Missouri Goodwill Industries v. Gruner

• Decision Date: 08 March 1948
• Docket Number: 40509
• Citation: 210 S.W.2d 38,357 Mo. 647
• Parties: Missouri Goodwill Industries an Eleemosynary Corporation, and Louis J. Cohen and H. H. Schwartz, a Partnership, Doing Business as Lou Cohen & Co., and Robert M. Close, Charles H. Close, Jr., and John W. Close, a Partnership, Doing Business as the Aquart Manufacturing Company, and George B. Lombardo and Hazel L. Lombardo, His Wife, Intervenors on Behalf of Plaintiff v. R. E. Gruner, Collector of the City of St. Louis, Missouri; and the City of St. Louis, a Municipal Corporation, and Board of Education of the City of St. Louis, Intervenors on Behalf of Defendants, Appellants
• Court: Missouri Supreme Court

210 S.W.2d 38

357 Mo. 647

Missouri Goodwill Industries an Eleemosynary Corporation, and Louis J. Cohen and H. H. Schwartz, a Partnership, Doing Business as Lou Cohen & Co., and Robert M. Close, Charles H. Close, Jr., and John W. Close, a Partnership, Doing Business as the Aquart Manufacturing Company, and George B. Lombardo and Hazel L. Lombardo, His Wife, Intervenors on Behalf of Plaintiff v. R. E. Gruner, Collector of the City of St. Louis, Missouri; and the City of St. Louis, a Municipal Corporation, and Board of Education of the City of St. Louis, Intervenors on Behalf of Defendants, Appellants

No. 40509

Supreme Court of Missouri

March 8, 1948

Rehearing Denied April 12, 1948.

Appeal from Circuit Court of City of St. Louis; Hon. Jos. J Ward, Judge.

Affirmed.

Alfred L. Grattendick for R. E. Gruner, Emmet T Carter for Board of Education, George L. Stemmler, John P. McCammon and Frank A. Neun for City of St. Louis, appellants.

(1) The right to exemption from taxation depends entirely on the use made of the property, and not on the motive of the property owner, nor the character of the organization, nor the purposes for which it was organized or incorporated. Property of a corporation recognized as a benevolent, religious or educational institution is not exempt from taxation merely because of such stated corporate purposes, and the trial court erred in holding respondent's property was used for purposes purely charitable. Evangelical Lutheran Synod v. Hoehn, 355 Mo. 257, 196 S.W.2d 134; Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826; Young Men's Christian Assn. v. Gehner, 329 Mo. 1007, 47 S.W.2d 776. (2) Where part of the land is used for business and non-charitable purposes, the whole is taxable, since it is not used exclusively for charity, and the trial court erred in refusing so to find. Evangelical Lutheran Synod v. Hoehn, 196 S.W.2d 134; St. Louis Y.M.C.A. v. Gehner, 47 S.W.2d 776; St. Louis Lodge No. 9, B.P.O.E. v. Koeln, 262 Mo. 444, 171 S.W. 329; In re Burroughs, 206 S.W.2d 340. (3) Charity, in the legal sense, is a gift made by the donor without hope of any material benefits or consideration being realized therefrom. Without some element of a gift, there would be no charity in the legal sense. Smith v. Raynolds, 43 F.Supp. 510; Evangelical Lutheran Synod v. Hoehn, 196 S.W.2d 134; Y.M.C.A. v. City of Philadelphia, 323 Pa. 401, 187 A. 204. (4) Exemptions from taxation are in derogation of equal rights and are not to be favored by the courts, but must be strictly construed against the property owner and in favor of the public, the only qualification being that the construction must be reasonable. Salvation Army v. Hoehn, 188 S.W.2d 826; Fitterer v. Crawford, 157 Mo. 51, 57 S.W. 532, 50 L.R.A. 191; State ex rel. Spillers v. Johnston, 214 Mo. 656; In re First Natl. Safe Deposit Co., 173 S.W.2d 403, 351 Mo. 423. (5) The burden is on one claiming tax exemption to show that it is exempt beyond a reasonable doubt, and respondent failed to meet this burden. State ex rel. Y.M.C.A. v. Gehner, 320 Mo. 1172, 11 S.W.2d 30; Adelphia Lodge, Knights of Pythias v. Crawford, 157 Mo. 356, 57 S.W. 1020. (6) Where charity operates in field of trade and commerce care will be exercised by the courts to preserve sound principles and avoid unwarranted exemptions from taxation, and the trial court erred in failing so to hold. Boston Chamber of Commerce v. Assessors, 315 Mass. 591, 54 N.E.2d 199, 152 A.L.R. 174; Chamber of Commerce of North Kansas City v. Unemployment Comp. Comm., 201 S.W.2d 771.

