Summary
In Peachtree on Peachtree Inn v. Camp, 120 Ga.App. 403, 170 S.E.2d 709 (1969), this Court held that although a small portion of a building owned by the Georgia Baptist Convention and used by two retail stores “would not be tax exempt” because “[t]he area where the stores are located is being used to gain rental [income] and not for the primary purpose of operating the [home],” that portion of the same building actually used as a home for the aged was tax-exempt, even though its residents paid rent.
Summary of this case from Fulton Cnty. Bd. of Tax Assessors v. Piedmont Park ConservancyOpinion
44368.
ARGUED APRIL 7, 1969.
DECIDED SEPTEMBER 4, 1969. REHEARING DENIED SEPTEMBER 30, 1969.
Tax appeal. Fulton Superior Court. Before Judge Etheridge.
Poole, Pearce Cooper, John J. Poole, Edwin Pearce, George V. Boyd, King Spalding, John Izzard, Daniel J. O'Connor, Jr., for appellant.
Harold Sheats, J. C. Murphy, Charles M. Lokey, for appellees.
Eugene T. Branch, Richard A. Allison, Nall, Miller, Cadenhead Dennis, Edward S. White, Haas, Holland, Freeman, Levison Gibert, Hugh W. Gibert, amicus curiae.
1. Since the appellant is a purely public charity and meets the requirements of Code Ann. § 92-201, that portion of its property which is being used as a home for the aged is tax exempt.
2. Where there is no certificate by the trial judge, the refusal to grant a motion for summary judgment is not subject to review by direct appeal or otherwise.
ARGUED APRIL 7, 1969 — DECIDED SEPTEMBER 4, 1969 — REHEARING DENIED SEPTEMBER 30, 1969 — CERT. APPLIED FOR.
The facts as stated by the appellant in its brief are as follows: "The Georgia Baptist Convention was commissioned by the Beazley Foundation, Incorporated, a tax-exempt charitable corporation, to charter a Georgia corporation through which one of the foundation's charitable purposes, to wit, providing, or assisting in providing, for the needs of elderly retired people of limited income, might be carried out in Georgia.
"The understanding between the foundation and the Georgia Baptist Convention was that when such corporation had been chartered and organized, the foundation would convey to it by deed of gift a 17-story building in downtown Atlanta and all real and personal property in and pertaining to the building, in order that a home for elderly persons of limited income might be operated in such building in furtherance of the foundation's charitable purpose. In pursuance of said understanding, the Georgia Baptist Convention caused the appellant, Peachtree on Peachtree, Incorporated, to be chartered on November 22, 1966, as a charitable non-profit corporation having no capital stock. The principal charitable purpose of appellant is to acquire, own, maintain and operate an institution to receive, house, feed and care for aged men and women who otherwise could not afford adequate facilities and to provide for their physical, mental and spiritual welfare.
"On December 31, 1966, the foundation, as anticipated, deeded the 17-story building (formerly known as the Peachtree on Peachtree Hotel) and all associated property to appellant.
"In 1967, appellant borrowed $250,000 to renovate and improve the building so as to place it in proper condition for use by elderly residents. This loan had the prior approval of the executive committee of the Georgia Baptist Convention. The foundation made an additional charitable gift of $50,000 to appellant to furnish funds with which operations could begin.
"The building was renamed the Peachtree on Peachtree Inn (the `Inn') and its renovation commenced on a floor by floor basis from the first floor upwards. By November 1967 ten floors had been completely renovated and the remaining floors were scheduled for renovation as funds and occupancy dictated. The inn consists of a lower lobby which houses cooking, dining, and other service facilities; a lobby level which houses the lobby, a chapel-library and office and administrative areas; a street level that houses two retail stores together with the entrance and service areas that serve the residents of the inn; and fourteen floors each containing twelve private or semiprivate rooms and living areas for the Inn's residents.
"As reflected in its admission policy, the inn is used to house and care for aged men and women who, though not entirely without income from social security, relatives or friends, or other retirement funds, do not have an income which is sufficient to support them in anything more than conditions detrimental to the well-being of the aged. Requirements for admission are that a person be not less than 60 years of age, be of good moral character, and be ambulatory. No preference is given to members of any church or denomination, nor is there any requirement that an applicant have any religious affiliation. The only other requirement is that the applicant be of such character that his associations with the other residents will not be offensive or create unpleasant surroundings.
