Dove Lewis Memorial Emergency Veterinary Clinic, Inc. v. Department of Revenue

Citation723 P.2d 320,301 Or. 423
PartiesDOVE LEWIS MEMORIAL EMERGENCY VETERINARY CLINIC, INC., Appellant, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent. TC 2086; SC S31597.
Decision Date05 August 1986
CourtSupreme Court of Oregon

Kirkham E. Hay, Portland, argued the cause and filed the brief for appellant.

Dave L. Canary, Asst. Atty. Gen., Salem, argued the cause for respondent. With him on the brief was Dave Frohnmayer, Atty. Gen., Salem.

Before PETERSON, C.J., LENT, LINDE, CAMPBELL, CARSON and JONES, JJ., and GILLETTE, J. Pro Tem.

GILLETTE, Justice Pro Tem.

Taxpayer, Dove Lewis Memorial Emergency Veterinary Clinic, Inc., appeals from a judgment of the Oregon Tax Court denying its claim to a real property tax exemption for the tax year 1981-82. 10 OTR 33 (1985). The Tax Court ruled that taxpayer was not entitled to the exemption because it did not qualify as a charitable corporation. Pursuant to ORS 305.445, we review anew upon the record to determine whether taxpayer is a charitable corporation and thereby eligible for the tax exemption. We agree that it is not eligible and therefore affirm.

The relevant facts are as follows: In 1965, a group of Portland area veterinarians who were members of the Portland Veterinary Medical Association (PVMA) attempted to provide an emergency service for the treatment of small animals. The service was available after the veterinarians' normal hours of operation; participating veterinarians volunteered their services and agreed to share on-call responsibilities. The system proved to be inefficient due, in large part, to the refusal of some members to respond to calls.

During the ensuing years, one of taxpayer's eventual founders, Dr. Werner, discussed the prospect of forming an emergency clinic with other local veterinarians but could not generate enough interest or financial backing. However, in 1973, a local dog breeder named Lewis contacted Werner and offered to donate a sum of money to start up the clinic as a memorial to his late wife.

Taxpayer was formed under ORS chapter 61 as a nonprofit organization. The Internal Revenue Service granted it nonprofit status on February 26, 1974, exempting it from federal income tax under Section 501(c)(3) of the Internal Revenue Code.

Taxpayer operated its clinic out of a rented building in downtown Portland for approximately seven years, realizing a profit in each year. In 1980, it purchased the subject property and facility with funds derived in part from the net revenues received in the preceding seven years of operation. A small but undetermined amount was made up of donations. Most of the funds, however, came from a loan obtained from a bank.

Taxpayer currently employs a full-time staff consisting of five veterinarians, eight technicians, one secretary and one business administrator. All are paid salaries comparable to persons similarly employed at other veterinary facilities. Taxpayer is open for business from 6 p.m. to 8 a.m. Monday through Thursday, from 6 p.m. Friday through the weekend, and 24 hours on holidays.

In March, 1981, taxpayer submitted an application pursuant to ORS 307.162 1 to Multnomah County for exemption from property tax. On July 7, 1981, Multnomah County informed taxpayer that its application for exemption from property tax was denied. On appeal to the Department of Revenue, the Department affirmed the Multnomah County Assessor's opinion and denied taxpayer's request for exemption. Taxpayer then filed this case. The Tax Court affirmed the opinion of the Department on February 26, 1985. The present appeal followed.

Taxpayer seeks exemption from payment of ad valorem taxes on its real and personal property pursuant to ORS 307.130, which provides, in pertinent part:

"Upon compliance with ORS 307.162, the following property owned or being purchased by incorporated literary, benevolent, charitable and scientific institutions shall be exempt from taxation:

(1) * * * only such real or personal property, or proportion thereof, as is actually and exclusively occupied or used in the literary, benevolent, charitable or scientific work carried on by such institutions.

(2) Parking lots used for parking or any other use as long as that parking or other use is permitted without charge."

Taxation is the rule and exemption from taxation is the exception. Corporation of Sisters of Mercy v. Lane County, 123 Or. 144, 152, 261 P. 694 (1927). The burden of establishing entitlement to an exemption is on the taxpayer claiming the exemption. Methodist Homes, Inc. v. Tax Com., 226 Or. 298, 307, 360 P.2d 293 (1961).

Taxpayer's primary contention is that it is a hospital and that the cases considering the eligibility of hospitals to a charitable exemption are controlling. Of course, the mere fact that an organization is either a hospital or a charity does not establish any inherent right to exemption. Unander v. U.S. Nat'l Bank, 224 Or. 144, 151, 355 P.2d 729 (1960); Corporation of Sisters of Mercy v. Lane County, supra, 123 Or. at 153, 261 P. 694; see Ackerman v. Phys. and Surgeons Hosp., 207 Or. 646, 660, 288 P.2d 1064, 298 P.2d 1026 (1956). Any organization claiming the benefit of the tax exemption statute as a "charitable" institution must have charity as its primary, if not sole, object, and must be performing in a manner that furthers that object.

The articles and bylaws of a corporation are prima facie evidence of the character of the corporation. Foundation of Human Understanding v. Dept. of Rev., 301 Or. 254, 722 P.2d 1 (1986) (articles); Benton County v. Allen, 170 Or. 481, 485, 133 P.2d 991 (1943) (articles); Hamilton v. Corvallis Hosp. Ass'n., 146 Or. 168, 171-72, 30 P.2d 9 (1934) (articles and bylaws).

