Summary
affirming denial of charitable-use exemption for the part of charitable institution's property that was used as living quarters for employees of religious printing and publishing establishment
Summary of this case from Christian Voice of Cent. Ohio v. TestaOpinion
No. 28922
Decided July 1, 1942.
Taxation — Exemption — Property of institutions used exclusively for charitable purposes — Section 2, Article XII, Constitution — Section 5353, General Code — Property producing income used exclusively for charitable purposes, not exempt.
1. Property belonging to a charitable institution may not be exempted from taxation unless it is used exclusively for charitable purposes.
2. Under Section 2 of Article XII, Constitution of Ohio, and Section 5353, General Code, property which is used to produce income to be used exclusively for charitable purposes may not be exempted from taxation. The test is the present use of the property rather than the ultimate use of proceeds received from the property sought to be exempted.
APPEAL from the Board of Tax Appeals.
Appellant, a corporation not for profit, filed two complaints with the Board of Tax Appeals asking its consent to the exemption of certain real and personal property from taxation upon the ground that it constituted property belonging to an institution used exclusively for charitable purposes within the meaning of Section 5353, General Code.
The evidence shows that the entire group of buildings contains approximately 1,819,660 cubic feet, not including the new storage and office building constructed in 1940. This cubage is subdivided for various uses as follows:
Dormitories, dining rooms and kitchen, 472,640 cubic feet, or 26 per cent of the total.
The chapel, used for public worship and located on the second floor above the warehouse, 41,820 cubic feet, or 2.3 per cent of the total.
The remaining 1,305,200 cubic feet, representing 71.7 per cent of the total cubage, is used for the housing of printing machinery and equipment, offices and warehouses — all used in connection with the publication of a number of religious papers, tracts, pamphlets, etc.
The evidence before the Board of Tax Appeals showed a subdivision of the 1940 assessment in the following approximate amounts:
Dormitories, dining rooms and kitchen $ 64,180 Chapel 18,310 Printing shops, warehouses, etc. 177,000 Two old dwellings destroyed in 1940 1,090 -------- Total 1940 building assessment $260,680
The personal property, including office furniture and fixtures, printing machine and equipment, was valued for 1940 in the sum of $132,323. The personal property in question consisted of printing equipment, manufacturing and manufactured stock and the equipment in lodging quarters and offices.
The Gospel Herald, published by appellant, had a circulation of about fifteen thousand per week, with three different subscription prices. There were a number of other publications, also sold at different subscription prices.
In answer to the question of whether the publications were sold and paid for, appellant's managing officer testified:
"Yes, they are paid for by them, but occasionally they are too poor to pay and if they are too poor to pay we do not stop the literature. We send it anyway. We contribute that."
However, other evidence shows that a considerable amount of literature is sent without charge to various institutions.
The net proceeds from the foregoing activities were used to help finance appellant's religious and charitable activities.
The Board of Tax Appeals denied consent to the exemption by reason of its finding that the property in question was not used exclusively for charitable purposes.
The cause comes to this court pursuant to an appeal under Section 5611-2, General Code.
Messrs. Hollington Macdonald, for appellant.
Mr. Thomas J. Herbert, attorney general, and Mr. Perry L. Graham, for appellee, William S. Evatt.
Cases decided by this court involving the exemption from taxation of charitable institutions must be read in the light of the then applicable constitutional and statutory provisions.
As said by Chief Justice Nichols in the case of Rose Institute v. Myers, Treas., 92 Ohio St. 252, 254, 110 N.E. 924:
"The Supreme Court has been frequently called upon to interpret the statutes exempting properties from taxation, and quite an array of reported cases on this subject are available."
In the more than a quarter of a century which has elapsed since that was written, another substantial array of cases on the same subject has been accumulated.
Under the wording of Section 2 of Article XII of the Constitution of Ohio now in force, such exemptions are now limited to those "institutions used exclusively for charitable purposes." (Italics ours.)
Section 5353, General Code, provides:
" * * * property belonging to institutions used exclusively for charitable purposes shall be exempt from taxation." (Italics ours.)
We have repeatedly held that statutes granting tax exemptions are to be strictly construed and that we indulge no presumption favorable to such exemptions.
In the recent case of In re Estate of Taylor, 139 Ohio St. 417, 40 N.E.2d 936, we held:
"A right to exemption from taxation must appear with reasonable certainty in the language of the Constitution or valid statute and must not depend upon a doubtful construction of such language."
In the case of Jones, Treas., v. Conn et al., Trustees, 116 Ohio St. 1, 155 N.E. 791, we held:
"Under Section 2 of Article XII of the Constitution of Ohio, in its present form, the personal property belonging to an institution of public charity is exempt from taxation only when used exclusively for charitable purposes * * *."
In the case of Zindorf v. Otterbein Press, 138 Ohio St. 287, 34 N.E.2d 748, we held:
"The use of property exclusively for charitable purposes is the criterion of exemption thereof from taxation. The right of exemption derived from Section 2 of Article XII of the state Constitution is lost if the property be appropriated to any other uses. ( Cullitan, Pros. Atty., v. Cunningham Sanitarium, 134 Ohio St. 99, approved and followed.)"
The case of American Issue Publishing Co. v. Evatt, 137 Ohio St. 264, 28 N.E.2d 613, is a border-line case and is to be confined to the facts of that case. As stated in the per curiam opinion, the court came to its conclusion "upon the facts outlined above."
In the instant case, the record shows that the gross sales of publications for the year 1939 amounted to $378,176.89; the net sales, $376,292.07.
The testimony shows that the surplus earnings or net profit, after paying the living expenses of workers amounting to $55,160.38 for the year and other expense of operation, was used for charitable purposes. Under some former language of the constitutional and statutory provisions this use of the property would not have precluded its exemption from taxation. However, under the present law, the test is the present use of the property rather than the ultimate use of the proceeds.
The use of part of these premises as living quarters for employees of the printing and publishing establishment and even of the purely religious activities of appellant is analogous to the "use" passed upon in the cases of Gerke, Treas., v. Purcell, 25 Ohio St. 229, and Watterson v. Halliday, Aud., 77 Ohio St. 150, 82 N.E. 962, inter alia. No separate question of exemption was raised in respect of the chapel, which occupied but 2.3 per cent of the cubic space in the buildings.
As said by Judge Matthias at page 292 in the case of Zindorf v. Otterbein Press, supra:
"This court will not interfere with a decision of the Board of Tax Appeals unless it appear from a consideration of the entire record that such decision is unreasonable or unlawful."
As we are of the opinion that the decision of the Board of Tax Appeals in the instant case is reasonable and lawful, such decision is affirmed.
Decision affirmed.
WEYGANDT, C.J., MATTHIAS and BETTMAN, JJ., concur.
WILLIAMS, HART and ZIMMERMAN, JJ., dissent.