San Francisco Boys' Club, Inc. v. Mendocino County

• Court: California Court of Appeals
• Writing for the Court: SIMS; MOLINARI, P.J., and ELKINGTON
• Citation: 62 Cal.Rptr. 294,254 Cal.App.2d 548
• Parties: SAN FRANCISCO BOYS' CLUB, INC., Plaintiff and Respondent, v. COUNTY OF MENDOCINO, a body politic, W. L. Brown, County Tax Assessor of the County of Mendocino, Dorothy Simons, County Tax Collector, County of Mendocino, John Mayfield, Jr., Ernest Banker, J. Harvey Sawyers, August J. Avila and Joseph Scaramella, Board of Supervisors, County of Mendocino, a body politic, Defendants and Appellants. Civ. 23940.
• Decision Date: 21 September 1967

Page 294

62 Cal.Rptr. 294 254 Cal.App.2d 548 SAN FRANCISCO BOYS' CLUB, INC., Plaintiff and Respondent,
v.
COUNTY OF MENDOCINO, a body politic, W. L. Brown, County Tax Assessor of the County of Mendocino, Dorothy Simons, County Tax Collector, County of Mendocino, John Mayfield, Jr., Ernest Banker, J. Harvey Sawyers, August J. Avila and Joseph Scaramella, Board of Supervisors, County of Mendocino, a body politic, Defendants and Appellants. Civ. 23940. Court of Appeal, First District, Division 1, California. Sept. 21, 1967.
Hearing Denied Nov. 15, 1967.

Page 295

[254 Cal.App.2d 549] Thomas F. Cleland, Dist. Atty., Mendocino County, Ukiah, by Timothy O. Stoen, Deputy Dist. Atty., for appellants.

Russel Shearer, Shearer, Thomas & Lanctot, San Francisco, for respondent.

SIMS, Associate Justice.

Defendants, the County of Mendocino and various public officials of that county, who were sued in their official capacity, have appealed from a judgment entered in four consolidated actions in which plaintiff, San Francisco Boys' Club, Inc., sought and was awarded a refund of real property taxes paid under protest on assessments made for the fiscal years 1962--1963, 1963--1964, 1964--1965 and 1965--1966. The trial court upheld the taxpayer's claim that the property in question was exempt from taxation under the provisions of section 1c of article XIII of the California Constitution and section 214 of the Revenue and Taxation Code.

Defendants contend that the taxpayer was not entitled to an exemption, and the resulting refund, because its entire property was not exclusively used for an exempt purpose as required by the constitutional and statutory provisions. As a corollary, they urge that the trial court erred in failing to expressly find, as a matter of fact, whether the property had been exclusively used for charitable purposes. Review reveals that the trial court properly concluded that the taxpayer was entitled to the exemption, and that the defendants cannot complain of the failure to find on the issue presented by them because it is a mixed question of fact and law, and, in any event, could only

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be resolved adversely to defendants in the light of the facts expressly found by the trial court.

The facts before this court are set forth in an agreed statement (California Rules of Court, rule 6(a)) which in turn adopts and supplements substantially all of the facts found by the trial court. They may be summarized as follows:

The San Francisco Boys' Club is a nonprofit corporation organized under the laws of the State of California, and operated exclusively for charitable purposes. Its articles of incorporation, indicate the purpose of the club, generally, is to promote the well-being of boys of San Francisco; that it is not organized and operated for profit and that no part of its net earnings accrue to the benefit of any private shareholder or individual. The corporation has no shareholders; it is a membership corporation. Article XVII further provides that [254 Cal.App.2d 550] in the event of liquidation, dissolution or abandonment, the corporation's property 'will not inure to the benefit of any private person, but shall be distributed to a fund, foundation or corporation organized and operated for charitable purposes.'

The club operates three clubhouses for boys in San Francisco, and in addition operates a summer camp in Mendocino County. The camp provides the opportunity for boys to go to camp for one or more periods of two weeks for five sessions during the summer. The boys are always charged less than the actual cost of the vacation, although the cost is approximately equal to the out-of-pocket expense for the operation of the camp. However, approximately 50 per cent of the boys going to camp attend at reduced rates, the difference between the contribution of such boy or his family being furnished by the club through its campership fund or by other organizations of the same general character.

The camp covers 1,937.98 acres of land in Mendocino County. Of this total acreage, 548.73 acres were held tax exempt, while 1,389.25 acres were taxed. The permanent buildings of the camp lie in the exempted area. The parcels that were not exempted contain the gathering source of the principal water supply of the boys' club camp, trails which have been in use by the boys' club for more than 20 years, the area used by the boys' club camp as a dump, the Camp Seven Road and the new road to the Sherwood Forest, the trails through the forest to the northerly boundary of the property on the Sherwood Road, and the camp site at the line shack adjacent to the Sherwood Road, and an intermediate camp site.

