Paraclete Manor of Kansas City v. State Tax Commission

• Decision Date: 10 November 1969
• Docket Number: No. 54229,No. 1,54229,1
• Citation: 447 S.W.2d 311
• Parties: PARACLETE MANOR OF KANSAS CITY, Appellant, v. STATE TAX COMMISSION of Missouri, Respondent
• Court: Missouri Supreme Court

Page 311

447 S.W.2d 311

PARACLETE MANOR OF KANSAS CITY, Appellant, v. STATE TAX COMMISSION of Missouri, Respondent.

No. 54229.

Supreme Court of Missouri, Division No. 1.

Nov. 10, 1969.

Motion for Rehearing or for Transfer to Court En Banc Denied

Dec. 8, 1969.

Max W. Foust and Duke W. Ponick, Jr. of Morris, Foust, Moudy & Jacobson, Kansas City, for appellant.

John C. Danforth, Atty. Gen., Walter W. Nowotny, Jr., Asst. Atty. Gen., Jefferson City, for respondent.

LAURANCE M. HYDE, Special Commissioner.

Plaintiff petitioned for review of decision of the State Tax Commission denying exemption from taxation. The circuit court entered judgment affirming the decision of the Tax Commission and plaintiff has appealed. Construction of the Constitution and the revenue laws is involved. 1945 Const. § 3, Art. V, V.A.M.S.

Plaintiff was incorporated as a Missouri nonprofit corporation for the purpose of constructing and operating a rental facility for elderly persons with low incomes under the provisions of § 202 of the Housing Act of 1959 as amended, § 1701q, Title 12, U.S.C. Plaintiff built a nine-story concrete frame building in Kansas City at a cost of $1,375,000.00, with the proceeds of a 50-year U.S. Department of Housing and Urban Development loan, bearing interest at 3 3/4%, which was a first mortgage on the property. The principal and interest was payable in equal installments which could not be prepaid. Plaintiff owns no other real estate. Its directors were seven representatives of the Kansas City Baptist Temple and three from a post of the Veterans of Foreign Wars. It had no members or stockholders. Its only salaried employee is a resident manager, salary $4,860.00 a year, who paid a rental of $105.00 per month for the apartment he occupied. Its only other employees were four part-time helpers, who cleaned the building, hauled trash and did miscellaneous chores.

Only persons 62 years of age or older were eligible for housing, limited to single persons with an annual income not exceeding $3,950.00 and to two persons living as a family unit with an annual income not exceeding $4,800.00. Rental rates were $65.00 per month for studio units and $85.00 per month for one-bedroom units, being based on actual cost of operation including amortization of its building loan. Its rental income is exempt from Federal income tax. Rents would have to be increased if plaintiff is subject to property taxes (indicated as $13.72 per unit). Rental charges include all utilities and occupants are furnished an icebox and a stove. Washing and drying facilities are available in the building but persons using them pay individually for their use. Some occupants receive welfare assistance and others receive rent supplements from the Federal government, which plaintiff administers, but all pay plaintiff the same rent for the kind of units occupied. It was shown that similar housing elsewhere in the community would cost $25.00 to $30.00 per month more. However, no persons live there without charge or for any reduced charge to plaintiff. The Housing Act authorized loans for such buildings to 'private nonprofit corporations, limited profit sponsors, consumer cooperatives, or public bodies or agencies.' § 1701q(a)(1) Title 12, U.S.C.

Exemption from taxation depends on § 6, Art. X, Const. and § 137.100 RSMo 1959, V.A.M.S., which exempts '(a)ll property * * * actually and regularly used exclusively * * * for purposes purely charitable, and not held for private or corporate profit.' The Commission relies on our recent decision in Defendants' Townhouse, Inc. v. Kansas City, 441 S.W.2d 365. It is ture as plaintiff says each tax exemption case is a separate cause of action and must be decided upon its own particular facts. The differences between this case and the Townhouse case claimed by plaintiff are: plaintiff has income limitations for admission; it is subject to strict statutory and regulatory conditions concerning its finances which exclude profit making (§ 202 Housing Act and regulations authorized by it); and it administers a rent supplement program for some of its occupants. Plaintiff also says Townhouse had maid service and commercial facilities that made it more like a hotel. Plaintiff further says by providing low cost housing to low income elderly citizens it relieves the burden of the state to care for them to a significant extent and is at least as strong a case for tax exemption as Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826; Bader Realty & Investment Co. v. St. Louis Housing Authority, 358 Mo. 747, 217 S.W.2d 489; Y.M.C.A. of St. Louis and St. Louis County v. Sestric, 362 Mo. 551, 242 S.W.2d 497.

In salvation Army v. Hoehn, a building formerly a hotel was owned by the Salvation Army, incorporated 'to engage charitable, educational, missionary, philanthropic and religious work.' Housing for women and girls was provided at a low rate which was in some cases reduced to subsidize needy and deserving applicants. There was a deficit in operating costs for the first four years of operation of $29,388.83 which was made up from the general funds of the Salvation Army. Officers were on duty 24 hours daily, available for advice, guidance and counsel; and there were classes in French, German and Spanish and First Aid instruction. The exemption in this case can be justified by reason of the Salvation Army being a religious organization which furnished lodging and instruction below its cost, using its own funds for a substantial part of the cost.

Bader Realty & Investment Co. v. St. Louis Housing Authority involved an authority authorized by a Missouri statute to build housing units to replace 'insanitary or unsafe dwelling accommodations' so that 'areas of congested population shall be free from the menace of slums and from the fire hazards, disease, crime and juvenile delinquency which result from slum housing, and which cause 'disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection and other public services and facilities. '' We said (217 S.W.2d, l.c. 492): 'purposes purely charitable' now 'comprehends activities not self-supporting 'which are intended to improve the physical, mental and moral condition of the...