Court Opinion

ID: 4135104
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:58:26.517597+00
Date Added: 2024-06-11T14:21:42.585677
License: Public Domain

Honorable Joe Resneber                   Opinion 190. (C- 357)
County Attorney
Harrle County                            Re:   Whether Bayou Manor is
Houston, Texas                                 exempt from ad ,valorem
                                               taxee as an inst&tution
,Dear Mr. Resweber:                            of purely public charity.
      We quote the following   excerpt from the memorandum
brlaf which you submitted in connection with your request
on tha above captionad.queation:
            “Brazes Presbytertan Homes, Inc., was
     chartered in 1960, by the State of Texas as
     8 non-profit    corporation    ‘to establish,   con-
     etruct,   maintain, support and operate a
     retirement home or homes- - -f&-worthy          older
     peopla . I The charter-state8       that it was
     ‘organized    exclusively   for +haritable    pur-
     poeee a8 a non-profit      corpor8tlon.t
             “The corporation  le an agency of the
     Praebytery of Brazes Presbyterian      Church, U.S..
     The building is a multi-story,     modern structure
     contaifilng:Yl~~~ unite consisting   of 1 room
     efficiency,    13 room and 2 room apartments
     situated on 6 acres of land in Houston, Texas.
     The apartments are-unfurnished     except for
     carpets and drapes and contain no kitchen
     fscilities.      There is a health center consisting
     of 12 rooms with 6 bade and plane for expansion
     to a 36 bed facility.      A nurse is on duty at all
     times and several doctors on call.
            “Bayou Manor furnishes its residents  with
     living quarters,    a health center, meals, religioue
     services,   a library complete with gamea, a sum
     deck, and a meeting room for family gatherings.

                                -1691-
                                                                      .   .

Honorable   Joe Resweber,   Page 2              Opinion IVo. (C-357$1

             “The letter recekved by this office  from the
      director   of Bayou Manor’contains the following
      statement:
                   ‘Residents are admitted by the
            Trustee8 on their ability     to adjust to.
            community living and their ability       to
            pay.    A regular-schedule   of  fees calls
            for entrance fees ranging from $6,goo.o0
            to $10,500.00 and Monthly Life Care Fees
            ranging from $200,.00 per month to $240.00
            per month. These fees are adjusted to the
            applicant’s    ability  to pay.’
            “Information   received by this office   indicates
      that as of September, 9, 1964, there were 33 persons
      occupying 27 rooms at Bayou Manor. Of these 33
      persons, 2 were full charity casea and 3 were partial
      charity cases.     One other partial  charity case was
      due to take up residence the following      week.”
       In addition to the facts contained in your memorandum
brief,   you have furnished us the following          Information..
Medical care is provided in the health center in the Manor
in accordance with the patient’s         ability   to pay.     There is
a dietitian      on duty who sees that any special diet, pre-
scribed’by     CLresident’s    doctor, is proper-lyypreparedt       The
acting director       of’ the Manor has stated that It Is their
intention     to care for more charity cases ae~ funds become
available     either from donations or from proflte,realieed
from full paying guests.         The further point ie made that
when’the Indebtedness incurred in constructing             the, Manor
is retired,      there will be more openings for charity CaBBe.
Specifically,      the Manor seeks as occupants those individuals
who are still      mentally active but who need an atmosphere
such as the Manor provides in order’to           prevent a developing
state of mental depression or a feeling           on the part of the
individual     of having ,outlrved his usefullness.

                                 .1692-
Honorable   Joe Resweber,    Page 3          Opinion No. (C-357)

