Bistline v. Bassett

Citation47 Idaho 66,272 P. 696
Decision Date08 December 1928
Docket Number5023
PartiesJ. M. BISTLINE, et al., Appellants, v. C. H. BASSETT, et al., Constituting Board of Equalization, Bannock County, Respondents
CourtUnited States State Supreme Court of Idaho

TAXATION-EXEMPTIONS-HOSPITALS.

1. Language of statute exempting certain property from taxation must be given its ordinary meaning.

2. Exemptions from taxation are never presumed, but burden is on claimant to establish right thereto.

3. Alleged grant of exemption from taxation will be strictly construed, and must be in terms so specific and certain as to leave no room for doubt.

4. Claim for exemption from taxation cannot be sustained, unless it is shown to be within spirit as well as letter of law.

5. Where use of property is criterion in determining tax exemption, exemption is lost if property is appropriated to other uses.

6. To ascertain whether property of corporation falls within exemption statute, C. S., sec. 3099, benevolent purposes from which no profit is derived, it must not only be judged by its declared objects, but also by what use is actually made of hospital.

7. Hospital used for private practice and profit of DOCTors which was between $20,000 and $30,000 per annum, held not exempt from taxation, within C. S., sec. 3099, as hospital "from which no profit is derived," since "hospital" within such statute is institution for reception and care of sick, wounded, infirm, or aged persons, "benevolent," though of broader meaning than "charity," is frequently used as synonymous with "charity," and contemplates conferring of benefits as distinguished from making profits and "use" has no different meaning than "actual use" or "exclusive use."

APPEAL from District Court of the Fifth Judicial District, for Bannock County. Hon. Ralph W. Adair, Judge.

Proceeding to determine taxability of property. From judgment affirming order denying petition to have property placed on tax-rolls petitioners appeal. Reversed and remanded.

Reversed and remanded with directions. Costs to appellants. Petitions for rehearing denied.

F. M. Bistline, for Appellants.

A "hospital used for benevolent purposes" must be one whose leading purpose is benevolence or charity and not the pecuniary profit or financial gain of its stockholders or members, and must be supported by charity and controlled by the public. (Nuns of Third Order of St. Dominic v. Younkin, 118 Kan. 554, 235 P. 869; City of Knoxville v. Ft. Sanders Hospital, 148 Tenn. 699, 257 S.W. 408; City of Vicksburg v. Vicksburg Sanitorium, 117 Miss. 709, 78 So. 702; Gray Street Infirmary v. City of Louisville, 23 Ky. Law, 1274, 65 S.W. 11, 55 L. R. A. 270.)

"The use of the property at the time in question is the test of exemption. As applied to charitable purposes, these provisions exempt from taxation only such property as is used exclusively, directly and immediately in dispensing charity." (Nuns of Third Order of St. Dominic v. Younkin, supra, and cases therein cited.)

The term hospital applies to an institution supported in whole or in part at public expense or by charity and not to a hospital treating patients at times for charity, but with a primary purpose to treat patients for pay. (City of Vicksburg v. Vicksburg Sanitorium, 117 Miss. 709, 78 So. 702.)

Chance for making profit, not actual profit is test whether property is for public use within tax exemption statute, test being whether there is opportunity for making profit. (Pomfret School v. Town of Pomfret, 105 Conn. 456, 136 A. 88.)

L. E. Glennon, J. H. Peterson and H. J. Swanson, for Respondents.

The fact that a hospital charges its patients who are able to pay and in general conducts its operations along business lines, does not even render it noncharitable, much less nonbenevolent. (30 C. J. 462; Corporations of Sisters of Mercy v. Lane County, 123 Ore. 144, 261 P. 694; City of Dayton v. Trustee of Speers Hospital, 165 Ky. 56, Ann. Cas. 1917B, 275, 176 S.W. 361, L. R. A. 1917B, 779; Hot Springs School District v. Sisters of Mercy, 84 Ark. 497, 106 S.W. 954; St. Joseph's Hospital Assn. v. Ashland County, 96 Wis. 636, 72 N.W. 43; Lutheran Hospital Assn. v. Baker, 40 S.D. 226, 167 N.W. 148; State v. Powers, 10 Mo.App. 263; Id., 74 Mo. 476; Sisters of Third Order of St. Francis v. Board of Review, 231 Ill. 317, 83 N.E. 272.)

HARTSON, District Judge. Wm. E. Lee, C. J., and Budge, Givens, and Taylor, JJ., concur.

OPINION

HARTSON, District Judge.

