Goldman v. Friars Club, Inc.

• Decision Date: 16 July 1952
• Docket Number: Nos. 32774-32780,s. 32774-32780
• Citation: 48 O.O. 147,107 N.E.2d 518,158 Ohio St. 185
• Parties: , 48 O.O. 147 GOLDMAN v. FRIARS CLUB, Inc. et al., and six other cases.
• Court: Ohio Supreme Court

Page 185

158 Ohio St. 185

107 N.E.2d 518, 48 O.O. 147

GOLDMAN v. FRIARS CLUB, Inc. et al., and six other cases.

Nos. 32774-32780.

Supreme Court of Ohio.

July 16, 1952.

Syllabus by the Court.

Real property is ued exclusively for charitable purposes and is exempt from taxation under Section 5353, General Code, where it is owned and operated without profit by a charitable institution and by it devoted, as its main objective, to an overall program of social, religious and educational service to persons in peculiar need thereof, without distinction as to race, color or creed, even though, as incidental to such objective, dormitory, dining room and other like services are furnished and a charge made therefor, the income therefrom being devoted to such program.

These cases are separate appeals from the Board of Tax Appeals. The question involved in each is whether the respective real property owned by the appellants is exempt from taxation on the ground that it is used exclusively for charitable purposes. The cases have similar facts and similar legal questions for determination. They were heard together in this court.

In case No. 32774, Jerome Goldman, pursuant to Section 5616, General Code, filed with the Board of Tax Appeals a complaint that certain real estate located on the corner of Ohio and McMillan streets in the city of Cincinnati, title to which was in the name of John T. McNicholas, archbishop, trustee, and which is popularly known as The Friars Club, be placed on the tax duplicate, the property for many years having been exempted from taxation.

The Friars Club, Inc., is an Ohio corporation not for profit organized for the purpose of 'advancing the moral and physical welfare of its members,' and, under its constitution attached to the articles of incorporation, its objective is 'the spiritual and physical welfare of the men and women of greater Cincinnati.' The club operates a four-story brick building. With the exception of a small chapel on the third floor, the top two floors are occupied as a place of residence by young men, approximately 50 per cent of whom are students employed by business firms and industries of Cincinnati. They pay low rentals, the rates varying according to their ability to pay and to the type of room occupied. Some occupants are admitted without payment if they are without funds and worthy of such consideration. The club, by concession, operates a public restaurant and a snack bar in a portion of the building and operates bowling alleys which are open to the public for a fee.

The club has both resident and nonresident members, all young people, without discrimination as to sex, race or religion. Athletic programs, both in and outside the buildings, are organized and carried on under trained supervisors. The institution generally is devoted to guidance and character building of young people. All revenues are devoted to the charitable objectives of the institution. It is supported by personal contributions and is one of the institutions partially supported by the community fund.

The Board of Tax Appeals held that the dormitories, restaurant and snack bar were not used exclusively for charitable purposes but that the remainder of the building was so used and attempted to set off those portions of the building used for charitable purposes as exempt from taxation under the provisions of Section 5560, General Code, the pertinent part of which is as follows:

'But where a separate parcel of real property, improved or unimproved, having a single ownership, is so used, that part thereof, if a separate entity, would be exempt from taxation, and the balance thereof would not be exempt from taxation, the listing thereof shall be split and the part thereof used exclusively for an exempt purpose or purposes shall be regarded as a separate entity and be listed as exempt, and the balance thereof used for a purpose or purposes not exempt, shall, with the approaches thereto, be listed at its true value in money and taxed accordingly.'

The Board of Tax Appeals found that it was impossible to divide by metes and bounds the portion of the property used for charitable purposes from that not so used and made a division of the building as to exempt and nonexempt purposes by determining the percentage of the cubical content of the various occupancies of the building. Accordingly, the board found that the cubical content of the entire building was 914,152 cubic feet; that the cubical content of the restaurant kitchen, refreshment bar, bowling alleys and domitories was 231,230 cubic feet; and that an undivided 74 per cent of the building was used for a charitable and tax exempt purpose whereas an undivided 26 per cent of the building was used for taxable purposes and was subject to taxes, which, however, should be a lien upon the entire building.

