House of the Good Shepherd v. Board of Equalization

Good, J. The board of equalization of Douglas county appeals from a judgment of the district' court for that county, holding exempt from taxation a laundry property, owned and operated by the House of the Good Shepherd, appellee herein. Appellee is a corporation organized by members of the religious and charitable order of the Good Shepherd. As stated in its articles of incorporation the object of the corporation is “to reform fallen women, to afford protection to other females whose circumstances in life might endanger their virtue, to surround such females with virtuous influences, and accustom them to habits of industry and self-respect.” The corporation has no capital stock, and no dividends have ever been distributed to its members; nor do they receive any salary or other financial recompense for their charitable and humanitarian labor. The corporation has acquired title to a tract of ground, a little more than a city block in extent, in the city of Omaha, on which it has erected a number of buildings, including a chapel, buildings for housing, caring for [491] and educating the inmates of thfe institution, and teaching them habits of industry. Connected with one of these buildings is a modern laundry, equipped for doing general laundry work. It is this laundry, and the lots on which it is located, that appellant seeks to hold subject to taxation. There are nearly 300 inmates in the House of the Good Shepherd, ranging in age from 21/g to 95 years, but the great majority of them are girls between the ages of 14 and 20 years. Religious services are held daily, and a school is maintained for the education of the younger inmates. Most of the girls are subnormal in intellect and in need of moral training and the acquisition of habits of industry, so that when they leave the institution they may be fitted to earn a living and become useful members of society. Because of their limited ability, there is open to them but a limited line of employment. Among these are sewing and laundry work. Therefore, to provide them suitable employment, the institution owns and operates a laundry and teaches the girls to do laundry work and sewing, and thereby accustom them to habits of industry and fit them to become self-supporting members of society. In the operation of the laundry, a considerable revenue is received from hotels, restaurants and others for whom laundry work is done. This work comes in competition with commercial laundries of the city of Omaha. The entire revenue derived from sewing and laundry work is used for the support of the institution and its inmates. About 10 per cent, of the inmates pay something for their maintenance, care and training, while about 90 per cent, of them pay nothing, except as revenue is derived from their labor. Appellant insists that the trial court erred in holding that the laundry and lots on which it is located are owned and used exclusively for religious, charitable and educational purposes, and not for profit. Section 5820, Comp. St. 1922, provides: “All property in this state, not expressly exempt therefrom, shall be subject to taxation.” Section 5821, Comp. St. 1922, enacted pursuant to the provisions of section 2, art. VIII of the [492] Constitution of this state,’provides: “The following property shall be exempt from taxes: * * * Property owned and used exclusively for educational, religious, charitable or cemetery purposes, when such property is not owned or used for financial gain or profit to either the owner or user.” Appellant argues, first, that the facts established in this case do not show that appellee’s laundry property is used exclusively for educational, religious or charitable purposes; and, second, that the evidence shows that the property is used as a separate commercial enterprise for profit or gain, and the fact that the income therefrom is used for educational or charitable purposes does not render the property from which such income is derived exempt from taxation. ' The rule is settled in this jurisdiction that statutes, exempting property from taxation, should be strictly construed. Young Men’s Christian Ass’n v. Douglas County, 60 Neb. 642; Watson v. Cowles, 61 Neb. 216. Under the law of this state, the use of the property is the criterion by which to determine whether it is or is not exempt from taxation. Young Men’s Christian Ass’n v. Lancaster County, 106 Neb. 105. Property of a religious, educational or charitable institution which is leased to others and used as a commercial enterprise is not exempt from taxation, even though the income from such property is idevoted to educational, religious or charitable purposes. The test is the use of the property itself, and whether it may be fairly and reasonably said to be used for such purposes. It was held in First Christian Church v. City of Beatrice, 39 Neb. 432, that property owned by a religious society, separate and distinct from that on which its church edifice stood, and which was rented to others, was not exempt from taxation; and in Young Men’s Christian Ass’n v. Lancaster County, supra, where certain floor space in a building, owned by a charitable organization, was leased to outside parties for the operation of a cafeteria, opened to and patronized by the general public as well as the membership, rentals being applied for the purposes of the organization, it was held that the portion of the building so leased was [493] not exempt from taxation, although the maintenance of the cafeteria therein was not only financially helpful to the organization, but promoted its charitable purposes by attracting people to the building. To the same effect are Young Men’s Christian Ass’n v. Douglas County, supra; Sisters of Peace v. Westervelt, 64 N. J. Law, 510, affirmed in 65 N. J. Law, 685. Keeping in view the principles thus announced, we will proceed to examine the facts disclosed by the record. That appellee is an educational, religious and charitable organization is established beyond question. Its main purpose is to care for and rehabilitate fallen women and to educate and train a class of girls who, but for such care, would become moral delinquents and a charge upon society at large. It is necessary that such girls should be educated, should become accustomed to habits of industry and trained in some occupation that will make them useful citizens, and also receive moral training. To provide for this class of girls,, appellee has established an institution and erected a laundry-in which the girls are employed, and where they are taught; an occupation and trained to become useful citizens and' accustomed to habits of industry. Under such circumstances,. we think the laundry may be fairly said to be used exclusively for educational and charitable purposes. It' is. necessary to give these girls training in industry. The fact, that an income is derived from the laundry work does not; militate against the fact that the property is used for the; purposes indicated. So long as the income derived does not inure to the benefit of the owners or the users, it does not transgress the statute providing for exemption from taxation. In St. Elizabeth Hospital v. Lancaster County, 109 Neb. 104, it was held that, notwithstanding a charge was made for the greater proportion of the patients cared for at the hospital, it was used exclusively for religious and charitable purposes and was exempt from taxation. And in Central Union Conference Ass’n v. Lancaster County, 109 Neb. 106, it was held that a farm and dairy property, used for school [494] purposes, was not subject to taxation. In that case the farm and dairy property was used in connection with the college for giving instruction in dairying and agriculture, and considerable income was derived from the dairy and applied to the support of the school. We think that the situation in that case is controlling in the case under consideration. The laundry is used as a means of rehabilitating fallen women and teaching habits of industry to girls who might otherwise become a public charge, and the income derived from the laundry does not inure to the financial benefit of the corporation or its members. After a careful examination of the record, we have reached the same conclusion, as did the trial court, viz., that the laundry property of appellee is used exclusively for educational, religious and charitable purposes, and is hot used for the financial gain or profit of the owner or user, and is therefore exempt from taxation. Affirmed.