Despite the declaration of purpose found in the charter of a hospital corporation, the court will examine and ascertain whether the property itself is dedicated to a beneficent purpose and used exclusively as an institution of purely public charity. The evidence discloses that the hospital in question was engaged principally for non-charitable purposes and apparently chiefly for the benefit of its staff. Hence, the trial judge did not err in dissolving a temporary injunction obtained under a petition by the hospital corporation, seeking to restrain and enjoin the levy and future collection of ad valorem taxes on its property and alleging that it was entitled to an exemption as being a purely public charitable institution.

ARGUED JANUARY 17, 1962 — DECIDED FEBRUARY 12, 1962.

Georgia Osteopathic Hospital, Inc., doing business as Doctors Hospital, filed a petition in the Superior Court of DeKalb County against the Tax Assessor, Tax Commissioner, and Sheriff of DeKalb County. The petition in its final form alleged the plaintiff was a non-profit charitable corporation without capital stock, chartered on December 19, 1950, by the Superior Court of Fulton County. The petition prayed for an injunction to restrain the defendant tax commissioner and sheriff from collecting the ad valorem taxes assessed against the plaintiff for the years 1959 and 1960, and against the tax assessors to enjoin them from levying similar taxes on the plaintiff's real and personal property. The judge of the superior court issued a rule nisi requiring the defendants to appear and answer the petition, and granted a temporary restraining order until the case could be heard.

The evidence submitted upon the trial consisted of testimony of the president, administrator and members of the plaintiff corporation's staff, and of financial statements of the institution covering the period for which the accrued ad valorem taxes were assessed. All of the evidence adduced before the judge when the case came on for hearing before him will not be set forth, but only that which relates to the single question at issue, whether the corporation was a non-profit, purely charitable institution. The record discloses that separate sets of books were kept for the Doctors Hospital and the Georgia Osteopathic Hospital, Inc., though the former was mere trade name of the latter. The statement furnished by the plaintiff and introduced into evidence showed the assets of the Doctors Hospital to be over $86,000, and that other corporate assets of the plaintiff were slightly less than $10,000. Other pertinent facts shown by the evidence are set out in succeeding paragraphs of this statement of facts.

There are approximately twelve or thirteen doctors on the staff of this twenty bed hospital. Treatment at the hospital is limited to patients of doctors on the staff of the hospital and the general public is not admitted without an order from a doctor on the staff. Patients are charged for the services of the hospital and the hospital has a substantial profit from its operation. Gross income for the fiscal year ending August 31, 1960, was $131,547.76; for the twelve months ending December 31, 1960, gross income was $146,879.72 and net income was $17,860.81. The above referred to statement of income, twelve months ending December 31, 1960, shows "Free Service — General Patients" $860.25. The Doctors Hospital makes a charge to all patients entering the hospital for the services rendered by the hospital. At an accounting date, in this case August 31, 1960, uncollected funds are charged off as charity or bad debts against the outstanding balance on the various accounts.

According to the testimony of the plaintiff hospital corporation's administrator, the hospital also makes a charge or collects fees on behalf of the doctors on its staff in some cases. Payments in excess of $500.00 a month for a long period have been made by the hospital to an anesthetist as well as to other doctors on the staff.

The administrator further testified: "Patients are admitted to our hospital by their particular doctor who admits the patient. Well, of course, if it is an emergency, we ask if they have a doctor on our staff, which we immediately call up. Usually the only patients we admit are admitted by doctors on our staff — they'd have to be sent there by the doctor. In other cases, it would not be the general public walking in no more than you or I or anybody else can be admitted, no one can be admitted without an order from the doctor.

"We do have two accounts, one Doctors Hospital and one Corporate Division account. The Doctors Hospital account is money that we used to operate this hospital as of that date. . . . The Corporate Division is not money that is not being used for nothing, it is money that is being used for something; if for no other purpose it is used because it is in readiness for the needs of the hospital.

"When I was talking about $7,500.00 for charity during this fiscal period, I was including this $5,673.20 that I have listed as provision for uncollectible, bad debts. I consider all bad debts personally as charity because this is something, we have to produce a service and we are not getting paid for it, and to me it is charity. In order to come up to the figure I used with Mr. Mackay, I would have to include bad debts because I only show $860.25 for this particular year. There has not been any effort to collect bad debts until we recently, not during this accounting period, but recently turned them over to collectors for the first time since I have been there. We do not turn them over to collectors if they can pay us anything, even a dollar a month. We do not file hospital liens yet."

An examination of the audit of the plaintiff's books showed substantially what is testified by the administrator.

It was explained by the same witness that the hospital accepted patients on what he termed a contract adjustment basis, that he stated meant for whatever amount of hospital insurance such patients had. He did not testify that on such accounts the hospital did not realize a profit.

