256 N.E.2d 232 | Ohio Ct. App. | 1970
This is an appeal under the provisions of Section
The foundation was created in 1953 as an inter vivos trust for charitable purposes. The settlor is now deceased, and the Chemical Bank New York Trust Company is the successor and existing trustee. The trust agreement provides that after the decease of the settlor "the distribution of trust funds and the general policy of the Foundation shall be directed by an Advisory Committee," which has been in existence, and is empowered "to direct the Trustee to pay and distribute all or a part of the net income of the Foundation," for the purposes of the trust, and "by unanimous vote or action, may at any time appropriate for distribution for the uses and purposes herein mentioned any part or all of the principal of the trust fund."
Pursuant to the purposes set forth in the trust instrument, on September 5, 1968, the trustee, also hereinafter referred to as the lessor, with the approval of the advisory committee, entered into a lease agreement with the Board of Trustees of the Union County Memorial Hospital and with the Board of County Commissioners of Union County, which boards operate a county hospital, pursuant to Section
The lease makes further provision for a "controlling board" of twelve members. The funded depreciation paid to the lessee "shall be used exclusively for health care purposes in Union County as determined and ordered by the `controlling board,'" limited, however "to the improvements and additions to the `Center' and Memorial Hospital as it [the controlling board] deems appropriate for the development of the overall care facility," including the retirement of indebtedness on the Center. The lessee also agreed to construct an enclosed corridor joining the hospital to the Center and "to administer and maintain the leased facilities in a manner consistent with the operation of a public health facility, strictly complying with the law with regard to admission of patients without regard to race, creed, color, or sex."
On July 1, 1969, at the time of the hearing before the attorney-examiner for the Board of Tax Appeals, it was testified that construction of the Center had commenced in 1968 and it had a completion date of November 15, 1969; that the term "extended care" did not contemplate that the Center would become a nursing home; "that it is intended that it be an extension of acute care, a halfway point between acute care and a patient's home or a nursing home"; and that it is contemplated that charity patients will be included in the patients to be admitted to the Center. *233
Upon submission the Board of Tax Appeals denied the application to exempt the real property involved, under the provisions of Section
As the decision of the board was certified only to the foundation and the Union County Auditor (who had recommended that the exemption be granted), counsel for these parties alone appeared in the appeal and sought, by consent, for this court to order the exemption. However, Section
The statutory provision involved is that contained in the last sentence of Section
In Jones, Treas., v. Conn (1927),
The Jones rule remained unmodified for many years. CompareWehrle Foundation v. Evatt, Tax Commr. (1943),
"Per Curiam. As the record discloses that since on and before tax-lien day 1950 the property in question, acquired by appellant for use for a charitable purpose, was undergoing repairs and remodeling to condition it for the charitable use for which it was acquired, and there being nothing in the record to show that during such time it had been used for a noncharitable purpose, the Board of Tax Appeals was in error in denying the exemption. * * *"
Thereafter, with relation to the exemption of church property under the provisions of Section
"A religious institution which purchases vacant land for the purpose of erecting a house of worship thereon is entitled to have such land exempted from taxation, where such institution is actively working toward use of such land for the public benefit; and the intent to make such a use of the land may be evidenced by a showing that plans had been prepared and funds were available, or were to be available, to effectuate actual construction of such house of worship within a reasonable time from the filing of the application for exemption."
That case was then cited as controlling authority in the case of Cleveland Memorial Medical Foundation v. Perk (1967),
Meanwhile, in Philada Home Fund v. Board of Tax Appeals
(1966),
"* * * The test is present exclusive use for charitable purposes. Wehrle Foundation v. Evatt, Tax Commr.,
However, in Judge Schneider's dissent in that case, concurred in by Chief Justice Taft and Judge O'Neill, the following appears at page 148:
"Such is the present posture of the Constitution and the statutory enactments pursuant thereto. The conclusion follows inescapably that real and tangible property shall be exempt from taxation (1) if it belongs to a nonprofit institution, (2) if that institution is so constituted that its property and energies are used exclusively for charitable purposes, that is, undiluted by fraternal, benevolent, educational or religious purposes, and (3) if the exemption thus created does not transgress the limitations of Section 2, Article I of the Constitution, so as to confer an unreasonable benefit on the property of the institution and to deny the equal protection of the laws to those not similarly benefited."
Subsequently, in Crestview of Ohio, Inc., v. Donahue, TaxCommr. (1968),
From the Carmelite Sisters case we conclude that Chief Justice Taft and Justices O'Neill and Schneider have abandoned the position which they took in the Philada Home case, that the operation of same was for a charitable purpose, and are now satisfied with the distinction implicit in these two cases, in paragraph two of the syllabus of Vick v. Cleveland MemorialMedical Foundation (1965),
This line of authority and that definition remove the emphasis from present exclusive use of the property for charitable purposes as set forth in the Jones case, supra, and place the emphasis on the nonprofit and exclusively charitable service character of the institution, exempting the property used by the institution in carrying out that charitable service.
What then is the effect, if any, of this line of authority and definition on the rule, if any, of Zangerle v. State, ex rel.Gallagher (1929),
The Lincoln Memorial Hospital case, in which two judges did not participate, is ambiguous in its decision. The owner taxpayer was a corporation organized for profit, and the charitable user was a nonprofit corporation. Although the court seems to recognize a rule of law arising from the Zangerle case that ownership and charitable use must coincide, before affirming the decision of the Board of Tax Appeals denying exemption it observes, "Besides it is obvious from the financial setup described that a large majority of those who availed themselves of the hospital facilities were patients who paid for the attention and accommodations they received and that nonpaying charitable *238 patients were decidedly in the minority." (This hardly conforms to the view of the Carmelite Sisters case thereafter decided.)
Nor do we derive anything authoritative from the case ofParkwood Villa, Inc., v. Auditor,
We observe, too, the case of Dayton v. Haines, Aud. (1951),
"Although the elements of ownership of the real property in the instant case are partly vested in the lessor and partly in the lessee, no one else has any interest of ownership whatever in that real property. Hence, since both the lessor and lessee are public bodies, there is nothing but a public ownership of that property, and the property is, to use the words of Section
We thus have arrived at a point in the development of the law pertaining to the exemption, where emphasis on charitable use of the property involved has given way to an emphasis on the nonprofit and exclusively charitable service character of the owner of the property charitably used; where the decisions tending to support coincidence of ownership and charitable use are ambiguous and are not sound authority for that proposition of tax law; where there are no specific and definitive decisions denying exemption where ownership is by a nonprofit institution of an exclusively charitable service character and the property is used by another nonprofit or public institution of an exclusively charitable service character; and where, with regard to the exemption, under Section
We also have arrived at the point in taxation exemption cases where we no longer have to resort to tortuous construction of the statutes in the light of any supposed limitations contained in Section 2 of Article XII of the Constitution, for it has been concluded that the General Assembly has plenary power to select subjects for exemption limited only by the Bill of Rights and not by any other supposed constitutional limitations. DenisonUniversity v. Board of Tax Appeals (1965),
There can be no doubt from the provisions of the foundation trust agreement, from the provisions of the lease, and from the testimony, that the foundation is a *240
nonprofit institution so constituted that its property and energies are used exclusively for charitable purposes, including providing for the care of the aged and infirm. There can also be no doubt from the provisions of the statutes (Section
Likewise, following the rationale of Dayton v. Haines, Aud.
(1959),
The decision of the Board of Tax Appeals is, therefore, unreasonable, and unlawful, the same is reversed and vacated, and final judgment is entered allowing the exemption applied for.
Decision reversed.
COLE, P. J., and YOUNGER, J., concur. *241