Court Opinion

ID: 4136559
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:15:02.255749+00
Date Added: 2024-06-11T14:49:44.945221
License: Public Domain

HE *a        ORNF,Y       GENERAL

                       OF%'EXAS

                          April 25, 1958

Hon. GeorgeR. Killam              OPINIONNO. WW-420
CountyAttorney
scurry county                     Re: Whether oil, gas and
Snyder,Texas                          mineralpropertiesheld
                                      in trust for Texas
                                      BaptistChildren'sHome
                                      for stateapurposesare
                                      exempt from countyad
Dear Mr. Killam:                      valoremtaxes.

     In your requestfor an opinionof this officeon the above
captionedmatter,you have advisedus of the followingfacts. Dora
E. Cunninghamdevisedall of her right,title and interestIn and
to the oil, gas and other mineralsin and under all of Section613
of Block 97 of the East part of Section653 In said Block 97,
H. & T.C. Ry. Co. Survey in Scurry County,Texas, in trust for a
statedperiod (whichperiodhas not expired)for the benefitof
the Texas BaptistChildren'sHome, locatedat Round Rook, Texas.

    We quote the followingexcerptfrom the will:

     "11. The incomeand principalof the Trust estate shallbe
      administeredand distributedas follows:

              "a) During the existenceof the Trust, there &all
         be paid to or for the benefit of the TEXAS BAPTIST
         Cm's       HOME, locatedat Round Rook, Texas, 80 much
         of the principalor income of the Trust as the Trustees
         in the exeroiaeof their sole discretionshall determine.
         I hereby state that the primarypurposesfor which this
         Trust Is establishedare

                  "1) To providefunds for the erectionand
         maintenanceof necessarybuildingsand the purchaseand
         maintenanceof necessaryequipmentfor the operationof
         said Texas BaptistChlldren'aHome;

                  "Ii) To providefunds for the care and
         maintenanceof the groundsof said Texas Baptist
         Children"8Home;

                  "iii) To providefunds for the purchaseof
         additionalgroundsneeded In the operationof said Texas
         BaptistChildren'sHorns,
                                                             -..    _

Hon. GeorgeR. Killam,page 2, (WW-420)

         and I direct that the exerciseof their discretionin
         this respect shallbe in conformitywith the foregoing
         purposes.

              "b) Any funds which the Trusteesin their sole
         discretionshall determineare not necessaryfor the
         purposesexpressedin subparagraph(a) of this paragraph
         11 of this ARTICLE II may be paid by the Trusteesin
         their sole discretionto any one or mom of the Southern
         Baptistreligious,charitable,sciantiffo,literaryor
         educationalorganizatfons  locatedin the State of Texas.

              "0) In limitationof all provisionscontainedin
         this my Last Will and Testamentwith respectto the
         Tmat herein created,I expresslydirect that:

                   "1) All funds, propertfssand assets of the
         Trust shall be used for religious,oharita'ble,solenti-
         fio, literaryor educationalpurposesor for the pre-
         ventionof crueltyto childrenand for no other purposes,
         provided,however,that all funds,propertiesand assets
         shall be used wfthin the Stats of Texas exoP~sivslyfor
         such purposes.s ."
                  11
                   . . D

            * The Trust heroin createdshall tem!.nateon she
         "I.2
    date which is the tweniy-fLrstanniversaq of ,$hedeath c~f
    the last survivorof MAURINEMYRTIS AWFAS,MATTE ROSS CONSLEY
    and DANIELM. GIBSON,and all prir,cipa:  and undistributedin-
    come then remainLugin Trust shallbe imnsdiatelydistributed
    to the Board of Trusteesof the Texas Baptrst ChiL3refi's Home
    of Round Rook, Texas, for tie 'useby said Boar6 Yor the bane-
    fit of said Texas BaptistChildren'sHome in conformitywftii
    the purposeshereinaboveexpressedin s&paragraph {aj of
    paragraph11 of this ARTICLE II.. If, on the date of such
    termination,the said Texas BaptistChiLLron'sHome fs no
    longer in sxistsnce,all principaland undistribntedincome
    than remainingin Trust shall be immediatelydistrsibuted  to
    the RAEIST FOUNDATIONOF TEXAS, Dallas,Texas,to be used
    for such religious,oharftable,scientific,literaryor
    educationalpurposeswithin the State of Texas as the govern-
    ing body of such BaptistFoundationof Texas shall determine."

