Harrisburg v. Harrisburg Academy

26 Pa. Super. 252 | Pa. Super. Ct. | 1904

Opinion by

Rice, P. J.,

We think this case was correctly decided in the court below. The opinion of its learned president judge has left little to be added in support of the judgment. What we have to say is confined mainly to a consideration of three cases which the learned counsel for the appellant regard as conclusively deciding the other way the question of law arising upon the admitted facts. They are Philadelphia v. Women’s Christian Association, 125 Pa. 572, Episcopal Academy v. Philadelphia, 150 Pa. 565, and Philadelphia v. Pennsylvania Hospital for Insane, 154 Pa. 9.

In the Women’s Christian Association case, Chief Justice Paxson stated the essential facts in detail and then summarized them as follows: “ It will be seen from the foregoing that the object of the association is to improve the temporal, moral and religious welfare of young females who are obliged to earn their own support, and that as a means to this end, it furnishes them, with food and lodging, not as paupers, but for a compensation which, while it does not compensate, aids in defraying the expenses and thus preserves the self-respect of the recipients, while to others who are unable to pay, temporary shelter is furnished free, and aid extended to them in the way of procuring employment. All this and much more is done by a band of devoted women who labor unselfishly, in season and out of season, giving their time and labor freely, and supplying the annual deficit in the treasury by contributions from themselves and their friends. There is no element of gain in the object or operations of this association.” . ,

In the Pennsylvania Hospital case it appeared, that within the portion of the grounds charged with the claim in suit there was a large building reserved exclusively for the use of patients paying a higher rate than any others; that while these payments exceeded the cost of maintenance assignable to themselves, if the original cost of the property and any estimated rental were excluded, yet if these were to be taken into conr sideration no actual profit was realized; that the apparent profit was used in extending the hospital capacity for good among the destitute members of the community and no portion of it enured to the benefit of any person concerned in administering the charity; and that there was annually more money expended by the defendant in carrying out the purpose of its incorporation than was received from all sources of its income, and this deficit was made up by annual contributions and donations made to it from time to time.

