Court Opinion

ID: 4135661
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:04:49.542756+00
Date Added: 2024-06-11T14:36:35.862062
License: Public Domain

E                  Y GENERAL
                         OF         XAS
                        AUSTIN   aa.TExas

                        April 17, 1962

Honorable R. E. Swift            Ooinion NO. ~~-131.8
County Attorney
Anderson County                  Re : Exemption from ad valorem
Palestine, Texas                      taxes of property belonging
                                      to The Cartmell Home for Aged
Dear Mr. Swift:                       and Orphans.
     We quote the following excerpt from your
                                            . letter
                                                _    requesting
the opinion of this office on the aoove captloneamatter:
              “Where a home for aged and orphans,
          which Is a public charity as set out in
          Article 7150, Section 7, is located on
          a 195 acre tract, and the buildings and
          the property actually used by the aged
          amounts to only about 5 acres, is the
          remaining 190 acres of this ssme tract
          subject to taxation?”
     In connectionwith your request you have supplied us with
detailed facts concerning the Cartmell Home for Aged and Orphans,
hereinafter referred to as the Home, which is Incorporatedunder
the laws of this State as a charitable corporationpursuant to
directives contained in the will of Sarah E. J. Cartmell of
Anderson County, Texas3 who died in 1948.
     By the residuary clause of her will, Miss Cartmell devised
and bequeathed all the resfdue of her estate to her Executors
snd Trustees to be used by them for the establishmentand main-
tenance of a home In and near Palestine, Texas, for the destitute
aged and for the destitute orphans. The testatrix directed that
her present “home place” be used for this home and that the home
be maintained there with such changes and additions to be made
and added as might from time to time be necessary.
     The Home obtained its charter in June of 1953, at which time
the estate of Miss Cartmell was distributedto the Trustees named
in the will and/or appointed by the court. The first unit of the
Home was opened in 1956,the second unit in 1960,both units
being located on the 195 acre tract in question which was the
former home place of Miss Cartmell. The Rome is being operated
at the top capacity for 56 persons with a wafting list of appli-
cants who desire admission.
Honorable R. E. Swift, Page 2          Opinion No. ~~-1318

     Residents pay $65 per month for all services Including room,
board, laundry, nursing care8 drugs and routine doctor bills,
the actual cost of which averages approximately$150 monthly.
Comparable services in a private home for the aged or one operated
for a profit have been estimated to run from $150 to $300 per
month.
     The balance of all of the real property devised by Miss
Cartmell to the Home (with the direction that the income therefrom
be devoted,Ltothe establishmentand maintenanceof the Home) has
been sold or is being held for sale or Is rented or being held
for rent. It has been rendered for taxation to the appropriate
authorities. It is not controvertedthat these properties are
subject to tax.
     You have correctly concludedunder the facts stated that the
Home is an "lnstltutlonof purely public charity" as that term
is used in Section 2 of Article VIII of the Constitutionof the
State of Texas, pursuant tf which Section the Legislatureenacted
Section 7 of Article 7150, Vernon's Civil Statutes. As such an
institution,it Is exempt from taxation, the sole questizn being
the extent of that exemption. Although you have stated
that the buildings and property actually used by the aged'and'
orphans amounts to only about 5 acres,. . .'I,elsewhere in con-
nection with your request, it Is stated that approximatelyeight
to ten acres of land immediatelysurroundingthe buildings are
kept by mowing. It Is further stated that some two or three
pear trees are located on another portion of the tract* and that
the pears are preserved in the kitchen in the Home for consump-
tion by the residents. The south portion of the tract Is des-
cribed as beinghilly ax&rocky and very rough land, with no

y     Section 7 reads as follows:
             "All buildings and personal property belong-
          ing to institutionsof 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 proffts and all moneys and
          credits are appropriatedby such institutions
          solely to sustain such Institutionsand for
          the benefit of the sick and disabled members
          and their famillea 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 inst&utionsOP not. An
          Institutionof purely public charity under this
Honorable R. E. Swift, Page 3            Opinion No. ~~-1318

buildings located on any portion thereof, ncr any Income derived
therefrom. The State Highway Department has advised the Home
that It hopes to acquire approximately22 acres of this tract
as right-of-wayfor a Bypass around the City of Palestine.
     We quote the following excerpt from the letter of the
manager of the Home:
              “The policy of the Board of Directors
           regarding this 195 acres has always been
           that thie fs the ‘Hometract’referred to
           In the will of Miss Cartmell and that it
           is to be used for the charitablepurpose>
           that fzlrtherexpansions are to take place
           on this tra-t as the years go by and as its
           assets grow and that no portion of this
           tract will be held for sale or for rent. ’
     In Hedgecroft v. City of Houston, 150 Tax. 654, 244 S.W.2d
632 (1952) the question was whether property in the City of
Houston owned by The Hedgecroft ClPnic, a charitable corporation
operating a charitablehospital, clinic and training school for
the treatment of polfomyelitisand similar diseases, was exempt
from ad valorem taxes of the Cfty &cd the Houston Independent
School District for the year 1949. The City took the position
that Hedgecrofthad failed to show an actual, direct and exclu-
sive use of the property for charitablepurposes on January 1,
1949, and asserted that such action did not ,ccmmer.ce
                                                     until May
13, 1949.
     The property ir,qdestlon had been given and conveyed to
Hedgecroft on December 30, 1948. Prior to that time, it had
been owned and occupied as a home, Long before Hedgecroft
acquired title, ft had agreed with a constructioncompany to
make necessary alter%tfonsand repairs of the property to fit it

