Rose Institute v. Myers, Treas.

• Decision Date: 04 June 1915
• Docket Number: 13882
• Parties: The Benjamin Rose Institute v. Myers, Treas., Et Al.
• Court: Ohio Supreme Court

110 N.E. 924

92 Ohio St. 252

The Benjamin Rose Institute v. Myers, Treas., Et Al.

13882

Supreme Court of Ohio

June 4, 1915

Taxation-Institutions of purely public charity-Real property exempt-But rented property not exempt-Although income devoted to charity, when.

The real estate belonging to an institution of purely public charity is exempt from taxation only when used exclusively for charitable purposes, and if such real estate is rented for commercial and residence purposes it is not exempt although the income arising from such use is devoted wholly to the purpose of the charity.

In June, 1910, The Benjamin Rose Institute sought the remedy of injunction, in the common pleas court of Cuyahoga county against the treasurer and auditor of that county to interdict the collection of taxes on certain real property in the city of Cleveland, it being contended that the property in question was exempt from taxation by favor of the last clause of Section 5353, General Code, reading "Property belonging to institutions of public charity only, shall be exempt from taxation."

The Benjamin Rose Institute, with a board of trustees named in the last will and testament of Benjamin Rose, late of Cuyahoga county, was created by will, having for its purpose the carrying into effect certain provisions thereof relative to the distribution of the income arising from the property sought to be exempted from taxation, among certain beneficiaries designated in the fourth item of said will, in the language following:

"It is my purpose to provide relief and maintenance so far as I am able for respectable and deserving, needy, aged people, as far as practicable, and mostly of the Anglo-Saxon race, and to supply temporary relief and aid to needy, crippled children or youth."

An elaborate scheme of instituting and managing the trust is set forth in great detail in the will. The property in question was devised to The Citizens Savings & Trust Company, as trustee, charged with the duty of holding and managing the same and paying over the net income to the institute aforesaid.

That the property so sought to be exempted is of great value is evidenced by the allegation of the petition that the semi-annual installment of taxes payable in June, 1910 amounted to the sum of fourteen thousand dollars. The petition seeking the relief sets forth in detail that no part of said property or the income thereof has been diverted to private use or profit, but that said property and the funds arising therefrom have been used exclusively in maintaining and prosecuting the charities provided for in said will.

It is conceded, however, by The Benjamin Rose Institute that none of the real property sought to be exempted from taxation is either actually or directly occupied or used for charitable purposes of any kind or character; in fact, by stipulation of the parties, it is agreed that all of said real estate, excepting a portion of small value situated in Nottingham, has been rented for residence and commercial purposes, and that the income and rental therefrom only have been used and are being used in maintaining and prosecuting the charities created by said will.

The treasurer and auditor of Cuyahoga county demurred to the petition of The Benjamin Rose Institute, which demurrer was sustained by the common pleas court and on appeal the same action was had in the circuit court of Cuyahoga county.

Mr. N. O. Mather; Messrs. Squire, Sanders & Dempsey; Mr. W. C. Boyle and Mr. Thos. M. Kirby, for plaintiff in error.

Mr. Cyrus Locher and Mr. John A. Kline, prosecuting attorneys, and Mr. F. W. Green, Mr. G. A. Howells and Mr. Walter D. Meals, assistant prosecuting attorneys, for defendants in error.

NICHOLS C. J.

The supreme court has been frequently called upon to interpret the statutes exempting properties from taxation, and quite an array of reported cases on this subject are available.

It is substantially conceded by counsel for the institute that, under any and all of these former interpretations, the real property of Benjamin Rose so trusteed would not be in the exempted class, but it is their contention that, by virtue of the amendment of May 9, 1908, to Section 2732, Revised Statutes, and more especially of the ratification, on February 15, 1910, of the report of the codifying commission by the general assembly of Ohio, all of the property, both real and personal, so devised to the above-mentioned public charity is wholly exempt from taxation.

