Court Opinion

ID: 9607503
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:59:18.418255+00
Date Added: 2024-06-11T18:02:39.263691
License: Public Domain

PERRY, J.,
dissenting.
It is difficult for me to find a logical or reasonable basis for the conclusion reached by the majority — that the real property of the appellant is not exempt from real property taxes under the provisions of ORS 307.130.
The majority state: “We conclude that the basic deficiency in the Manor’s reasoning is that it would *107grant a charitable tax exemption to housing for aging persons paid for by these same aging persons.”
This statement is based on the reasoning of the preceding paragraph of the majority opinion — that the situation of the appellant “is identical to what exists when an individual aged person provides his own home or a group of aging persons construct a cooperative apartment.”
I presume it would be presumptive to ask where the title to this realty used in the above examples resides, what control they have over it, and to whom it passes on the aged resident’s demise?
It is quite clear that such reasoning is utterly falacious since the statute can in no way be construed to exempt individually owned property not under some control by the state, since all property of a charity is subject to the requirement by the state that it be used for charitable purposes. Real property used for charitable purposes is dedicated in perpetuity to charitable purposes. When a nonprofit charitable organization is dissolved the property “shall be transferred or conveyed” to another “organization engaged in activities substantially similar to those of the dissolving corporation,” ORS 61.530 (3), and the circuit courts of this state are granted jurisdiction and authority to enforce dissolutions and compliance with this requirement upon application of the attorney general if the funds or property should be used for other than the purposes intended. ORS 61.565 and subsequent statutes.
“One obvious reason for exemption of the property of charitable corporations from taxation as distinguished from the property of individuals is that such a corporation is subject to the supervision of the courts at the instance of the attorney *108general (11 C.J. Charities, see. 84, p. 366) whenever it seeks to devote its property to other than the purposes for whieh it was organized, while an individual is not subject to such supervision, but may exercise plenary control over his property and without notice or explanation make any change or changes he may wish. A corporation of the character here discussed cannot thus alter its purpose without at least amending its articles of incorporation and thereby destroying its right to the statutory exemption.” Waller v. Lane County, 155 Or 160, 171-172, 63 P2d 214.
Therefore, I feel the majority should state the title to and control over the property in question which its occupants acquire.
If these tenants do not acquire a fee interest in the property, and I am sure they do not, but are merely donors, as stated elsewhere in the majority opinion, are they not entitled to deduct their entrance fees from income tax as a charitable donation since it is admitted the Manor is carrying on a charitable purpose?
As a second argument against granting appellant’s petition for tax exemption, the majority state: “that in order to cloalt property with the charitable exemption it is essential that the property [I presume they mean the property sought to be exempted] be donated by others and not purchased by the users of the property in consideration for being granted such use.” (Emphasis mine)
There is, of course, no evidence that the users are purchasing this property in consideration for being permitted to live in the property. The agreement in evidence discloses the tenants are purchasing a right to live in certain quarters and to be properly cared for as long as they live. The tenant may enforce his contract or lease, but he acquires no fee interest in *109the property. The property is being purchased by the nonprofit appellant from the proceeds of the contract.
The majority apparently overlook the words of the exemption statute which must be applied to the facts in this case. The statute, ORS 307.130, applies to all “property owned or being purchased by the charitable corporation.” (Emphasis mine) There is nothing in the statute which even suggests that only real property donated to a charitable organization shall be exempt, and it specifically exempts real property being purchased.
The pertinent question that should be answered by the majority, but which is not, is: May a nonprofit organization which is doing charitable work charge those able to pay for the use of its facilities used in carrying out its charitable purposes without destroying its charitable exemption?
I venture to state that very few charitable organizations that dispense services, such as hospitals, schools and orphanages, have acquired all of the real property which they have acquired entirely through gifts.
This fact was recognized by this court in Corporation of Sisters of Mercy v. Lane County, 123 Or 144, 261 P 694, where a hospital was granted real property tax exemption. The facts therein disclose that at the corporation’s inception it had resources of $2,000, and “the only sources of income which this corporation has or will have is the moneys which may be derived by them from schools and hospitals, together with the donations which may be made to it from time to time by the charitable.” 123 Or 144, 147. (Emphasis mine)
The evidence discloses that the Sisters of Mercy hospital was not operated for profit, that if any surplus was accumulated it went to pay off the indebted*110ness. It also discloses that the corporation owned and was operating a 50 to 60 bed hospital.