Taxpayer's bylaws state:

"The primary objective of the Clinic shall be to provide emergency veterinary service for small animals directed primarily to those hours when the private clinics would not be operating and on weekends, and in addition thereto, to provide further educational facilities for the dissemination of literature, library and other facilities and any other lawful purpose as set out in the Articles of Incorporation."

Taxpayer is organized to provide "emergency small animal veterinary service." One of the principal founders of taxpayer testified that it was formed "probably out of frustration more than anything else," referring to the failed attempt to provide an all-volunteer after-hours emergency service. Although taxpayer's expressed purpose is beneficial, we cannot say that it is as a matter of law "charitable," as that term is used in ORS 307.130. Neither, however, do the articles and bylaws eliminate taxpayer as a charity. We turn to a consideration of whether taxpayer's activities are sufficiently charitable to entitle it to exemption.

In determining whether an organization is, by its conduct, charitable, the crucial consideration is the element of a gift or giving.

"This is a sound and salutary rule. It is one reflecting human experience. Unselfish declarations of intended purpose and promises of future worthy endeavor are many times rendered meaningless by inaction and should give the declarer no preferred status unless ultimately resolved into concrete and tangible reality." Methodist Homes, Inc. v. Tax Com., supra, 226 Or. at 308, 360 P.2d 293.

In Methodist Homes, Inc. v. Tax Com., supra, this court reviewed the line of "hospital" cases and outlined six factors that are relevant in determining the charitable character of a hospital:

(1) Whether the receipts are applied to the upkeep, maintenance and equipment of the institution or are otherwise employed;

(2) Whether patients or patrons receive the same treatment irrespective of their ability to pay;

(3) Whether the doors are open to rich and poor alike and without discrimination as to race, color or creed;

(4) Whether charges are made to all patients and, if made, are lesser charges made to the poor or are any charges made to the indigent;

(5) Whether there is a charitable trust fund created by benevolently and charitably minded persons for the needy or donations made for the use of such persons; and

(6) Whether the institution operates without profit or private advantages to its founders and the officials in charge. 226 Or. at 309-10, 360 P.2d 293 (Citations omitted). Even after listing these factors, however, this court issued a precautionary note:

"We do not hold that all the foregoing factors must be present before a given institution can be declared one of charitable or noncharitable pursuits. Nor do we say that the list includes all items which may assist in a conclusion respecting the charitable or noncharitable status of a given corporation. The itemization represents only those particulars which have been in the past employed by this court in discovering if a given hospital is or is not in fact eleemosynary." 226 Or. at 310, 360 P.2d 293.

In this court's enunciation of the factors to be considered, we noted in Methodist Homes that, although all of the factors need not be present, the absence of two factors can negate any claim to exemption. The two factors are the existence of a separate account containing funds and donations committed to charitable use and the absence of profit or private advantage to the organization's founders and officials. 226 Or. at 311, 360 P.2d 293. On our review of the record, we find no testimony or evidence to indicate whether a fund was established for the original donation by Lewis or for any subsequent funds received by taxpayer to be...

To continue reading

Request your trial
148 cases
  • Dep't of Revenue v. New Friends of Beaverton City Library
    • United States
    • Oregon Tax Court
    • November 26, 2019
    ...giving." SW Oregon Pub. Def. Services v. Dept. of Rev., 312 Or 82, 89, 817 P2d 1292 (1991) (citing Dove Lewis Mem. Emer. Vet. Clinic v. Dept. of Rev., 301 Or 423, 428, 723 P2d 320 (1986) and former OAR 150-301.130-(A)7)). Taxpayer contends thatit satisfies all three requirements. The Depart......
  • Southwestern Oregon Public Defender Services, Inc. v. Department of Revenue, State of Or.
    • United States
    • Supreme Court of Oregon
    • September 19, 1991
    ...Our cases hold that "[t]axation is the rule and exemption from taxation is the exception." Dove Lewis Mem. Emer. Vet. Clinic v. Dept. of Rev., 301 Or. 423, 426, 723 P.2d 320 (1986) ("Dove Lewis"); accord Skyline Assembly of God v. Dept. of Rev., 274 Or. 259, 263, 545 P.2d 879 (1976); Corpor......
  • Young Men's Christian Ass'n of Columbia-Willamette v. Department of Revenue, COLUMBIA-WILLAMETTE
    • United States
    • Supreme Court of Oregon
    • February 6, 1990
    ...as its primary, if not sole, object, and must be performing in a manner that furthers that object." Dove Lewis Mem. Emer. Vet. Clinic v. Dept. of Rev., 301 Or. 423, 427, 723 P.2d 320 (1986) (citations This court has also held that good intentions and willingness to act on them are not enoug......
  • Toyota Motor Sales, U.S.A., Inc. v. Multnomah County Assessor
    • United States
    • Oregon Tax Court
    • May 2, 2008
    ...urging the court to adopt a rule of strict construction, asserting that under Dove Lewis Mem. Emer. Vet. Clinic v. Dept. of Rev., 301 Or. 423, 426, 723 P.2d 320 (1986) (Dove Lewis), a “fundamental principle in Oregon [is] that ‘taxation is the rule and exemption from taxation is the excepti......
  • Request a trial to view additional results
1 books & journal articles
  • How Good a Samaritan? Federal Income Tax Exemption for Charitable Hospitals Reconsidered
    • United States
    • Seattle University School of Law Seattle University Law Review No. 14-03, March 1991
    • Invalid date
    ...free services to poor not entitled to property tax exemption); Dove Lewis Memorial Emergency Veterinary Clinic v. Department of Revenue, 301 Or. 423, 723 P.2d 320 (1986) (veterinary hospital providing free or below cost services only by happenstance not entitled to property tax exemption); ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT