is profit, no matter to what purpose that money is applied. In Northwestern University v. People, 80 Ill. 333, 22 Am. Rep. 187, it was held that under § 3 of article 9 of the Constitution of 1848, which provided that such property as the general assembly might deem necessary for schools and religious and charitable purposes might be exempted from taxation, it was not competent for the general assembly to exempt from taxation property owned by educational, religious, or charitable corporations which was not itself used directly in aid of the purposes for which the corporations were created, but which was held for profit, merely, although the profits were to be devoted to the proper purposes of the corporation. In People ex rel. Thompson v. First Cong. Church, supra, it was held that a parsonage occupied by the pastor of a church as a residence was used for a secular and not for a religious purpose, and that a statute exempting all parsonages or residences actually and exclusively used by persons devoting their entire time to church work, and owned by the congregation or the church authorities and not used for pecuniary profit, was not within the terms of the constitutional provision authorizing the exemption of property used exclusively for religious purposes from taxation. It is argued in behalf of the appellant that the test of exemption is whether the property is so used that it relieves the public of a burden that it would have if the property were put to another use; that if the entire income is used to support the women living in the home the property is exempt, even though leased, because there is no profit to the home within the meaning of the statute. The trouble with this argument is that the Constitution and the statute have not adopted that test, but have made the test that the property shall be exclusively used for the charitable purpose, and shall not be leased or otherwise used for the purpose of profit. In Monticello Female Seminary v. People, 106 Ill. 398, 46 Am. Rep. 702, the seminary was the owner of about 75 acres of land, a part of which was used for garden, part for orchard, part for raising hay, corn, and oats, part for pasturage, and part by a building occupied by the superintendent of grounds and outdoor work, and, when necessary, by the students. It was shown that all the property was necessary for the proper carrying on of the institution and the land was used exclusively for the purpose of the institution, no part of it being leased or used with a view to profit. It was necessary, in connection with the institution, to have cows to supply milk for the scholars and teachers, numbering about one hundred seventy-five persons, who resided and lived upon the grounds of the institution; that horses were required to do the necessary hauling connected with the seminary, and all the hay, corn, and oats raised on the place went to the feeding of the stock; that nothing was ever sold off the premises, but what was raised was but a partial supply for the institution; that the object of the institution was, so far as possible, to make it self-sustaining. The lands formed one connected body, upon which the seminary buildings were situate. They were not leased by the institution, or otherwise used with a view to profit, and it was held that they were used strictly and exclusively for the carrying on of the seminary, and were, therefore, exempt from taxation. A question arose in connection with the right of this same seminary to exemption from taxation of certain personal property, consisting of credits; that is, bonds with interest coupons attached, and promissory notes secured by mortgages. It was held that the right to enjoy exemption from taxation could only be established by direct proof that the funds were not used with a view to profit; but as to the $35,000 of the fund which had been given to the institution for the purpose of fur (312 Ill. 136, 143 N. E. 414.) nishing free scholarships, the seminary having the right only to the use of the income, and its ownership being limited by the requirement that the principal should be kept intact and the income only used for the specific purpose of furnishing free scholarships, it was held that the income was not a profit; that the trustees could be compelled to use the income for the purpose stipulated by the donors; and that the principal sum of the $35,000 endowment fund was exempt from taxation, but the other funds were not. Monticello Seminary v. Board of Review, 249 Ill. 481, 94 N. E. 938. In Smith v. Board of Review, 305 Ill. 38, 136 N. E. 787, the Caroline Mark Home was established by the will of Caroline Mark as a home for the aged women of Carroll county, and the counties adjoining, who were homeless and poor. The home itself was situated on a tract of land of about 15 acres, an annex upon a tract of about 10 acres, and there were two other tracts of 186 and 62 acres, respectively, which were leased by the trustees to other persons for cash rent. It was held that the tract of land on which the home itself was situate was exempt from taxation; that so much of the tract on which the annex was built as was used in connection with the home should be exempt; but since a part of that tract was conceded to be leased for cash rent, and the record did not show what part of the tract was exclusively used and occupied by the annex building and what part was leased for cash, it was impossible to separate the exempt from that which was liable to taxation; and that no error was committed in holding the entire tract subject to taxation. In Knox College v. Board of Review, 308 Ill. 160, A.L.R., 139 N. E. 56, it was held that a residence owned by the college, and occupied and used exclusively