Untitled Texas Attorney General Opinion ( 1963 )

c .
Mr. Jules Damiani, Jr e Opinion No. C-27
Criminal Metrict Attorney
Galve~stonCounty Re: Whether the Moody House is
Galveston, Texas exempt from the payment of
ad valorem taxes under the
Dear Mr. Damiani: stated facts.
You have requested our opinion a8 to whether or not
the property set out in your statement of facts Is exempt
from ad valorem taxes. The following facts are copied from
your letter:
“The property originally known as the
Buccaneer Hotel, including the Buccaneer
Cabanas and Pool was acquired by The
Methodist Homes for Older People, a
charitable corporation Incorporated
under the laws of the State of Texas,
on the 29th day of December, 1961, as
a gift from The Moody Fogdation, and
commenced operating it as a home for.
older people on the 1st day of Januaryp
1962 q
“The Methodist Homes for Older People
was required to take title to the property
subject to any and all leases and rental
contracts then in existence. There were
three (3) outstanding leases for store or
office space that are still in effect and
from which the pres&it owner receives a
small rental D All of the rent8 received
ftiomthese three (3) tenants Is by action
of the Board, befng plaoed In a special
‘Health Care Trust Fund’ and is used
solely for health and welfare care of
residents of Moody’ Abuse 0
“One of the rental units la oocupled
as a barber shop which Is being operated
almost entirely for the convenience of
the residents of Moody House. The other
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Mr. Jules Damianl, Jr., Page 2 (No. C-27)
rental units are a small gift shop and
the OalveStOn MerchaantsAssociation, all
of which have leases that were In effect
at the time the property was acquired and
as above stated, the .present owner was
~requlred to accept the title subject to
these leases. The total reAta1 received
from these units amounts to only $375.00
per month.
"This property la malntalAed aAd operated
as a home for older people and offers full
custodial and Aurslng care. Some of the
present residents are Aot ln a financial
posltlon to pay for their entlre care and
maintenance which Is being subsidized from
other fuAda. Moody House IA 1962, paid an
average of approximately $l,OOO.OO per
reslderatas subsldlzatlon. It will con-
tinue to be the policy to accept residents
at Moody House who will require some sub-
sldlzatlon for thelr care and support.
"Moody House has been licensed by the
State Health Department for a nursing
'home and this-service Is now being offered
with ffve (5) nurses being provided. The
care being offered to PesideAts of Noody
House includes lodging, meals, medical
and ``rsl~g service.
'The Nethodlst Homes for Older People
1s incorporated under the Texas Nonptioflt
Corporation Act for charitable and benevo-
lent purposes, Moody .House,operated by
said corporation, la a project of The Texas
Conference of The Methodlst Church, and 1s
operated by an admiAlstratOr aAd staff under
the supervlslon of aA Executive Steering
Committee appointed by the Board of Dlrec-
tors of sald corporatloA aad approved by
the Annual C6AfereAce of The Methodlst
ChurchD
"The AdmlAlStPRtOr and SteerlAg Commltt&e
have attempted to determflaewhat It will cost
: to operate Moody House. The charges being
made to resldelntsare expected to underwrite
the cost of furnlshlng the residents' living
quarteras all meala, a complete staff lncludlng
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Mr. Jules Damianl, Jr., Page 3 (No. C-27)
an administrator, a full time Director of
Social Activities, a resident doctor, a
sufficient nursing staff which Includes
registered nurse8 and licensed vocational
nurses.
“There la AO admission fee or a fixed
amount for admission to Moody House. In
each case the matter of the amount to be
paid by the resident Is negotiated and a
mutual agreement as to the amount to be
paid by the Individual Is determined from
his needs and ability to pay. It Is not
expeoted that every person will underwrite
the cost of his or her care, and It Is not
expected that any person will be In such
financial circumstances as to require full
financial aid D All funds received from
residents, rentals or otherwise, will be
used for the care and maintenance of the
residents, and that such funds will be
from time to time supplemented by The
Methodist Church.
