Tax, Exemption. Charity. The charter of a corporation stated that it was organized "for the purpose of founding a hospital or charitable asylum . . . for the care and relief of indigent or other sick or infirm persons, at which institution may be received also patients and patrons who are able to and who pay for the benefits therein received and which institution shall devote the funds and property acquired . . . exclusively to maintain itself, improving its conditions and facilities, extending its benefits and usefulness and facilitating and promoting its purposes by such sanitary, dietetic, hygienic and philanthropic reforms and efforts as are germane or auxiliary thereto. All of its said purposes being undenominational, non-sectarian, philanthropic, humanitarian, charitable and benevolent and in no manner directly or indirectly for profit or dividend paying to any one." The corporation, from contributions, supplemented by loans and mortgages from friends, purchased land, built thereon several buildings and conducted a modern sanitarium with physicians, nurses and attendants. Besides the sources above mentioned, the expense of maintenance was paid by sums paid by various patients and others who came to visit patients. During the year 1907, one and seven one hundredths per cent of those who received accommodations were free patients, four and seven one thousandths per cent were part paying patients, and the rest paid the full rate named in an advertised schedule which ranged from $12 to $35 per week. None of the officers of the corporation, except the treasurer, who also was the manager, received any remuneration. Free patients, before they were admitted, had to be passed upon by a committee as to their character and financial standing. Held, that the personal property and real estate of the corporation was exempt from taxation under the provisions of R.L.c. 12, § 5, cl. 3, which exempts from taxation the personal property of benevolent and charitable institutions and such of its real estate as is owned and occupied by it for the purposes for which it was incorporated.
BRALEY, J.
The exceptions to the denial of the motion to dismiss having been waived, the report of the presiding judge presents for decision the question, whether the real and personal property of the petitioner, upon which the respondent assessed and collected a tax, was exempt under the provisions of R.L.c. 12, 340, § 5, cl. 3. The petitioner was incorporated, "for the purpose of founding a hospital or charitable asylum within the State of Massachusetts for the care and relief of indigent or other sick or infirm persons, at which institution may be received also patients and patrons who are able to and who pay for the benefits therein received and which institution shall devote the funds and property, acquired and received by it from time to time and from all sources, exclusively to maintain itself, improving its conditions and facilities, extending its benefits and usefulness and facilitating and promoting its purposes by such sanitary, dietetic, hygienic and philanthropic reforms and efforts as are germane or auxiliary thereto. All of said purposes being undenominational, non-sectarian, philanthropic, humanitarian, charitable and benevolent and in no manner directly or indirectly for profit or dividend paying to any one." The report states very fully the endowment and financial resources of the corporation, and the details of its management in the reception and care of the classes of patients who were admitted. It appears that the land and buildings with their furnishings and equipment as a hospital were paid for by contributions supplemented by loans and mortgages from friends; and the entire income from all sources is spent in furtherance of the purposes of the institution, while the members and officers, with the exception of the treasurer, give their services. In its advertisements in medical journals, and in the pamphlet descriptive of the institution and its methods, while the graduated cost of board and expenses of medical services and nurses were given, a statement of its charitable character, and that under its charter all earnings not needed for expenses, improvements and medical appliances were to be devoted to benevolent work, also appears. It invited at different prices those who needed rest with mental diversion and chronic invalids for treatment, while excluding persons suffering from contagious or incurable diseases or who were insane or epileptic. If those who applied for free treatment, or for a reduction from the regular rates were not admitted until a committee had passed upon the character and financial standing of the applicant, a regulation of this nature was not only reasonable, but necessary to prevent imposition. In his summary of the work accomplished during the six years of its domicil in the town, the commissioner states that of the entire number of patients admitted by far the larger part were paying patients, but it also appears that the expenses in some years were so increased by caring for free patients and those who could not pay in full, and by disbursements for outside charitable work, that a deficit resulted.
The commissioner, while not explicitly separating his findings of fact from his rulings of law, upon which the judge affirmed and ordered judgment for the respondent, leaves no doubt as to the grounds upon which he refused to rule as requested by the petitioner, that it was a charitable corporation. They appear in these paragraphs which follow the findings of fact: "The plaintiff was not run as a public hospital under obligation to receive and care for at any time the indigent and sick. While it intended mainly to care for the sick it might fill up its rooms with those who were not sick in the ordinary meaning of the word and who could pay for benefit received. It in fact received a large number of this class. It was run rather as a health resort which, while its purposes were humanitarian, did not necessarily or primarily help to relieve the community of its burden of caring for the indigent and sick."
