Court Opinion

ID: 9776690
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:42:22.402036+00
Date Added: 2024-06-11T09:09:17.762698
License: Public Domain

FONES, Justice,
dissenting.
I respectfully dissent.
I agree with the majority wherein it is said that the status of Vanderbilt and St. Thomas as exempt institutions cannot be imputed to plaintiff and that plaintiff, as a separate corporation, “is either charitable or not, in its own right,” and that it must qualify as a charitable institution in order for its property to be exempt.
The charter of Shared Hospital Services Corporation describes its purpose, in part, as follows:
5. The purposes for which the corporation is organized are to supply and furnish to its members on a non-profit cooperative basis such reuseable or disposable linen and laundry supplies and such linen and laundry supplies as they may require and such other related supplies and services of any kind as they may require; ...
The remainder of the purpose clause, confers the usual powers necessary and incidental to the attainment to the quoted purposes.
*140The Tennessee definition of a charitable institution requires, in essence, that its efforts and property be devoted “exclusively to the improvement of human rights and/or conditions in the community.” I cannot agree that a legal entity carrying out its chartered purpose of furnishing reuseable or disposable laundry supplies to non-profit charitable or other exempt institutions is thus devoting its efforts and property exclusively to the improvement of human rights and/or conditions in the community. The furnishing of laundry supplies is simply not ministering to the needs of the community.
In Tennessee we have a three-pronged test that must be met in order to qualify for the exemption at issue in this case. First, the institution must be qualified as a religious, charitable, scientific or educational institution. Second, it must own the property that it claims to be exempt. Third, the property must be occupied and used exclusively for one or more of the exempt purposes of its charter by the exempt institution. Book Agents of Methodist Episcopal Church v. State Board of Equalization, 513 S.W.2d 514 at 522 (Tenn.1974). Plaintiffs property is used exclusively as a laundry which is not an exempt purpose and it seems to me that even if it could qualify as a charitable institution it would still fail to meet the third necessary prerequisite.
The majority’s conclusion with which I disagree, that Shared Hospital Services Corporation is a charitable institution in its own right, appears to be predicated upon the reasoning employed in the Kentucky case of Department of Revenue v. Central Medical Laboratory, Inc., supra, and the Massachusetts case of Children’s Hospital Medical Center v. Board of Assessors of Boston, supra.
In Kentucky there is no three-pronged requirement to qualify for the exemption. Section 170 of the Kentucky constitution sets out the simple requirement as follows: “There shall be exempt from taxation ... institutions of purely public charity.” The court in Central Medical Laboratory, used the definition of a purely public charity set forth in the prior case of Commonwealth ex rel. Luckett v. I.W. Bernheim Foundation, 505 S.W.2d 762 (Ky.1974), “that charity includes activities which reasonably better the condition of mankind and that it is broader than relief to the needy poor.” 555 S.W.2d at 634. The only rationale I find in the Kentucky court’s opinion, to bring the laboratory within that definition, is that the laboratory makes no profit and the lower lab fees were said to inure to the benefit of the general public. It is not clear whether there was proof in support of those two conclusions or mere implications drawn from the non-profit status of the labs and hospitals. In any event, I am not impressed with the logic of the Kentucky court in finding a shared laboratory testing facility that makes its services available to exempt hospitals, to be “a purely public charity.”
I am even less impressed with the logic of the Supreme Judicial Court of Massachusetts wherein the conclusion was reached that “a policy to provide this service [laundry] efficiently and at a low cost does help to relieve the bodies of patients from disease, suffering or constraint” and thus qualifies a shared laundry corporation as a charitable institution.
While, as indicated above, I agree with the rejection of the theory of “imputing” the status of Vanderbilt and St. Thomas to plaintiff corporation, I regard it as a more palatable rationale than the one used to grant this exemption.
I would reverse the trial court and the Court of Appeals and dismiss this non-exempt plaintiff’s suit to recover taxes.