Opinion
Nos. 30459 and 30460
Decided January 16, 1946.
Taxation — Charitable institutions — property producing income used exclusively for charitable purposes, not exempt.
APPEALS from the Board of Tax Appeals.
Joseph B. Richardson died in 1906 leaving a last will and testament.
By item 10 of such will he devised a 76-acre parcel of his farm in Summit county "to the township of Tallmadge to be managed by the trustees of said township of Tallmadge and their successors in office in trust for the purpose of providing a home for the aged and destitute people of said township of Tallmadge or any of the residents thereof who by reason of sickness or unavoidable misfortune are unable to provide for themselves. Said farm is not to be sold, but maintained by said trustees, permanently as a home as above specified under such rule and regulations as may be prescribed by said trustees. To fully carry into effect the charitable purposes herein explained, said trustees shall have the power in case not all the premises are needed at any time for the use of the home to rent any portion thereof temporarily and apply said rental to the maintenance of said home."
By item 11 the testator gave a life use in a 15-acre parcel of his farm to Sally Dreisbaugh and after her death such parcel was to go "to the township of Tallmadge to be managed by said trustees of Tallmadge in trust. Said place is not to be sold but maintained by said trustees permanently and added to the 76 acres above mentioned for the same charitable purposes under the same rules and regulations to fully carry into effect the charitable purposes above expressed."
By item 13 the testator gave and devised to the trustees of Tallmadge township "any and all my property not hereinbefore disposed of in trust, for the purposes of further providing for the maintenance of said home, in trust.
The township trustees accepted the trust by resolution entered on their journal in 1907, entered upon their duties as trustees and disbursed certain funds coming to them under the will, for the benefit of aged or destitute people of the township, but never housed any indigents in the buildings on the farm.
In 1914 a taxpayer's action was brought in the Court of Common Pleas to enjoin the trustees from using the income from the trust for furnishing what was designated as outdoor (outside) relief to the persons entitled to the 76 acres as a home. The answer of the trustees prayed for an order authorizing and instructing them as to the use of the trust fund and its income in providing necessary relief to the parties entitled thereto, as specified in items 10 and 13 of the will, without being required to maintain a home or to commit any of such persons thereto. The Court of Common Pleas denied an injunction and instructed the trustees to rent the farm and to use the proceeds and the income from the personal estate "in caring for the aged and destitute people of said township of Tallmadge or of the residents thereof, 'who by reason of sickness or unavoidable misfortune are unable to provide for themselves,' without committing said persons or any of them to said home or maintaining the same for them, but granting such assistance to said persons from said net income of said farm and the income from said principal fund, at such places, at such times and under such conditions as the said trustees or their successors in office may think will be the best and cheapest method of caring for such persons, having in mind the charitable purpose expressed in the will of said decedent."
Thereafter the sole heir and next of kin of testator brought an action to set aside the charitable trust on the ground that the trust failed for uncertainty of beneficiaries, for want of beneficiaries, or for incapability of enforcement or administration. That litigation terminated in favor of the trustees, in the case entitled Gearhart v. Richardson, 109 Ohio St. 418, 142 N.E. 890.
Sally Dreisbaugh paid taxes upon the portion of the farm which she occupied, until her death in 1924, and that portion ha s remained upon the tax duplicate since that time. The records in the instant cases disclose that no application for exemption had been filed as to the 76-acre parcel and it was placed on the tax list and duplicate for the tax year 1944.
The trustees filed an application to exempt the entire farm from taxation on the grounds that it was property of an institution used exclusively for charitable purposes within Section 5353, General Code, and that the farm was public property used for a public purpose within Section 5351, General Code.
The county auditor found the 15-acre parcel should be exempted from taxation.
The Board of Tax Appeals decided that neither parcel is entitled to exemption and denied the application. Cause No. 30459 is an appeal to this court from that decision.
The trustees filed also an application under Section 5570-1, General Code, for the remission of taxes and penalty, to which the county auditor recommended the consent of the Board of Tax Appeals. The board ordered that the application for remission be denied, and cause No. 30460 is an appeal by the trustees to this court from that decision.
Mr. Charles F. Schnee and Mr. Scott A. Belden, for appellants.
Mr. Hugh S. Jenkins, attorney general, and Mr. Joseph F. Ford, for appellees.
Section 5353, General Code (110 Ohio Laws, 77), provides:
"Lands, houses and other buildings belonging to a county, township, city or village, used exclusively for the accommodation or support of the poor, or leased to the state or any political subdivision thereof for public purposes, and property belonging to institutions used exclusively for charitable purposes, shall be exempt from taxation."
The facts disclosed by the records in these cases render the case of Incorporated Trustees of Gospel Worker Society v. Evatt, Tax Commr., 140 Ohio St. 185, 42 N.E.2d 900, controlling here.
The syllabus in that case is as follows:
"1. Property belonging to a charitable institution may not be exempted from taxation unless it is used exclusively for charitable purposes.
"2. Under Section 2 of Article XII, Constitution of Ohio, and Section 5353, General Code, property which is used to produce income to be used exclusively for charitable purposes may not be exempted from taxation. The test is the present use of the property rather than the ultimate use of proceeds received from the property sought to be exempted."
In numerous other cases this court has held that exemption from taxation may not be granted where real or personal property of a charitable institution is applied toward producing income which is used exclusively for charitable purposes. See Benjamin Rose Institute v. Myers, Treas., 92 Ohio St. 252, 110 N.E. 924, L.R.A. 1916D, 1170, and Jones, Treas., v. Conn et al., Trustees, 116 Ohio St. 1, 155 N.E. 791, which are cited in the Gospel Worker case, supra.
The Board of Tax Appeals also denied the exemption authorized by Section 5351, General Code, and counsel for appellants do not challenge such determination in this court.
The decisions of the Board of Tax Appeals are reasonable and lawful and are affirmed.
Decisions affirmed.
WEYGANDT, C.J., ZIMMERMAN, BELL, WILLIAMS, TURNER, MATTHIAS and HART, JJ., concur.