Untitled Texas Attorney General Opinion ( 1990 )

Honorable Steven D. Wolens Opinion No. X4-1257
Chairman
Business and Commerce Committee Re: Whether a chamber of
Texas Rouse of Representatives commerce is a "charitable
P. 0. Box 2910 organizationot within the
Austin. Texas 78768-2910 Charitable Immunitv and
Liability Act of -1987,
Civil Practice and
Remedies Code chapter 84
(RQ-2054)
Dear Representative Wolens:
You request advice about the Charitable Immunity and
Liability Act off 1987, codified as chapter 84 of the Civil
Practice and Remedies Code. You specifically inquire
whether a chamber of commerce is a "charitable organization
as defined by that statute.
The Charitable Immunity and Liability Act of 1987
[hereinafter the act] was adopted to reduce the liability
exposure and insurance costs of charitable organizations "in
order to encourage volunteer services and maximize the
resources devoted to delivering these services." Civ. Prac.
& Rem. Code 5 84.002(7).1 With certain exceptions, a volun-
teer serving as an officer, director, or trustee of a
charitable organization is granted immunity from civil
liability for "any act or omission resulting in death,
damage, or injury" done in the course and scope of his
1. The Supreme Court of Texas gave notice in Watkins
v. Southcrest Baotist Chm 399 S.W.2d 530 (Tex. 1966),
that the doctrine of. charitable immunity would be reconsi-
dered and might be abrogated. In Rowle v. Camu Amon C rt I:
470 S.W.2d 629 (Tex. 1971), the court held thata t&k
doctrine was completely abrogated as to causes of action
arising from events occurring after the motion for rehearing
in Watkins was overruled on March 9, 1966.
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Honorable Steven D. Wolens - Page 2 (JM-1257)
duties. ;EBL 0 84.004(a); s.s2 ia, JS 84.004(c), 84.007
(exceptions). A similar immunity is granted to a person
serving as a direct service volunteer of a charitable
organization if he acts in good faith and in the course and
scope of his duties or functions within the organization.
L 5 84.004(b). The liability of employees and of the
organization itself is limited to money damages in a maximum
amount set out in the statute. ra, 5s 84.005 - 84.006.
These limitations on liability are available only to a
charitable organization that carries liability insurance in
the amounts required by the statute. L f 84.007(g).
The definition of "charitable organization" is given in
section 84.003 of the act:
(1) *Charitable organization' means:
(A) any organization exempt from federal
income tax under Section 501(a) of the
Internal Revenue Code of 1986 by being
listed as an exempt organization in Section
501(o)(3) or 501(c)(4) of the code,
[enumeration of additional conditions thi:
must be met]:
(B) any bona fide charitable, religious,
prevention of cruelty to children or animals,
youth sports and youth recreational, or
educational organization, excluding alumni
associations and related on-campus organiza-
tions, or other orua&j&ation oraanized and
ouerated exclusivelv for the nromotion of
social welfare bv beina nr.&8rllv enoaaed in
promotina the common aood and aeneral welfare
of the oeoole in a commu~&y, and that:
(i) is organized and operated exclusively
for one or more of the above purposes:
(ii) does not engage in activities which
in themselves are not in furtherance of the
purpose or purposes;
(iii) does not directly or indirectly
participate or intervene in any political
campaign on behalf of or in opposition to any
candidate for public office;
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Honorable Steven D. Wolens - Page 3 (JM-1257)
(iv) dedicates its assets to achieving
the stated purpose or purposes of the
organization:
(v) does not allow any part of its net
assets on dissolution of the organization to
inure to the benefit of any group, sharehold-
er, or individual: and
(vi) normally receives more than one-
third of its support in any year from private
or public gifts, grants, contributions, or
membership fees: or
((3 a homeowners association as defined
by Section 528(c) of the Internal Revenue
Code of 1986.
Civ. Prac. h Rem. Code S 84.003(l) (emphasis added, foot-
notes deleted).
A chamber of commerce is not a homeowners association
within section 84,003(1)(C). Wor does it fit the definition
of charitable organization within section 84.003(1)(A).
Although a chamber of commerce does have an exemption from
federal income tax, it is not exempt under section 501(c)(3)
or 501(c)(4), but under section 501(c)(6) of the Internal
Revenue Code, which designates the following entities as
exempt organizations:
'(6) Business leagues, Ghambers of commerc
real-estate boards, boards of trade, EG
professional football leagues . . . not
organized for profit and no part of the net
earnings of which inures to the benefit of
any private shareholder or individual.
I.R.C. 8 501(c)(6) (emphasis added).
Section 84.003(1)(B) describes organizations that are
organized and operated for one or more stated purposes. An
organization must fit within this description and comply
with the conditions.set out in subsection (B)(i) through
(B)(vi) to qualify as a "charitable organizationV1under this
provision. Thus, as a threshold issue, we must identify the
purpose of a chamber of commerce and determine whether it is
one of the purposes described in subsection 84.003(1)(B).
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Honorable Steven D. Wolens - Page 4 (JM-1257)
The decision that a particular entity is a "charitable
organizationn within the act ordinarily involves the inves-
tigation and resolution of fact questions, which cannot be
undertaken in the opinion process. &S Attorney General
Opinion JW-951 (1988) (whether a public broadcasting station
is a charitable organization within section 84.003(1)(B) is
a question of fact). However, in the present case, we may
rely on judicial and administrative determinations about the
purpose of a chamber of commerce in deciding whether it is a
charitable organization.
The federal regulation construing the tax exemption
granted by section 501(o)(6) of the Internal Revenue Code
describes the activities of a chamber of commerce as lIdi-
rected to the improvement of business conditions of one or
more lines of business as distinguished from the performance
of particular services for individual persons.n 26 C.F.R.