Also, this court in Benton Co. v. Allen et al., 170 Or 481, 133 P2d 991, has recognized the fact that a charitable organization is not to be denied its charitable real property tax exemption because it borrows money to build and equip a hospital where it may carry out its charitable work. We stated, p. 488:
“The defendant insists, however, that there is no distinction between issuing bonds, in effect in payment for the hospital property, and borrowing money with which to build and equip a hospital. It argues that if a charitable corporation may borrow money for the purpose of building and equipping a hospital, which evidently it may (Waller v. Lane County, 155 Or 160, 63 P2d 214; Sisters of Mercy v. Lane County, 123 Or 144, 261 P 694), without losing its character as a charitable corporation, there is no reason why it may not issue bonds in consideration of a conveyance to it of a hospital already built and equipped. * * *”
If the majority are correct in their premise, I feel sure there are many charitable organizations which are now receiving tax relief that should not.
If the majority feel that these organizations have complied with their requirements because a portion of the real estate was donated by charitably minded persons, they should set out what portion is required by donation and what percentage may be paid from income.
Finally, the majority seem to reason that those who are using the facilities of the Manor are the same group of persons who organized the corporation for their own benefit.
There is not one iota of evidence in this case that *111will support such a conclusion and the facts the majority recite refute their own statement.
They state the corporation had its inception through efforts of the Quaker members of the church and that the Articles of Incorporation show the use of the facilities provided are “for use in providing for the aged on an impartial basis without regard to race, color, nationality, creed or political beliefs.” (Emphasis mine)
The evidence disclose that only 50 per cent of the residents are of the Quaker faith in a total of 296 occupants and at least 14 other denominations are represented; also some of nondenominational belief.
There is no evidence that any of these aged residents participated to the slightest degree in the preparing or planning of this charitable venture or ever expected to use the facilities until after they discovered they were in fact available.
Por a legal foundation upon which to build the illogical conclusions reached by the majority, they depend upon Ore. Physicians’ Serv. v. State Tax Com., 220 Or 487, 349 P2d 831; In re Henderson’s Estate, 17 Cal2d 853, 112 P2d 605; La Societe Francaise, etc., v. California Employ. Com., 56 Cal App2d 534, 133 P2d 47; In re Hobourn Aero Components Limited’s Air Raid Distress Fund, L E [1946] ch 194.
Not a single one of these cases has any application to the facts in this case. Each discloses that the expenditures made were for the benefit solely of those expending the money and over which those paying could exercise control of the expenditures.
In Ore. Physicians’ Serv. v. State Tax Com., supra, 220 Or 487, 496, the question before the court was stated as follows:
“The crux of the problem before this court is *112whether the plaintiff is an association ‘not organized for profit bnt operated exclusively for the promotion of social welfare.’ ”
The facts of that case disclose that the Oregon Physicians’ Service was formed by physicians to provide prepaid medical insurance to those who sought membership in the organization and thus assure payment for medical service rendered to the ill who had become members of the group. The association assured payment to the doctors, and we stated, p. 505: “* * * we hold that the association fails to show that it is ‘not organized for profit’ * *
The tax commission admits that appellant herein was not organized for profit.
Also, in the case of Ore. Physicians’ Serv. v. State Tax Com., supra, the court was not examining the question of a charitable purpose, but of what constitutes “social welfare” and stated, p. 506:
“In our view the test of ‘social welfare’ adopted by the court of appeals for the second circuit in Consumer-Farmer Milk Cooperative v. Commissioner, supra, is a correct one. If the ‘dominant and controlling’ motive of the taxpayer is ‘primarily to benefit the taxpayer’s membership economically, and only incidentally to further larger public welfare,’ then the exemption must be denied. A rule of thumb capable of serving the purposes of ORS 317.080 (6) in cases of this kind would very likely envision that in order for the activities of a taxpayer to entitle him to exemption as ‘social welfare’ work they must be calculated to benefit some other group than the one which supplies the money and directs its disposition. The group benefited may be large or small, definite or indefinite in number, but in the benefaction some motive of altruism must clearly shine forth.”
*113When the quotation in the majority opinion is read in context it is clear the court was distinguishing between those instances where the taxpayer’s motive in entering into an enterprise was primarily to benefit the taxpayer’s business venture with the benefit to the public at large an incidental result, and those instances where the primary purpose of a taxpayer is to benefit the public at large and the income from the venture although in the nature of a return from a business is used solely as means of promoting the general public welfare and not for profit.