These two cases are easily distinguishable from the case before us and do not necessarily rule it. They go only to the extent of deciding that an institution that is in its nature and purpose a purely public charity does not lose its character as such under the tax laws, if to some extent it receives a revenue from the recipients of its bounty. But in the Episcopal Academy case Mr. Justice Williams, after referring to what the Women’s Christian Association case decided, said: “We are now disposed to go further, and say that an institution that is in its nature and purposes a public charity does not lose its character as such under the tax laws if it receives a revenue from the recipients of its bounty sufficient to keep it in operation. It must not go beyond self-support. When a charity embarks in business for profit it is liable to taxation like any other business establishment; but so long as the trustees of the school manage it as a charity, giving the benefit of what might otherwise be profit to the reduction of tuition fees or the increase of the number of free scholars in furtherance of ‘ the education of youth,’ the corpus of the trust, the schoolhouse, is entitled to exemption.” That no part of this can be rejected as the mere dictum of the justice writing the opinion and that it expressed the judgment of the court upon a question which they considered was raised by the pleadings and evidence, is shown beyond all question by the decree itself, which was, that the defendant’s real estate, “ used exclusively for school purposes, is exempt from taxation under the provisions of the act of May 14, 1874, P. L. 158; so long as no income Sis derived from it by the contributors or by the corporation other than that necessary to make the charity self-sustaining.” Speaking of the point decided in this case Mr. Justice Dean said in a later case: “ The school was founded and endowed by public and private charity; the rates of tuition were adjusted with a view to make the school self-sustaining; a majority of the pupils paid full rates, a small number half rates, and a still smaller number nothing. It was held to be a purely public charity, because its revenues only made it self-supporting, but it was distinctly intimated that if the revenues had gone beyond the line of self-support it would not have been exempt: ” American Sunday School Union v. Philadelphia, 161 Pa. 307. It is thus seen that the suggestion of appellee’s counsel, that the controlling fact in these three cases was that the institutions seeking exemption had not sufficient income to maintain them, but had to depend upon voluntary contributions to mee]; the necessary running expenses, cannot be sustained, so far, at least, as the Episcopal Academy case is concerned. It has been declared, however, that in these cases, and especially the latter, the “ court went to the outside limit of liberality in construction of the constitution ”—American Sunday School Union v. Philadelphia—and that “ they can be sustained only by a very liberal construction of the act of 1874, and they go in the direction of exemption to the uttermost limit of such construction” — per Dean, J., in White v. Smith, 189 Pa. 222—but they have not been distinctly overruled. On the contrary, the learned justice, evidently speaking for the court, said in White v. Smith: “ We have no desire to disturb the judgments in the three cases cited; they stand on the facts peculiar to them, and are outside the line of cases which follow Donohugh’s Appeal.” Speaking further of the prominence given them “ to the one fact, the absence of corporate or private gain, ” he said: “We will not open the road further in that direction, because both the constitution and the statute obstruct it; and it is immaterial whether the courts break through or go around this obstruction, the end is the same; the very thing which the constitution sought to cure as a legislative abuse will become a judicial one.” Assuming, then, that the Episcopal Academy case may still be regarded as an authoritative precedent in cases where the essential facts are the same, but that the doctrine of the case is not to be extended one jot further, it becomes our duty to examine critically the agreement as to the facts and to determine therefrom whether this is such a case. The facts relative to the founding and the endowment of the academy need not be recited at length in this opinion. It is sufficient to say, adopting the language of Judge Weiss, that “ it is beyond dispute that the academy was ‘founded, endowed and maintained by public or private charity ’ and hy both for many years.” But for more than forty years, including the tax year in question, no private or public donations or contributions of any kind or character were made to the academy for the maintenance thereof. The premises consist of a lot having a frontage of about 103 feet, and a depth of about 119 feet upon which is erected the academy building, and another building, known as the Maclay Mansion, used as a residence for the principal. He pays to the trustees “ a nominal rent of $150 per annum for the buildings and grounds, and charges the scholars for tuition less than the rates usually charged for similar tuition in academies conducted for profit; said charges ranging from $50.00 to $70.00 a pupil per annum, some being charged a less rate, and some, nothing.” There are three teachers, including the principal, who are paid the average salaries paid for similar services in the locality. The trustees receive no compensation for their services. Whilst no more is received for tuition than “ actual cost, including instructors’ salaries, light, heat, repairs and insurance,” yet it is admitted that “ the income derived from tuition charges ” has been “ sufficient to pay for the maintenance ” of the institution for forty years and more. It. is stated that “ the institution has been, and is now, controlled free from any element of profit,” and this is doubtless true, if the full rental value of the premises for any purpose to which they are adapted is to be added to the sums paid for salaries, light, heat, repairs and insurance in ascertaining the cost of maintenance. But there is no warrant for holding that that is the test by which to determine whether an institution, founded and endowed by public or private charity, is or is not self-sustaining within the meaning of the decisions cited. Notwithstanding the rather indefinite and vague allegation that the institution is controlled free from any element of profit, the fact remains that in addition to the income from tuition charges, which was admittedly sufficient for the maintenance of the institution, the corporation received as rent of the buildings and grounds f 150 a year. This is called a “ nominal rent,” and the sum is not large, it is true, but it is not so small as to be within the’maxim de minimis. To what purpose this sum was devoted does not appear, nor is it material to the decision of the case that we should know, in view of the admission that the revenue derived from other sources made the institution self-sustaining. We need not discuss the case further. If the constitutional provision, and the act of 1874 were to be construed in this case for the first time we should feel constrained to conclude from the admitted facts that the defendant’s property is not exempt from taxation. We are equally clear in our conviction that to hold it to be exempt we would be required to extend the doctrine of the three case$ relied on by the learned counsel for the appellant to a point beyond where it had thus far been carried.

Judgment affirmed.