Albert E. Hausman for respondents.

(1) When the primary and inherent purpose for which real property is used is purely charitable, it is tax exempt, and this is true though there may be a secondary or incidental use, which is essential to the full performance of the primary use, and which, if standing alone, would not entitle the real estate to exemption. The primary purpose of Goodwill Industries is to rehabilitate handicapped persons; all other activities are secondary and incidental. Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826; State ex rel. Spillers v. Johnston, 214 Mo. 656. (2) The words "used exclusively for purposes purely charitable" have reference to the primary and inherent use of real property, and a mere secondary or incidental use, necessary to fully round out a charitable use, will not defeat or interrupt the exclusive use for the primary, charitable purpose. The sale of the incidental product of the training or labor of handicapped persons does not interrupt the exclusive use of Goodwill real estate for charitable purposes. State ex rel. Spillers v. Johnston, 214 Mo. 656; State ex rel. Alexian Brothers Hospital v. Powers, 10 Mo.App. 263; Young Women's Christian Assn. v. Baumann, 344 Mo. 898, 130 S.W.2d 499. (3) Real property used exclusively for Goodwill operations is used exclusively for purposes purely charitable because the sole and only object of Goodwill Industries is to help handicapped persons to help themselves. This is charity. Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826.

OPINION

Clark, J.

Respondents obtained a decree in the Circuit Court of the City of St. Louis enjoining collection of tax bills for the years 1941 to 1945, inclusive, on seven parcels of real estate in St. Louis, on the ground that the property was "used exclusively for purposes purely charitable." Five of the parcels had been sold by Missouri Goodwill Industries prior to the trial and the purchasers joined as intervening plaintiffs. Appellants, defendants below, are the City of St. Louis, its Collector and its Board of Education.

Missouri Goodwill Industries, Inc., hereafter called Goodwill, is one of ninety-eight similar institutions operating in the United States and Canada. It began under the auspices of the Methodist Church and to a limited extent is supervised by a Board of that church, but is governed by a board of directors which contain a Jewish Rabbi, Roman Catholics, Presbyterians and others. It is incorporated under our statutes relating to benevolent, etc., institutions and its charter purposes are: "For benevolent and educational purposes, for the industrial, moral and ethical training of the poor and neglected; the encouragement of thrift and healthful conditions of living and labor; the prevention of pauperism and the relief of the temporary distresses of the unfortunate." It cannot issue stock or pay dividends.

The real estate owned by Goodwill during 1941, 1945, was: parcel No. 1, a small building equipped with machinery for shredding and baling paper; parcel No. 2, a brick garage used to house Goodwill trucks; parcels 3 and 4, connected buildings operated by Goodwill as a retail store and containing its general offices; parcels 5, 6, and 7, adjoining buildings, operated as a factory.

Goodwill operates as follows: it sends out trucks and gathers donations of discarded clothing, waste paper, books and other articles. These are brought to the factory, sterilized, repaired, reconditioned and sold in the retail store above mentioned and in three other stores in buildings which Goodwill rents. It deals only in second hand goods except that some new material is purchased for use in making repairs. Its employees, except the headquarters staff, truck drivers and some instructors, are physically or mentally handicapped persons who are unable to secure employment in regular industry. For the most part these persons are referred to Goodwill by churches or charitable organizations. A new employee, after being interviewed, is started and trained in work to which he or she seems adaptable. The employee is paid some wages from the start and wages are increased as proficiency increases. When the employee becomes sufficiently adept he or she is helped to secure employment in regular industry. From 100 to 125 of these persons are employed and the annual "turnover" is about three times the average number of persons employed. Those who are so handicapped as to be precluded from obtaining other employment are retained in the "sheltered workshop" and paid a sufficient amount "to enable them to live."

Goodwill employs a full time chaplain and some free medical service is furnished the employees by a physician.

The testimony indicates that the total receipts of Goodwill for the years considered ranged from about $ 100,000.00 to $ 200,000.00 per annum and that its payroll ranged from about $ 80,000.00 to about $ 125,000.00. Appellants set out a table in their brief in an attempt to show that a large operating profit is made. Respondents attack the accuracy of this table and offer figures to show a large operating loss. The evidence shows that Goodwill is allotted a substantial amount annually from the Community Chest. Appellants also point to testimony showing a large increase in Goodwill's...