as his residence by the college president as a part of the consideration for his service, and fraternity houses not used exclusively for school purposes, but rented for the accommodation of students belonging to certain fraternities, are not exempt from taxation. In Grand Lodge, A. F. A. M. v. Board of Review, 281 Ill. 480, 117 N. E. 1016, the Masonic Grand Lodge was the owner of 464 acres of land on which it had constructed a suitable home for the widows and orphans of Masons. It was all in one body, separated only by public highways, the whole constituting a single farm operated for the maintenance of the charity. The entire 464 acres were farmed, controlled, and managed by committees of the Grand Lodge for the support of the home and hospital. Cows and other stock were kept on the farm, and there were numerous persons employed as farm hands, laborers, nurses, and other employees, and a large appropriation was made out of the charity fund of the order for the use and maintenance of the home in addition to what was furnished by the farm. This property was clearly, actually and exclusively used for the charitable purpose of the home, and was not leased or otherwise used with a view to profit, as the court held. The latest case which we have decided involving the construction of the tax exemption here claimed is People ex rel. Pearsall v. Catholic Bishop, 311 Ill. 11, 142 N. E. 520, in which the principles announced in the cases which have been cited are repeated. The case of Trinidad v. Sagrada Orden de Predicadores, 263 U. S. 578, 68 L. ed. 458, 44 Sup. Ct. Rep. 204, is not in conflict with these principles. That case involved an exemption from income tax of any corporation "organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the income of which inures to the benefit of any private stockholder or individual." It was income, only, which was involved; the exemption applied to the corporation and the purposes for which it was operated, and con templated that such a corporation might have a net income, making no reference to the source of the income, but making its destination the ultimate test of exemption. The law is clearly established by the decisions of this court that property can be held exempt from taxation in this state on the ground that it is devoted to a charitable purpose only when it is clearly shown that it is actually and exclusively used directly in the charitable work, and that such use is not indirectly through a lease or other use for profit and the application of the income or profits made to the use of the charity. The judgment of the County Court will be affirmed. ANNOTATION. Exemption of charitable organization from taxation or special assessment. I. Introductory, 634. II. General tax: a. In general; strict construction, 635. b. As affected by the character or purpose of the institution: 1. In general, 636. 2. As affected by receipt of 3. As affected by fact that 4. Organization primarily for profit, 646. 5. As affected by geographical 6. Orphanages, homes, and 7. Libraries, museums, histor- 8. Missionary and other church organizations, 653. 9. Humane societies, 655. 10. Schools, 655. 11. Specific exemption of alms house or poorhouse, 657. 12. Miscellaneous, 659. c. As affected by character or use ! of property: 1. Introductory. The existence and extent of the legislative power with respect to the exemption of charitable institutions or their property are beyond the scope of the annotation. The purpose of the annotation is to deal with the con II. c-continued. 1. Real property rented for income, 659. 2. Land used for farming, 665. 3. Personal property producing income, 667. 4. Vacant or unused property, 5. Property held for use in fu- 7. Property used as residence of employees, 674. 8. Property held by institution under lease, 675. 9. Miscellaneous, 675. III. Succession or inheritance tax: a. In general, 677. b. As affected by character or purpose of institution: 1. In general, 678. 2. Orphanages, homes, and 4. Humane societies, 680. 5. Institution to be formed in future, 681. 6. As affected by geographical field of operation, 681. 7. As affected by limiting benefits to special class, 685. 8. Miscellaneous, 686. IV. Special assessments, 687. struction and effect of constitutional or statutory provisions exempting the property of nongovernmental charitable institutions from taxation, excluding the exemption of property of fraternal or relief associations, which is dealt with in the annotation in 22 A.L.R. 907, and the exemption of property of the Y. M. C. A., which will be treated specifically in the annotation. to Y. M. C. A. v. Lancaster County, post, The question as to whether an exemption from taxation of a religious or charitable body extends to exempt property which the body has no right to hold is also excluded from the present annotation, as it is dealt with in the annotation in 27 A.L.R. 1047. the In almost all of the states the property of charitable institutions is exempted from taxation by statute; such statutes are universally held constitutional, even in states requiring equality of taxation, on ground that, as such institutions perform a work which would otherwise have to be carried on at the expense of taxpayers, an exemption from taxation lessens rather than increases the burdens of taxation on other taxpayers. 