American Sunday School Union v. City of Philadelphia

Opinion by

Mr. Justice Dean,

The corporation known as the American Sunday School Union has its principal place of business in the city of Philadelphia. It occupies No. 1122 Chestnut street, the lot fronting on the street thirty-five feet, and extending back to Sansom *312street two hundred and thirty-five feet. The building is large and valuable, and covers the whole lot. The society was incorporated by special act of assembly in 1845; its purpose, as declared in the 2d section of the act, is “ the erection and maintenance of Sunday schools, and the publication and circulation of moral and religious publications.” It is a corporation with no capital stock, declares no dividends and divides no profits; is carried on for benevolent and religious purposes. The Board of Revision of Taxes of the city of Philadelphia rated its property on Chestnut street at $158,000 ; of this valuation $28,000 was stricken off as exempt from taxation ; the remainder, $180,000, was assessed at the city rate, $1.85 per $100, making $2,405 for each of the years 1891 and 1892.

The Sunday School Union, the plaintiff, filed this bill to enjoin the defendant, the Receiver of Taxes, from collecting this assessment, averring that its purpose as disclosed by its charter, and as carried out in the building on 1122 Chestnut street, was that of a purety public charity, and it was therefore exempt from all taxation.

The defendant denies that plaintiff is such charitable institution as is by law exempt from taxation, and avers that the premises described are occupied and used mainly in carrying on the business of manufacturing and selling books and other articles of merchandise.

C. W. MeKeehan, Esq., was appointed master, whose finding of facts and conclusions of law, in a very concise and clear report, are with the plaintiff. On exceptions being filed by the city, the learned judge of the court below differed with the master in his legal conclusion from the facts, and dismissed the bill. From this decree plaintiff brings this appeal.

The master finds these material facts, on which he bases his opinion that the society is exempt from taxation:

“For many years the society issued its publications and sold them to Sunday schools and to the public below the cost of production, in order to bring them within the reach of all. Subsequently, the contributions of the public being insufficient to continue this plan, the managers were compelled to place the publication operations of the society upon a basis that would be self-supporting. This is now the policy of the association, but it is not its aim to make money, and if any profits are realized be*313yond what are absolutely necessary to maintain the publication operations, the surplus is used in promoting the missionary work and establishing Sunday schools in needy communities, and in the gratuitous distribution of its literature.”

Then, further, he finds, that the first floor of the Chestnut street end of the society’s building “is devoted to retail and wholesale sales, and the south part, towards Sansom street, is used for stock in large quantities, kept there for filling orders, and where it is packed and shipped.” And further: “ In the salesroom on Chestnut street, publications of the society, and publications other than those of the society, are sold at the prices at which they are sold by the other booksellers of the city of Philadelphia. No publications are allowed to be sold which are not of a high moral character, but such standard works as Webster’s Dictionary and similar publications are kept by the society, and sold to their regular trade, although as a rule persons asking for standard publications are referred to other booksellers. The publications not issued by the society, but sold by it, are so sold in order to aid it in making its business self-supporting.”

The master, on these facts, concluded the society was wholly exempt from taxation ; the court, that it was not. Which was right ?

Conceding the fact that the society is an “institution of purely public charity,” and as such exempt from taxation, it seems to us, such an institution may, as an aid to the accomplishment of its primary object, carry on a business, or use part of its property for a business purpose, which renders such business or such part of its property taxable. The first floor of the society’s Chestnut street building was used for purely business purposes, and its business was conducted in that location for the avowed purpose of profit. As the master finds, in the first years of the society’s operations, it sold its books at less than cost, but finding this plan was not on the whole successful, “the managers were compelled to place the publication operations of the society upon a basis that would be self-supporting.” That is, they established and maintain upon one of the most eligible and valuable sites of the city, a book-store for profit. In this they sell, not only the society’s own publications, but others. While they confine their trade to “ publications of a high moral char*314acter, and such standard works as Webster’s Dictionary and like works,” this in no way negatives the business character of the enterprise. There are but few reputable booksellers anywhere who would wish a trade in immoral books, or in publications other than meritorious. Nor does the fact that the profits- gathered on the counter of the book-store are devoted to the primary object of the charity, which is purely public, in any degree affect the character of the trading or commercial enterprise. Every dollar the society expends is some charitable contributor’s gains or profits from some business not charitable; if such contributor devoted the whole of his profits from the sale of dry goods, groceries or books to promote this particular charity, that fact would not make the source of such profit a purely public charity. And if, as the master has found, the society was compelled to put a part of its operations on a basis that was self-supporting, by starting a book-store to sell books only of a high moral character, and standard publications, that is trade. That the entire profits of this branch of the business are devoted to the purposes of the charity, no more changes its business nature than if, instead of a book-store, the society had established and carried on a shoe-store. It might have operated a farm or rolling-mill with the same end in view, to put the society, as the master aptly says, on a basis that was self-supporting ; but the end would not have exempted the business from taxation.