      This office has written numerous opinions concerning
exemptions Prom state and county ad valorem taxes of hoppee
for the aged under various fact eituationr.        Attorney Oeneral
0 inions Roe.- VW- 1 (l-7-60),      VW-1277 [3-16-621,    ,~ww-1318
&17-62),    WY-14227 (8-24-62)   and C-209 l-29-64       accorded
exemption in view of the facts considered therein.          ,The Pacts
were held not to warrant exemption in Attdrne          Qanaral
NOS. W-1427 (a-30-62),      c-27 (3-6-63)  and c-l 64 (11-26-i$9?@
        Of these Opinions, we think Opinion No. WI-1277 le the
moet closely      analogous In the Pacts therein coneidered         to the
facts which you present for our consideration.              In this
Opinion, Morningside Manor, Inc., herelrufter            referred   to a8
the Home, ~86 see-          exemption from ad valorem kxas.           Thir,
Home was incorporated       under the Terns Non-Profit       Corpora-
tion Act Por choritsble        and beWvolant    purpoaer.      The Em WI
also a project      of a church, specifically      the S8n Antonio
District    of the Mathodlst Church.        xt was deeigned to house
approximately      109 residents.     In contradistinction      to tha
requirementa of tha Manor, the Home did not raquire an admir-
sion Pee; howevar, the Home did require a contract              Prcm its
residents     under the terma of which the resident p8id X dollara
to the Home to provide against any contlngenclas             that might
arise with a provision       for a refund bf any amount r&nWning
therein to the resident or to hie e&ate.             Likeuire,    thoea
who were financially       able to pay were requlrad to do 80.           The
facilities     offered by the Home were much the same au thoue
that are offered by the Manor. There were’, at the time
this Opinion was written,         22 persons residing     in the Rome,
of which number three were charity residents,            a percentage
of 13.6$ as oppoeed to the 5M percentage presented by the
f8Ct8 in your case.        The Methodist Church member8 h8d made
contributions      to help underwrite the co&s of the Home and
will continue to contribute         to its support.
      The Opinion points out that in pursuance to the
authorieation     contained in Section 2 of Article      VIII OP the           ~ .
gonstitution     of the State of Texas to exempt fro! taxation
  . , .institutlons     of purely public charity.     . . , the
Legislature     enacted iktV%e 7150,‘V$~n~nla-.CfysI      :Stattit;ea,
t~e~~,~aftb~eabrpootio~ of:.tihictCrbiids~~ as follows:

                                   -1693-
Honorable   Joe Resweber,   Page 4         Opinion No. (C-357)

            "The following     property shall be exempt from
     taxat;on,    to-wit:
            II;.* kblic    charities.     All buildings   and
     personal property belonging to institutions
     of purely public charity,        together with the
     lands belonging to and occupied by such lnstl-
     tutions not leased or otherwise used, with a
     view to profit,      unless such rents and profits
     and all moneys and credit8 are appropriated            by
     such institutions      solely to sustain such inatii:..'.    :.
     tutions and for the benefit of the sick and
     disabled members and their families          and the
     burial of the same, of for the maintenance of
     persons when unable to provide for themselves,
     whether such persons are member6 of such ineti;L;-
     tutions 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 mem-
     bers whin'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. otherpersons.'.'

     Since we think holding of Opinion WW-1277 is correct
and the reasons therefor   equally applicable to this case,
we quote the following   excerpts therefrom:
            "Itis clear that under the above section
                  an institution     can gain exemption
     @%?&ldings.               .together with the lands
     belonging to and occupied by such institutions
     on1 if it is an 'institution       of purely public
     dity.    1

                                -1694-
Honorable    Joe Resweber,   Page 5          Opinion No. (C- 357)

             “In City of Houston ‘v. Scottish Rite Benev.
     Aee’n.,    1’11 T      191 iga     230 s w g7a gtu         211,
     thecourt      eairthat     :the &isla&e       m&t reazn-
     ably conclude that an institution          was one of “purely
     public charity” where:         Firrt,  it made no gain or
     profit;    second, It accomplished ends wholly benevo-
     lenti and,,tNrd,        it benefited   persons, Indefinite
     in numbers and in personalties,          by preventing them,
     through absolute gratuity,         from~becomlng burdane to
     eociety and to the state.’
            @‘Admittedly, the Home meets the first      requirement
     since   it makes no gain or profit.      Doee it accomplieh
     ends wholly benevolent and will it benefit         perrone
     indefinite   in numbers by ,preventing them Prom bacom-
     lng burdens to society and the State?          In the brief
     submitted In support of the proposition         that tha
     property is taxable,    it is argued that nineteen oecu-
     pants ara not faced with the probability         that they will
     become a public charge since they are paying their
     room and board,accordlng     to the schedule before quoted,
     that three are partially     doing so, that none are on a
      ‘Pull and exclusive   charity basis.     . .,I and that
      ‘neither the Constitution    or the courts have established
     a percentage of charitable     use BE a baeistbr an exemp-
     tion exceot 100 ner cent.’       We think that these arau-
     ments are-refuted    by the decision    in Santa Rosa In?irmar
     v. City of San Antonio, 259 S.W. 926, (T ex. om. pp.,           96.