For the 10-week period of the camping season all of the forest trails and away-from-camp overnight camp sites are available for use and the entire property is used for the operation of the camp. Over 200 boys attend the camp during each of five two-week sessions.

In 1960 the club began selling timber, logged from its property. The decision to sell such timber was made by the directors who determined the timber should be harvested, and if not harvested, would be wasted; the directors further determined that the roads constructed because of the logging operations would improve safety in case of emergency. The logging operations were carried on by independent contractors [254 Cal.App.2d 551] hired by the purchaser of the timber. The cutting of timber was prohibited during the camping season, and the cutting did not in any way prevent the use of any portion of the premises as a camp. The income from timber sales during the tax years in dispute averaged about $20,000 a year. Approximately 25 per cent of the receipts were used to provide permanent roads into the main living area of the camp, from the Sherwood Road, a county road on the north, and from the main living area to the Jackson State Forest on the south. All of such receipts have been devoted to the purposes of the boys' club.

The County of Mendocino did not attempt to withhold the club's exemption

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until the 1962--1963 fiscal year. ¹ In that year, and in the subsequent years involved, taxes were levied against 1,389,25 acres of camp property which contained timber and certain camp facilities. The remaining 537.33 acres of the camp's property, where the main buildings were located, were not taxed. During the period in question the club has paid the tax assessor, under protest, $4,914.02.

Insofar as is pertinent to this case, the Constitution since 1944 has provided and now provides: 'In addition to such exemptions as are now provided in this Constitution, the Legislature may exempt from taxation all or any portion of Property used exclusively for religious, hospital or Charitable purposes and owned by community chests, funds, foundations or corporations organized and operated for religious, hospital or charitable purposes, not conducted for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. * * *' (Cal.Const., art. XIII, § 1c; emphasis added.)

Pursuant to this authority the Legislature adopted and from time to time has revised section 214 of the Revenue and Taxation Code, the so-called welfare exemption. (Stats. 1945, c. 241, § 1, p. 706; Stats. 1949, c. 642, § 1, p. 1150; Stats. 1951, c. 242, § 1, p. 502; Stats. 1953, c. 730, § 1, p. 1994 (operative Jan. 1, 1953, c. 730, § 2, p. 1995, and effective May 18, 1953 as emergency legislation, c. 730, § 4, pp. 1995--1996); Stats. 1955, c. 1067, § 1, p. 2034; Stats. 1965, c. 869, § 1, p. 2471; and Stats. 1966, 1st Ex.Sess., c. 121, § 1, p. 605.) It [254 Cal.App.2d 552] is conceded that the club complies with all the requirements imposed by the Legislature in that section, except those relating to use of the property, which, during the years in question read, and now read as follows: 'Property used exclusively for religious, hospital, scientific, or charitable purposes owned and operated by community chests, funds, foundations or corporations organized and operated for religious, hospital, scientific, or charitable purposes is exempt from taxation if: * * * (3) The property is used for the actual operation of the exempt activity; * * *' (See Rev. & Tax.Code. § 214.)

The guilding principles for interpreting the constitutional and statutory provisions were enunciated in a series of cases decided by the Supreme Court of this state in 1950. It is established that 'the rule of strict construction applies to the welfare exemption law and the institution seeking its benefit must clearly show that it comes within the terms thereof; but adherence to this rule does not require so rigid and narrow an interpretation of the exempting language as to defeat the apparent design of the lawmakers. In short, there must be a strict but reasonable construction of this law as applied to the particular facts at hand. To this point it would appear that the exemption of property 'used exclusively for religious * * * or charitable purposes' should be held to include any property of the religious or charitable entity which is used exclusively for any facility which is incidental to and reasonably necessary for the accomplishment of religious or charitable purposes. The integrated activities as a whole must be examined in determining the tax status of property for the welfare exemption.' (Serra Retreat v. County of L.A. (1950) 35 Cal.2d 755, 758, 221 P.2d 59, 61, following Cedars of Lebanon Hospital v. County of Los Angeles (1950) 35 Cal.2d 729, 734--736, 221 P.2d 31, 15 A.L.R.2d 1045; accord: Y.M.C.A. v. County of L.A. (1950) 35 Cal.2d 760, 767, 221 P.2d 47; Fredericka Home v. County of San Diego (1950) 35 Cal.2d 789, 795--796, 221 P.2d 68; Sarah Dix Hamlin School v. City etc. of San Francisco (1963) 221 Cal.App.2d 336, 342, 34 Cal.Rptr. 376; Samarkand of Santa Barbara, Inc. v. County of

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Santa Barbara (1963) 216 Cal.App.2d 341, 355--356, 31 Cal.Rptr....