The citation of the majority from In re Henderson’s Estate, supra, shows in itself the fallacy of its application to the facts of this case. The first line of the quotation assumes the organization of a group to care for themselves. There is no evidence in this case of a group of persons organizing Friendsview Manor and contributing to a common fund to care for each member of the group’s general welfare. The facts, as previously stated, disclose the formation of an organization to care for the aged of the whole world, regardless of race, creed or color. The management of Friendsview Manor seeks only the primary good of the aging. The managing members of the organization get nothing for their labors. They seek only to provide a good home and reasonable comfort and care for those who seek shelter in the home. Thus there could be no predetermined group seeking to aid only themselves.
The case of La Societe Francaise, etc. v. California Employ. Com., supra, falls in the same category as the quotation from In re Henderson’s Estate, supra, for the emphasized quotation discloses that a group of people banded together for their own benefit. The same is true of In re Hobourn Aero Components Limited’s Air Raid Distress Fund, supra.
*114The facts in the present case show only that each elderly person who seeks the shelter of the home is paying solely and individually for the services he or she expects to receive, without regard to the welfare of any predetermined organized group, present or future, so as to “stamp” the payments “with the character of a private and personal trust fund.”
So far as the record in this case is concerned, the organizers of Friendsview Manor had not the slightest notion of who might seek their accommodations any more than a hospital knows who its next patient might be. For this court to, in effect, hold that those who are now occupying Friendsview Manor banded together and established the Manor for their own benefit is an utter contradiction of the record and a fantastic fantasy.
In my opinion, in the following statement of facts and citations of law applicable thereto is found the answer to the questions raised on this appeal.
The factual background of plaintiff discloses, as do most of the nonprofit charitable institutions providing meals, lodging, nursing care and educational instruction, that it is church-sponsored. Friendsview Manor was incorporated as a nonprofit organization in November, 1956. The Manor, a five-story, reinforced concrete building situated on approximately twelve acres of land, contains 125 living units, together with an office, library, lounges, combination dining room and auditorium, kitchen, room for recreational and hobby facilities, and an infirmary. The building of the Manor was commenced in 1960 and completed in March, 1961. The structure is furnished for the accommodation of the elderly. Each room is equipped with an alarm system whereby the desk may be notified in case of illness, extra-wide doors to accommodate *115wheelchairs, grab rails on the stairways, and numerous other types of equipment for the safety of the aged and infirm. The individual units on the average are 12 by 15 feet with a large bathroom and closet attached. The infirmary, which is fully staffed, is equipped with 13 beds, and also therapy rooms.
To provide these physical facilities, the plaintiff obtained an F.H.A. loan in the amount of $1,450,000, which it hopes to liquidate predominately from the charges made to those occupying the premises. The present rates are $7,500 for the standard room, $8,000 for balcony rooms, and $8,500 for each comer room. The monthly board bill and health care originally was $85 for a single person and $165 for a couple. Because of increased operational costs this charge has been raised and the plaintiff’s accounts still disclose an operating loss.
At the time of incorporation, it was provided that “[t]his corporation is formed solely and exclusively for religious, charitable and non-profit purposes, and the earnings, if any, of this corporation shall be used exclusively for the purposes for which this corporation is formed, as hereinabove described. All property acquired by the corporation, real or personal, and all increments, interests, or earnings thereof are and shall be devoted in perpetuity and irrevocably dedicated to religious, charitable and non-profit purposes, and in the event of the liquidation, dissolution, or abandonment of this corporation, its property will not inure to the benefit of any private person.”
Also, a trust fund, called the “charitable assistance fund,” was created for the assistance of those who were financially unable to meet all the charges made to those fully able to finance themselves. This fund was created by donations from charitably-minded *116persons, $3,407 in 1963, and by setting aside $100 from the rental charge for life occupancy of the rooms as they were rented and re-rented upon death of the occupant. In 1961, $16,812 were expended for this purpose and in 1962, $7,475.
There is no contention that the directors, or anyone connected with the management and operation of the Manor, receive any gain, profit or private advantage from its operation.
Article II, paragraph f., of the Articles of Incorporation provides:
“No applicant will be denied the right to occupy housing facilities provided by this corporation on the basis of his race, color, creed or national origin.”