--Appellants, who are residents and taxpayers of Bannock county, instituted this proceeding by petition addressed to the county commissioners sitting as a board of equalization, asking that certain real estate, with the improvements, furniture, fixtures and equipment, be placed upon the tax-rolls for 1925 and preceding years. The board denied the petition. Appeal was taken to the district court where the order was affirmed and the appeal dismissed. This appeal is from the judgment.

The property is a two-story brick building with contents in the city of Pocatello. It is occupied by Lynn Brothers Benevolent Hospital. In 1919, a corporation named Lynn Brothers Hospital was organized, capital $ 15,000, divided into 15,000 shares of $ 1.00 par value. Drs. I. W. Lynn and J. H. Lynn own and hold all but three shares. There are five directors, three of whom are Dr. and Mrs. I. W. Lynn and J. H. Lynn. The corporate object, as expressed in the articles, was to conduct "a general hospital and training school for nurses." In 1920, Lynn Brothers Hospital received title to the property. Equipment was provided for a hospital of 40 beds. On April 9, 1925, Lynn Brothers Benevolent Hospital, a benevolent association, was incorporated, without stock. Interest is evidenced by memberships, only four of which have been issued. The members are Dr. and Mrs. I. W. Lynn, J. H. Lynn and R. W. Mulica. The first three are the officers. The Doctors Lynn and R. W. Mulica are the directors. The expressed objects are similar to, if somewhat broader than that of Lynn Brothers Hospital, but "pecuniary profit is not the object. . . ." On April 30, 1925, Lynn Brothers Hospital conveyed the property to Lynn Brothers Benevolent Hospital.

The witness R. D. Leach, accountant, testified from examination of books of the hospital that, as a unit, it was not profitable or self-sustaining during 1924, 1925, but that there was a deficit in operating expenses. He produced his written report from which, and his testimony, it appears that total income, cash and charge accounts, in 1924, was $ 64,510.39 and in 1925 was $ 59,881.59. These figures, however, include personal calls, clinic, obstetrics, surgery and other items not properly chargeable to expense of the hospital, because they are income from Lynn Brothers' professional services. The Lynns, as will further appear, use the hospital and equipment in their private practice. They operate their own business and that of the hospital together. Eliminating such items, income of the hospital for 1924, 1925 is $ 25,444.69 and $ 23,147.50, respectively. Deficits were paid by the Lynns out of a bank account common to themselves and the hospital. No books or accounts are kept by the Lynns separately from those of the hospital. All hospital bills and fees of the Lynns are paid out of cash, and the remainder deposited in the bank account. No rent is charged or paid by the Lynns. The room rate for patients averages $ 35 per week. All are charged for hospital services and collections made where possible. Two store-rooms on the ground floor are rented from time to time. Five or six automobiles are in use, one as an ambulance, another for the collector, and the others by the Lynns personally. About $ 1,200 was spent in advertising the hospital.

Dr. I. W. Lynn testified, in part, that he and his brother are in charge. No discrimination is made between patients. Many charity patients are received. The wives of the doctors have at times worked without charge. The object of Lynn Brothers Hospital and Lynn Brothers Benevolent Hospital was to operate without hope of gain for benevolent purposes. The Lynns have derived no profit from the hospital, never hope to, and he knows they never will. There has been no endowment from outside sources. There are no members other than the original incorporators. He and his brother practice at the hospital, have all their patients there, and maintain no other offices. Any outside physician may bring patients, but none is actually treated by other doctors except incidentally as assistants. The Lynns give the hospital about one-third of what they make, but they lose on the hospital. All money received for professional services, not expended for hospital bills, belongs to them, and they do what they want with it. As to operations, they make charges customary among other physicians and surgeons.

The trial court found that the hospital is used for benevolent purposes, and no profit is derived therefrom.

Numerous errors are assigned, but we need discuss only that relating to insufficiency of the evidence to support the findings. There is no conflict in the evidence.

The claim of exemption from taxation must be justified, if at all, by the terms of C. S., sec. 3099, the material part of which reads as follows:

"The following property is exempt from taxation: . . . .

"Hospitals, with their furniture and equipment, used for benevolent purposes, with the ground appurtenant thereto and used therewith, from which no profit is derived."

It will be observed that the exemption depends solely upon the use of the property, and not upon the ownership, nor the character charitable or otherwise, of the owner. It is purely a property exemption. Language of exemption statutes must be given its ordinary meaning. (City of Pasadena v. Los Angeles County,...

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