            “In the Santa Ross 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 8s Sisters of Charity, and the
     Santa Rosa Infirmary,      hereinafter  referred to,as the
     Hospital,   both incorporated     for charitable purposes, to
     recover taxes assessed against the real estata and im-
     provements thereon owned by the Hospital.        The Hospital
     was a subsidiary      of the Sisters of Charity and was con-
     trolled   by it in the management and operation of its
     property.

                                 -1695-
Honorable   Joe Resweber,    Page 6              Opinion No. (C-357)

            11. . .

            "All patient% whose financial       condition  per-
     mitted them to pay for the hospital          services  did so.
     The money so received was ueed for the maintenance,
     upkeep and Improvements of the Hospital and main-
     tenance of young Sisters,       future member% of the
     HospV~l,     for the support of sick and disabled mem-
     bers 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 it8 pay
     patients.     The Sisters of the Hospital engaged in
     other charities    and charitable     work%. 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 fund% of
     the Hospital.     There wa8 testimony to the effect        that
     the large majority of patient% were pay patients,
     that the applicants     for charity were comparatively
     small in number, that the institution         was entirely
     self-sustained    and in no way dependent on any out-
     side charity or solicitations        from other organi-
     zations connected with the church.
              "The court discusses    the ca%e of Morris v. Mason%,
     68 Tex. 703, 5 S.W. 519 (1887) which held th t
     building owned by a Masonic body claiming toabeaa
     purely charitable      organization    was not entitled      to
     exemption since the building was largely leased to
     tenant% from whom rental% were collected.              The' court.
     therefore     did not decide whether the Masonic body was,
     in fact, a 'purely public charity.'             The court di,s-
     tinguished     the Morris case from the case under considera-
     tion on the ground that although the constitutional                pro-
     vision authorizing      exemption wa8 still        the same, the
      statutory provision     implementing the constitutional           pro-
     vision had been amplified         to include rents and profits
     when appropriated      by charitable     institutions    sole1     to
      sustain such institutions.         The court stated TIidSTpe
     -rolling                                  statute was to be given
      effect,    charitzble  institutions     might use funds derived
      pas an incident of the administration           of their charities.'
      (Rmphaeis supplied)       The court expreesly rejected         the
      contention    that the Hospital lost Its status a% a purely

                                 -1696-
IXonorabl% Joe ~Re%u%ber, Page 7              opinion   lb.   (c-397)

     public aharity because the majority of the room%
     in the hospital    wa% used to take cue of pay patimmtr
     and rtated,at   page 932 that '. . .the mere faqf th8t
     pay pa$ients largely predominated over the alyrJ,ty
     patient%, or Uhat the inetitutlon    did not o 0uJ;
     into the highways snd by-way% eeeking out f hoee to
     whom ite~charitabla    officer might be extended, cot@&
     not,, under the,great   weight of authority,  be uid
     to,so detract from its charitiee    a% to disqualify
     It a% an institution    of purely public charity.
          “At page 935, the court     eaid;
                 ‘The theory upon which inetitutions
          of thim character are exempted from
          taxation is that they %erve the govern-
          ment by relieving     It 00 %ome extent of
          what would otherwise be a public duty or
          governmental function to care f,ar the
          indigent sick and afflicted        and It 1%
          the assumption by such institutions         of
          thls burden which compenratas,the govern- ,
          ment for the exemption granted them fra ,/,‘; ,,:~
          the general obligation      resting upon all
          citizens    to pay taxee.    It 1% thhrefore
          esrentially    to the general public interest
          that the facilities      of these inrtitutione
          tc carry on this burden be extended by
          addition&l, new structure%,      and building
          fund%, looking to that end and keeping
          pace with a growing pbEp~~Wm~~.~2     and it%
          necesearily    increasing   demands for
          charitable    di%psn%afions.~
            “Both the State and Federal Oovernmente are devoting
     attention   to the ever increasing    problem of the aged who
     constitute   an ever increasing    percentage of our pOpu@4Wri~~’   ”
     We think it is self-evident      that en aged person na%d ,& be
     wholly without financial     mean% in order to become a publ3.c     (
     aharge . The Home serve% the Government by relieving      it
     to some extent from what would otherwise be a public duty
     or governmental function to care for the aged, and may be
     deemed, therefore,    an institution    of ‘purely public
     charity’ a% those word% are ueed In our Constitution.