The bylaws provide that the powers of the corporation shall be vested in the board of directors. The bylaws also provide that “ [n] o person who is a resident in the Manor as a ‘Founder’ or member shall be a member of the Board of Directors during residency.”
It will thus be noted that the facilities of the Manor are open to the general public and that those who engage life care have no control over the expenditure of their funds or the management of the Manor.
The primary basis for rejecting the claim of a charitable purpose in the case of Methodist Romes, Inc. v. Tax Com., 226 Or 298, 360 P2d 293, was the fact that the charter of the nonprofit corporation provided upon dissolution for the distribution of the assets to the members of the association as contrasted with the requirement of statute that the assets be dedicated in perpetuity to charity, as was done by Friendsview Manor.
It is well established in this state that taxation is *117the rule and exemption is permitted only as provided by legislative grant. Methodist Homes, Inc. v. Tax Com., supra; Benton Co. v. Allen et al., 170 Or 481, 133 P2d 991; Corporation of Sisters of Mercy v. Lane County, 123 Or 144, 261 P 694.
OES 307.130, under which plaintiff seeks exemption, reads as follows:
“Upon compliance with OES 307.162, the following property owned or being purchased by incorporated literary, benevolent, charitable and scientific institutions shall be exempt from taxation:
“(1) Except as provided in OES 740.080, only such real or personal property, or proportion thereof, as is actually and exclusively occupied or used in the literary, benevolent, charitable or scientific work carried on by such institutions.”
OES 307.162, mentioned therein, provides only that a proper application be filed by the organization with the county assessor, and no issue is presented upon this point.
It is to be noted that the legislature has not defined the words “benevolent” and “charitable” in the statute, but it is clear that the statute contemplates that such organization to be exempt must be organized to cany on a legally recognized benevolent and charitable purpose without gain or profit or private advantage. Ackerman v. Phys. & Surgeons Hosp., 207 Or 646, 288 P2d 1064, 298 P2d 1026; Hamilton v. Corvallis Hosp. Ass’n., 146 Or 168, 30 P2d 9; Corporation of Sisters of Mercy v. Lane Co., supra.
Since we have no legislative definition, we must look to those purposes recognized in the law as benevolent and charitable. A primary question then presented is whether providing for the aged is a legally recognized charitable purpose.
*118Providing for the aged was recognized as a charitable purpose, distinct from earing for the poor, as early as the year 1601. 7 Statutes, 39 Eliz to 2 Oh II, ch 4, p 43.
Lawful charitable purposes extend far beyond giving to the relief of tire poor and needy.
“* * * the courts have defined ‘charity’ to be something more than mere alms-giving or the relief of poverty and distress, and have given it a significance broad enough to include practical enterprises for the good of humanity operated at a moderate cost to those who receive the benefits.” Young Men’s Christian Ass’n v. Lancaster County, 106 Neb 105, 111, 182 NW 593, 34 ALR 1060.
In the words of the late Mr. Chief Justice Robert S. Bean, “* * * [i]f that only be charity which relieves human want, without discriminating among those who need relief, then, indeed, it is a rarer virtue than has been supposed.” (Emphasis supplied.) Benevolent Society v. Kelly, 28 Or 173, 191, 42 P 3, 30 LRA 167.
Examination of many court decisions discloses without question that the giving of alms to the poor is not a necessary attribute of every benevolent and charitable purpose.
