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is profit, no matter to what purpose

In Monticello Female Seminary v. that money is applied.

People, 106 Ill. 398, 46 Am. Rep. 702, In Northwestern University v. the seminary was the owner of People, 80 Ill. 333, 22 Am. Rep. 187, about 75 acres of land, a part of it was held that under $ 3 of article which was used for garden, part for 9 of the Constitution of 1848, which orchard, part for raising hay, corn, provided that such property as the and oats, part for pasturage, and general assembly might deem neces- part by a building occupied by the sary for schools and religious and superintendent of grounds and outcharitable purposes might be ex

door work, and, when necessary, by empted from taxation, it was not

the students. It was shown that competent for the general assembly all the property was necessary for to exempt from taxation property the proper carrying on of the instiowned by educational, religious, or tution and the land was used excharitable corporations which was clusively for the purpose of the innot itself used directly in aid of the stitution, no part of it being leased purposes for which the corporations or used with a view to profit. It were created, but which was held for was necessary, in connection with profit, merely, although the profits the institution, to have cows to supwere to be devoted to the proper ply milk for the scholars and teachpurposes of the corporation.

ers, numbering about one hundred In People ex rel. Thompson seventy-five persons, who resided First Cong. Church, supra, it was and lived upon the grounds of the held that a parsonage occupied by institution; that horses were rethe pastor of a church as a residence quired to do the necessary hauling was used for a secular and not for a connected with the seminary, and all religious purpose, and that a statute the hay, corn, and oats raised on the exempting all parsonages or resi- place went to the feeding of the dences actually and exclusively used stock; that nothing was ever sold off by persons devoting their entire the premises, but what was raised time to church work, and owned by was but a partial supply for the inthe congregation or the church au- stitution; that the object of the inthorities and not used for pecuniary stitution was, so far as possible, to profit, was not within the terms of make it self-sustaining. The lands the constitutional provision author- formed one connected body, upon izing the exemption of property which the seminary buildings were used exclusively for religious pur- situate. They were not leased by poses from taxation.

the institution, or otherwise used It is argued in behalf of the ap- with a view to profit, and it was held pellant that the test of exemption that they were used strictly and exis whether the property is so used clusively for the carrying on of the that it relieves the public of a bur- seminary, and were, therefore, exden that it would have if the prop- empt from taxation. erty were put to another use; that A question arose in connection if the entire income is used to sup- with the right of this same semiport the women living in the home nary to exemption from taxation of the property is exempt, even though certain personal property, consisting leased, because there is no profit to of credits; that is, bonds with interthe home within the meaning of the est coupons attached, and promisstatute. The trouble with this ar- sory notes secured by mortgages. It gument is that the Constitution and was held that the right to enjoy exthe statute have not adopted that emption from taxation could only be test, but have made the test that established by direct proof that the the property shall be exclusively funds were not used with a view to used for the charitable purpose, and profit; but as to the $35,000 of the shall not be leased or otherwise used fund which had been given to the for the purpose of profit.

institution for the purpose of fur

(312 Ill. 136, 143 N. E. 414.) nishing free scholarships, the semi- rented for the accommodation of nary having the right only to the use students belonging to certain fraof the income, and its ownership be- ternities, are not exempt from taxaing limited by the requirement that tion. the principal should be kept intact In Grand Lodge, A. F. A. M. v. and the income only used for the Board of Review, 281 Ill. 480, 117 N. specific purpose of furnishing free E. 1016, the Masonic Grand Lodge scholarships, it was held that the was the owner of 464 acres of land income was not a profit; that the on which it had constructed a suittrustees could be compelled to use able home for the widows and orthe income for the purpose stipu- phans of Masons. It was all in one lated by the donors; and that the body, separated only by public highprincipal sum of the $35,000 endow

ways, the whole constituting a sinment fund was exempt from taxa- gle farm operated for the maintetion, but the other funds were not. nance of the charity. The entire Monticello Seminary v. Board of Re- 464 acres were farmed, controlled, view, 249 Ill. 481, 94 N. E. 938.