     The trust propertyis presentlyproduof~?of1 and gas, and you
ask whetherthe mineral Interestheld by the Trustees,isexemptfrom
county M:'aloPem taxes.
Hon. GeorgeR. Killam,page 3, (WW-420)

    ArticleVIII, Section2 of the Constitutionof the State of
Texas, has empoweredthe Legislatureto exemptfrom taxationcertain
enumeratedproperties,among which are "- . . institutfonsof purely
public charity." In pursuanceto this particularconstitutional
grant, the LegislatureenactedSection7 of Article7150, V.C.S.
Article 7150 reads, in part, as follows:

    "The followingpropertyshall be exempt from taxation,to-wit:

         "7. Public charities.I All buildingsbelongingto
    institutionsof purelypublic charity,togetherwith the
    lands belongingto and occupiedby such Institutionsnot
    leased or otherwiseused with a view to profit,unless such
    rents and profitsand all moneys and creditsaru appropriated
    by such institutionssolelyto sustainsuch institutionsand
    for the benefitof the sick and disabledmembersand their
    familiesand the burial of the same, or for the maintenance
    of personswhen unable to providefor themselves,whether
    such personsare members of such institutionsor not. An
    institutionof purely public charityunder this artiole is
    one which dispensesits aid to its membersand others in
    sicknessor distress,or at death,withoutregard to poverty
    or riches of the recipient,also when the funds,property
    and assets of such institutionsare placed and bound by
    its laws to relieve,aid and administerin any way to the
    relief of its memberswhen in want, sicknessand distress,
    and providehomes for its helplesssnd dependentmembersand
    to educateand maintainthe orphansof its deceasedmembers
    or other persons."

     It is clear that the charitabletrust under considerationis
an institutionof purelypublic charitywfthin the meaningof
Section2 of ArticleVIII of the Texas Constitotionand Section7
of Article 7150, V.C.S. State v. Settegast,254 53-w.925 (Comm.
APP. 1923)0 We, therefore,pass to a consider&&m of whether
exemptionmay be accordedthe propertyin qusstlonunder the facts
in this case.

     In Morris v. Lone Star Ch. Ro. 6, R.A.M., 68 Tex. 697, 5 S.W.,
519 (1887)the court held that under Section2 of ArticleVIII of
the Constitution,the bgislature could exempt from taxationthe
buildingsof "institutions  of purely public charity"but that such
authorizationextendedonly to such buildingsaud groundsas were
used exolusivelyand owned by such institutionsand that exclusive
use meant the actual and directuse for the purposesof the chari-
table association.
                                                               -     ^.

Hon. GeorgeR. Killam,page 4, (WW-420)

     In the S&t=      case, supra,the court held that the trustees
   _        -.     ^
owea tax08 on oertalnpropertieswhich wore a psrt of the Hermsnn
HospitalEstate. In that case the will had establishede.trust far
the purposeof buildingand maintaininga charitablehospital. The
trusteeswere conductingthe businessof -aging the propertyand
constructingthe hospitalunder the name of the H-nu     Hospftal
Estate. The propertyin questionInvolvedsix rent houses;and all
rents and incometherefromwere to be uasd solelyto supportand
maintainthe HornannHospital. The court pointedout that the
hospitalitselfwas to be built on other propertyand that the
propertyin questionwas not being used directlyin connection
with the bullding and operationof the hospital'but or-
In Its maintenance.

