This case originated in the probate court of Hamilton county, Ohio, on an application to determine the inheritance tax on the property of the estate of Mary M. Emery, deceased.
The probate court made its determination and entered its findings on the 20th day of November, 1928. The Tax Commission of the State of Ohio filed exceptions to the findings of the probate court, which exceptions were overruled, and the commission *Page 544 perfected an appeal to the court of common pleas. On consideration, the court of common pleas affirmed the probate court, and the commission prosecutes error to this court from that judgment of affirmance.
The case was heard by the court of common pleas on an agreed stipulation of facts. The stipulation briefly and concisely sets forth the facts and the proceedings, and is as follows:
"It is hereby stipulated and agreed, by and between counsel for the Tax Commission of Ohio and counsel for the Estate of Mary M. Emery, deceased, that the following statement correctly sets out the facts in this case, and is hereby made a part of the record herein:
"This matter comes on appeal from the Probate Court, perfected by the Tax Commission, to the determination of inheritance tax on the property of the Estate of Mary M. Emery, deceased, as made and entered by said Probate Court on the twentieth day of November, 1928.
"The decedent, Mary M. Emery, died on the eleventh day of October, 1927, a resident of the Town of Middletown, County of Newport, State of Rhode Island. The decedent died testate. A copy of her will and codicils thereto is hereto attached and made a part hereof, marked `Exhibit A.' Said will in substance provided for the payment of certain specific bequests and annuities, and the residuary estate passed to The Thomas J. Emery Memorial, a corporation not for profit, organized under the laws of the State of Ohio. Administration was had in the Probate Court of the Town of Middletown, County of Newport, State of Rhode Island, and *Page 545 ancillary administration was had in the Probate Court of Hamilton County, Ohio.
"Upon the application of the Executor, Charles J. Livingood, the Probate Court determined the inheritance tax upon the Ohio property under Section 5334-1 of the General Code, and the entry was duly certified to the Tax Commission by said Court on the twentieth day of November, 1928. The Probate Court in determining said tax considered only the tangible personal property and real estate in Ohio. The bequests and annuities were prorated according to the proportions which the Ohio property bore to the Rhode Island property. The Court, after taxing these specific bequests, exempted the residuary estate in the Ohio property, amounting to $3,039,652.45, which passed to The Thomas J. Emery Memorial, as a bequest to `an institution for purposes only of public charity' under Section 5334 of the General Code.
"To this determination of tax as made and entered by said Court, the Tax Commission filed exceptions, alleging therein that the residuary estate which passed to The Thomas J. Emery Memorial was not exempt under Section 5334 of the General Code, for the reason that said succession is not to be used for purposes only of public charity under the aforesaid section.
"Later on these exceptions were amended, and in addition to the first allegation pertaining to the exemptions under Section 5334, a second allegation was raised, alleging that the reciprocal provision of Section 5334-1 of the General Code was unconstitutional, being contrary and repugnant to the provisions *Page 546 of the Constitution of the State of Ohio, specifically Article12, Section 7 and the Constitution of the United States, for the reason that certain stocks, as follows: 1,000 shares Cincinnati Conservatory of Music Company, 610 shares Cincinnati Model Homes Company, 185 shares Dayton Michigan Railroad Company, 1,056 shares The Emery Candle Company, 200 shares The Loring Andrews Company, 69,995 shares The Mariemont Company, 275 shares The Mariemont Building Loan Association, as shown by said record in the Probate Court, were property within the jurisdiction of the State of Ohio, being stocks of corporations organized under the laws of Ohio, and were therefore subject to the laws therein.
"In the event the second allegation is well taken, the tax on said stock as aforesaid shall be determined under the provisions of Section 5345 of the General Code. The exceptions of the Tax Commission were overruled by the Probate Court.
