HE *a ORNF,Y GENERAL
OF%'EXAS
April 25, 1958
Hon. GeorgeR. Killam OPINIONNO. WW-420
CountyAttorney
scurry county Re: Whether oil, gas and
Snyder,Texas mineralpropertiesheld
in trust for Texas
BaptistChildren'sHome
for stateapurposesare
exempt from countyad
Dear Mr. Killam: valoremtaxes.
In your requestfor an opinionof this officeon the above
captionedmatter,you have advisedus of the followingfacts. Dora
E. Cunninghamdevisedall of her right,title and interestIn and
to the oil, gas and other mineralsin and under all of Section613
of Block 97 of the East part of Section653 In said Block 97,
H. & T.C. Ry. Co. Survey in Scurry County,Texas, in trust for a
statedperiod (whichperiodhas not expired)for the benefitof
the Texas BaptistChildren'sHome, locatedat Round Rook, Texas.
We quote the followingexcerptfrom the will:
"11. The incomeand principalof the Trust estate shallbe
administeredand distributedas follows:
"a) During the existenceof the Trust, there &all
be paid to or for the benefit of the TEXAS BAPTIST
Cm's HOME, locatedat Round Rook, Texas, 80 much
of the principalor income of the Trust as the Trustees
in the exeroiaeof their sole discretionshall determine.
I hereby state that the primarypurposesfor which this
Trust Is establishedare
"1) To providefunds for the erectionand
maintenanceof necessarybuildingsand the purchaseand
maintenanceof necessaryequipmentfor the operationof
said Texas BaptistChlldren'aHome;
"Ii) To providefunds for the care and
maintenanceof the groundsof said Texas Baptist
Children"8Home;
"iii) To providefunds for the purchaseof
additionalgroundsneeded In the operationof said Texas
BaptistChildren'sHorns,
-.. _
Hon. GeorgeR. Killam,page 2, (WW-420)
and I direct that the exerciseof their discretionin
this respect shallbe in conformitywith the foregoing
purposes.
"b) Any funds which the Trusteesin their sole
discretionshall determineare not necessaryfor the
purposesexpressedin subparagraph(a) of this paragraph
11 of this ARTICLE II may be paid by the Trusteesin
their sole discretionto any one or mom of the Southern
Baptistreligious,charitable,sciantiffo,literaryor
educationalorganizatfons locatedin the State of Texas.
"0) In limitationof all provisionscontainedin
this my Last Will and Testamentwith respectto the
Tmat herein created,I expresslydirect that:
"1) All funds, propertfssand assets of the
Trust shall be used for religious,oharita'ble,solenti-
fio, literaryor educationalpurposesor for the pre-
ventionof crueltyto childrenand for no other purposes,
provided,however,that all funds,propertiesand assets
shall be used wfthin the Stats of Texas exoP~sivslyfor
such purposes.s ."
11
. . D
* The Trust heroin createdshall tem!.nateon she
"I.2
date which is the tweniy-fLrstanniversaq of ,$hedeath c~f
the last survivorof MAURINEMYRTIS AWFAS,MATTE ROSS CONSLEY
and DANIELM. GIBSON,and all prir,cipa: and undistributedin-
come then remainLugin Trust shallbe imnsdiatelydistributed
to the Board of Trusteesof the Texas Baptrst ChiL3refi's Home
of Round Rook, Texas, for tie 'useby said Boar6 Yor the bane-
fit of said Texas BaptistChildren'sHome in conformitywftii
the purposeshereinaboveexpressedin s¶graph {aj of
paragraph11 of this ARTICLE II.. If, on the date of such
termination,the said Texas BaptistChiLLron'sHome fs no
longer in sxistsnce,all principaland undistribntedincome
than remainingin Trust shall be immediatelydistrsibuted to
the RAEIST FOUNDATIONOF TEXAS, Dallas,Texas,to be used
for such religious,oharftable,scientific,literaryor
educationalpurposeswithin the State of Texas as the govern-
ing body of such BaptistFoundationof Texas shall determine."
The trust propertyis presentlyproduof~?of1 and gas, and you
ask whetherthe mineral Interestheld by the Trustees,isexemptfrom
county M:'aloPem taxes.
Hon. GeorgeR. Killam,page 3, (WW-420)
ArticleVIII, Section2 of the Constitutionof the State of
Texas, has empoweredthe Legislatureto exemptfrom taxationcertain
enumeratedproperties,among which are "- . . institutfonsof purely
public charity." In pursuanceto this particularconstitutional
grant, the LegislatureenactedSection7 of Article7150, V.C.S.
Article 7150 reads, in part, as follows:
"The followingpropertyshall be exempt from taxation,to-wit:
"7. Public charities.I All buildingsbelongingto
institutionsof purelypublic charity,togetherwith the
lands belongingto and occupiedby such Institutionsnot
leased or otherwiseused with a view to profit,unless such
rents and profitsand all moneys and creditsaru appropriated
by such institutionssolelyto sustainsuch institutionsand
for the benefitof the sick and disabledmembersand their
familiesand the burial of the same, or for the maintenance
of personswhen unable to providefor themselves,whether
such personsare members of such institutionsor not. An
institutionof purely public charityunder this artiole is
one which dispensesits aid to its membersand others in
sicknessor distress,or at death,withoutregard to poverty
or riches of the recipient,also when the funds,property
and assets of such institutionsare placed and bound by
its laws to relieve,aid and administerin any way to the
relief of its memberswhen in want, sicknessand distress,
and providehomes for its helplesssnd dependentmembersand
to educateand maintainthe orphansof its deceasedmembers
or other persons."
