Court Opinion

ID: 5451047
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:39:55.611283+00
Date Added: 2024-06-11T08:32:21.577266
License: Public Domain

SCHAUER, J.
I concur in the judgment. I am in accord with the conclusions of the majority as to the nonexempt character of the shops, restaurants and property leased to the government agency, and as to the inapplicability of the welfare exemption to the flood control assessments.
As to the holding that the dormitory property is exempt from taxation, I concur solely on the ground that it is apparent from the agreed statement of facts that no portion of such property was consistently and intentionally operated so as to produce a profit. As stated by the majority (p. 771), *77711 That . . . [an] operating deficit prevails with respect to the dormitory portions as a segregable department in plaintiff’s buildings cannot be disputed when it is remembered that at some of plaintiff’s branches . . . these facilities constitute the only additional service feature offered and while, wherever furnished, they are a main source of revenue, nevertheless the branch as a whole carries on its work at a net financial loss.” If a portion of the dormitory property were operated under a policy of charging more rent than the cost of furnishing shelter, then in my view such property would not be tax exempt even though the profits were devoted to defray the expense of operating other dormitory property at a loss. To hold otherwise would not seem to me to give to the tax exemption statute a “strict but reasonable” construction; rather, with excessive liberality to the selected taxpayer, such holding would effectively delete from the statute the clause, “regardless of the purposes to which the profit is devoted.” As I understand the majority opinion, it would permit such a holding. For example, the majority say (pp. 771-2), “income derived by plaintiff here from dormitories maintained for its members in the normal pursuit of its exempt purposes, that is to say, from a facility which is incidental to and reasonably necessary for the accomplishment of its exempt purposes, is to be distinguished from income derived from a facility which is not so correlated with its exempt purposes. It is income in the latter sense that the welfare exemption condition, reasonably construed, should be held to cover in its reference to the receipt of ‘profit’ as precluding property so used from attaining a tax exempt status even though such ‘profit’ be exclusively devoted to the exempt purposes.”
The case of San Gabriel Cemetery Assn. v. County of Los Angeles (1942), 49 Cal.App.2d 624 [122 P.2d 330], here relied upon by the majority (p. 772) but distinguished by them in Cedars of Lebanon Hospital v. County of Los Angeles, ante, p. 729 [221 P.2d 31], was concerned with the meaning of the phrase “used or held for profit” in section lb of article XIII of the California Constitution, which exempts ‘ ‘ all property used or held exclusively for the burial or other permanent deposit of the human dead or for the care, maintenance or upkeep of such property or such dead, except as used or held for profit.” There, cemetery lots were sold at more than cost, but the excess proceeds were used for upkeep, advertising and the purchase of more lots. It was held that such use of the lots and the proceeds of sale was within *778the use permitted by the exemption clause of the Constitution. In my view the clause “regardless of the purposes to which the profit is devoted” was placed in section 214 of the Revenue and Taxation Code to prevent a similar construction where, for example, hospital beds are operated at more than cost and the proceeds are devoted to hospital uses. Hence, the cited ease neither requires nor permits a construction of the present exemption statute which would exempt dormitory property operated for profit even if such profit is used to defray the expense of operating other dormitory property at a loss.