5 1.501(c)(6)-1 (regulation defining "business league" by
analogy to 'chamber of commerce) . A chamber of commerce
promotes the general economic welfare within a geo-
graphically defined area. a I
-States, 565 F.2d 845 (2d Cir. 1977), affLB, 440 U.:.
472 (1979) (discussing Treas. Reg. 5 1.501(c)(6)-1).
Prior opinions of this office and at least one Texas
court have also considered the purposes of a chamber of
commerce. &S Jcordus v. Citv of Gaw 561 S.W.Zd 260
(Tex. Civ. App. - Tyler 1978, writ ref'd A.r.e.); Attorney
General Opinions JW-1199 (1990); JW-516 (1986); Ii-397
(1974): see also Attorney General Opinions C-76 (1963);
WW-106 (1957) (application of franchise tax exemption to
chamber of commerce). Most of these decisions address the
question of whether a municipal government may donate money
to a chamber of commerce, but their descriptions of the
purpose of such entities are helpful in addressing the
question before us.
Attorney General Opinion H-397 (1974) held that a
county could not become a dues-paying member of a chamber of
commerce operated by a private corporation. The county
attorney who requested the opinion advised that the purposes
of the Beeville and Bee County Chamber of Commerce included
"promoting industrial development in the county, the
development of downtown Seeville, and the promotion of the
county-owned stadium." &at 1. It also supported other
measures beneficial to its commercial members. The opinion
determined that the payment of dues would be a donation of
public funds to a private entity in violation of article XI,
section 3, of the Texas Constitution. It was "an attempt to
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Honorable Steven D. Wolens - Page 5 (JM-1257)
secure for the community and its citizens by subscription
general benefits resulting from encouragement of private
industry and business." L at 2.
Attorney General Opinion H-397 was cited in Rordus v.
Cm a suit by taxpayers of the city to recover
money the city' had donated to the Garland Chamber of
Commerce and to enjoin future payments. The court agreed
with the opinion that the Texas Constitution prohibited
donations and expenditures of this nature. See also Attor-
ney 'General Opinion JW-1199 (1990) (festivals held by
chamber of commerce and similar organizations to promote
local products and businesses).
The purpose of a chamber of commerce can be summarized
as the promotion of the general economic welfare of an area
through activities that advertise its products and indus-
tries and encourage private industry and business. Our
question is whether an organization with this purpose is
included in the following definition of "charitable organ-
ization":
(B) any bona fide charitable, religious,
prevention of cruelty to children or animals,
youth ~sports and youth recreational, or
educational organization . . . 9r other
d ODerated exclu-
Sivelv for the
. .uromot1on of social welfare
v belna or-v enaaaed in Dromotma the
008)~gnaood and aeneral welfare of the neonle
in a mrmw4.b .
Civ. Prac. h Rem. Code S 84.003(1)(B) (emphasis added).
A chamber of commerce is not any of the special purpose
entities listed at the beginning of the provision. The
remainder of the provision, underlined in the quotation,
encompasses organizations that promote the social welfare by
promoting "the common good and general welfare of the people
in a community." This statement of charitable purpose is so
broad that it is difficult to apply in isolation from the
rest of the statute. However, it can be given further
definition by reference to the .legislature‘s statement of
findings and purposes, which provides in part:
(1) robust, active, bona fide, and well-
supported charitable organizations are needed
within Texas to Derform essential and needed
senrices:
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Honorable Steven D. Wolens - Page 6 (JM-1257)
(2) the willingness of volunteers to
offer their services to these organizations
is deterred by the perception of personal
liability arising out of the services ren-
dered to these organizations;
. . . .
(5) these to diminish
services
beina orovided +o Texas nq
v because of higher costs znd
fewer programs:
(6) the citizens of this state have an
pverridina interest in the continued and
must be balanced with other policy considera-
tions.
Civ. Prac. 6 Rem. Code 5 84.002 (emphasis added).
This statement of purpose indicates that the legisla-
ture was concerned about the delivery of needed services to
citizens. In resolving the question before us, we will not
attempt to determine the full range of activities that might
be performed by organizations that are *organized and
operated exclusively for the promotion of social welfare by
. . . promoting the common good and general welfare of the
people in a community.w Nonetheless, we believe that the
legislature had in mind an organization that provides
services to individuals who are in need of them. It did not
intend to include an entity that promotes the general
economic welfare of an area in expectation of some benefit
to some residents in the indefinite future, but does not
provide tangible assistance to specific individuals in the
present.2 We conclude that the purposes of a chamber of
2. Courts of other states have determined that a
chamber of commerce was not a charitable institution within
particular statutes. &S Bostomer of Commerce v,
Assessors, 54 N.E.2d 199 (Mass. 1944) (not a
charitable institution within tax exemption): Chamber of
Commerce of North K nsa Citv v. Unemolovment Comuensation
comm ission, 201 S.i.2ds771 (MO. 1947) (not a charitable
institution within exemption from unemployment compensation
law).
p. 6706
Honorable Steven D. Wolens - Page 7 (JM-1257)
commerce are not the purposes of "charitable organization"
as defined by section 84.003(1)(B) of the Civil Practice and
Remedies Code. The Charitable Immunity and Liability Act of
1987 does not apply to a chamber of commerce.
SUMMARY
The Charitable Immunity and Liability
Act of 1987, codified as chapter 84 of the
Civil Practice and Remedies Code, does not
apply to a chamber of commerce.
JIM MATTOX
Attorney General of Texas
RARYZBLLRR
First Assistant Attorney General
Lou MCCREARY
Executive Assistant 'AttorneyGeneral
JUDGE ZOLLIE STEARLBY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Susan Garrison
Assistant Attorney General
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