In case No. 32775 Goldman filed with the Board of Tax Appeals a complaint demanding that certain real estate located on Commercial square on the north side of Fifth street between Broadway and Pike streets in the city of Cincinnati, title to which was in the name of John T. McNicholas, archbishop, trustee, and which is popularly known as the Fenwick Club, be placed on the tax duplicate, although the property had been for many years exempted from taxation.

The Fenwick Club is likewise a corporation not for profit. It is housed in a building consisting of a basement and nine stories, a part of the fifth and all of the sixth, seventh, eighth and ninth floors, consisting of 125 rooms, being devoted to a residence program. These rooms are occupied as places of residence by persons who pay from $5 to $9 per week for these accommodations. The original purpose of the club was to house homeless boys, but it has been expanded into a community center for the underprivileged persons of that section of the city and serves as a home for men who, although working, need and receive counsel and guidance. The club houses persons who have been referred to it by social societies as needing such social assistance as the club can give. It also serves women and girls with reference to social and domestic problems. The club is open to all without distinction as to race or religious affiliation. A cafeteria is operated for the use of the occupants of the building and occasionally for persons outside the building.

The Board of Tax Appeals concluded that the building was not used as a whole exclusively for charitable purposes but that it was subject to apportionment as to exempt and nonexempt uses. It found that the cubical content of the building was 695,259 cubic feet; that the cubical content of the cafeteria and kitchen on the fourth floor was 68,433 cubic feet; that the cubical content of the kitchen and space used for dormitories on the fifth floor was 19,075 cubic feet; that the cubical content of the dormitory space on the sixth, seventh, eighth and ninth floors was 147,793 cubic feet; that an undivided 66 percent of the cubical content of the building was used for tax exempt purposes whereas 34 per cent of the cubical content was used for nonexempt purposes; and that 34 per cent of the building was subject to taxation under the provisions of the statute hereinbefore referred to.

In case No. 32776 Goldman filed with the Board of Tax Appeals a complaint demanding that certain real estate located on the south side of Fifth street between McAllister and Lawrence streets in Cincinnati, owned by the Congregation of Sisters of St. Joseph of New Orleans and popularly known as 'The Fontbonne,' be placed on the tax duplicate although this property for many years had been exempted from taxation. The Fontbonne is a corporation not for profit organized under the laws of the state of Louisiana. It occupies and operates a six-story building which is used to carry out various programs and to further its basic charitable purposes. The programs consist of residential service, religious service, restaurant service, library service, settlement work, lecture and educational service, social activity service, and community service, etc. It is admitted by the complainant that the corporation is a charitable institution but he claims the property is not 'used exclusively for charitable purposes.' The building contains on the second to sixth floors, inclusive, about 190 rooms, a majority of which are occupied as places of residence by young women and girls, both Catholic and non-Catholic and who are employed. Some of the rooms are free to those who are unable to pay rent, and about 30 of the rooms are reserved for this purpose, but the remainder of the rooms are rented at rates of from $5.50 to $8 per week.

Programs are carried on for recreation, religious and cultural development and consist of lectures and classes, counselling by nuns, nurses and lay personnel, a library, a chapel and a snack bar and cafeteria. There are 14 sisters engaged in managing these programs, none of whom receives any compensation or salary, but each having a room on the second floor. The chapel is open to the public generally. The income from the rental of rooms for the period from January 1, 1950, to September 30, 1950, was $52,597.23, all of which was devoted to the charity program.

The Board of Tax Appeals concluded that the building as a whole was not used exclusively for charitable purposes, and that certain portions of it were so used but could not be set off by metes and bounds. It found that the total cubical content of the building was 1,440,543.86 cubic feet; that the cubical content of income-producing rooms devoted to dormitory purposes was 288,327.60 cubic feet; that the cubical content of the dining rooms, snack bar, kitchen, storeroom, etc., was 31,446.02 cubic feet; and that an undivided 74 per cent of the building was used for tax exempt purposes whereas 26 per cent was used for nonexempt purposes, and ordered taxes assesed accordingly.

In case No. 32777 a complaint was filed with the ...