It is clear that the charitabletrust under considerationis
an institutionof purelypublic charitywfthin the meaningof
Section2 of ArticleVIII of the Texas Constitotionand Section7
of Article 7150, V.C.S. State v. Settegast,254 53-w.925 (Comm.
APP. 1923)0 We, therefore,pass to a consider&&m of whether
exemptionmay be accordedthe propertyin qusstlonunder the facts
in this case.
In Morris v. Lone Star Ch. Ro. 6, R.A.M., 68 Tex. 697, 5 S.W.,
519 (1887)the court held that under Section2 of ArticleVIII of
the Constitution,the bgislature could exempt from taxationthe
buildingsof "institutions of purely public charity"but that such
authorizationextendedonly to such buildingsaud groundsas were
used exolusivelyand owned by such institutionsand that exclusive
use meant the actual and directuse for the purposesof the chari-
table association.
- ^.
Hon. GeorgeR. Killam,page 4, (WW-420)
In the S&t= case, supra,the court held that the trustees
_ -. ^
owea tax08 on oertalnpropertieswhich wore a psrt of the Hermsnn
HospitalEstate. In that case the will had establishede.trust far
the purposeof buildingand maintaininga charitablehospital. The
trusteeswere conductingthe businessof -aging the propertyand
constructingthe hospitalunder the name of the H-nu Hospftal
Estate. The propertyin questionInvolvedsix rent houses;and all
rents and incometherefromwere to be uasd solelyto supportand
maintainthe HornannHospital. The court pointedout that the
hospitalitselfwas to be built on other propertyand that the
propertyin questionwas not being used directlyin connection
with the bullding and operationof the hospital'but or-
In Its maintenance.
In Hedgecroftv. City of Houston,150 Tex. 654, 244 S.W. 2d
612 (1952).the court was concernedwl,th ,thsPollowinafacts. The
H~dg&~ft'Corporation had acquiredtitle to the propertyin
questionthroughgift and oonveyar~cs on December30, 1948. Before
that tfme the corporationhad agreed with a constructioncompany
to make the necessaryalterationsand repairs of the propertyto
fit It for the operationof a hospital,clinicand trainingschool;
and beginnfngwith the week endingJuly 7, 1948, and oontlnulng
until December29, 1948, the constructioncompanyhad been preparing
plans for repairsand alterations. From August 1, 1948, through
December27, 1948, a blue print compav had farnfshednuminous
blue prints concerningthe contemplatedrepairs. Prior to the
corporation's acquisitionof tha prapperty fn ques-',jcln
and immediately
thereafterincludl.ug January I, lpkp, the corporationwas engaged
in planningand znaklngthe necessaryrepaira. The remodsliagwas
completedou May L3 to an extentwhit!!&lowed tbs clinic
to move on to the p&:2:: ; and tts ollnit: had since 'been.
o~~ntfnuous-
ly in operationthere. The Cii;yof Housrrxant the B:onston Inde-
pendentSchool Dis,triot Instituteda suit for taxes for t&e year
1949.
It wa8 contendedthat there was no actual use of the premises
within the meaningof the oonst:ftationSecanse,thebu:ldingwas
not then actuallybeing used for charitablepurposes, The court
reviewedthe followingTexas cases deal.l.ng,#it.h
the requzrement
of exolusiveuse: State v. Settegast,254 S.W. 923 (Conrm. App. 1%
Morris v. Lone St& ChapterNo. 6 Royal Arch Masons, 68 Tex. 698,
;8Sg.;T519; B.P.O.E.Lodge No. 151 v, City of Houston,44 S.W. 2d
ex. Civ. App., 1g319errorre%), and distinguished these on
the ground that in each case third partieswe'reoccupyingall or a
portion of the premises.
In holdingthat tna propertyin qUeStlOU was exempt, the court
revieweddecisionsin other States in which exemptionhad been
accordedon the basis that if the subsequentuse of the premises
1 . -
Hon. GeorgeR. Killam,page 5, (w-420)
createda tax exempt situationthen & uee which wae confinedto
readyingthem for such purposeestablisheda right to exemption.
At page 636 the court said:
,I
. . D The work proceededuntil it wa.8 completedon May 13,
1949, and since that time the hospitaland cliniohave been
operateda8 8.public charity. The facts alleged show, in
(Emphasissupplied.)
The court in allowingthe exemptionrecognizedthe well settled
rule that exemptionsfrom taxationare not favoredand shouldbe
strictlyconstrued,but statedthat a constructionof the acts
alleged in the petitiona8 not amountingto uee would be un-
reasonablystrictand narrow.
We think it evidentfrom these decisionsthat the exemption
accordedto charitableinstltutlonsextendsonly to the buildings
and groundsused in the actual conductof the charitablepurppses
for which the institutionIs operated. We thereforehave concluded
that the propertyin questionis not exempt from countyad valorem
tsxee; and you are accordinglyso advised."
SUMMARY
Oil, gas and mineral interests
held in trust for the Texas
Baptist ChlldrenssHome and for
other charitablepurposesaze
not exemptfrom countyad
valoremtaxes.
Yo;lrsvery truly
WILL WITSON
AttorneyGeaercsl
of Texas
MMP/bn
APPROVED:
OPINION COMMITTEE
George Pi Blackburn,Chairman
8. ~&lark
ticLaughlin
&gYFyg~r
RJJVCEWED
FOR T@.ATTORNEY GENERAL
>
hy~ W.~:v,
Lieppert