Under “charity”, Black’s Law Dictionary, 4th ed, p 296, states:
“* * * All which aids man and seeks to improve his condition. Wadell v. Young Women’s Christian Ass’n, 133 Ohio St. 601, 15 NE2d 140, 142. * * * Amelioration of persons in unfortunate circumstances, Second Nat. Bank v. Second Nat. Bank, 171 Md. 547, 190 A. 215, 111 A.L.R. 711. * * * Any purpose in which the public has an interest, Collins v. Lyon, Inc., 181 Va. 230, 24 S.E.2d 572, 580. Any purpose of general benefit untainted by motives of private gain. Stearns v. Association of Bar of City of New York, 276 N.Y.S. 390, 395, 154 Misc. 71. *119Any scheme or effort to better the condition of society or any considerable part thereof. Tharpe v. Central Georgia Council of Boy Scouts of America, 185 Ga. 810, 196 S.E. 762, 764, 116 A.L.R 373. * * ° General public use which extends to the rich as well as to the poor. Hamilton v. Corvallis General Hospital Ass’n, 146 Or 168, 30 P2d 9, 14. * * * Improvement of spiritual, mental, social, and physicial conditions. Andrews v. Young Men’s Christian Ass’n of Des Moines, 226 Iowa 374, 284 N.W. 186, 192. * * * Physical, mental or moral betterment. In re Tollinger’s Estate, 349 Pa. 393, 37 A.2d 500, 501, 502. * * * Promotion of happiness of man. Old Colony Trust Co. v. Welch, D.C. Mass., 25 F. Supp. 45, 48. * * * Promotion of well-doing and well-being of social man. Krause v. Peoria Housing Authority, 370 Ill. 356, 19 N.E.2d 193, 199. * * * Whatever proceeds from sense of moral duty or feeling of kindness and humanity for relief or comfort of another, Doyle v. Railroad Co., 118 Mass. 195, 198, 19 Am. Rep. 431. * *
In 14 CJS, Charities 440-441, § 12, it is stated:
“* * * Although the relief of the poor, or a benefit to them in some way, is in its popular sense a necessary ingredient in a charity, this is not so in the view of the law, and hence a gift to a public use is not unlawful as a charity because it is not limited to the purpose of relieving the sick or poverty stricken, or because it extends to the rich as well as to the poor. A charitable use, where neither law nor public policy forbids, may be applied to almost anything that tends to promote the well-doing and well-being of social man. * * *”
In Hansen v. Oregon Humane Soc., 142 Or 104, 18 P2d 1036, we stated that the protection of animals or birds was a charitable purpose.
The Restatement of the Law defines a charitable purpose as follows:
“A purpose is charitable if its accomplishment *120is of such social interest to the community as to justify permitting the property to be devoted to the purpose in perpetuity.
“There is no fixed standard to determine what purposes are of such social interest to the community; the interests of the community vary with time and place. * * *”
2 Restatement, Trusts 2d, 248, ch 11, § 368b.
The care of the aging is of great public interest. Note that the Report of the Proceedings of the Third Washington State Governor’s Conference on Aging, May 28-29, 1964, The Older American, Report of the President’s Council on Aging, 1963, The White House Conference on International Cooperation, Report of the Committee on Social Welfare, November 28-December 1, 1965, U.S. Housing & Home Finance Agency, Proceedings of the Interfaith Conference on Housing for Senior Citizens, April 20-21, 1964, all disclose a compelling interest of society to meet the social and physical needs of the aged separate and apart from financial.
In 1958, the Congress of the United States passed an act entitled “White House Conference on Aging Act,” 1 US Code Congressional and Administrative News, p. 2101, declaring:
“(1) The number of persons forty-five years of age and older in our population has increased from approximately thirteen and one-half million in 1900 to forty-nine and one-half million in 1957, and the number sixty-five years of age and over from approximately three million in 1900 to almost fifteen ■million at the present time, and is expected to reach twenty-one million by 1975.”
On page 2102:
“(5) [T]he lack of suitable facilities and opportunities in which middle-aged persons can learn *121how to prepare for the later years of life, learn new vocational skills, and develop and pursue avocational and recreational interests is driving many of our older persons into retirement shock, premature physical and mental deterioration, and loneliness and isolation and is filling up our mental institutions and general hospitals and causing an unnecessary drain on our health manpower; * *
The President’s Council on Aging, 1963, The Older American, page 28, notes:
“Persons retiring 5, 10, or more years from now will be accustomed to more free time in their active earning years than are most older Americans today. Shorter hours of work per day, shorter workweeks, longer yearly vacations, earlier retirement for all will help prepare tomorrow’s Older American for active later years. Retirement will more often be anticipated as an opportunity to embark on a second career, a chance to grow in new interests, find new avenues of creativity, continue to live fully, adventurously, and generously, with the knowledge that activity itself is an essential ingredient of successful living in the later years.
“But today’s picture, all too frequently, is one of disillusioned persons suddenly being forced into a completely strange period of inactivity, with no place to go, nothing to do, no purpose. It is not surprising that many normal men and women react badly to these circumstances. Inertia, boredom, and tentative withdrawal can quickly lead to isolation. And isolation deprives human beings emotionally, spiritually, and socially. Isolation leads to disillusionment and bitterness. It should not — must not — be tolerated in a country that places as high a value as our country does on the worth of each man.