The adjudications of this court were all had prior to the amendment of May 9, 1908, the cases, chronologically arranged, being Cincinnati College v. The State, 19 Ohio 110; Gerke, etc., v. Purcell, 25 Ohio St. 229; Humphries, Auditor, v. Little Sisters of the Poor, 29 Ohio St. 201; Cleveland Library Assn. v. Pelton, Treas., 36 Ohio St. 253; Watterson v. Halliday, Auditor, 77 Ohio St. 150. It is quite evident that but for the amendments to the statutes of May 9, 1908, and February 15, 1910, respectively, exempting property, this action would not have been instituted. An examination of the several tax-exemption statutes is not only necessary for a proper consideration of the case, but is alike interesting and illuminating.

Prior to the adoption of the constitution of 1851, the nature and extent of exemption from tax was wholly a matter of legislative discretion, which was afterwards limited in set terms by the then new constitution The original statute, under the new order of things, was adopted in 1852 (see 91 O. L., 135) and provided that "All buildings belonging to institutions of purely public charity, together with the land actually occupied by such institutions not leased or otherwise used with a view to profit," shall be exempted, etc.

By the revision of 1880, this language was carried into and became a part of Section 2732, Revised Statutes of Ohio.

In 1894 (see 91 O. L., 216) this particular paragraph was amended and made to read as follows: "All buildings belonging to institutions of purely public charity and all buildings belonging to and used exclusively for armory purposes by lawfully organized military organizations which are and shall continue to be fully armed and equipped at their own expense, by law made and subject to all calls of the governor for troops, in case of war, riot, insurrection or invasion, together with the land actually occupied by such institutions and that owned by and used as sites for such armory buildings of said military organizations, not leased or otherwise used with a view to profit, and all moneys and credits appropriated solely to sustain, and belonging exclusively to said institutions and military organization."

In May, 1908 (99 O. L., 449), a further change was made, and the paragraph then read: "All property belonging to institutions of purely public charity, and all buildings belonging to and used exclusively for armory purposes by lawfully or- ganized military organizations which are and shall continue to be Fully armed and equipped at their own expense and by law made subject to all calls of the governor for troops in case of war, riot, insurrection or invasion together with the land actually occupied by such institutions and that owned and used as sites for such armory buildings of said military organizations not leased or otherwise used with a view to profit, and all moneys and credits appropriated solely to sustain and belonging exclusively to said institutions and military organizations."

In February, 1910, the report of the codifying commission was adopted by the legislature of Ohio, and thereafter the exemption of institutions of purely public charity was entirely disassociated from those of armory organizations, with which they had been classified since 1894, and associated instead with county, township and village infirmaries. Section 5353, General Code. And the exemption of armory organizations was provided for in separate Section 5354, General Code.

An examination of these several enactments will disclose the fact that from 1852 to 1908 the statutes read "All buildings belonging to institutions of purely public charity," etc., whereas, in 1908, the cord "buildings" was changed to the word "property." It is around the change of the word "buildings" to "property" that counsel for the institute seek to build their case in the first instance.

It must be noted, however, that the language "together with the land actually occupied by such institutions" remains intact in all of the several statutes, commencing with the original act of 1852, down to and including the act of May 9, 1908. If we eliminate from Section 2732, Revised Statutes, as amended May 9, 1908, all reference to armory organizations, we will find it reading as follows: "All property belonging to institutions of purely public charity, * * * together with the land actually occupied by such institutions, * * * not leased or otherwise used with a view to profit," which is precise in terms with the original act of 1852, excepting the change above referred to of "buildings" to "property."

It is contended by The Benjamin Rose Institute that in the act of May 9, 1908, the words "together with the land actually occupied by such institutions" have no proper place or significance, for the reason that since the general assembly expressly exempted all property belonging to institutions of purely public charity, this latter phrase was not intended to be and cannot be construed to be a limitation upon the express provisions of the statute.

With this interpretation the court cannot agree. If these words are to be construed as a limitation upon the express provisions of the statute as originally enacted and as amended from time to time, we can find no possible warrant authorizing a...