is expressly under-
         stood that no fiduciary relation Is created
         thereby.'
           "The Methodist Church members have made con-
         tributionsto help underwrite the cost of furnleh-
         lng this facility and are going to continue to
         contributeto Its support. Except for these ~
         contributions,the Home could not afford to
         operate. At the date of this writing, twenty-
         two persons have moved Into the Home. Of these;
         three such members (13.6$) are charity residents,
         I.e. they pay only a fractionalpart of the
         estimated cost for their care. As the Home con-
         tinues to fill, It Is expected the percentageiof
         charity cases will Increase."
     There 18 no substantialdisagreementbetween the taxing
authorlt$esand the Home as to the facts. The brief submitted
by the Criminal District Attorney In support of his position
that MornlngsldeManor Is not exempt from state and county ad
valorem taxes contains a few facts In addition to those contained
In the above                    The purchase price of the land
Involved was                 ihe cost of the building, $912,501.56,
totaling                     costs to the date of completion
came from Individual oontributlonsand the Issuance of bonds.
Honorable Charles J. Lleck, Page 4       Opinion No. m-1277

Hereafter the Home will be syRported from such contributions
and the charges received from,those residing in the building.
     The entire 20.325 acres will be cleared and landscaped
and the land, In addition to the building site and immediate
bampus, will be used by the residents for recreation and for
vegetable and flower gardens. Exemption has been requested
for the entire tract of land.
     We have carefully examined the,briefs submitted In connection
with your request, We have concluded th&t, with certain llmlta-
tlons, the property In question Is exempt from taxation.
     Article VIII, Section 2 of the Constitutionof the State
of Texas has empowered the Legislature to exemp; from taxation
certain enumerated properties, among which are        Institutions
of purely public charity". In pursuance to thls'p%3cular eon-
stltutlonalgrant, the Legislatureenacted Section 7 of Article
7150, Vernon's Annotated Texas Statutes, which effectuatesexemp-
tion to the extent of the exemptlve powers conferred by Article
VIII, Section 2. Little Theatre of Dallas Inc. v. City of Dallas,
124 S.W.2d 863 Clv.App. 1939) Clty f Wichita Falls v. Cooper,
170 S.W.2d 777 Clv.App. 1943,;errorzef )' D lcklson v. Woodmen
of the World Life Insurance Co., 280 S.W:2;1315 (Clv.App. 1955,
error ref.).
     Section 7 of Article   7150 reads as follows:
           "Public charities. All buildings and
         personal property belonging to lnstltutlona
         of purely public charity, together with the
         lands belonging to and occupied by such
         Institutionsnot leased or otherwise used
         with a view to profit, unless such rents
         and profits and all moneys and credits are
         appropriatedby such Institutionssolely
         to sustain such Institutionsand 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 persona are members of such lnstltutlona
         or not. An lnetitutlonof purely public
         charity under this article Is one which
         dispenses Its aid to Its members and others
         in sickness or distress, or at death, wlth-
         out regard to poverty or riches of the
         recipient, also when the funds, property
         and assets of such Institutionsare placed
         and bound by its Paw to relieve, aid and
Honorable Charles J. Lleok, Page 5     Opinion No. WW-1277