“Our communities have the primary responsibility. The small villages are no less responsible for the well-being of all their citizens than are the metropolitan areas. Wherever there are people *122who have retired, who are older, whose lives are no longer full or meaningful or satisfying, there is need for some kind of community action that will give them opportunities for useful, rewarding participation.”
That these humanitarian principles exist is disclosed in the fact that the federal government is now providing subsidized hospitalization to all persons over 65 years of age regardless of their financial circumstances. Social Security Amendments of 1965, 79 Stat. 286.
It should also be noted that federal tax relief is also granted to homes operated for the purpose of providing care and comfort for the aged.
In the ease of The Salem Lutheran Home v. Com’r, 2 TCM 157, 159, the court stated:
“* * * In other words, is the operation of a home for the care and comfort of aged persons, without profit to any individual and from purely religious or philanthropic motives, a charity within the intendment of the statute? We think that it is. * * *
* * It does not operate for the benefit of any select group of individuals or institutions. The fact that it is necessary for petitioner to charge a substantial admission fee in order to carry on its work does not deprive it of the status of a tax exempt corporation.”
It is thus apparent that it is common knowledge that the aged require care and attention entirely independent of financial needs, and that present-day humanitarian principles demand that those in their declining years have the opportunity to live with as much independence as their strength will permit, in as pleasant and happy surroundings as their finances will reasonably justify.
*123Other courts which have had occasion to carefully examine this particular issue, care of the aged, as a charitable purpose, have all reached the conclusion that providing for the care, welfare and happiness of human beings in their declining years is a charitable purpose. American-Russian Aid Ass’n. v. City of Glen Cove, 246 NYS2d 123, 41 Misc2d 622 (1963); Fredericka Home for the Aged v. San Diego County, 35 Cal2d 789, 221 P2d 68 (1950); Fifield Manor v. County of Los Angeles, 188 Cal App2d 1, 10 Cal Reptr 242 (1961); Pacific Home v. County of Los Angeles, 41 Cal2d 844, 264 P2d 539 (1953); Solheim Lutheran Home v. County of L.A., 152 Cal App2d 775, 313 P2d 185 (1957); Samarkand of Santa Barbara, Inc., v. County of Santa Barbara, 216 Cal App2d 341, 31 Cal Reptr 151 (1963); Topeka Presbyterian Manor v. Board of County Commissioners, 195 Kan 90, 402 P2d 802 (1965); Old Colony Trust Co. v. O. M. Fisher Home, Inc., 301 Mass 1, 16 NE2d 10 (1938); The People v. Withers Home, 312 Ill 136, 143 NE 414 (1924).
Nor is our holding of charitable purpose contrary to our holding in Methodist Homes, Inc. v. Tax Com., supra, much relied upon by the defendant Tax Commission. In that case it was assumed that the care of the aged was a charitable purpose, but in fact Methodist Homes did not qualify as a charitable corporation.
The defendant State Tax Commission appears to have the impression that in Methodist Homes this court allied itself with the popular misconception that a charity to be exempt must in some manner be linked to the giving of aid to the poor. We quoted from Hamilton v. Corvallis Hosp. Ass’n, supra, 146 Or 168, 312:
“ ‘An important feature * * * is the absence *124of any charitable trust fund for the defendant [corporation] to administer. There is no income from a fund or funds created by “contribution of benevolent and charitably minded persons” to be used by the association in relieving the distress of the needy. * * ”
And also cited to the same effect Ackerman v. Physicians & Surgeons Hospital, supra, 207 Or 646.
However, it must be kept in mind that the Hamilton and Ackerman cases were dealing with the immunity of hospitals from tort liability and in this tort concept we noted on page 178, Hamilton v. Corvallis Hosp. Ass’n, supra:
“In all, or practically all, the cases holding that charitable institutions are immune from liability for the negligence of their servants the reasoning is based on the ground that the institutions derive their funds mainly from public or private charity and that their trustees are charged with the duty of administering such funds exclusively for the charitable uses for which they have been donated.”
The court then points out the reason why a charitable institution should not be subject to tort liability, citing from Hewett v. Women’s Hospital Aid Association, 73 NH 556, 64 Atl 190; 7 LRA NS 496:
“ * * that to use them [donated funds] for the payment of damages in an action of tort against it would be an unwarranted diversion thereof ***.'"