It is clear, from the evidence here, that the city did not tax any portion of the funds paid by pious and benevolent contributors; it sought only to collect a tax from that part of the business which was purely commercial. And there is no injustice in this, nor any harshness. The commercial operation occupies thirty-five by two hundred and thirty-five feet of the most valuable ground in the city; its location is peculiarly favorable to the business carried on there. The large municipal expenditures in the past have greatly increased its value; the millions now being expended, and that will be expended in the future, will still further enhance the price of the land, and increase the profits of the business. The taxable property of other dealers and real estate owners, in the city can claim no exemption. Why should not this business pay its fair proportion of the taxes necessary to the paving of streets, construction *315of sewers, furnishing of light and water, maintaining a fire department, supporting a police force, and other municipal objects ? To exempt this book-store from taxation to the amount of $2,405 each year, is in effect a shifting of that much of an individual’s burden to the shoulders of the public. If the society does not pay it, the general public must; another individual dealer in the same business must pay his full share of taxation, and then his share of what his rival ought to pay.

Nor is this conclusion a novel one. The Board of Revision of Taxes has, in the case of all other institutions of a like character, for years followed a system of taxation whereby the mercantile part of the business was taxed, and the “purely public charit3r ” part exempted. The Presbyterian Board of Publication is assessed at $260,000, whereof $60,000 is exempted; the American Baptist Publication Society is assessed $225,000 and $20,000 is exempt; the Board of Church Extension of the Methodist Church is assessed at $25,000 and $7,000 is exempt; the Young Men’s Christian.Assoeiation is assessed at $400,000, of which $210,000 is exempt. The Board of Revision of Taxes, in the performance of their manifest duty in these cases, as in the one in hand, seem to have carefully separated that, in each institution, which was a “ purely public charity ” from that which was commercial in its character, and determined the liability to taxation accordingly.

In all cases of this kind the tendency naturally is to an excessively liberal construction of the constitutional exemption, a construction not warranted, perhaps, by its plain restriction. The people knew what they meant, when in 1874 they said, by an overwhelming majority, “ The General Assembly may by general laws exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private or corporate profit, and institutions of purely public charity.” The3'- meant nothing else should be exempt from taxation. By no judicial rule of construction can these words be made to mean that a commercial enterprise, is exempt because the whole profit of it goes into the treasury of, and it is carried on by, a purely public charit}'. In so far as the institution is charitable, and its revenues are derived from the contributions of the charitable, it is protected by the constitution. But if such institution sees fit to engage *316in trade for the purpose of increasing its revenue, or making any part of its business “self-supporting,” the trade part of its business can be taxed, and ought to be.

The authorities cited by the learned counsel for appellant, on their facts, are not in conflict with what is here decided. In Donohugh’s Appeal, 86 Pa. 306, the opinion is by our brother Mitchell, then sitting in the common pleas, which on affirmance was adopted as the opinion of this court. The Library Company of Philadelphia claimed exemption, on the ground that it was a “ purely public charity.” It appeared that the use of the books was without charge to all who used them in the library building; to all members, within certain limitations, who took them away for use; and to all persons for a small compensation, who took them away for use, and gave security for their return. It was held that the privilege of taking away for a small compensation was a mere regulation, and not part of the fundamental law of the corporation; but that even if this privilege was repugnant to the nature of the charity, the privilege would be void, and the public character of the charity was not thereby changed.

In Philadelphia v. Women’s Christian Association, 125 Pa. 572, meals and lodging were furnished to all women dependent on their own labor for support; to those able to pay, a small charge was made ; but there was no element of gain or profit, the entire revenue not nearly equaling the expenditure. On the facts it was declared a “ purely [aublic charity,” because, whatever revenue it received by charges was wholly from the recipients of the institution’s bounty; the payment made by no one of the beneficiaries equaling in value the cost of the lodging and meals obtained by her. The case was decided on its special facts, and was rested on Donohugh’s Appeal.

In the case of the Episcopal Academy v. Philadelphia, 150 Pa. 565, this court went to the outside limit of liberality in construction of the constitution. The school was founded and endowed by public and private charity; the rates of tuition were adjusted with a view to make the school self-sustaining ; a majority of the pupils paid full rates, a small number half rates, and a still smaller number nothing. It was held to be a purely public charity, because its revenues only made it self-supporting, but it was distinctly intimated that if the revenues *317had gone beyond the line of self-support it would not have been exempt. The decision was rested on Donohugh’s Appeal and Philadelphia v. Women’s Christian Association. We are not required to question the judgments in these cases ; they differ essentially from the one before us in their facts. If the Women’s Christian Association had carried on a bakery, meat shop or grocery, that the profits therefrom might make the public charity, the lodging and boarding house, self-supporting, the bakery and meat shop would not have been exempt from taxation; or if the Episcopal Academy had carried on a coal yard or school book-store in conjunction with their school to make it self-supporting, the coal yard and book-store would not have been exempt. In neither of the cases cited was the business outside of or disassociated from the charity; in each case it was so blended with the “ purely public charity ” that on its facts it was difficult to draw a distinction, and the exemption claimed was sustained by this court on the special facts.

But we hold in this case that carrying on a book-store, or any business for profit, subjects such business to taxation, even although the whole profit therefrom goes to the principal institution for purposes of “ purely public charity.”

As to whether the proportions exempt and taxable have been correctly determined, that is a question with which we, in this proceeding, have nothing to do. Any complaint on that score can only be heard on appeal from the decision of “ the Board of Revision of Taxes.”

The judgment is affirmed, and the appeal is dismissed at costs of appellant.