
    LUTHERAN HOSPITAL ASSOCIATION OF SOUTH DAKOTA, v. BAKER, County Treasurer, Respondent.
    (167 N. W. 148.)
    (File No. 4280.
    Opinion filed March 26, 1918.)
    1. Taxation — Incorporated Hospital Association, Whether Taxable— Church Benevolent Society — Public Charity — No Capital Stock or Profits — Revenue From Patients — Nurses’ Training School, Effect — Constitution, Statute. ■Const., Art. 11, Sec. 6, provides that Legislature shall by general law exempt from taxation property used exclusively for charitable purposes. Pol. Code, 'Sec. 2056, provides that all property belonging to a charitable society, or used exclusively for charitable purposes shall he exempt from taxation. Held, that a hospital association chartered under Civ. Code, Art. 19; Ch. 3, relating to' benevolent corporations, whose membership is composed of members of some Lutheran congregation, whose corporate purpose is to provide for, nurse, and give medical attention to sick persons; whose property, etc., is obtainable by gift, grant, purchase and testamentary will; whose members are not liable for corporate debts; which may not issue stock certificates, whose members receive no corporate dividends or profits; whose revenues were derived from membership fees, donations and gifts, it receiving no doctors’ fees; the only persons receiving compensation therefrom being its superintendent and its employees; which charges nothing for services to indigent members; which maintains a nurses’ training school, such apprentices receiving a small salary from the hospital; and whose pauper patients are charged to county at regular minimum rate — is a corporation or society organized and conducted, and its property is used; exclusively for charitable' purposes; the criterion in this class of cases being that whatever is done or given gratuitously in relief of public burdens, or for advancement of public good,' is a public charity; and an institution founded as a public charity does not lose its character as such under tax laws by receiving revenues from recipients of its county sufficient to keep it in operation; or, applying another test: ■ If the object for which an institution is founded is the general public good, not private gain, and it is so conducted that the public receives all the benefits of it, it is purely a public charity.
    2. Benevolences — Charity Hospital Indefiniteness of Beneficiaries, As Characterization.
    Indefiniteness of beneficiaries, is one of the characteristics of a charitable use; a public charity may he open to all mankind, or its officers may he empowered to select beneficiaries from designated classes of humanity; so held, in construing articles of association of a church hospital association.
    3. Benevolences — Denominational Charity Hospital — Training Nurs- • es, Effect re Charitable Purposes.
    The fact that an incorporated denominational charity hospital association has a department for training nursos; is not , conflicting with its charitable purposes.
    Appeal from Circuit Court, Codington County. Hon. Cari, G. Sherwood, Judge.
    
      ’Action by -the Putheran Hospital Association of South Dakota, ¿ti incorporated association), against D. Baker, as treasurer oif the County of Codington, South Dakota toi recover -certain taxes lexaad and assessed against plaintiff’s .property and! paid under .protest. From- -a judgment for defendant, an!d from 'an Odder denying a new trial, plaintiff appeal®.
    Reversed -and remanded for - further proceeding.
    
      Hanten, Hanten & Gaull, for Appellant.
    
      Sheafe & Haugen, for Respondent.
    (i) To tpoint -one -of the opinion, Appellant cited: Const. Art. ii, S'eq. 6; City -of Daytoni v. Trustees of Speers Hospital, (Ky.) 176 S. .W., 361; Mich. Sanitarium Assn. v. City -of Battle Creek, (Midi.) 101 N. W., 855; St. Joseph’s1 Hospital Assn. v. Ashland Count}1-, (Wis.) 72 N. W-. 43; In re taxes, 27 Minn-. 460, 8 N. W,' 595; Sisters of Sit. Francis v. Board -of Review, (111.) 83 N. E. 272; Mason County v. Haywood H-os-pital, 179 S. W. 1050; Hot Springs School Dli-s. v. Sisters of Mercy, (Ark.)' 106 S. W. 954; N. F. Sanitarium' v. Stoneh-am, 91 N. E. 385 ; ■City of Philadelphia v. P'a. Hospital, 25 At. 1076 (Pa.).
    Respondent -cited: Unlion Padiflc Railway C-o. v. Artist, 60 Federal, 365, 6 -Cyc. 898, Note 1; anld submitted) that: Plaintiff is u-sed by doctors for operations-, anid they ¡receive large- -operating fees as a result oif their dcinnaotion- with the Plaintiff As-so-cAatiom. H-eoc-e, Plaintiff i-si not an Association formed! -exclusively for, 'charitable purposes, iandl is, títerefo-re. -subject to taxation; citing, .6 Cyc. 897-900; 37 Cyc. 926-8, ‘and iCas-.es cited; Ann. Cas-. 1917-B, 275; Note, Ann. Cas. 1917-B, page 278.
   McCOY, J,

This action was brought under the provisions of chapter 289, Laws of 1915, ita recover -certain raxes assessed -and levied .against the property of plaintiff -an-d paid under protest. Fiuldlngis and judgment were in- favor of defendant, and •plaintiff appeals..