     In Hedgecroftv. City of Houston,150 Tex. 654, 244 S.W.2d
612 (1952).the  court was concernedwl,th  ,thsPollowinafacts. The
H~dg&~ft'Corporation had acquiredtitle to the propertyin
questionthroughgift and oonveyar~cs  on December30, 1948. Before
that tfme the corporationhad agreed with a constructioncompany
to make the necessaryalterationsand repairs of the propertyto
fit It for the operationof a hospital,clinicand trainingschool;
and beginnfngwith the week endingJuly 7, 1948, and oontlnulng
until December29, 1948, the constructioncompanyhad been preparing
plans for repairsand alterations. From August 1, 1948, through
December27, 1948, a blue print compav had farnfshednuminous
blue prints concerningthe contemplatedrepairs. Prior to the
corporation's acquisitionof tha prapperty  fn ques-',jcln
                                                       and immediately
thereafterincludl.ug  January I, lpkp, the corporationwas engaged
in planningand znaklngthe necessaryrepaira. The remodsliagwas
completedou May L3         to an extentwhit!!&lowed tbs clinic
to move on to the p&:2:: ; and tts ollnit:  had since 'been.
                                                           o~~ntfnuous-
ly in operationthere. The Cii;yof Housrrxant the B:onston    Inde-
pendentSchool Dis,triot  Instituteda suit for taxes for t&e year
1949.
     It wa8 contendedthat there was no actual use of the premises
within the meaningof the oonst:ftationSecanse,thebu:ldingwas
not then actuallybeing used for charitablepurposes, The court
reviewedthe followingTexas cases deal.l.ng,#it.h
                                               the requzrement
of exolusiveuse: State v. Settegast,254 S.W. 923 (Conrm.  App. 1%
Morris v. Lone St& ChapterNo. 6 Royal Arch Masons, 68 Tex. 698,
;8Sg.;T519; B.P.O.E.Lodge No. 151 v, City of Houston,44 S.W. 2d
      ex. Civ. App., 1g319errorre%), and distinguished these on
the ground that in each case third partieswe'reoccupyingall or a
portion of the premises.

    In holdingthat tna propertyin qUeStlOU was exempt, the court
revieweddecisionsin other States in which exemptionhad been
accordedon the basis that if the subsequentuse of the premises
1   .    -

        Hon. GeorgeR. Killam,page 5, (w-420)

        createda tax exempt situationthen & uee which wae confinedto
        readyingthem for such purposeestablisheda right to exemption.
             At page 636 the court said:
             ,I
              . . D The work proceededuntil it wa.8 completedon May 13,
             1949, and since that time the hospitaland cliniohave been
             operateda8 8.public charity. The facts alleged show, in

             (Emphasissupplied.)
             The court in allowingthe exemptionrecognizedthe well settled
        rule that exemptionsfrom taxationare not favoredand shouldbe
        strictlyconstrued,but statedthat a constructionof the acts
        alleged in the petitiona8 not amountingto uee would be un-
        reasonablystrictand narrow.

             We think it evidentfrom these decisionsthat the exemption
        accordedto charitableinstltutlonsextendsonly to the buildings
        and groundsused in the actual conductof the charitablepurppses
        for which the institutionIs operated. We thereforehave concluded
        that the propertyin questionis not exempt from countyad valorem
        tsxee; and you are accordinglyso advised."
                                  SUMMARY
                            Oil, gas and mineral interests
                            held in trust for the Texas
                            Baptist ChlldrenssHome and for
                            other charitablepurposesaze
                            not exemptfrom countyad
                            valoremtaxes.
                                                Yo;lrsvery truly
                                                 WILL WITSON
                                                 AttorneyGeaercsl
                                                                of Texas

        MMP/bn
        APPROVED:
        OPINION COMMITTEE
        George Pi Blackburn,Chairman
        8. ~&lark
                ticLaughlin
        &gYFyg~r
        RJJVCEWED
                FOR T@.ATTORNEY GENERAL
         >
        hy~ W.~:v,
                 Lieppert