"Each resident of the inn is assigned a private or semi-private room, is furnished clean linen and towels and periodic cleaning service with respect to his room, can use the common areas and is entitled to eat all of his meals in the inn dining room. For these facilities, including three nourishing meals per day, a resident or his sponsor was initially called upon to make a $100 deposit upon admission and to pay a monthly sum ranging from $140 to $175. Beginning with July 1968, to the extent that the resident or his sponsor was financially able to do so, a deposit of $200 has been made and each resident is charged only to the extent that he or his sponsor is able to defray the maximum charge of $140 to $175 a month.
"When the Inn was conveyed to appellant, tenants occupied two retail stores on the ground floor under ten-year leases and such tenants continue to operate their stores. The area devoted to these two stores is approximately 4% of the total usable area in the building. Aggregate annual rentals received by appellant for these stores, in the amount of $22,000 are applied exclusively against the direct cost of operating the Inn, which cost was budgeted at $276, 156 for 1968.
"The aggregate monthly payments made by residents plus rentals from the two stores have fallen far short of covering the direct cost of operating the inn. The main items of operating expense have been incurred for meals, cleaning the inn including the residents' rooms and furnishing linens and towels. In 1967, appellant incurred an operating deficit of $65,950. In addition to the aforementioned $50,000 gift received from the Foundation, appellant received charitable contributions from the Georgia Baptist Convention in the amount of $6,000 and from other persons in the amount of $1,525 which were applied against such deficit. These contributions totaling $57,525 fell $8,425 short of covering the 1967 deficit. Appellant's trustees realized that the inn would probably suffer a similar loss in 1968 and discussed this concern with the foundation which agreed to give $25,000 if the trustees would raise $25,000 in the Atlanta community. The trustees raised $26,014 from 23 persons and the foundation contributed $25,000 as promised. Anticipating a loss in 1968 approximately equal to that in 1967, the foundation further agreed to match local donations up to $33,000. For the first three months of 1968 the operating deficit was $10,008.
"Not only have the payments made by the residents plus the store rentals been insufficient to cover direct operating expenses of the inn, but no part of such payments have been applied towards mortgage amortization on the building, it having been unencumbered when received from the foundation. Likewise, no part of such payments is applied towards the amortization of the $250,000 loan obtained to renovate and improve the building. Each year appellant requests the Georgia Baptist Convention to pay the accrued interest and principal due on the loan. The 1968 budget of the convention included $35,000 for that purpose. In effect, all residents of the inn have the use and enjoyment of the building, furnishings and improvements without cost or obligation — that is, rent free.
"As of November 30, 1967, the inn was home to approximately one-half of the 169 residents which it plans ultimately to accommodate. Of all the residents of the inn, 85% had incomes below the poverty level for persons of their age. Poverty levels are measured by the objective standards promulgated by the Atlanta Housing Authority. Two-thirds of the residents had a net worth that is below the level considered necessary by the Atlanta Housing Authority to raise a person of limited income above the poverty level.
"The policy statement of the inn provides that consideration would be given to the financial needs of individual residents with respect to whether monthly payments might be reduced in given situations. When the inn opened in 1967, all available funds were utilized to renovate and prepare the building for occupancy including the addition of eating facilities. At that time there were no additional funds available to defray the direct costs of operating the inn. In July, 1968, through the continuing generosity of the foundation, it became possible for appellant to fully effectuate this policy by accepting otherwise qualified residents who were unable even to make the minimum monthly payments established by the inn, even though, as indicated, these minimum payments fell far short of defraying a resident's pro-rata cost of operating the inn. In keeping with this new capability two persons had already been accepted on a substantially reduced payment basis by July 26, 1968.
"In 1967, the joint City-County Board of Tax Assessors of the City of Atlanta and Fulton County, Georgia, assessed the inn and all personal property in and pertaining thereto for ad valorem tax purposes notwithstanding appellant's request to the board that its property be exempted from taxation as an institution of purely public charity. Subsequently, appellant received notices of ad valorem taxes due to Fulton County, and a fi. fa. notice in favor of the City of Atlanta, all pertaining to ad valorem taxes alleged to be due for the year 1967. Thereafter, appellant brought a declaratory judgment action in the Fulton Superior Court principally seeking to have itself declared an institution of purely public charity with respect to the property in question and therefore exempt under Georgia law from the ad valorem taxes sought to be collected.