1 ConltJ
           article is one which dispenses its a%3 to its
           members and others in sickness or distress, or
           at death, without regard to poverty or riches
           of the recepient, also when the funds, property
           rd aosets of such institutionsare placed and
           boc?d by its law to relfeve, aid an+ adminrstcr
           in ark ‘wayto the relief of its members when in
           want> sickness and distress, and provide
           homes for its helpless and dependent members
           and to educate and maintafn the orphans of
           its deceased members or other persons.”
Honorable R. B. Swift, Page 4           Opinion No. ~~-1318

for the operation of a hospital, clinic and training school. Be-
ginning with the week ending July 7, 1948, and continuing until
December 29, 1948, the constructionoosl~anyhad been reparlng
plans for repairs and alterations. Form August 1, 19t28 through
December 27, 1948, a blueprint company had furnished Hedgecroft
with numerous blueprints for remodeling the premises. Prior to
HedgecroftIs acquisitionof the property,,..on,.the,
                                                 daysof acqulsl-
tion and immediatelythereafter,Hedgecroftwas engaged in plan-
ning and making the necessary repairs and improvementfor the
clinic and hospital, and on May 13, 1949, these repairs had
been completed sufficientlyto allow Hedgecroft to move from its
old premises to the premises which were the subject of this suit.
On and since the date of acquisition,the premises had been used
exclusivelyby Hedgecroft,whoserepresentativesvisited the pre-
mises, supervisedremoval of furniture, started work,on the yard,
etc. The building permit for the remodelingwas Issued December
29, 1948.
     It was admitted by the City that Hedgecroft was an lnstitu-
tion of purely public charity within the meaning of that term as
used In Section 2 of Article VIII of the Texas Constitutionand
that such use as it had made of the property since It became the
owner thereof had been exclusive In the sense that no one else
had occupied the property nor had it been leased or otherwise used
for profit.
     It was argued that the use required by the Constitutionfor
exemption must be actual, direct and exclusive and that Sedgecroft’s
actions in relation to the property were merely evidence of future
plans and intentionsand did not constitutea present use on
January 1, 1949, forits charitablepurposes in that no patients
were admitted for treatment on that day or prior thereto. In
other words, it was argued that since the building was not then
being actually operated and was not ready to be operated for the
treatment of patients, it was not exempt. The court rejected
this position and accorded exemption.
     The court reviewed decisions from other states holding, under
similar exemption provisions, that when the subsequentuse created
a tax exempt status, then a use which was confined to readying
property for such purpose likewise created a tax exempt status.
We quote the following excerpt from page 636 of the opinion of
the court:
             “In our opinion the rule announced and
          applied in the out-of-statedecisions above
          discussed is sound and is appropriate to this
          case. We approve the position taken by
          petitioner as tfiusstated in Its application
          for writ of error: ‘It is obvious that with-
 Honorable R. E. Swift, Page 5            Opinion No. W-1318

           out some preparation of the premises, there
           never could have been a polio clinic in opera-..
           tion. To fulfill the charitablepurpose of
           treating polio sufferers,Hedgecrofthad first
           to remodel the property, then to operate
           the clinicQ Preparationfor tiedoperation
           of the clinic are both Indispensable. Both
           took place on the premises. Both constituted
           a use by Hedgecroft of the premises. The
           constitutionalclause which admittedlyexempts
           the property during operation likewise exempts
           the property during bona fide necessary pre-
           paration.’
              ,I      The facts alleged show, In our
           oplni&: in actual and direct use of the
           property on and prior to January 1, 1949,
           for the charitablepurpose.
              “Respondentmakes the valid argument that,
           ownership with mere Intentions,well-grounded
           plans and hopes cannot confer the exemption,
           in other words, that intention to use, without
           use, is not sufficient. But according to the
           allegationsof the petition there was more
           tkan mere 3ntention to use. o * qn
       In view of the facts which have been furnished us, we can-
  not say that the Cartmeli Home is making an actu%l, direct use
  of the entire 195 acres for its charitablepurposes. Just how
 much of 195 acres is being dfrectly used by the Rome Is a fact
  question which must be determinedby you. But Insofar as the
  Board of Directors of the Rome contemplatesfurther expansion
  on the tract “as the years $0 by”, in view of the Hedgecroft
  case, ownership with mere intentions,well-groundedplans and
  hopes is insufficientto confer exemption. Tht non-use of the
  property by other% or the fact it produces no revenue,18 not
: sufficientto effectuate exemption,

                          SUMMARY
                That portion of the 195 acre tract
           which is directly used by the Cartmell Home
           for the Aged and Orphans for its charitable
           purpose is exempt from ad valorem taxes.
           The rematifng portion of the acreage which
           is not presently being directly used by the
           charitable corporationfor Its charitable
Honorable R. E. Swift, Page   6            Opinion No.   ~-1318

            purposes cannot be exempt from ad valorem
            taxation despite the fact that further
            expansions and ultimate direct use are
            contemplatedat some uncertain future
            time.
                                  Yours very truly,
                                  WILL WILSON
                                  Attorney General of Texas

                                      Assistant
MMP:cm
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
Jay Howell
W. 0. Shultz
Charles Lind
John Hoffmann
REVIEWED FOR THE ATTORNEY GENERAL
By: Houghton Brownlee, Jr.