Dallas County Appraisal Dist. v. Institute for Aerobics Research

• Citation: 766 S.W.2d 318
• Decision Date: 31 January 1989
• Docket Number: No. 05-86-00883-CV,05-86-00883-CV
• Parties: DALLAS COUNTY APPRAISAL DISTRICT and Dallas County Appraisal Review Board, Appellants, v. INSTITUTE FOR AEROBICS RESEARCH, Appellee. Dallas
• Court: Court of Appeals of Texas

Page 318

766 S.W.2d 318

DALLAS COUNTY APPRAISAL DISTRICT and Dallas County Appraisal

Review Board, Appellants, v. INSTITUTE FOR AEROBICS RESEARCH, Appellee.

No. 05-86-00883-CV.

Court of Appeals of Texas,

Dallas.

Jan. 31, 1989.

Rehearing Denied Feb. 28, 1989.

Peter G. Smith, Roy L. Armstrong, Dallas, for appellants.

B. Prater Monning, III, Michael G. Wimer, Dallas, for appellee.

Before STEPHENS, ¹ McCLUNG and LAGARDE, JJ.

OPINION ON REHEARING

McCLUNG, Justice.

Both appellants and appellee filed motions for rehearing and we grant appellants' motion for rehearing. We withdraw our original opinion and the following is now our opinion.

The Dallas County Appraisal District and the Dallas County Appraisal Review Board (collectively referred to as the District) appeal the entry of a summary judgment in favor of the Institute for Aerobics Research (Institute) granting it an exemption from ad valorem taxes for the year 1985. The District claims in points of error one, three, four, five and six that there were issues of material fact on whether the Institute/taxpayer met the criteria for tax exemption under certain statutory and constitutional provisions. In point of error two, it contends that the District's summary judgment should have been granted. In point of error seven, it claims the trial court erred in denying the District's summary judgment because the Institute did not meet the criteria for exemption as a religious organization. In point of error eight, the District asserts the trial court erred in denying the District's summary judgment because the Institute's claim that they were denied due process under 42 U.S.C. § 1983 was frivolous. We agree only with those points of error claiming there were remaining issues of material fact with regard to the entry of the Institute's summary judgment and reverse and remand this matter for trial.

The Institute's summary judgment evidence, an affidavit from its Chief Executive Officer, established the following facts: The Institute purchased the buildings and real property near the intersection of Preston Road and Churchill Way, in 1983 from the Churchill Way Presbyterian Church. The church continued to use the first floor of the building for church services and related church activities until mid-1985 through a "lease arrangement" in which they paid no rent. The Institute used the second floor to conduct biomedical research and education for the public benefit. The Institute filed for and received a tax exemption from ad valorem taxes for the years 1984 and 1986. The District assessed ad valorem taxes for 1985. The Institute protested the assessment and after a hearing before the Dallas County Appraisal Review Board, taxes were assessed. The Institute filed suit and both the District and the Institute filed motions for summary judgment. The trial court granted the Institute's summary judgment now before us.

Since both parties moved for summary judgment, all the evidence accompanying both motions should be considered in deciding whether or not to grant either party's motion. Villarreal v. Laredo National Bank, 677 S.W.2d 600, 605 (Tex.App.--San Antonio 1984, writ ref'd n.r.e.). Under Rule 166a of the Texas Rules of Civil Procedure, summary judgment may be rendered only if the pleadings, depositions, admissions, and affidavits show (1) that there is no genuine issue as to any material fact and (2) that the moving party is entitled to judgment as a matter of law. See McFadden v. American United Life Ins. Co., 658 S.W.2d 147, 148 (Tex.1983); Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). As the plaintiff/movant, the Institute had the burden to show that it was entitled to prevail on each element of its cause of action. See Texas International Airlines v. Wits Air Freight, 608 S.W.2d 828, 829 (Tex.Civ.App.--Dallas 1980, no writ). The District, as defendant/movant, had the burden to establish as a matter of law that there was no genuine issue of fact as to one or more of the essential elements of the Institute's cause of action. Ridgeline Inc. v. Crow-Gottesman-Shafer # 1, 734 S.W.2d 114, 116 (Tex.App.--Austin 1987, no writ). A fact issue is presented when conflicting inferences may be drawn from uncontroverted summary judgment proof. Id. at 116-17.