"The superior court granted appellees' motion to strike allegations and exhibits showing that appellant is exempt from Federal income taxes and has been granted a free business license by the City of Atlanta."
The appellees agree that the statement of facts contained in the appellant's brief is correct but state that there are additional pertinent facts which are as follows: "Prospective residents of Peachtree on Peachtree Inn are required to file an application for admission." The questions solicited under this application contain requirements for family history, church history, health history, fraternal and life insurance, statement of financial resources, together with the reservation in the board of trustees to accept or reject any application for admission.
"The prospective resident is required to sign an agreement to pay rent in advance in monthly installments. A sponsor is required to guarantee the payment of all residence fees and assume responsibility for the care of the resident at any time he/she requires special facilities or services.
"A physical examination is required, and the physician clothed with authority to recommend or reject a prospective resident on physical grounds.
"An additional health certificate with more detail is required of each prospective resident. The consent of the resident to inspection of his/her private medical history was likewise required... The application is significant because same specifically requires that the applicant pay the expense of the medical examination.
"By stipulation of counsel the applications of all persons in residence on the date the petition was filed were tabulated for financial responsibility and income. From this it is evident that 43 of the residents had cash and investments in excess of $5,000; 13 had cash and investments in excess of $30,000.
"The same stipulation indicates that of 94 residents, 56 had incomes in excess of $150 per month.
"The purpose of the institution is stated in Exhibit L of the stipulation: `The purpose of Peachtree on Peachtree Inn is to provide a residence where elderly people of modest means can procure shelter, food, companionship and the comforts of a Christian home. The minimum age for admission will be 60.'
"The same stipulation reveals that residents are required to be persons of good character, who are ambulatory and able to accept responsibility for their own care. Each resident must have an acceptable sponsor or sponsor who guarantee the full payment of resident fees and assume responsibility for the care of the resident at any time he/she requires care beyond the facilities or services of the inn.
"The same Exhibit, paragraph 6, shows that residents are required to deposit $200 in advance, with half of that amount held in reserve to be applied on the resident's last month's rent, and to repay any amount spent on resident's behalf. All charges are payable in advance.
"Exhibit M furnished by appellant as material evidence on the motion for summary judgment sets up the scale of services and costs to residents."
Both sides made motions for summary judgment based on the pleadings, certain affidavits and stipulations. After a hearing on such motions, the trial judge denied the appellant's motion and granted the appellees' motion. From that judgment appeal was taken.
Code Ann. § 92-201 (Ga. L. 1943, p. 348; 1946, p. 12; 1947, p. 1183; 1955, pp. 262, 263; 1965, pp. 182, 183), provides in part: "The following described property shall be exempt from taxation, to wit: ... all institutions of purely public charity; ... provided the property so exempted be not used for the purpose of private or corporate profit and income, distributable to shareholders in corporations owning such property or to other owners of such property, and any income from such property is used exclusively for ... charitable purposes, ... and for the purpose of maintaining and operating such institutions; this exemption shall not apply to real estate or buildings other than those used for the operating of such institution and which is rented, leased or otherwise used for the primary purpose of securing an income thereon." See Georgia Constitution, Art. VII, Sec. I, Par. IV, as amended ( Code Ann. § 2-5404).
The question for determination is whether the appellant qualifies for tax exemption under the provisions of the above statute. To meet the criterion the institution must be purely charitable and public. "A familiar meaning of the word `charity' is almsgiving, but as used in the law it may include `substantially any scheme or effort to better the condition of society or any considerable part of it.' Wilson v. Independence First National Bank, 164 Iowa 402, 412 ( 145 N.W. 948, AC 1916D, 481). `"Charity," as used in tax exemption statutes, is not restricted to the relief of the sick or indigent, but extends to other forms of philanthropy or public beneficence, such as practical enterprises for the good of humanity, operated at moderate cost to the beneficiaries, or enterprises operated for the general improvement and happiness of mankind.' 61 CJ 455, § 505." Sharpe v. Central Ga. Council, B. S. A., 185 Ga. 813 ( 196 S.E. 762, 116 ALR 373).
The appellees contend that the appellant is not a purely public charity because the residents are required to pay a monthly rental. In the appellant's statement of facts, agreed to by the appellees, it states: "In July, 1968, through the continuing generosity of the foundation, it became possible for appellant to fully effectuate this policy by accepting otherwise qualified residents who were unable even to make the minimum monthly payments established by the inn, even though, as indicated, these minimum payments fell far short of defraying a resident's pro-rata cost of operating the inn. In keeping with this new capability two persons had already been accepted on a substantially reduced payment basis by July 26, 1968."