26 R. C. L. § 277, p. 316. The fundamental ground upon which the exemption in favor of the charitable institutions is based is a benefit conferred upon the public by them, and the consequent relief, to some extent, of the burden imposed on the state to care for and advance the interest of its citizens. Congregational S. S. & Pub. Soc. v. Board of Review (1919) 290 III. 108, 125 N. E. 7. One ground on which a statute exempting charitable institutions from taxation can be justified in the constitutional sense is that these institutions administer to human and social needs, which the state itself might and does undertake to do, so that the ultimate obligation of the state is thus discharged by the private charity. Massachusetts General Hospital v. Belmont (1919) 233 Mass. 190, 124 N. E. 21. And in Lutheran Hospital Asso. v. Baker (1918) 40 S. D. 226, 167 N. W. 148, it was said that the basic reason for exempting from taxation the property of charitable institutions, when the same was clusively used for the purpose of the charity, was that the existence and operation of such an institution re ex lieved the public from maintaining by taxation an institution of its own. The determination of the exemption in a particular case seems to depend, in the last analysis, upon two things: First, whether the organization claiming the exemption is a charitable one; and, second, whether the property on which the exemption is claimed is being devoted to charitable purposes. In general, it may be said that any body not organized for profit, which has for its purpose the promotion of the general welfare of the public, extending its benefits without discrimination as to race, color, or creed, is a charitable or benevolent organization within the meaning of the tax exemption statutes. In determining whether the property is being devoted to charitable purposes within the meaning of the statute, the rule that tax exemptions are to be strictly construed is generally applied, with the result that, in the absence of a specific charter or statutory provision, no property owned by a charitable institution, but held as a source of income, can escape taxation, although the fact that a charge is made for benefits conferred, against those who are able to pay, in no way detracts from the charitable character of an organization. New Jersey. - Vincent De Paul v. Brakeley (1901) 67 N. J. L. 176, 50 Atl. 589; Presbyterian Bd. of Relief v. Fisher (1902) 68 N. J. L. 143, 52 Atl. 228. North Dakota.-Engstad v. Grand Forks County (1900) 10 N. D. 54, 84 N. W. 577. And in Barbee v. Dallas (1901) 26 Tex. Civ. App. 571, 64 S. W. 1018, it was held that the Texas statute exempting from taxation "all institutions of purely public charity" authorized the exemption only of real estate, with buildings thereon, owned and exclusively used by such institutions, and did not extend the personal property of a charitable institutionciting as authority for this proposition, Morris v. Lone Star Chapter (1887) 68 Tex. 698, 5 S. W. 519, set forth in 22 A.L.R. 927, in the annotation on "Taxation of fraternal societies." And it has been said that, as exemptions from taxation burdens are to be strictly construed, it may well be doubted whether the statute exempting "institutions of purely public charity" from taxation was intended to embrace more than institutions of public charity, such as were founded and maintained solely by the state and contradistinguished from institutions founded by private enterprise for the dispensation of private charities. People ex rel. Huck v. Seamen's Friend Soc. (1877) 87 Ill. 246. That case held, however, that even though the statutory exemption referred to was construed to embrace all charitable institutions, whether public or private, it did not extend to exempt from taxation the property of a branch of a foreign charitable institution located within the state. In Smith v. Board of Review (1922) 305 III. 38, 136 N. W. 787, it was stated that it had been held that the laws and the Constitution of Illinois contemplated that only property actually and exclusively used for charitable purposes should be exempt from taxation, and that a law exempting prop erty should be strictly construed, and that it devolved upon those claiming the specific exemption to show clearly that the property was within the contemplation of the law. But in Com. v. Lynchburg Y. M. C. A. (1914) 115 Va. 745, 50 L.R.A. (N.S.) 1197, 80 S. E. 589, it was held that a constitutional provision provision exempting property of a charitable nature from taxation, in accordance with the policy of the state, was not to be construed with the same degree of strictness as obtained in cases of exemptions generally. In Y. M. C. A. v. Lancaster County (Neb.) post,, the court, in construing the Nebraska Tax Exemption Statute, states that the theory that the rule requiring strict construction of a tax exemption statute demands that the narrowest possible meaning should be given to words descriptive of the objects if it would establish too severe a standard, and that the rule should be that such words as "charitable" should be given a fair and reasonable construction in ascertaining the true intent of the statute, and that then the statute should be strictly applied and enforced in order not unduly to extend its scope. A charitable institution retains its character as such within a tax exemption statute, notwithstanding that it pays its employees for services performed. Yates v. Will County (1924) - Ill. 144 N. E. 1. b. As affected by the character or purpose of the institution. 1. In general. To be entitled to an exemption as an institution of purely public charity, it is not sufficient that the institution shall have originated in a charitable gift or bequest, but it must actually dispense charity. Hunter's Appeal (1888) 22 W. N. C. (Pa.) 361. But the institution need not necessarily be founded exclusively upon donations; nor does it lose its exemption because it goes into debt for its equipment, and pays that debt, together with the interest, out of the incidental earnings. Santa Rosa Infirmary v. San Antonio (1923) Tex. |