In re Farmers' Union Hosp. Ass'n of Elk City

• Decision Date: 31 March 1942
• Docket Number: 30474.
• Citation: 126 P.2d 244,190 Okla. 661,1942 OK 128
• Parties: In re FARMERS' UNION HOSPITAL ASS'N OF ELK CITY.
• Court: Oklahoma Supreme Court

126 P.2d 244

190 Okla. 661, 1942 OK 128

In re FARMERS' UNION HOSPITAL ASS'N OF ELK CITY.

No. 30474.

Supreme Court of Oklahoma

March 31, 1942

Rehearing Denied May 19, 1942.

Application for Leave to File Second Petition for Rehearing Denied June 9, 1942.

Syllabus by the Court.

In determining whether a hospital is exempt from taxation under 18 O.S.1941§ 581 and 68 Okl.St.Ann. § 23 (10), 12319 O.S.1931, the character of the institution is to be determined not alone by the powers of the corporations as defined by its charter, but also by the manner of conducting the hospital.

Appeal from District Court, Beckham County; T. R. Wise, Judge.

Proceeding in the matter of the assessment of property of the Farmers' Union Hospital Association of Elk City Oklahoma. From a judgment affirming decision of County Excise Board of Beckham County denying petition of the Farmers' Union Hospital Association for an exemption of its property from ad valorem taxes, the Farmers' Union Hospital Association appeals.

Affirmed.

Jim Ted Robinson, Co. Atty., of Elk City, for respondent.

BAYLESS Justice.

Farmers' Union Hospital Association, a benevolent and charitable organization, petitioned the County Excise Board of Beckham County for an exemption of its property from ad valorem taxes, and when this was denied appealed to the district court, and, when that court affirmed the ruling of the board appealed to this court.

The plea for exemption was based in law on 18 O.S.1941 § 581 reading:

"The following associations for benevolent and charitable purposes may become incorporated, *** to-wit:

1. To establish and maintain hospitals and infirmaries for the care of the sick ***"; and on 68 Okl.St.Ann. § 23(10), 12319, O.S.1931 enumerating the property exempt from taxation, including:

All property, both real and personal, of *** benevolent institutions *** or societies, devoted solely to the appropriate objects of these institutions"; and on the language of its articles of incorporations providing that the organization (1) was organized for benevolent and charitable purposes; (2) to operate and maintain hospitals; and (3) there should be no capital stock, no dividends should be paid and, "none of the profits, if any, shall inure to the benefit of the individual members thereof, but the profits if any, (after paying the necessary expenses of operation) shall be used for said charitable and benevolent purposes".

The testimony showed there had been a somewhat similar organization that was formed and operated for profit, and its members owned shares of stock of a par value of $50. The new non-profit organization had been organized and had the same property and members, generally, but members now did not own stock but memberships that cost $50. The evidence showed that the organization was formed, and exists and is operated primarily for the benefit of the members, although it receives and ministers to non-members. The evidence showed that members paid an annual fee, estimating the cost for the current year on past experience and future expectations, and this fee was relatively small per member. The evidence showed that non-members, who were entire strangers, paid the customary cost for service received, which was at a much higher rate than members; and that owners of memberships who were delinquent in annual fees received some adjustment or consideration by virtue of their status, thereby receiving service at less cost than non-members.

With respect to charity or benevolence, there is no evidence of any conscious effort to bestow those benefits on any person not connected with the organization. All that could be said in this respect was that some people received services for which they did not pay or for which the association was unable to collect. We think the testimony of the "Secretary, Treasurer, or Organization and Business Manager", illustrates this aspect of the case. He testified that lots of free work was done, but that the benefits of the hospital service were derived by those who are members or who have been members, and their costs were on a co-operative basis.

This organization very generally makes an annual profit, and this profit is used to increase its facilities and to reduce the cost of service to its members for the following year. The official whose testimony we have just quoted stated, in answer to a question, that theoretically it was possible under the scheme of management to realize such a profit in one year as to be able to furnish service to its members the following year at very little, if any, cost.

Association cites In re Beta Theta Pi Corp., 108 Okl. 78, 234 P 354; Bd. of Com'rs of Garfield County v. Phillips University, 144 Okl. 57, 289 P. 720; State v. Bartlesville Lodge, 168 Okl. 416, 33 P.2d 507; Bd. of County Com'rs of Tulsa County v. Sisters of the Sorrowful Mother, 141 Okl. 32, 283 P. 984; and Sand Springs Home v. State, 168 Okl. 323, 32 P.2d 928, and the citation of the text of 5 R.C.L. 374, and 26 R.C.L. 326 in support of its contention.

Beckham County relies upon the facts to differentiate this...