QUILLIAN, Justice.

The sole question for decision is whether, according to the evidence submitted upon the trial of the case, the plaintiff hospital corporation was a purely charitable institution within the meaning of the Constitution of 1945, Art. VII, Sec. I, Par. IV ( Code Ann. § 2-5404), and the statutes of the State embodied in Code Ann. § 92-201 (Ga. L. 1946, p. 12, and Ga. L. 1947, p. 1183).

In the case of Elder v. Henrietta Egleston Hospital, 205 Ga. 489, 492 ( 53 S.E.2d 751) it is held: "In 1946 the General Assembly passed an act exempting from taxation all of the property enumerated in the above-stated clause of the Constitution, using the identical language there employed, Ga. L. 1946, p. 12. By that act the General Assembly fully exhausted its constitutional power to make exemptions, and the amending act of 1947 (Ga. L. 1947, p. 1183), which expressly exempted from taxation all hospitals of purely public charity added nothing to what the General Assembly had previously done by the act of 1946."

This court in the same well considered case (before the writer became one of its members) made clear that a purely charitable institution, a hospital, was not removed from that category simply because it derived a profit from the patronage of patients who were able to pay, so long as the money earned was reserved for the purpose of carrying out its purely charitable purposes. The opinion recognized that as a matter of common sense that it was necessary for such institution to acquire and maintain a surplus in order to carry out its charitable design by the expansion of its facilities and services.

In the case of Mu Beta Chapter c. House Corp. v. Davison, 192 Ga. 124, 126 ( 14 S.E.2d 744), the rule is stated: "The test is not whether the plaintiff is an organization of purely public charity, but whether the property itself is dedicated to charity and used exclusively as an institution of purely public charity . . . It is the use to which the property is put, rather than the declaration of purpose found in its owner's charter, that determines the question of exemption from taxation."

The constitutional provisions for tax exemption of public charities were clearly summarized in a recent opinion of this court, United Hospitals Assn. v. Fulton County, 216 Ga. 30, 32 ( 114 S.E.2d 524): "There are infinite charities that deserve the plaudits of all mankind, but the Constitution restricts tax exemption of institutions of charity to those and those only that are `purely' charity and also that are `public' charity. Without a positively fixed recognition of the indispensability of the presence of these two qualifying words, courts would ramble in a wilderness of private charitable actions in seeking an answer to their eligibility to tax exemption. We have looked with apprehension upon national legislation under the `general welfare clause' of our Federal Constitution which may be welfare for special groups but not the general public. Our great admiration for all charitable acts must not cause us to overlook the plain mandate of the Constitution."

Applying the principles, to which we refer, to the facts of the present case, we must determine whether there was evidence upon which the trial judge could predicate his judgment dissolving the temporary injunction restraining the defendants from enforcing the ad valorem taxes assessed against the property of the plaintiff corporation and in the future assessing like ad valorem taxes against it, which was in effect holding that the plaintiff was not a purely charitable institution.

We think the issue is so clearly made by the pleadings and evidence quoted in the foregoing statement of facts as to require little discussion. While the plaintiff corporation from the facts shown in the record is rendering, as is the case of most hospitals and all skilled physicians, a valuable and splendid service in the healing of the sick and injured, we can not hold that under the facts developed by the record it functions as a purely charitable institution.

According to the testimony of its own officers and the facts reflected by its records the hospital operated generally for profit, and while there was some evidence that it did on occasion treat indigent patients, the general practice of the institution was to collect all that it could from its patients, and only charge off as charity those bills it was unable to collect. The evidence in this behalf showed it employed the methods of collection customarily used by business institutions. The evidence is very clear that the principal beneficiaries of the hospital's activities were its employees and the doctors who used its facilities in the profitable practice of their profession and the collection of accounts due them by patients.

In this connection the observation is inescapable that only the staff doctors were permitted the use of the hospital facilities. There was proof that except in emergency cases only patients referred by them could be admitted to the hospital, and that in emergency cases they were called to perform surgical operations or medically treat the emergency patients.

The plaintiff, plaintiff in error here, contends that as in the Egleston Hospital case, supra, its purpose was to accumulate funds so as to expand its facilities so that it could carry out its charitable design. The cases are distinguishable upon their facts. In the Egleston Hospital case the hospital was functioning as a charitable institution and earning money from patients able to pay was a mere incident in its operation, and the money so earned was to carry on the beneficent work of the institution. Here, the Doctors Hospital is, according to the evidence adduced upon the trial, engaged principally for non-charitable purposes and apparently chiefly for the benefit of its staff.

Judgment affirmed. All the Justices concur.