Court Opinion

ID: 5657772
Source: CourtListenerOpinion
Date Created: 2022-01-12 00:10:15.498065+00
Date Added: 2024-06-11T08:38:52.744499
License: Public Domain

DOOLING, J.
I dissent: My associates in this case take too narrow a view of the power of the Legislature to promote a public purpose. The purpose of the Legislature in adopting the 1953 amendment to section 214 Revenue and Taxation Code is set forth in section 4 of the enactment. (Stats. 1953, pp. 1995-1996.) After reciting the general understanding that “it was the purpose and the intent of the Legislature that under section 214 Rev. & Tax. Code such organization could rightfully use the income from the property devoted to the exempt activity for the purposes of debt retirement, expansion of plant and facilities or reserve for operating contingencies without losing the tax exempt status of its property,” the Legislature referred to the then recent decision of Sutter Hospital v. City of Sacramento, 39 Cal.2d 33 [244 P.2d 390] and added: “this decision was broad in its application and has caused the postponement or actual abandonment of plans for urgently needed hospital construction and expansion at a time when there are insufficient hospital facilities in this state to properly care for the health needs of its citizens, and virtually no surplus facilities for use in case of serious epidemic or disaster. This Legislature has recognized that in addition to gifts and bequests, the traditional method for the financing of the expansion and construction of voluntary religious and community nonprofit hospital facilities is through the use of receipts from the actual operating facilities . . .
“It has never been the intention of the Legislature that the property of . . . organizations otherwise qualifying for the welfare exemption should be denied exemption if the income from the actual operation of the property ... be devoted to . . . debt retirement, expansion of plant and facilities or reserve for operating contingencies ...”
This legislative finding is ignored by the majority opinion, the whole expressed legislative purpose to foster hospital facilities which the Legislature has found to be urgently needed being brushed off with the statement: “We can find nothing in the 1953 amendment which would compel the appellant to use the 10% profit exclusively for such hospital purposes as would also be proper public purposes.” This statement ignores the very basis of the tax exemption as outlined in section 214. After providing that to qualify for the exemption the following conditions must be met: “ (2) No part of the net earnings . . . inures to the benefit of any private shareholder or individual; (3) the property is used for the actual *60operation of the exempt activity; (4) The property is not used or operated ... so as to benefit any officer, trustee, director, shareholder, member, employee, contributor, or bondholder of the owner or operator, or any other person, through the distribution of profits, payment of excessive charges or compensations or the more advantageous pursuit of their business or profession; (5) The property is not used . . . for fraternal or lodge purposes, or for social club purposes except where such use is clearly incidental to a primary . . . hospital . . . purpose,” the Legislature has added “(6) The property is irrevocably dedicated to . . . hospital purposes and upon the liquidation, dissolution or abandonment of the owner will not inure to the benefit of any private person except a fund, foundation or corporation organized for . . . hospital . . . purposes. ’ ’
The combination of these requirements gives legal assurance that the money remitted in taxes for 1953 will be devoted exclusively to hospital purposes. (Pasadena Hospital Assn. v. County of Los Angeles, 35 Cal.2d 779, 786-787 [221 P.2d 62].)
The legislative determination of the facts upon which the constitutionality of the statute depends is primarily for the Legislature and the courts can only overturn such determination if that determination is clearly erroneous. (11 Cal.Jur.2d, Constitutional Law, § 77, pp. 411-412; Id. § 183, p. 583.) Every reasonable doubt must be resolved in favor of constitutionality. (Id. § 78, pp. 412-413.)
“One of the most important fields of regulation under the police power is that of public health and safety.” (Id. §158, p. 543.) And the Legislature is free to choose any means that has a reasonable relation to the end sought to be accomplished. (Id. § 184, p. 584.)
The Legislature has determined that a public necessity exists for the encouragement of the operation and expansion of nonprofit hospitals and the means that it has chosen by the remission of taxes cannot be said not to be reasonably promotive of those purposes. The cases cited in the majority opinion demonstrate that taxes already a lien may be remitted for a valid public purpose.
I would reverse the judgment.
A petition for a rehearing was denied May 10, 1957. Dooling, J., was of the opinion that the petition should be granted. Appellant’s petition for a hearing by the Supreme Court was denied June 4, 1957. Carter, J., and Spence, J.,' were of the opinion that the petition should be granted.