There is no eO-ntflicifc Ska the testimony. Thie sole and only question presented is whether or not the. -property of -appellant, tai which assessment and levy -oif -taxes was miadle, was- being used -exclusively- for -charitable ¡and bemevofenit purposes. Appellant is a corporation organized- and existing umidar and- -by virtue of the provisions of article 19, c. 3, of the Civil Qoldfe, relating to -benevolent -corporations-. The property of appellant on which said -taxes was levied) consists of a hospital and equipment and the grounds upon ■w-hach the same are 'located, situated in the city of Watertown, valued at about $32,500.

S'o fiar as is material to this controversy, the articles' of incorporation of appellant are asi follows: That the members thereof have agreed! to associate themselves together for the purpose of becoming incorporated -in perpetuity under the provisions of said article 19; that the general purpose of said incorporatioln shall be to receive, provide for, nurse, and give medical attention to sick persons, and such persons and partiente as may apply for admission to the hospital under the rules' and by-laws of said association; that its plan oif operation- shall be to' organize and establish 'a suitable hospital for the porpoises aforesaid, and to .provide for eu:dh management as may be necessary to carry out its general purpose as a church charity, or benevolent society; that the terms of 'admission to membership intol said corporation shall be itihait such members shall belong to sbrae L/Uitherao congregation, and the payment of such initiation fee as ishlalli be prescribed by the by-liaws; that all other -property and money of saíldl coirip'ottiation: shall be obtained by gift, grant, purchase, and testamentary will; that the individual property of ¡the members of said ctrpiorafion shall not be liable for the d’ebts of said 'corporation ; that the- said1 corporation may held such real 'and! personal property as shall be requisite to the immediate a'cc'oromddati'oin of its business, or such as ma}" from time to time be (alcqulired by purchase, donations, gifts, or wills, dr such a's shall have been purchased at sales upon judgments, decrees, or mortgages obtained or made for 'debits 'due sladdl eaipclration; that the affairs and business tilainisaciti'onls of said Corporation' shall be under the management and oomtibli of a board of 'directors to- be elected by the members of saidl .assbeiation. Froto the1 evidence submitted it appears that ¡the articles of incorporation and Charter of appellant permits no capital stock to 'be issued; that there are no shares of stock sand none have been issued, -and that 1» dividends or profits in. any folrm have been received by any of Itihe members of the association; that the corporation is composted of members Wbo> have paid $10 dr' miare tawtatlls the establishment of said ‘hospital; that the funds with which said hospital wais established were received'frota stitih membership fees, donations, and gifts; that 1» salaries sire :paidi to any officers connected with Bald association; that tille only pensions who receive compensation are the superintendent, the minuses', andl other persons employed directly /^Tn and about siaiid bispiitial; that the hospital receives tío part of the dictator’s fees and has ntoi control over the fees of doctors1 except that they are required tot be reasonable; tihlalt the association requires that in the event a patient is' unlaible to pay no- charge- of any Mind1 is¡ made, and that the attending physician donate his ser"^vices.; thlait those who> are able ¡to pay for 'services1 'aire expected1 and required to do. so., but, where patients are unable to pay the regulation rate, they arie only -asked and -required tol. pay what they reasoniab-liy. can; tihiafc al-1 persons or patients in need o-f hospital treatment are 'admitted without regard to race or creed, executing ¡tho'se having Contagious dise-ases, whether they have money or not; that the prop,or biota, of pay patients- to- -charity platients has been (approximately estimated as pt p'er -c-ent. pay to 5 -per, cénit, chlailty: that the entire premises are used for -hospital purposes and- nloit otherwise ;-flh,alt the receipts from pay ipatienibs yand current donations have at times-' exceeded the expenses of running tibe hospital, and at the time -of the trial off this case there w'a®. some -surplus -of receipts -over running expenses, but which surplus funds are and .always have been us-ed solely to keep up -and impnove- tih-e saiid hospital .property, and in paying interest on bonded indebteldne-ss- -owing by salid association-; that a nurses’ training E'dhbiol- i-si maintained at -said hospital wherein apprentice nurses- are 'taught all the- elemente iclf nursing, including lectures by trained’ nurse’s ainid doctors, and that -s-aid lappriemtice nurses receive a -small s'alary, amid if found qualified are- graduated by tire hospital as graduate nu-rslesi; -that all patients who are Codington dourly ch'argelsi, hieing plaulpers., are charged to said county at the regulation minimum- rate; that all persons, including Members of appellant corporation, who /have- paid and- Contributed tel said corporation- are etaititled upon request to- a rebate- of one-third of any hospital- hill they may incur until the -amtount so contributed has been wholly retifnield’ lb the donors- in- rebates.