        administer in any way to 'therelief of Its
        members when In want, sloknese and dietrees,
        and provide homes Sor its helpless and
        dependentmember8 and to educate and maintain
        the orphans of Its deceased members or other
        pereons.”
     It la clear that under the above section an InstLtutloncan
gain exemption for Its "bulldlngr. , . together with the lands
belonging to and occupied by such ln8tltutlons"only If it IS
an "institutionof purely public charity."
     In City of Houston v. Scottish Rite Benev. AeerniC ;;3.eTex.
191, 198, 230 S.W. 978 931 (1921) th        t said th
Legislaturemight rea&ably concl:de Fh?%       ln8tltutlonwas
one of 'purelypublic charity' where: First, It made no gain
or profit; second, It accompllehedends wholly benevolent; and,
third, It benefited persons, indefinite In numbers and In
personalties,by preventing them, through absolute gratuity,
from becoming burdens to society and to the state."
     Admittedly, the Home meets the first requirement slnce'lt
makes no gain or profit. Does It accomplish ends wholly benevolent
and will It benefit persons Indefinite In numbers by preventing
them from becoming burdens to society and the State? 'Inthe
brief submitted In support of the proposition that the property
18 taxable, It Is argued that nineteen occupants are not faced
with the probability that they will become a public charge since
they are paying their room and board according to the schedule
before quoted, that three are partially dolnfiso, that none are
on a "full and exclusive charity basis. .     and that "neither
the Constitutionor the courts have establikhed a percentage of
charitableuse as a basis for an exemption except 100 per cent."
We think that these arguments are refuted by the decision In
Santa Rosa Infirmary v. City of San Antonio, 259 S.W. 926 (Tex.
 om. pp.,      .
     In the Santa Rosa case, the City of San Antonio and the
San Antonio Independent School District Instituted suit against
the Sisters of Charity of the Incarnate Word, hereinafter
referred to as Sisters of Charity, and the Santa Rosa Infirmary,
hereinafter referred to as the Hospital, both Incorporatedfor
charitablepurposes, to recover taxes assessed against the real
estate and improvementsthereon owned by the Hospital. The
Hospital was a subsidiaryof the Sisters of Charity and was
controlledby It in the management and operation of Its property.
     A Sister of Charity of the Incarnate Word became a member
of the Hospital when she was assigned to duty there by the
Congregationof Sisters of Charity. The Sisters had,no'lnterest
                                : ..,,4'
 .
Honorable Charles J. Lleck, Page 6     Opinion No. W-1277

In the corporation,received no compensationfor their services
except that room8 in the Hospital were furnished them when they
became sick and that they received the expenses of their room,
board, clothing and funeral expenses.
     All patients whose financial condition permitted them to
pay for the hospital services did so. The money so received was
used for the maintenance,upkeep and Improvementsof the Hospital
facilities,for the liquidationof Its debts, for the educatlan
and maintenance of young Sisters, future members of the Hospital,
for the support of sick and disabled members of the Hospital, and
the balance went to a building fund. The Hospital had no other
source of revenue than that which It derived from Its pay patients.
The Sisters of the Hospital engaged In other charities and
charitableworks. They conducted St. Luke’s Free Clinic, fed
and clothed the needy, aided unwed mothers -- all of these additional
charities being performed from the general funds of Hospital. There
was testimony to the effect that the large majority of patients
were pay patients, that the applicants for charity were comparatively
small In number, that the lnetltutlonwas entirely self-sustained
and In no way dependent on any outside charity or eollcltatlone
from other organizationscOMeCted with the church.
     The court discusses the case of Morris v. Masons, 68 Tex.
703, 5 S.W. 519 (1887) which held that a building owned by a
Masonic body claiming to be a purely charitableorganizationwas
not entitled to exemption since the building was largely leased
to tenants from whom rentals were collected. The court therefore
did not decide whether the Masonic body was, In fact, a “purely
public charity.” The court dletlngulshedthe Morris case from
the case under considerationon the ground thamough       the
constitutionalprovision authorizingexemption was still the
same, the statutory provision Implementingthe constitutional
provision had been~ampllfledto imlude rents and profits when
appropriatedby charitable lnetltutlonssolely to sustain such
Institutions. The court stated that If the language of the then
controllingstatute was to be given effect, charitable lnetltu-
tlons might use funds derived ‘as an Incident of the administration
of their charities.” (hphasls supplied) The court expressly
rejected the contention that the Hospital lost its status as
a purely public charity because the majority of the horns
In the hospital wftsused to take care of pay patients and stated
at page 932 that        the mere fact that pay patients largely
predominatedover ihi dharlty patients, or that the lnatltutlon
did not go out Into the highways and by-ways seeking out those
to whom Its charitableoffices might be extended, could not,
under the great weight of authority, be said to so detract from
Its charities as to disqualify it as an lnetltutlonof purely
public charity.”
    .