and managed by committees of the In Smith v. Board of Review, 305 Grand Lodge for the support of the III. 38, 136 N. E. 787, the Caroline

home and hospital. Cows and other Mark Home was established by the stock were kept on the farm, and will of Caroline Mark as a home for

there were numerous persons emthe aged women of Carroll county, ployed as farm hands, laborers, and the counties adjoining, who

nurses, and other employees, and a were homeless and poor. The home large appropriation was made out itself was situated on a tract of

of the charity fund of the order for land of about 15 acres, an annex the use and maintenance of the upon a tract of about 10 acres, and

home in addition to what was furthere were two other tracts of 186

nished by the farm. This property and 62 acres, respectively, which

was clearly, actually and exclusively were leased by the trustees to other used for the charitable purpose of persons for cash rent. It was held

the home, and was not leased or oththat the tract of land on which the

erwise used with a view to profit, as home itself was situate was exempt

the court held. from taxation; that so much of the

The latest case which we have detract on which the annex was built

cided involving the construction of as was used in connection with the

the tax exemption here claimed is home should be exempt; but since

People ex rel. Pearsall v. Catholic a part of that tract was conceded to

Bishop, 311 Ill. 11, 142 N. E. 520, in be leased for cash rent, and the

which the principles announced in record did not show what part of the

the cases which have been cited are tract was exclusively used and occupied by the annex building and repeated. The case of Trinidad v.

Sagrada Orden de Predicadores, 263 what part was leased for cash, it

U. S. 578, 68 L. ed. 458, 44 Sup. was impossible to separate the exempt from that which was liable to

Ct. Rep. 204, is not in conflict with taxation; and that no error was

these principles.

That

case incommitted in holding the entire

volved an exemption from income tract subject to taxation.

tax of any corporation “organized In Knox College v. Board of Re

and operated exclusively for review, 308 Ill. 160, – A.L.R. — 139 ligious, charitable, scientific, or eduN. E. 56, it was held that a residence cational purposes, no part of the inowned by the college, and occupied

come of which inures to the benefit and used exclusively as his residence of any private stockholder or indiby the college president as a part of vidual." It was income, only, which the consideration for his service, and was involved; the exemption applied fraternity houses not used exclu- to the corporation and the purposes sively for school purposes, but for which it was operated, and contemplated that such a corporation only when it is clearly shown that might have a net income, making no it is actually and exclusively used reference to the source of the in- directly in the charitable work, and come, but making its destination the that such use is not

use is not indirectly ultimate test of exemption.

through a lease or other use for The law is clearly established by profit and the application of the inthe decisions of this court that prop- come or profits made to the use of erty can be held exempt from taxa- the charity. tion in this state on the ground that The judgment of the County Court it is devoted to a charitable purpose

will be affirmed.

ANNOTATION.

Exemption of charitable organization from taxation or special assessment.

I. Introductory, 634.

II. C-continued. II. General tax:

1. Real property rented for ina. In general; strict construction,

come, 659. 635.

2. Land used for farming,

665. b. As affected by the character or

3. Personal property producing purpose of the institu, tion:

income, 667.

4. Vacant or unused property, 1. In general, 636.

668. 2. As affected by receipt of

5. Property held for use in fupay from beneficiaries:

ture; buildings in course (a) In general, 637.

of construction, 671. (b) Orphanages,

6. Property used for recreahomes, and hos

tion, 673. pitals, 641.

7. Property used as residence 3. As affected by fact that

of employees, 674. benefits are limited to

8. Property held by institution special class, 645.

under lease, 675. 4. Organization primarily for

9. Miscellaneous, 675. profit, 646.

III. Succession or inheritance tax: 5. As affected by geographical

a. In general, 677. field of operation, 648.

b. As affected by character or pur. 6. Orphanages, homes, and

pose of institution: hospitals, 648.