It may be conceded that a trust for the exclusive benefit of the least wealthy of a well to do or prosperous class could not be sustained as a charity under the St. of 43 Eliz. c. 4. Attorney General v. Northumberland, L.R. 7 Ch. D. 745. But the controlling purpose may be none the less charitable, even if those who need no pecuniary aid are either directly or indirectly benefited. A hospital established for the free treatment of poor patients may receive payments from rich persons who are permitted to avail themselves of its benefits. Every charity created for the gratuitous treatment and relief of disease, or the physical infirmities of the indigent, or other purposes enumerated in this statute, or if not enumerated, which are held to come within its spirit and intendment, in a large sense helps and aids the community, without regard to the social rank or pecuniary condition of its members. Lord Camden in Jones v. Williams, Ambl. 651, tersely defined a charity to be, a "gift to a general use, which extends to the poor as well as the rich," and this definition has been amplified, approved and followed in Drury v. Natick, 10 Allen, 169, Jackson v. Phillips, 14 Allen, 539, and Dexter v. Harvard College, 176 Mass. 192. It is not confined to mere almsgiving or the relief of poverty and distress, but has a wider signification, which embraces the improvement and promotion of the happiness of man. Molly Varnum Chapter, D.A.R. v. Lowell, 204 Mass. 487. Gifts to colleges and other educational institutions, for the advancement of learning or to aid necessitous students in procuring an education, are charitable even if the donee may derive revenue from other investments and from students who are able to pay. Mount Hermon Boys' School v. Gill, 145 Mass. 139. Dexter v. Harvard College, 176 Mass. 192. So in Franklin Square House v. Boston, 188 Mass. 409, and Thornton v. Franklin Square House, 200 Mass. 465, it was decided, that property, acquired, occupied and used as a home for working girls who paid for fuel, light, food, laundry and domestic services at prices as cheap or cheaper than such accommodations could be obtained elsewhere under similar conditions of respectability and comfort, was held and occupied for charitable uses and exempt from taxation. The increase of charitable funds, through receipts from patients or inmates who are able to pay wholly or partially for benefits received, does not change a home for aged people, or hospital, organized and conducted as a charity, into a private association, maintained for the pecuniary advantage of the promoters. The original eleemosynary character of the institution is not transformed by this patronage, even if sufficient to relieve it from financial burdens, but the charity as established remains unaffected. Gooch v. Association for Relief of Aged Females, 109 Mass. 558, 567. McDonald v. Massachusetts General Hospital, 120 Mass. 432, 435. Thornton v. Franklin Square House, 200 Mass. 465. Blake v. Mayor of London, 18 Q.B.D. 437. Cawse v. Nottingham Lunatic Hospital, 1 Q.B. 585, 590, 592.
If, as the commissioner finds, payments were received from patients or patrons who were able to pay the prices charged for food and lodging provided or medical services rendered, he also reports that no part of this revenue was retained for compensation or divided as profits. It is true, that, while the petitioner, by liberally advertising its attractions as a hospital or sanitarium with its methods of cure and a schedule of prices has succeeded in securing quite an extensive patronage from paying patients, it has not neglected to apply the income derived from all sources to promote the objects for which it was organized. A bequest to trustees of a fund to be accumulated and administered for the purposes enumerated in the charter would have been valid as a public charity, and as such relieved from taxation. Saltonstall v. Sanders, 11 Allen, 446. Minns v. Billings, 183 Mass. 126. Ould v. Washington Hospital for Foundlings, 95 U.S. 303. Jones v. Habersham, 107 U.S. 174. Williston Seminary v. County Commissioners, 147 Mass. 427.
The petitioner's statutory rights are not to be ascertained by an apportionment of the classes who may have been benefited, so that if the number of paying patients preponderates, the exemption fails. The dominant purpose for the promotion of which the institution was organized and has been maintained furnishes the test, whether it is a charity or a business organization conducted for commercial gain with incidental acts of benevolence and philanthropy. To be entitled to the exemption the statute requires that the property not only shall be owned, but must be occupied for the charitable purposes of its incorporation. It was said by Chief Justice Knowlton in Emerson v. Milton Academy, 185 Mass. 414, 415, "An occupation and use of real estate to produce income to be expended for the purposes for which the institution was incorporated is not within the statute, while an occupation whose dominant purpose is directly to accomplish some one of the objects for which the corporation was established is within it. If incidentally there are results of the use which would not entitle the property to exemption, that is immaterial, so long as the dominant purpose of the occupation is within the statute." If the petitioner had decided to receive only those who were able to pay the charges for what they received until from accumulated profits the institution could be maintained solely for the relief of the poor, while the end to be attained would have been charitable and the same as if the fund so provided had been secured by their voluntary contributions, the real estate during the period of accumulation, although owned, would not have been occupied by it within the meaning of the statute. Chapel of the Good Shepherd v. Boston, 120 Mass. 212. Salem Lyceum v. Salem, 154 Mass. 15.
During the years, however, for which a tax has been levied the occupation of the real estate has not been thus limited or restricted. But, having been occupied and used for the administration of the charity for which the petitioner was incorporated, it is entitled to the exemption from taxation provided by the statute, while the personal property, being either a part of the furnishings and equipment of the hospital, or exclusively used in connection with its maintenance, also was exempt. Mount Hermon Boys' School v. Gill, 145 Mass. 139.
By the terms of the report, judgment is to be entered for the petitioner for the amount of the tax assessed upon its real and personal property, with interest from the dates therein named.
So ordered.
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