The fact that the residents are charged a rental toward the expenses of operating the inn would not destroy the charitable nature of the institution. Brewer v. American Missionary Assn., 124 Ga. 490 ( 52 S.E. 804); Williamson v. Housing Authority of Augusta, 186 Ga. 673, 690 ( 199 S.E. 43). It should be noted that payments made by the residents plus the store rentals have been insufficient to cover the direct operating expenses of the inn. All income is used for the operation, maintenance and enlarging the facilities with no part of its income being distributed to any person with an interest therein.
It is also contended that the inn is not public because the residents must meet certain qualifications before they are eligible to be admitted. With this contention we do not agree. The requirements are that the residents must be at least 60 years of age, of good moral character, ambulatory and must pass a medical examination. While the inn is not open to the whole public it is open "to the whole of the classes for whose relief they are intended or adapted." Trustees, Academy of Richmond County v. Bohler, 80 Ga. 159, 161 ( 7 S.E. 633); Tharpe v. Central Ga. Council, B. S. A., 185 Ga. 810, 816, supra.
The case sub judice is distinguishable from Georgia Osteopathic Hospital v. Alford, 217 Ga. 663 ( 124 S.E.2d 402); United Hospitals Service Assn. v. Fulton County, 216 Ga. 30 ( 114 S.E.2d 524); and Camp v. Fulton County Medical Society, 219 Ga. 602 ( 135 S.E.2d 277), cited by the appellee. In the Georgia Osteopathic Hospital case, the facts revealed that the hospital was operated primarily for a profit from which the doctors benefited. The United Hospitals Service Assn. case held that it was not public because only those who bought a policy would receive any benefits, and only such benefits as were paid for by the premium with no free or extra service regardless of the circumstances. The Supreme Court held the Fulton County Medical Society building was taxable because the purpose of the society was for the improvement of the medical profession which only incidentally benefited the public.
In the present case the facts disclose that the inn's objective is to house, feed and care for aged men and women who otherwise could not afford adequate facilities and to provide for their physical, mental and spiritual welfare. As is stated in Bozeman Deaconess Foundation v. Ford, 151 Mont. 143, 148 ( 439 P.2d 915): "The concept of charity is not confined to the relief of the needy and destitute, for `aged people require care and attention apart from financial assistance, and the supply of this care and attention is as much a charitable and benevolent purpose as the relief of their financial wants.'"
Since the appellant is a purely public charity and meets the requirements of Code Ann. § 92-201, that portion of the property which is being used as a home for the aged is tax exempt. However, that part of the building consisting of two retail stores which are leased would not be tax exempt. The area where the stores are located is being used to gain rental and not for the primary purpose of operating the inn. Church of God v. City of Dalton, 216 Ga. 659 ( 119 S.E.2d 11).
The appellees' motion for a summary judgment prayed that the entire property located at 176 Peachtree Street, N.W., be declared subject to ad valorem taxation. The granting of the motion was error.
2. The appellant also enumerated as error the trial judge's failure to grant its motion for summary judgment. However, due to the fact that there was no certificate of the trial judge allowing an appeal of the refusal to grant the motion for summary judgment, this court is without authority to review such ruling. Code Ann. § 81A-156 (h) (Ga. L. 1966, pp. 609, 660; 1967, pp. 226, 238) provides: "an order denying summary judgment is not subject to review by direct appeal or otherwise, unless within 10 days of the order of denial the trial judge certifies that the order denying summary judgment as to any issue or as to any party should be subject to review." Moulder v. Steele, 118 Ga. App. 87 (3) ( 162 S.E.2d 785).
Judgment reversed. Bell, P. J., Jordan, P. J., Hall, Pannell, Deen and Whitman, JJ., concur. Felton, C. J., and Eberhardt, J., dissent.
In my opinion the facts of this case bring it squarely within the decision of the Supreme Court of Georgia in United Hospitals Service Assn. v. Fulton County, 216 Ga. 30 ( 114 S.E.2d 524). Under the facts of this case and under said decision of the Supreme Court the appellant here is not a pure charity or a purely public charity within the constitutional provisions of Code Ann. § 2-5404.
I am authorized to state that Judge Eberhardt concurs in this dissent.