,

        Honorable Charles J. Lleck, Page 7     Opinion No. WW-1277

             At page 935, the court said:
                   “The theory upon whloh institutionsof
                 thie character are exempted from taxation
                 is that they serve the government by rellev-
                 lng it to some extent of what would otherwise
                 be a public duty or governmentalfunction  to
                 care for the indigent sick and afflicted, and
                 It Is the assumption by such institutionsof
                 this burden which compensate8the government
                 for the exemption granted them from the
                 general obligation resting upon all citizens
                 to pay taxes. It is therefore essentially
                 to the general public Interest that the
                 facllltlee of these institutionsto carry
                 on this burden be extended by additions, new
                 structures,and building funds, looking to
                 that end and keeping pace with a growing
                 population and Its necessarily increasing
                 demands for charitable dispensations.”
             Both the State and Federal Qovernmentsare devoting attention
        to the ever Increasingproblem of the aged who constitutean ever
        lncreaslngpercentage of our population. We think It is self-
        evident that an aged person need not be wholly without financial
        means in order to become a public charge. The Home serves the
        Qovernment by relieving it to some extent from what would other-
        wise be a public duty or governmentalfunction to care for the
        aged, and may be deemed, therefore,an Institutionof “purely
        public charity” a8 those words are used in our Constitution.
             Numerous decisions of our courts clearly establish the rule
        that in order to gain the exemption granted by Section 7 the
        “Institutionof purely public charity” muet not only own the
        property for which exemption is sought, but must, in addition,
        make an actual, direct and exclusive use of said property for
        charitablepurposes. City of Longvlew~v. Markham-McRee-    Memorial
        Hoa ltal 137 Tex. 178, 152 S W 26 1112 (1941). Markham Hospital
        c-tk    of Longview, 191 S.W.id’695 (Clv.App.&      , error ref )*
        Santa ROS8 Infirmary, supra; Benevolent and Protectlv&,OrderGf’
        Elks v. City of Houston, 44 S.W 2d 4Utl(Cl~.APP. 1945
        ref.) I th bif        submitted ii support of the propo&l%rthat
        the Homenl.setaxibfe It Is argued that the requisite of “exclusive
        use” Is not met in Chls case since some of the rooms will be
        rented. We do not think that this fact la determinativeof the
        “exclualveuee” requirementbut rather that that requirement is
        met by the fact that the property will be used exclusively for
        the oharltable:ptipose ,of-            .the aged. We are unable to
                                    caring ‘f0tr
        distinguishthe occupancy of the Home by those aged persons who
        pay for their expenrer   and the occupancy of hospitals by pay
                                                                         .

Honorable    Charles   J. Lleck,   Page 8          Opinion No. WW-1277

patients.    Of course, any change in the existing     factual
altuatlon   which prevents the Home from meeting the threefold
requirementsof (1) ownership of the property,       (2) bona fide
charitable   purpose as evidenced by actual charitable      work,
and (3) exclusive    use of the property by the charltabie.lnstltu-
tlon itself   would result In a loss of the exemption accorded
by Section 7.    The determination   of these controlling    facts
must always be made by the proper loos1 authorities        In deciding
whether exemption will be accorded.

                             SUMMARY
                  Under submitted facts,   Morningside
            Manor, Inc., a charitable    corporation
            operating a Home for older adults In San
            Antonio, la an Institution    of pureiy public
            charity and Is exempt from ad valorem taxes.
                                     Yours very truly,
                                     WILL WILSON
                                     Attorney General of Texas

                                            Assistant
MMP:cm
APPROVED
       :
OPINION COMMITTEE:
W. V. Qeppert,
             Chairman

J. C. Davis
Marvin Thomas
Bob Flowers
Elmer   McVey
FEWED FOR THE ATTORNEY   GENERAL
  : Houghton Brovmlee, Jr.