"The Thomas J. Emery Memorial was organized on April 11, 1925, two and a half years prior to Mrs. Emery's death. A copy of its Articles of Incorporation is attached hereto and made a part hereof, marked `Exhibit B.' Prior to the death of Mrs. Emery The Thomas J. Emery Memorial received from Mrs. Emery Three Hundred Thousand Dollars ($300,000), to be used in the construction of a new wing for the Cincinnati Art Museum, an institution for purposes only of public charity under Section 5334 of the General Code of Ohio. It also received various park and recreational properties located in Mariemont, a new town built by Mrs. *Page 547 Emery in Hamilton County, Ohio, which park and recreational facilities have at all times been for the use of and open to the public. These were the only activities of The Thomas J. Emery Memorial prior to Mrs. Emery's death."
The Tax Commission in this error proceeding presents two questions: First, was the probate court correct in exempting the bequest of the residuary estate to the Thomas J. Emery Memorial, as an institution for purposes only of public charity, under Section 5334 of the General Code? Second, it is contended that Section 5334-1, containing what is known as the "reciprocal law," is violative of Section 7 of Article XII and Section 2 of ArticleI of the Constitution of Ohio.
We will first consider the question of the exemption of the bequest of the residuary estate under Section 5334. The pertinent part of that section is as follows: "The succession to any property passing to or for the use of * * * an institution for purposes only of public charity, carried on in whole or in substantial part within this state, shall not be subject to the provisions of the preceding sections of this subdivision of this chapter."
The Thomas J. Emery Memorial is admittedly an institution. The question is: Is it an institution "for purposes only of public charity" within the language of the statute? This requires a consideration of item XII of the will of Mary M. Emery, which is as follows:
"All the rest, residue and remainder of my property and estate, real, personal and mixed, of whatsoever kind and wheresoever situated of which I *Page 548 shall die seized or possessed or which I shall be entitled to dispose of by appointment or otherwise at the time of my death, and including any of the foregoing legacies and devises which may have lapsed, I do give, devise and bequeath to Isabella F. Hopkins, Charles J. Livingood, Frank H. Nelson, Morison R. Waite and Robert A. Taft, the survivors or survivor of them, and their successors, In Trust, to create and endow, or if already created, then to endow, The Thomas J. Emery Memorial, such Memorial to be my residuary legatee and devisee.
"The trust fund shall be kept invested by my said Trustees, and their successors in said trust, and the income therefrom shall be used for the physical, social, civic and educational betterment of residents of the United States, preferably those in the State of Ohio, on humanitarian lines, but I authorize said Trustees, and their successors in said trust, from the principal of said trust fund to purchase real estate and to erect such building or buildings as in their opinion may from time to time be needed for the purposes of this trust. The said Trustees may also make expenditures for disseminating such information, evidence and argument, as they may think necessary or desirable in order to secure efficient Government, State or Municipal action for the objects of this trust.
"The general purpose of this Memorial shall be to secure a citizenry which will be more sane, sound and effective because of more satisfactory initial conditions of environment and education.
"I direct that there shall, at all times, be five Trustees of this fund, and that if any individual *Page 549 above named as Trustee shall at any time fail to qualify, decline, die, resign, be removed or otherwise be incapable of acting as Trustee hereunder, the vacancy or vacancies so created shall be filled by written appointment by the remaining Trustees.
"I desire that such Memorial shall be kept a separate and distinct Memorial, and not be merged with any other, or placed under the control or direction, in any manner, of any other Board, public or private, or of any institution which now exists or may hereafter be created, and shall not be under any joint control with any other board or institution.
"Provided, however, that my said Trustees may in their discretion cause the said Memorial to be incorporated, and in such event it is my desire that there shall at all times be at least five Directors of the corporation so formed."
