People ex rel. New York Hospital v. Purdy , 65 N.Y. Sup. Ct. 386 ( 1890 )

Barnard, P. J.

By chapter 466, Laws 1875, the real and personal property of the relator in the city and county of New York was made exempt from taxation if no income was derived from it, and the same was used exclusively for the purpose for which the relator was chartered. By chapter" 462, Laws 1889, this exemption was extended to property “ wherever situated, ” but under the same terms and conditions. The hospital has a farm of land in Westchester county exclusively used for the charter purposes of the society. The farm is not self-supporting, and food is sent from New York for the use of the patients beyond the products of the farm, and the farm supplies the New York Hospital with vegetables. There are occasionally sales made of certain insignificant articles of produce, such as cabbage, pigs, and male calves, the proceeds from which have been applied to the support of the inmates of the hospital buildings on the farm.

The sole question is whether this is income within the meaning of the statute. The exemption as to many corporations depending on “ profits or income” was held not to apply where there were receipts, although the receipts were less than the expenses. People v. Supervisor, 4 Hill, 20. The words “profit” or “income” are said by the court to be frequently used synonymously, but “net income profits” and “clear income” are also used in the statute. The court decided the case, however, on what was deemed a legislative intent in the use of the words “profit or income.” ■ A later section of the act was deemed to exclude “net profit” or “clear income” as inapplicable-to- the case. The case of People v. Supervisor, 18 Wend. 605, held that, as to moneyed and manufacturing corporations deriving an income on their capital, the exemption classed under the words “profits” or “incomes” included any incomes, though less than the expenses. The present case is very different. The hospital is not a stock company, but a charitable one. The buildings in the city of New York are exempted by law from taxation, and by this amendment the exemption is extended to lands elsewhere, The farm is used solely for the purposes of the charity. The cost of raising the produce exceeds the value of the product, and it is almost entirely used in the institution of the hospital.

The case is very analogous to Betts v. Betts, 4 Abb. N. C. 317, where it was held that the sale of a few simple articles manufactured by the blind inmates of an institution for the blind were not to be deemed a source of income. The evidence in this case shows that all the proceeds of the farm go to the support .of the relator’s patients, and this result determines the character of the income received from the farm, as a whole, and not from a few sales of property which could not be advantageously used by relator. It the hospital had permittéd this property to be wasted, no exemption would be waived or forfeited. Seminary v. Cramer, 98 N. Y. 121. The hospital does not waive its exemption because it charges some people who are able to pay. Whether this fact makes the hospital other than a public charity, and thus subjects its buildings in New York, and the farm as well, to taxation, is fully discussed and decided in City of Philadelphia v. Hospital, 47 Leg. Int. 70, (Feb. 14, 1889.) The case shows that all its income from property and donation is used for the purpose of the charity, and the money received from pay patients is wholly applied to the support and attendance on those who cannot pay. The hospital is at present quite heavily in debt, and has to meet many thousands of applicants every year. There is a large excess of disbursements over receipts of board for patients in 1888, amounting to $128,994.50. The order should therefore be reversed, and judgment given that the farm is exempt from taxation, with $10 costs and disbursements on appeal.