Since this court in Hungerford v. Portland Sanitarium, 235 Or 412, 384 P2d 1009, has now rejected the immunity theory of charitable corporations for the torts of its servants, no need now exists for retaining a theory that a charity must have and maintain a fund “created by contributions of benevolent and charitably *125minded persons to be used * * * in relieving the distress of the needy,” in order to qualify as a charitable institution under a statute granting tax exemption generally to benevolent, charitable institutions.
The Tax Commission also argues that since the plaintiff charges for the services rendered to support the purchase and maintenance of the home for the aged it cannot be considered a legal charity. OES 307.130 specifically provides that property “being purchased” falls within the exemption. Nor has the fact that charges are made to those able to pay been considered as changing the charitable character of the nonprofit corporation.
“The fact that it charges and receives pay for patients able to pay, does not detract from the charitable nature of the service rendered. In [Lutheran] Hospital Association v. Baker, [40 S.D. 226, 167 NAY. 148] * * * 95 per cent, of the patients were pay patients. In City of San Antonio v. Santa Rosa Infirmary, [sic] [259 S.W. 926] * * * 87% per cent, were pay patients. In St. Elizabeth Hospital v. Lancaster County, [109 Neb. 104, 189 N.W. 981] * * * only a small per cent did not pay. # * * #
“If these incomes from pay patients and donations are used for the purpose of caring for or relieving the sick or disabled and increasing the facility of the institution for that purpose, and are not used for the purpose of declaring dividends or the financial profit (other than the paying of necessary operating expenses) of those connected with or having charge of the institution, such use is simply an extended use for charitable purposes.” Third Order of Nuns of St. Dominic v. Younkin, 118 Kan 554, 559, 560, 235 P 869, 872.
This statement is in keeping with our holding in Ben*126ton Co. v. Allen et al., 170 Or 481, 486-487, 133 P2d 991, where we stated:
“It is well settled that the fact that fees are charged those patients who are able to pay does not derogate from the charitable character of the institution, provided the income so derived is used to maintain the institution or extend its facilities devoted to charity, or for other charitable purposes. Sisters of Mercy v. Lane County, supra, [123 Or 144, 261 P 694]; Restatement, Trusts, sec. 376.”
And in Corporation of Sisters of Mercy v. Lane Co., 123 Or 144, 155, 261 P 694, we stated:
“30 C.J. 462, thus states the proposition which governs in determining this question:
“ ‘The test which determines whether a hospital is charitable or otherwise is its purpose; that is, whether it is maintained for gain, profit, or advantage, or not. * * * Where a hospital can otherwise be classed as a charitable institution, the fact that patients who are able to pay are required to do so does not deprive it of its charitable character.’
“There are many authorities sustaining this proposition.
“So if a particular enterprise exists to carry out a purpose recognized in law as charitable, it is a charity. If it is maintained for profit, it is not. See 11 C.J., p. 303.”
The fact that fees are charged by a charitable corporation for those who use its facilities to maintain the institution does not detract from its charitable status. 2 Restatement, Trusts 2d, 266, ch 11, § 376c.
The majority state “that what is being paid for in our hospital decisions is completely different from what is being paid for in the present case.” They then attempt to distinguish the payments made by patients in a hospital from those made by occupants of the *127Manor on the basis that the occupants of the Manor paid into a fund to build the building they hoped to occupy while hospital patients do not.
William K. Shepherd, Portland, argued the cause for appellant on rehearing. With him on the brief was G. Bernhard Fedde, Portland.
Gerald F. Bartz, Assistant Attorney General, Salem, argued the cause for respondents on rehearing. With him on the brief were Robert T. Thornton, Attor*128ney General, and Alfred B. Thomas, Assistant Attorney General, Salem.
*127As pointed out previously, there are no facts in the record that will support such a conclusion.
Hospital patients pay for room, board and care. Occupants of the Manor pay for room, board and care. The only distinction is that the occupants of the Manor pay for their room in advance while hospital patients usually pay at the end. of their stay. If this is a reasonable distinction, then I am without reason.
I am unable to find any reasonable distinction between a hospital which charges those able to pay for services rendered, such as room, board and nursing care, and a home for the aged which charges those able to pay for room, board and mental and physical care and comfort in their declining years.
I would reverse the judgment of the trial court, and, therefore, I dissent.
McAllister, C. J. and Sloan, J., join in this dissent.