The Thomas J. Emery Memorial was incorporated as a corporation not for profit. It was organized some two and a half years prior to Mrs. Emery's death. The purpose clause in the articles of incorporation reads as follows: "Third: The purpose for which the corporation is organized is as follows: To bring about the physical, social, civic and educational betterment on humanitarian lines of residents of the United States, and preferably of those residing in the State of Ohio: To take such steps as shall be calculated to produce a citizenry which will be more sane, sound, and effective because of more satisfactory conditions of environment and education; to improve the physical, mental and moral condition of humanity, and generally to advance charitable and benevolent objects; to extend financial or other *Page 550 aid or assistance to such institutions used exclusively for charitable purposes as are now or may hereafter be engaged in furthering the purposes above named or either of them without gain or profit to their members, stockholders, trustees or directors, and to establish, promote, maintain and endow in whole or in part any such institution; and incidentally to the said main purpose the corporation shall have power to erect, manage and operate a building or buildings; to acquire by deed, devise, bequest, gift, purchase, or otherwise real and personal property, and to hold, invest, reinvest, manage and dispose of the same; and to do all other things necessary or incidental to the said purposes or any of them."
While the purpose clause does not determine the character of the purpose as declared in the will, it does have a bearing on the intention of the testatrix, since the same was incorporated more than two years prior to her death. She undoubtedly knew of the purpose clause and approved of the same as being in conformity with her intention under the will.
It is argued that the rule of construction in an application for exemption from taxation requires a strict construction of the exemption statute.
Counsel for the estate urge that there is no reason for strictness; that the splendid objects to be attained under the charity would call for liberality in determining its character. We find no difficulty in arriving at the conclusion hereinafter announced either from a liberal or strict interpretation. The provisions of item XII of the will seem to us to be so clearly expressed that no conclusion can be arrived *Page 551 at other than that it was so intended, and that the memorial, broadly expressed, is a purely public charity.
It is argued by counsel for the Tax Commission that the discretion given to the trustees, under which they might render assistance to an individual, or for a specific thing, destroys its public character. The answer to this is that no public charity could possibly be dispensed generally without resulting in benefit to individuals or single institutions. The charity to be bestowed through the memorial is as comprehensive as humanitarian considerations; it is as wide as the states; and that a substantial part of the charity is to be bestowed within the state of Ohio is indicated.
When testatrix says in a provision of her will, "and the income therefrom shall be used for the physical, social, civic and educational betterment of residents of the United States, preferably those in the State of Ohio, on humanitarian lines," her preference is expressed for residents of the state of Ohio, and this is binding upon the trustees. That they are so administering the trust, recognizing this injunction to prefer the residents of the state of Ohio, is indicated by the activities of the trustees, set forth in the agreed stipulation of facts.
Counsel for the Tax Commission relies largely on the case ofTax Commission v. Paxson, 118 Ohio St. 36, 160 N.E. 468. We are of opinion that the Paxson case is in no wise determinative of the question here. The trust provision in the will under consideration in the Paxson case declared that for certain reasons the testatrix, the daughter of Dr. Wilson, desires *Page 552 "to create a fund from which members of his profession may be compensated for alleviating the suffering of the unfortunate, needy, afflicted and thus rendering a service which he in his lifetime took great pleasure in rendering personally." Further on in her will testatrix in the Paxson case authorized and empowered the trustees, if they should find "in their judgment, it would best subserve the objects and purposes of this bequest, they may expend any part of, or all of said fund * * * in the erection of said hospital." This was the extent of the provision of this charity. It was given strictly for private charity, to create a fund for the benefit of doctors, and was not of a public character.
There is a wide difference between creating a charity for compensating the medical profession and creating one to be used for the "physical, social, civic and educational betterment on humanitarian lines of residents of the United States, and preferably of those residing in the State of Ohio," and "to produce a citizenry which will be more sane, sound, and effective because of more satisfactory conditions of environment and education."
The language of the will is so clear it seems unnecessary to discuss the proposition further.
Our conclusion is that the bequest of the residuary estate to the Thomas J. Emery Memorial is a bequest to an institution "for purposes only of public charity," and that it was properly exempted under Section 5334 of the General Code.
This conclusion makes it unnecessary to consider the second proposition in regard to the constitutionality of Section 5334-1, General Code. *Page 553
The judgment of the court of common pleas of Hamilton county, affirming the finding of the probate court as to the exemption, is affirmed.
Judgment affirmed.
CUSHING, P.J., and ROSS, J., concur.