In its first, third and fourth points of error, the District claims the trial court erred in granting summary judgment in favor of the Institute because there was an issue of material fact as to whether the property satisfied the criteria of Section 11.23(h) of the Texas Tax Code ² or Texas Constitution, art. VIII, § 2. In its second point of error, the District contends that its summary judgment should have been granted because there is no issue of material fact which established that the Institute should have been exempt from ad valorem taxes. We consider these related points together.

The District contends that because the Institute allowed the church to use the first floor of the building, it failed to meet the statutory criteria of "uses exclusively for biomedical research and education." The District introduced as its summary judgment proof the Institute's admissions that 50% of the property was leased by the church. Cf. City of Austin v. University Christian Church, --- S.W.2d ----, 33 S.Ct.J. 66 (November 26, 1988) (Church leased its parking lot to a commercial parking company for secular use. The supreme court held that the determination of "primary use" of church property was a fact issue and not a question of law).

Section 11.23(h) specifically provides:

(h) Biomedical Research Corporation. A nonprofit corporation as defined in the Texas Non-Profit Corporation Act is entitled to an exemption from taxation of the property it owns and uses exclusively for biomedical research and education for the public benefit.

This statutory provision, however, must be considered together with its constitutional underpinnings in TEX. CONST. art. VIII, § 2. That provision provides in pertinent part:

Sec. 2. (a) All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax; but the legislature may, by general laws, exempt from taxation public property used for public purposes; [churches, graveyards, solar energy devices, schools, state or national organizations such as the YMCA, endowment funds] ... and institutions of purely public charity ...

Thus, the Institute would necessarily have to qualify as a "purely public charity".

A review of relevant case law indicates that both the statutory and constitutional provisions have been considered together in determining if the taxpayer should receive a tax exemption. In Daughters of St. Paul, Inc. v. City of San Antonio, 387 S.W.2d 709 (Tex.Civ.App.--San Antonio 1965, writ ref'd n.r.e.), the court strictly construed the eligibility requirements for a bookstore/taxpayer that was combined with a religious organization. There the ground floor of the building was used as a bookstore and the second floor was used as living quarters for the nuns who ran the bookstore. The income from the sale of books was used to meet their expenses and any profits were sent to their order. The Court of Appeals denied the tax exemption of the nonprofit corporation whose primary purpose was to sell Roman Catholic literature and religious articles because it was not a purely public charity.

Two nonprofit organizations shared the use of a building in City of Houston v. River Oaks Garden Club, 360 S.W.2d 855 (Tex.Civ.App.--Houston [1st Dist.] 1962, aff'd, 370 S.W.2d 851 (Tex.1963)) where a nonprofit corporation owned and maintained a building that was a historical landmark. The building was used for the education of the club's members and the public in the art of growing and arranging flowers. The Court of Appeals denied the tax exemption because the club had shared the property with other nonprofit organizations who had the same goals and interests. It held this shared activity rendered the club's use non-exclusive and destroyed its tax-exempt status. The Texas Supreme Court affirmed the appellate court's decision, but denied the tax exemption because the club was not a purely public charity.

This Court considered the issue of property "owned and used exclusively" in Little Theatre of Dallas, Inc. v. City of Dallas, 124 S.W.2d 863 (Tex.Civ.App.--Dallas 1939, no writ). The city assessed ad valorem taxes against property used as a school and society of fine arts. This Court applied a strict construction of both the statutory and constitutional provisions to deny the tax exemption because the school's primary purpose was to furnish entertainment to its members and patrons and only incidentally provided instruction in the theater arts.

The burden is on the taxpayer to show by facts that it comes clearly within the requirements of both the...