Board of County Com'rs of Chaffee County v. Denver & R.G.R. Co. Employes' Relief Ass'n

• Citation: 203 P. 850,70 Colo. 592
• Decision Date: 09 January 1922
• Docket Number: 9967.
• Parties: BOARD OF COUNTY COM'RS OF CHAFFEE COUNTY et al. v. DENVER & R. G. R. CO. EMPLOYES' RELIEF ASS'N,
• Court: Supreme Court of Colorado

203 P. 850

70 Colo. 592

BOARD OF COUNTY COM'RS OF CHAFFEE COUNTY et al. v. DENVER & R. G. R. CO. EMPLOYES' RELIEF ASS'N,

No. 9967.

Supreme Court of Colorado, En Banc.

January 9, 1922

Error to District Court, Chaffee County; James L. Cooper, Judge.

Action by the Denver & Rio Grande Railroad Company Employés' Relief Association against the Board of County Commissioners of the County of Chaffee and John H. Owen, County Treasurer. From judgment for plaintiff, defendants bring error.

Reversed and remanded, with directions.

Wallace Schoolfield, of Salida, for plaintiffs in error.

E. N Clark and J. G. McMurry, both of Denver, for defendant in error.

ALLEN J.

This is an action brought by the Denver & Rio Grande Railroad Company Employés' Relief Association, a corporation, against the board of county commissioners of the county of Chaffee and the country tresurer of Chaffee county, to recover back the taxes which it paid for the year 1913. Plaintiff had judgment, and defendant brings the cause here for review.

The property which was assessed, and upon which the taxes were paid, consists of lots in the city of Salida. The lots or parcels of land constitute a tract comprising about three acres. There are, and were, buildings on the lots, and these are used for and in connection with a hospital.

The action was brought on the theory that plaintiff's land and the buildings thereon, are and were exempt from taxation under section 5, article 10, of the state Constitution, which section, so far as material here, reads as follows:

'Lots, with the buildings thereon, if said buildings are used solely and exclusively for * * * strictly charitable purposes, * * * shall be exempt from taxation unless otherwise provided by general law.'

The same exemption is provided by statute. Section 5545, subdivision 2, R. S. 1908.

The plaintiff contends, while the defendants deny, that the property in question, during the year 1913, and at other times, was 'used solely and exclusively for strictly charitable purposes.' The trial court upheld plaintiff's contention, and accordingly held the property to be exempt from taxation, and rendered judgment for the recovery of taxes paid.

The facts which are necessary and material to determine whether the property was used solely and exclusively for strictly charitable purposes are not in dispute. Whether the property was so used is, upon the record, a question of law, and the ultimate question to be determined upon this review.

The plaintiff below is a corporation. The purpose, or purposes, for which it was incorporated is or are as set forth in its certificate of incorporation reading, in part, as follows:

'That this corporation is formed for the purpose of creating a common fund by the payment of monthly dues by the members thereof, to be used in buying, leasing or renting lands on which to build hospitals, the building * * * of hospitals, the furnishing and equipping of the same, * * * the employment of surgeons, * * * and of every proper and desirable agency in the treatment of all such injuries and diseases of its members as it may see fit to undertake, and to provide for their burial, and the relief of their families, when they die, in such manner as may be provided in the constitution and by-laws of the association.'

It is clear from the foregoing that the primary purpose of plaintiff's incorporation was to create a common fund by the contribution of its members to secure and maintain a hospital for such members. The purpose is here mentioned because it throws light on the use made of the property. Whether it is exempt from taxation must depend on the use made of the property, rather than upon the charitable character of the owner. Horton v. Colorado Springs Society, 64 Colo. 529, 173 P. 61, L.R.A. 1918E, 966.

The complaint alleges, and there is no dispute as to the truth of the allegation, that plaintiff 'has at all times heretofore and does now conform to the purpose set forth in said certificate.' That the benefits of the association are intended to be limited to the members thereof is shown by the following provisions of its Constitution and by-laws (italics ours):

'Section 1. (Article 2.) Under the restriction and provisions hereinafter enumerated, the general object of the association shall be to create a fund for the purpose of furnishing medical and surgical treatment to its members, and to pay the funeral expenses of deceased members, and, in addition thereto, such relief for the family, in case of the death of a member as may be hereafter provided.

'Section 1. (Article 4.) The members of this association shall be required to pay monthly dues to the treasurer of the association.

'Section 1. (Article 7.) The funds hereby created shall be devoted exclusively to the payment of the legitimate expenses of the association, and the furnishing of relief to sick and disabled employés, as hereinafter more specifically set forth.

'Section 4. (Article 7.) To secure admission to any hospital of the association, and the treatment and medicines provided for in this constitution, the applicant must be a contributing employé of the Denver & Rio Grande Railroad Company, and must be identified as such.

'Section 1. (Article 4.) The membership of this association is involuntary, and includes all officers and employés of the Denver & Rio Grande Railroad Company.'

The plaintiff's lots, with the buildings thereon, were, during the year for which the taxes were paid, used for the purposes indicated by the above-mentioned certificate of incorporation, and the Constitution and by-laws.

Are such purposes 'strictly charitable purposes'? In other words, the question is, Is the hospital maintained as a charity? As to what constitutes a charity, both sides are satisfied with the definition given by Mr. Justice Gray in Jackson v. Phillips, 14 Allen (Mass.) 556, as follows:

'A charity, in the legal sense, may be more fully defined as a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government.'

This definition may also be found in a quotation in Bishop v. Treasurer, 37 Colo. 378, 384, 86 P. 1021.

Tested by the foregoing definition, any gift, donation, contribution, or enterprise involved in the instant case is not a charity. The manner in which, and the purposes for which, 'the common fund' is obtained by plaintiff is similar to that described in Haggerty v. St. Louis, etc., R. Co., 100 Mo.App. 424, 74 S.W. 456. Speaking with reference to the operation of a Relief Department of a Railroad Company, the court said:

'In our judgment the relief department, organized by the defendant company, in view of the regulations provided for its government, cannot be classed as a charity without doing violence to every significance that word bears, either in popular or legal usage. It is not a charity within the definition of Justice Gray, above quoted, because the fund administered is not a gift by the employés who make contributions; much less by the railroad company, which does not make any unless a deficit occurs. The fund is made up from sums contributed by members for their mutual benefit and is to be enjoyed by them if they suffer from sickness or accident. It is, in effect, a provision made by the employés to insure a stipend for them to live on if they are disabled, and a benefit to their families if they die. In addition to this, if disabled by accident, their medical attendance is paid out of the fund. This strikes us as a purely business arrangement on the part of the employés of the railroad company.'

One of the purpose of the relief department mentioned in that case was to prevent damage suits, but, aside from that fact, the court's...