                             -1697-
Honorable   Joe Resweber,   Page 8                  Opinion No. (C-3573

            "Wumerous decisions   of our courts clearly
     establish    the rule that in order to gain the
     exemption granted by Section 7 the linstitution
     of purely public charity'     must not only own the
     property for which exemptionis       sought, but must,
     in addition,    make an actual,  direct and exclueive
     use of said property for charitable      purposes.

              :ef submitted in support of the proposition-that
      the Home is taxable,     it is argued that the requi%iteLbf
      lexclu%i've u%e' is not met in-this           case since-some of
      the rooms will be rented.         We do not think that this
      fact is determinative      of the 'exclusive        use' require-
     ment but rather that that requirement is met by the
      fact Iihat the property will be ueed exclusively              for
     ,the charitable    purpose of 'caring for the aged.            We
      are unable to distinguish       the occupancy of the Hcme
      by those aged persons who pay for their expenses and
      the occupancy of hospitals        by pay patients.        Of cour%e,
      any change in the existing         factual    situation   which
      prevents the Home from meeting the threefold              require-
     ments of (1) ownership of the property,               (2) bona fide
      charitable   purpose as evidenced by actual            charitable
      work, and (3) exclustve use of the property by the
      charitable   institution    itself     would result in a loss
      of the exemption accorded by Section 7.               The deter-
      mination of these controlling           facts must always be
      made by the proper local authorities             in deciding whether
      exemption will be accorded.v!,
      We quote the following excerpt from a copy of a letter
from the attorney% for the Manor to the Tax Assessor and
Collector  of Harris County:

                                 -1698-
.

    Honorable    Joe Resweber,   Page 9        Opinl.on Ho. (C-357)

                 "In discussing  with your office  the original
          determination    that Bayou Manor was not entitled    to
          exemption, It was indicated    that a short time ago
          there would have been little    question concerning
          the exempt status of Bayou Wanor under the then
          existizig underetandlng of the provisions    for exemp-
          tion.    It was stated, however, that the decision     of
         .the Supreme Court of-Texas in-River Oaks Garden club
         v. City of Houeton, 370 S.Y.2d U51 -3)         ha%
          changed this understanding of the requirements for
          exemption. . . .'I
           We do not so construe the River Oak% Garden Club case.
    The Club was a non-nrofit     cornoration   which maintained a
    landmark of historical    value~%nd had, a% its main activity,
    the, education and enlightenment of its members and the public
    in the art of growing and arranging flower%.        Other non-
    profit  organizations   were permitted to u%e the property
    without charge.     The Court of Civil Appeals had denied tax
    exemption for that reason. The Supreme Court held that It
    did not reach the question because there were far more basic
    reason% for holding that the exemption of the Club's pro-
    perty was not authorized by the Constitution       under the pro-
    vision of Section 2, Article     VIII which empower%,,the Legis-
    lature to exempt "inatltutlons      of purely public charity."
           The Club had not sought exemption under Section 7 of
    Article   7150, quoted supra at pages 3. The Club's stated
    charter purpose% were patterned after Section 14 .of Article
    7150 (pertaining   to Societies    of Fine Arte)   and Section 20
    of Article   7150 pertaining to non-profit      organizations
    incorporated   for the purpoae of preeervlng hietorical       build-
    ing site% and land markr.       It therefore  eought exemption
    under these Sections.
           At page 853, the SPpr~ma...~aurt:;,.ai~e~r;~~o~.;~~~s            -which
     tic!: &$ld 'tht- ac~tYon~ 5s da&         ,.wilea acrperlrty: i% -.nC#~ymd
    'r&&sivei$     &b) jJfg$~
                            ,.&j$&&'~~f~~
                                        frtupm&~ :of:~-m,&&$ @t\nLJ$&q&@&$y.
    ,T~O .of 'the cases cited are Ci!ty of LongtrieW v. Markham-McRee
     Memorial Hospital ax&Benevolent         and Protective      Order of m
     'v. city of Houston, also cited in Opinion RO. WW-1277
     page 7     These cases are not in point in view of the San         " 3= a
     Rosa Infirmary case.