‘With ‘referenceto paragraph three,
you will note that there are vaPlous units
rented o.utIn the Moody House to private
lndlvlduals. Vernonts Annotated Civil Sta-
tutes, Article 7150 aAd The Constitution
of the State of Texas, Article 8--section 2,
holds that to be an Institute of purely
public charity no that its property may i
be exempt for taxation, the fnstftutlon
must be one whose property la used wholly
and exclusively for charitable purposes.
In BPOE L.ode WoQ.151 vs City of Houston,
44 SW2nd 48!, there Is a holding that where
lndlvldual COACefB3fOA~ were leased Out t0
lndfvfduala and were not used solely for
the beneflt of the organlzatlon, -that said
organlzatlon.would not be exempt from taxa-
tion. It Is the wrlterqs opinion that the
Moody House lu baslcally a charitable lnstl-
tutlon, ‘howeverp under the holding herein
before cited it would appear by leasing fOP
a fee Its premises to lndfvfduals other than
the resedents of the Institution and the
allowance of the public to patronize and
use these facllltles would result In the
ruling that the Moody House was not a
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Mr. Jules Dsmlanl, Jr., Page 4 (No. C-27)
charitable organization and Is Aot exempt
from taxation. Your 0plAibn la Pespect-
fully Pequested."
Under the facts stated, it appears that thd organization
owning this property described has complied with theeAeCessaPy
law and facts to make it a charitable fnatltution, aAd the pro-
perty would be exempt from ad valorem taies were it not for the
fact that certain parts of the property are being leased to
tenants as stated IA your request. This matter has been dls-
cussed at length IA opinions heretofore rendered by this depart-
ment, being OPIAIOAS Nos. WW-12 7 dated March 16, 1962, W-1424
dated August 24, 1962, and WY-1127aated August 30, 1962, copies
of which are enclosed herewith.
In Morris v. Lone Star.Cha ter No. 6, Royal Arch
Masons, 68 Fe em f, s w 519 d87 th f t h tha
thebuilding &own ;s thi l&on& Tej&e w:s ttei ~y'~lain~lff
and other Masonic organizations to h6ld their meetings but that
a part of the building was rented to'different pePsons, and
plaintiff received a monthly rental for each of sald rooms
rented amounting In the aggregate to about $15O,OO per month
for all of the rooms in the ffrst and second stories In the
.bulldlng.
The Court IA Its ?plnlon had the following to say:
II
D D D The burden of .showlngthat an
exempt.loAfrom taxatlon exists9 rests upon
the party who olafma It, o'D D and when the
constrmctlon of~the law Is doubtful, the
doubt will be resolved In favor of:the state,
and against the exemption, D + * Applying
these rmles, we conclude that the buildlAg
In questlon %s not @used exclusively' by
appellee'ln the sense gIveA to these words
in the constitutf0A~ the exclusive me meant
being the actual aAd direct use for the pur-
poses of the assOclatfOA, and not a use by
others fop reveAue, although that revenue
may be exclusively appropslated for the
'objects of the charity. The legislature
IA exerclslng~the power CoAfePPed by the
constitution seems to follow,the constrmc-
tloA we have adopted, .aAd exempt ‘all
buIldlAgs belOAglAg t0 1AStltutlOns Of
purely public charlty;together with the
1aAds belOnglAg to and occupfed.by such'.
lnstlttitlons,~'Aotleaaed or othepwlse used
wlth a view td prof+t,'aAd all moneys and
Mr. Jules Damlanl, Jr., Page 5 (No. c-27)
credits appropriated solely to sustaining
suoh Institutions,’ This means that a
building leased for profit 1s not exempt
although such profit may be appropriated
solely to the purposes of the charity,
and not to the private gain of Its pro-
moters or stockholders. o e *”
of Houston v. Scottish Rite Benev. hss’n.,
0 S.W. 978 (1921)-6f the Ancient
and Accepted Scottish Rite of Fre&nasonry of the City of Houston
purchased certain property which was known as ScoMlsh Rite
Cathedral. The lot and bulldlng situated thereon was actually
used by members of the association, and no part of the same was
rented or used by any other person or instltutlon. The asso-
ciation owned no property used with a view tog;flt. It had
no capital stock and declared no dlvldenda. v”,f was
used by the Masonic orders, Including San Jaclnto f&e
Perfection No. 6 and the Houston Chapter of Rose Croix No. 5,
each of which collected membership fees and dues whloh were
used for charitable purposes other than the bare neceseltles
for the lodge. No person received any salary or profit directly
from the lodge or lodges. The building was used pplncipally for
meetings of thn various Masonic orders.