Section 6, art. n, State Const., provides- that the Legislature shall by general law exempt froto iteration property us-ecl exclusively for -charitable purposes. Section 2056 io!f the Political Ctade provides th-at all- property belonging to -any charitable, society, or used -excl-usi-vely tor charitable purposes, shall be exempt from taxation. We are of the opinion that the appellant -is a corporation or 'society organized) anidl conducted -ex'cffis'i-veiy for charitable purposes, and that-'its said property was arid is being used 'exclusively far such purpose. The criterion, in this class of easeis seems to be that whatever is dlone or -given gratuio-usly in the relief of public burdens or for the advancement of the public good is a public charity, and) an institution founded as a purely public charity does mot lose Sts character a® such under the tax laws if it receives a revenue from the recipients of its bounty sufficient itla keep ¡it in 'operation; or, applying another test, if the object for which 'an institution, is founded is the general public good', and not private gain, and it is sloi conducted that the public receives all the 'benefits oif it, it is purely a public charity. The case of Dlayton v. Trustees of Sipeers is clearly Eh piolint. 165 Ky. 56, 176 S. W. 361, L. R. A. 1917B, 779, Ann. Cas. 1917B, 276, and note. In that case, among other things, the court said:

“The county in which ¡it is situated and' the nearby cities have used it as an -instrumentality to care £o.r their indigent sick, -and to procure surgical- and medica-l treatment for them.' It is true,, the '-county and cities have compensated the institution for the care and treatment of their piob-r and friendless sick, but in a sum les® itham ¡the actual cost to the instiutioo for caring for them. * * * While a cbiarge is made against every, patient, other than the ones who- are consigned there by the county or cities-, it does not appear that any one Was ever been turned -away, or ex-cludled * * * because of poverty or .inability to pay for the benefits.. Private patients are received who pay the -institution for their rooms-, boarding, -and nursing, and pay their physicians for their treatment, but the fundís received from ithi's source are all devoted to the general expenses of the hospital. A -building and grounds and furniture are not adequate to maintain- a hospital. The nur-ses must -be p-aid, fuel and lights, water and food provided', and some one to supeiriilnitemd and' -direct -the 'Operations of the hospital. The fact ■ that the institution -receives a revenue from the neci-pi-ents of its bounty, sufficient to keep it in operation, does not take from -it its character as a purely public charity, where it was found and .endowed ais such, and when all of the receipts go to- providiiog- foir tire purposes for which it was erected and maintained. The municipalities and the counity itself in which Aie institution is located, amid whose duty it is to- care for the indigent sick of each of them, respectiilvely, have, by its •use, been saved Aie burden of erecting an institution of A a bind of their own, or otherwise earing for such side. * * * The Spears Hospital ’ hlas been so conducted and was so endowed and maintained that no private gain has come toi any one, and all of its benefits go to the public.”

In the case of State v. Powers, 10 Mo. Apip. 263, 74 Mo. 476, in rendering Ac opinion in a similar Case, Ae court, among oAer things, said:

“The feet Aat paying" patients; are taken, Ae profits derived from attendance upon Aeise palti-ente being exclusively devoted to the. maintenance eif the charity, seems rather to enhance Ae usefulness of the institution to- the .poor; for lilt is a matter of commlom .observation amongst those who Have gone about -at all amongst Ale 'suffering classes', A at the deserving pebr can with difficulty he persuaded toi enter an lasylum of any kind confined to Ae recqoirion of objects of charity; and that their honest pride is much less wounded by being plalced ini an institution' in which paying patients are also, received. The foot of receiving money from some oif the pariente doles mot, we think, at .'aill impair the character of Ae -charity, so long as tire money thus1 received is devoted altogether to the charitable object which the 'institution is intended to further.”

In Ae case of St. Josephs Hospital Association v. Ashland County, 96 Wis. 636, 72 N. W. 43, the court among other things said:

“Plow it can he doubted that Alils institution is doing a benevolent work in the truest sense of Ae word, we are unable to see. It is really the work of the good Samaritan. It is true Aat those who are able to pay do pay a moderate weekly 'charge, but those who; are unable to pay receive Ae same care for nothing. This doiels not render the wiork dome any A'e lesS benevolent. Doubtless, if the hospital! were labsolutel)^ free to all, it oouMi not be operated It i® Ale very fact Aat pay is collected from those who cam pay wihidh enables the sisters toi operate the hospital, and care for those who are too ipioor to- pay. If this work -be not benevolent work, especially in the great cities and In the newly settled 'disitirilcfs, then there will have to he a new meaning attached to the word ‘benevolent.’ * * * The fact that there were surplus receipts a,t times., which were loaned to build) other hospitals of the sarnie character, dotes molt show that the .property wias used! for pecuniary profit.”