1. In general, 678. 7. Libraries, museums, histor

2. Orphanages, homes, and ical and patriotic socie

hospitals; specific exempties, 652.

tion of almshouses, 678. 8. Missionary and other

3. Churches and church organ. church organizations,

izations, 679. 653.

4. Humane societies, 680. 9. Humane societies, 655.

5. Institution to be formed in

future, 681. 10. Schools, 655.

6. As affected by geographical 11. Specific exemption of alms

field of operation, 681. house or poorhouse, 657.

7. As affected by limiting bene. 12. Miscellaneous, 659.

fits to special class, 685. c. As affected by character or use 1

8. Miscellaneous, 686. of property:

IV. Special assessments, 687. 1. Introductory.

struction and effect of constitutional The existence and extent of the or statutory provisions exempting the legislative power with respect to the property of nongovernmental chariexemption of charitable institutions table institutions from taxation, exor their property are beyond the scope cluding the exemption of property of of the annotation. The purpose of the fraternal or relief associations, which annotation is to deal with the con- is dealt with in the annotation in 22 A.L.R. 907, and the exemption of prop- lieved the public from maintaining by erty of the Y. M. C. A., which will be taxation an institution of its own. treated specifically in the annotation The determination of the exemption to Y. M. C. A. V. Lancaster County, in a particular case seems to depend, post,

in the last analysis, upon two things: The question as to whether an First, whether the organization claimexemption from taxation of a reli- ing the exemption is a charitable one; gious or charitable body extends to and, second, whether the property on exempt property which the body has which the exemption is claimed is beno right to hold is also excluded from ing devoted to charitable purposes. the present annotation, as it is dealt In general, it may be said that any with in the annotation in 27 A.L.R. body not organized for profit, which 1047.

has for its purpose the promotion of In almost all of the states the prop- the general welfare of the public, exerty of charitable institutions is tending its benefits without discrimexempted from taxation by statute; ination as to race, color, or creed, is such statutes are universally held a charitable or benevolent organizaconstitutional, even in states requir- tion within the meaning of the tax ing equality of taxation, on the exemption statutes. In determining ground that, as such institutions per- whether the property is being devoted form a work which would otherwise to charitable purposes within the have to be carried on at the expense meaning of the statute, the rule that of taxpayers, an exemption from tax- tax exemptions are to be strictly conation lessens rather than increases strued is generally applied, with the the burdens of taxation on other tax- result that, in the absence of a spepayers. 26 R. C. L. $ 277, p. 316. cific charter or statutory provision,

The fundamental ground upon which no property owned by a charitable the exemption in favor of the chari- institution, but held as a source of table institutions is based is a benefit income, can escape taxation, although conferred upon the public by them, the fact that a charge is made for and the consequent relief, to some ex- benefits conferred, against those who tent, of the burden imposed on the are able to pay, in no way detracts state to care for and advance the from the charitable character of an interest of its citizens. Congrega- organization. tional S. S. & Pub. Soc: v. Board of

II. General tax.
Review (1919) 290 Ill. 108, 125 N.
E. 7.

a. In general; strict construction. One ground on which a statute The general rule that an exemption exempting charitable institutions from from taxation is to be strictly contaxation can be justified in the con- strued seems to be applicable to statstitutional sense is that these institu- utes exempting charitable

charitable institutions administer to human and soeial tions. needs, which the state itself might Connecticut. Stoughton V. Hartand does undertake to do, so that the ford (1912) 85 Conn. 674, 84 Atl. 95. ultimate obligation of the state is thus Illinois.-Re Allerton (1921) 296 discharged by the private charity. Ill. 340, 129 N. E. 801; PEOPLE EX REL, Massachusetts General Hospital v.

BALDWIN v. JESSAMINE WITHERS HOME Belmont (1919) 233 Mass. 190, 124 N. (reported herewith) ante, 628. E. 21.