The facts further showed that the association was not
one that did nothing but dispense charity, but it did dispense
charity. The main purpose of the association was to provide a
lodge and place of meeting, and to look after and provide for
lndlvldual Masons and their families.
The Court said in Its opinion:
“By the very tinner and terms of this
property’s acqulsltlon, It was required __
to be used9 as it was In fact used, by,.
the two Masonic orders* ‘to enable them
to pursue their work as Masonic lodges, I I.
such work being, as agreed, only partly
charitable.
“To the extent that the property was
used by ~aonlc organizations, whoae
actlvltles Included other fields than
charity, It was not, aAd could not be,
used exclusively by an lnstltutlon of
purely public charity. Not.belng used
exclusively by an institution of purely
public charity, the claim to exemption
under the constltutlonal prOViSIOn fails,
or. Jules Damlanl, Jr., Page 6 (No. C-27)
and our answer to the certified question
Is that the property was subJect to tax-a-
Mon."
In the case of B.P.O.E., Lodge No. 151 v. City of
Houston, 44 S.W.2d 488 lTex.Civ.App. 1931, error ref.),.the
City Houston sued the Elke Lodge for ad valorem tnxes on
the property occupied by the lodge. The facts showed that
the lodge dispensed charity but carried on other actlyitles
such as games, daACeS and othe'rSocial activities for the pur-
pose of entertaining its members and securing new members.
The Court said that whether appellant Is a purely
charitable lnstltutloA 1s one of fact. There was within the
building a barbershop, the proprietor 6f which paid no rent
but kept all the money he took In from services rendered to
members of the lodge, a gymnasium IAstructor, and a restaurant
operator, none of whom paid any rent or money to the lodge.
The Court said:
"Under the law, for the property of
appellant to be exempt from taxation, It
must Aot only be owned, but also be used
exclusively, by an lnstltutlon of purely
public charity. Is It,so used here? The
barbershop 1s operated by one who gets
all the income. He pays no rent, but he
gets free space'to operate his trade, aAd
retains for himself all the income. The
iaanwho ruAs the gymnasium Is a paid
lAstructoP. He not only receives $200 a
month as Instructor, b t he keeps in the
:gymnaslumhis own sto,cI: of supplies and
sells them 'to the membera, has free space9
and,retalAs the whole of the Income for
his own use. The man who rune the reStaU-
rant also keeps aAd furAfShsS all his
supplies aAd PetalAs all the Income. He
shares fn the use of space free of rent.
The marpwho gives electric batha furnishes
the towels ana rubbing llnfmeaatsaAd keeps
all the Income. e D 0
11
D e .
"ExemptlOAB from taxation are not favored,
and the law allowing exemptions should be
given a strict Interpretation, It'Is then
policy of the states aAd but justice between
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Mr. Jules Dnmlanl, Jr., Page 7 (No. c-27)
Its citizens, that all property should be
taxed, and that no property shall escape
this common burden, unlese It comes clearly
within the exemption, and It wao Incumbent
on the appellant to show that It comes
within the exemption clauses of the Con-
stitution and the statute. We do not
think this has been shown."
It is.our opinion that since portions of the Moody
House are rented to private lndlvlduals who pay rent to the
operators of Woody House, that in accordanoe with the decisions
above, this property is not uaed exclusively for oharltable pur-
poses and therefore does not meet the requlr’ementsto be exempt
from taxation.
SUMMARY
SUMMARY
Under the facts stated the property
Involved In this opinion Is not used exclu-
sively by an lnstltutlon of purely public
charity and la therefore not exempt from ad
valorem taxes.
Yours very truly,
WAQQONER CARR
Attorney General of Texas
JHB:pw .
Enclosures
APPROVED:
OPINION COMMITTEE
W. V. Qeppert, Chairman
Joe R. Long
Brady Coleman
Albert P+uett
Jerry Brock
APPROVBD FOR ‘i’RE
ATTORNEY QENERAL
By: Stanton Stbne
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