O'brien v. Physicians Hospital
| Decision Date | 06 March 1917 |
| Docket Number | 15222 |
| Citation | 115 N.E. 498,96 Ohio St. 1 |
| Parties | O'brian v. Physicians Hospital Association. |
| Court | Ohio Supreme Court |
Public charity hospital - Corporation not for profit - Evidence acceptable to show nature of organization - Property purchased with donated funds - Impressed with trust character - Reception of pay patients - Not to interfere with acceptance of indigents - Receipts cannot be diverted to private profit.
1. A corporation, organized not for profit, may show by its charter, constitution and by-laws, or by oral evidence not inconsistent therewith, that it is organized solely for the purpose of administering a public charity, the foundation of which is derived from private donations.
2. Property purchased with funds donated for public charity is impressed with the trust character of the funds with which it was purchased, and neither the property itself nor the income derived from its use can be diverted to private profit.
3. The trustee of real estate purchased with funds donated for a specific public charity, cannot lawfully use the property so purchased for purposes other than the administration of the trust imposed by the donors of the fund.
4. Where funds are donated for the purpose of establishing and operating a public charity hospital, and the trustee of such funds purchases property therewith and uses the same for the purpose of a hospital, such hospital must he conducted as a public charitable hospital.
5. A public charitable hospital may receive pay from patients who are able to pay for the hospital accommodations they receive hut the money received from such source becomes a part of the trust fund, and must be devoted to the same trust purposes and cannot be diverted to private profit. (Taylor, Admr., v The Protestant Hospital Ass's., 85 Ohio St. 90, approved and followed.)
6. A public charitable hospital cannot receive pay patients to such an extent as will exhaust its accommodations so that it cannot receive and extend hospital service to the usual and ordinary number of indigent patients applying for admission under proper rules and regulations adopted by the authority managing and controlling the operation of such hospital.
On the 15th day Of January, 1915, The Physicians Hospital Association filed its petition in the common pleas court of Cuyahoga county, averring that it is a corporation not for profit; that it is the owner of certain described real estate situate in Cleveland, Cuyahoga county, Ohio, upon which premises it is operating and conducting a public hospital known as "Grace Hospital," as an insti- tution of purely public charity only; that the same is exempt from taxation under the laws of Ohio; that the hospital maintains thirty-seven beds for patients and is open to the public to the extent of its facilities; that all moneys received by it are applied toward the discharge of its outstanding indebtedness and in the payment of current expenses and the advancement and promotion of the objects and purposes of its incorporation; and that the auditor of Cuyahoga county has, without authority of law, placed its property upon the tax duplicate, charged with $367.10 taxes and penalty, and delivered the duplicate to the defendant P.C. O'Brien, treasurer of Cuyahoga county, who threatens to, and will unless restrained by the court, proceed to advertise and sell the same for the payment of the taxes illegally assessed against it and the penalty illegally charged thereon for nonpayment. The prayer of the petition is that the defendant treasurer be permanently enjoined from demanding and collecting from plaintiff said taxes and penalty, and enjoined from advertising and selling the property for the purpose of collecting the same; and for all other equitable relief.
The defendant by answer admits his official capacity as treasurer of Cuyahoga County; that plaintiff is the owner of the property described in the petition; that there is charged against the property, upon the tax duplicate, the amount stated in plaintiff's petition; and denies each and every other allegation in the petition contained.
On November 3, 1915, the court of common pleas found on the issues joined in favor of the plaintiff, and permanently enjoined the defendant treasurer from demanding or collecting said taxes and penalty. Error was prosecuted to this judgment in the court of appeals, which court affirmed the judgment of the common pleas court, and this proceeding is brought in this court to reverse the judgment of the common pleas court and the judgment of the court of appeals affirming the same.
Mr. Cyrus Locher, prosecuting attorney, and Mr. Frederick W. Green, assistant prosecuting attorney, for plaintiff in error. Messrs. Chapman, Howland, Niman & Younger, for defendant in error.
It is shown by the articles of incorporation, and conceded by counsel for plaintiff in error, that The Physicians Hospital Association was organized as a corporation not for profit under the general corporation laws of this state. Neither the articles of incorporation nor the constitution adopted by the association show that the purpose of the organization is a public charity. The...
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