And in Lutheran Hospital Indiana.-United Brethren Pub. EsAsso. v. Baker (1918) 40 S. D. 226, tablishment v. Shaffer (1920) 74 Ind. 167 N. W. 148, it was said that the App. 178, 123 N. E. 697. basic reason for exempting from tax- Kentucky. - Moorman v. Jefferson ation the property of charitable in- County (1921) 192 Ky. 242, 232 S. W. stitutions, when the same

379. clusively used for the purpose of the Maryland. — Frederick County v. charity, was that the existence and Sisters of Charity (1878) 48 Md. 34. operation of such an institution re- Michigan. – Detroit Young Men's

was

ex

Soc. v. Detroit (1854) 3 Mich. 172; erty should be strictly construed, and Fuller's Petition (1924) Mich. that it devolved upon those claiming 197 N. W. 552.

the specific exemption to show clearly New Jersey. Vincent De Paul v. that the property was within the conBrakeley (1901) 67 N. J. L. 176, 50 templation of the law. Atl. 589; Presbyterian Bd. of Relief But in Com. v. Lynchburg Y. M. C. v. Fisher (1902) 68 N. J. L. 143, 52 A. (1914) 115 Va. 745, 50 L.R.A. (N.S.) Atl. 228.

1197, 80 S. E. 589, it was held that a North Dakota.—Engstad v. Grand constitutional provision exempting Forks County (1900) 10 N. D. 54, 84 property of a charitable nature from N. W. 577.

taxation, in accordance with the And in Barbee v. Dallas (1901) 26 policy of the state, was not to be conTex. Civ. App. 571, 64 S. W. 1018, it strued with the same degree of strictwas held that the Texas statute ex- ness as obtained in cases of exempempting from taxation "all institu- tions generally. tions of purely public charity" au- In Y. M. C. A. y. Lancaster County thorized the exemption only of real (Neb.) post, —, the court, in conestate, with buildings thereon, owned struing the Nebraska Tax Exemption and exclusively used by such institu- Statute, states that the theory that tions, and did not extend the personal the rule requiring strict construction property of a charitable institution- of a tax exemption statute demands citing as authority for this propo- that the narrowest possible meaning sition, Morris v. Lone Star Chapter should be given to words descriptive (1887) 68 Tex. ' 698, 5 S. W. 519, set of the objects if it would establish forth in 22 A.L.R. 927, in the anno- too severe a standard, and that the tation on “Taxation of fraternal socie- rule should be that such words as ties."

"charitable" should be given a fair And it has been said that, as exemp- and reasonable construction in ascertions from taxation burdens are to be taining the true intent of the statute, strictly construed, it may well be and that then the statute should be doubted whether the statute exempt- strictly applied and enforced in order ing "institutions of purely public

not unduly to extend its scope. charity” from taxation was intended A charitable institution retains its to embrace more than institutions of character as such within a tax exemppublic charity, such as were founded tion statute, 'notwithstanding that it and maintained solely by the state pays its employees for services perand contradistinguished from institu- formed. Yates v. Will County (1924) tions founded by private enterprise - Ill. —, 144 N. E. 1. for the dispensation of private chari

b. As affected by the character or purties. People ex rel. Huck v. Seamen's

pose of the institution. Friend Soc. (1877) 87 Ill. 246. That case held, however, that even though

. 1. In general. the statutory exemption referred to To be entitled to an exemption as was construed to embrace all char- an institution of purely public charitable institutions, whether public or ity, it is not sufficient that the inprivate, it did not extend to exempt stitution shall have originated in a from taxation the property

charitable gift or bequest, but it must branch of a foreign charitable institu- actually dispense charity. Hunter's tion located within the state.

Appeal (1888) 22 W. N. C. (Pa.) 361. In Smith v. Board of Review (1922) But the institution need not neces305 Ill. 38, 136 N. W. 787, it was stated sarily be founded exclusively upon that it had been held that the laws donations; nor does it lose its exempand the Constitution of Illinois con- tion because it goes into debt for its templated that only property actually equipment, and pays that debt, toand exclusively used for charitable gether with the interest, out of the purposes should be exempt from tax- incidental earnings. Santa Rosa Ination, and that a law exempting prop- firmary v. San Antonio (1923) - Tex.

of a

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