                ,.
                                      -1699-
Honorable   Joe Resweber,   Page 10             Opinion No. (C- 357)

      At page 854, the Court quotes the same excerpt from the
Scottish Rite Benev. AgeIn. case which Opinion No. WIT-1277
quotes as the accepted d finition  of an lnstltutlon of purely
public charity.   Supra, iage 4.
     At   page 855, the Court quotes      fromMassachusetts      General
                                          , ‘233 Mass.   190   14h.E.      21,
                                       on which exemp&ons from
                                       can be justified  in the
constitutional  sense Is that they minister 50 human and social
needs which the State might and’does to a greater or less
extent undertake to satisfy,  thus’dlrcharglng    through the
private charity an ultimate obligation    of the state.   This
same theory was stated by the court in the Santa Rosa Infirmary
case and Is quoted, SUDrS, at page 6.
      In the argument submitted to us In support of the
proposition     that tax exemption should be denied,      reliance
is placed on that        ortlon-of    the River Oaks Garden Club
o&nlon.
  I         at naaes 1 55 and 856. which states that lg
exemption weie-accorded         the-Ciub there would be no end of
exemptions accorded Club houses and meeting places ‘owned
by small groups of persons of common aesthetic          interest
who associate     themselves to promote and enjoy their
particular    interests.      The Court said at page 8561
             I,     .It 1s but a half stride from
      the ari Gf gardening to the art of interior
      decorating,      and leas than a half stride to
      the art of dramatics.          Many other are but
      a stride away.”
     We think, for the reasons stated ln the last paragraph
on page 6, au ra that there Is a vast distinction    between
the examples% a ove given by the Supreme Court and the caring
for the aged. We are still   unable to distinguish the oc-
cupancy of homes for the elderly by some residents   who pay
for their expenses and the occupancy of hospitals   by some
paying patients.   It Is true that the Court, in the,,ltlver Oaks
Garden Club case stated at page 856:

                                - 1700-
.   . .   .

    Honorable      Joe Resweber,   Page 11             Opinion No. (C-357)

                        . .The fact that an oragnlsation performs
              some charitable   acts or engages In some charitable
              activity   is not enough to qualify it for the tax
              exemption provided ln Sec. 2, Art. VIII of the
              Constitution."
    But the cases cited In support of this statement involved
    organizations engaged, not only ln charitable   activities,
    but also in unrelated activities distinctly   non-charitable
    ln nature.
          For these reasons we do not think the River Oaks Garden
     Club case affects the holding of Opinion No. WW-1277 and th
    iiince the Manor meets the requirements of Opinion No. WW-12f;;,
     It is exempt from ad valorem taxes.
                                   SUMMARY
                                   -------
                    Under the submitted facts, Bayou Manor,
              operated by Braeos Presbyterian  Homes, Inc., a
              charitable  corporation, managing a home for
              older adults In Houston Is an institution   of
              purely public charity and Is exempt from ad
              valorem taxes.
                                               Yours very truly,
                                               WAGGONER CARR
                                               Attorney General of Texas

                                                             L
                                             47 aZ,Z~&      II &mL   lz,,
                                               Rarietta NcGregorpa
                                               Assistant Attorney GE&
    MMcGP:sjl
    APPROVED:
    OPINION COMMITTEE
    W. V. Geppert,      Chairman
    W. E. Allen
    Brady Coleman
    George Black
    APPROVEDFORKTRE ATTORNBY
                           GENERAL
    BY: Stanton Stone

                                      -1701-