Lead Opinion
Thе State Tax Commission appeals from an order of the surrogate denying its appeal from a pro forma order assessing the tax on transfers under the last will and testament of Emma B. Kennedy and exempting from taxation a bequest of $15,000 to the respondent “Alumnae Association of the School of Nursing of the Presbyterian Hospital in the City of New York.” The alumnae association was incorporated in 1899 by chapter 71 of the Laws of 1899, and, as its name imports, consists of graduate nurses of the Presbyterian Hospital. It had a membership, when first organized, of one hundred and nineteen. Since that time its membership has been augmented by thirty to forty graduates annually until 1926, and by sixty to seventy graduates annually thereafter. The initiation fee is five dollars. The dues for active resident members are five dollars a yeаr, and for non-resident and associate members three dollars. The objects of the association, as stated in its articles of incorporation, are:
(1) To promote a common fellowship among graduate nurses;
(2) To advance in every way the interests of all graduate nurses;
(3) To provide a benefit or loаn fund for its members when ill or otherwise in need, and to tender them pecuniary or other assistance;
(4) To secure a permanent home or club house for its members and to provide such other home or homes, or buildings as may be required to fully carry out the objects and purposes of said corporation.
Although the articles of incorporation provide that one of the objects of the association is to secure a permanent home or club house for its members, this has not been done.
The association also maintains two special funds. The larger of these, amounting, approximately, to $250,000, is the pension fund, out of which pensions at the rate of $300 a year are paid to members, who, on account of adversity, happen to be in nеed of help. This fund represents accumulations of contributions made throughout many years and the proceeds of entertainments given by the association. The benefit fund, now amounting to about $86,000, has been accumulated from contributions made by friends of the association. Out of this fund, loans of one hundred dollars, at interest of three per cent, are made to needy members of the association and sick benefits for eight weeks at the rate of twenty dollars a week are paid to members who are temporarily ill. At the present time pensions average annually about twenty-one, sick benefits thirty, and loans to members ten. It should be observed, however, that the bequest of Mrs. Kennedy is to the alumnae association and not to either of these special funds. Had the testatrix directed the bequest to be paid to either special fund a different question would be here. (Matter of Willey,
The question then is whether the bequest to the alumnae association for its general corporate purposes is to a charitable or benеvolent corporation so as to be exempted from taxation by the provisions of section 221 of the Tax Law. That section, so far as material, provides: “ Any property devised or bequeathed * * * to any religious, educational, library, charitablе, missionary, benevolent, hospital or infirmary corporation, wherever incorporated, * * * shall be exempted from and not subject to the provisions of this article. There shall also be exempted from and not subject to the provisions of this article personal property other than money or securities bequeathed to a corporation or association wherever incorporated or located, organized exclusively for the moral or
We need not concern ourselves with the second part of section 221, which is applicable to a bequest “ other than money or securities.” The bequest here, being of money, is only exempted if the alumnae association is “ charitable ” or “ benevolent.” That a distinction exists between a chаritable and a benevolent corporation is evident (People v. Powers,
At the outset we must divest our minds of any thought that an association is charitable because it is composed of those whose occupation it is to nurse the sick. The bequest here is not to destitute persons who are in need of nursing nor to nurses who are destitute. It is to a corporation whose membership consists of a restricted group of nurses whose only necessary qualification consists in graduation from the school of nursing of a particular hospital. A bequest not otherwise charitable is not rendered so because it is to persons who fоllow an employment which is noble and appealing. Neither the law of charities nor section 221 of the Tax Law creates any exemption in favor of those who minister to the sick as distinguished from persons engaged in any other occupation. Morеover, the general policy of the law in cases of this character is to require all to bear in just proportion the burdens of government and, therefore, to construe strictly statutes exempting property from taxation by denying exemptions which depend on doubtful implications. (People ex rel. D. K. E. Society v. Lawler,
The test of a charitable use and a charitable corporation is the same. (Matter of Beekman,
The alumnae association is essentially a co-opеrative enterprise, apparently organized and to a large extent sustained by members. For the advantages which it offers to its members they pay dues, which, except for the pension and benefit funds, are approximately the equivalent of the general expenses of the organization. Almost all the contributions of third persons to the alumnae association have been made to its two special funds. The revenues used for the general purposes of the association are those not рrincipally derived from gifts, testamentary or otherwise, but are the proceeds of dues, the payment of which by the membership is not for any purpose which is charitable or benevolent. Such a corporation, it seems to me, is a mutual benefit association, the members paying dues in return for reciprocal benefits. (Zollman Charities, §§ 206-208.) The relation then becomes one of contract, not of charity, between the corporation and its members. It is one thing if by endowment or donation a corporаtion is established and sustained for the benefit of others (Matter of Altman, supra), even though the beneficiaries contribute something for the advantages received. (Butterworth v. Keeler,
But we do not need to rest our decision on that ground alone, because the only corporate purpose that could at all be classified as benevolent consists in maintenance by the alumnse association of its special funds. All its other purposes are either fraternal or professional. Without violation of its corporate powers it could apply its general funds, including this bequest, exclusively to these non-сharitable purposes. To prevent this result it has become a settled principle of the law of charities that the right of a corporation to exemption must be determined from the articles of incorporation alone and that if any of its рowers are not charitable, the corporation is not entitled to be classified as a charity. (Matter of Beekman,
The first and last of the purposes of the alumnae association are “ to promote a common fellowship among graduate nurses ” and “ to sеcure a permanent home or club house for its members.” This is a fraternal and social, not a charitable or benevolent purpose and has been almost uniformly so held. (Starr v. Selleck,
The order should be reversed, with costs, and the proceeding remitted to the Surrogate’s Court for further action in accordance with this opinion.
Finch, P. J., Merrell and O’Malley, JJ., concur; Martin, J., dissents and votes for affirmance.
Dissenting Opinion
(dissenting). I vote to affirm. (See Matter of. Altman,
Order reversed, with costs, and proceeding remitted to the Surrogate’s Court for further action in accordance with the opinion.