In the case of Sisters of St. Francis v. Board of Review, 231 Ill. 317, 83 N. E. 272, a similar case, the count said:

“The corporation ' hais received, at various times, gift® amid legacies from benevolent persons, and! all moneys received' by it, from every Bounce, are u'sied in maintaining this hospital, and when there is 1a surplus over the ¡cost of maintenance it is used in extending or adding- to the building's, or in improving' the facilities flor caring for the sick. The corporation has never paid any dividends or profits to any person whatsoever, andi its purpose is never to. do so. The facts in reference to the training school conducted ini tibi's hospital .are ntet cleanly made to' appear by the evidence, but, as¡ we understand1 tine record), piersons not members of the corporation whb desire to become trained niursies are permitted to enter the hospital, where they are boarded and taught to perform the duties of their cboSem calllihg in exchange for such assistance as they cah give in doing the work of the instiutio'n. * * * This hb'spliltlait charity is> extended to all ¡the members o,f tire commu'nit}’, and is hot confined to any partSfcul&r class of individuals. It is am institution of public charity, and where (an institution' devoted toi benevolence of tihalt character is, under the law, exempt from taxation, it does mot 'los'e its immunity by reason of the fact Ithiat those patients receiiiv'ed' by it who are able to pay .aíre required to do so, or by reason of the fact it receives contributions1 from outside isloMrces', sOi long as all the money received by it is devoted to the general purposes of the charilby, and no portion of ¡the money relaeiived by if is ¡permitted to inure to the benefit of any private ihdiOvMtial engaged in managing ¡the charity. * * * It is then argued that this hospital should not be helidl to be an instiution of publlilc .charity by reason of the great disparity betwteen tibe mumlber off charity patients and those who pay for the care and attention they receive at this institution. This objection seems to us witlhlduiti merit, so long as 'charity was dispensed' to all those who needled it and who applied therefor, and so long as no private gain Or profit came to any person conmieclbed with the institution.. * * * The institution could not extend its benefactions to those who did not need them, or to those who did nlolt seek admission.”)

In the case of Holt Springs School District v. Sisters of Mercy, 84 Ark. 497, 106 S. W. 954, under a statute exempting from taxation property excllusiively used for public charity, a hospital, where those who -are able to play are required to do so, •amid those who are mot able to pay are treated free, and where the ¡institution also maintained a school f:or nurses, and which employed -a number of girls wbfo were talking instruction, wbla assisted in nursing tine patients, and where all moneys received from any siduroe was used to maintain the institution, and to pay borrowed money, and where such institution was open to any and all worthy si’ck persons., moit afflicted wlilth contagions or infectious disease®, or where no- one was- re-fused dm account of religion or inability to ¡pay, and where the whole off the money received waís d'eivoited toi the charitable abject which toe institution was intended to further, it was held that toe propery bo used by the hospital was exempt from taxation. And a great many other dedslilohs- hold toi tote same -effect, 'amlong which are the following: Michigan Sanitarium Association v. Battle Creek, 138 Mich. 676, 101 N. W. 855; German Hospital v. Board of Review, 233 Ill. 246, 84 N. E. 215; In re Texas, 27 Minn. 460, 8 N. W. 595; Mason County v. Hayswood Hospital, 167 Ky. 17, 179 S. W. 1050; Sanitarium v. Stoneham, 205 Mass. 335, 91 N. E. 385; Parks v. Northwestern University, 218 Ill. 381, 75 N. E. 991, 2 L. R. A. (N. S.) 556, 4 Ann. Cas. 103; Duncan v. Nebraska Sanitarium Association, 92 Neb. 162, 137 N. W. 1120, 41 L. R. A. (N. S.) 973, Ann. Gas. 1913E, 1127; Board of Review v. Chicago Policlinic, 233 Ill. 268, 84 N. E. 220.

Inidefiniteniess of beneficiaries is one of the eharac-te'risltiics of a charitable use. 11 C. J. 363. A public charity may be open to ¡all mankind, -or the officers thereof may be empowered to select beneficiaries from designated classes of humanity. In re Cleven, 161 Iowa, 289, 142 N. W. 986; Grant v. Saunders, 121 Iowa, 80, 95 N. W. 411, 100 Am. St. Rep. 310. Every characteristic in relation to toe organization, and conduct of appellant shows it to -be am association organized and conducted for no other purpose toan that of charity and benewdlemce. All toe money reaeiipfe off whatever nature go towards providing for the purposes for which appellant was- brought into' existence. The ^ fact that it has a depianbmenlt for toaitaing nurses is not in conflict with its charitable purpose. It i© just :as necessary to have trained) nurses ,as any other appliance. Common observation would ©•ay that one of the most efficient mebhoids fD!r procuring trained nurses would be to do your own braining, so1 that 1» private profit respited) tiherefrom. So training, and halving on hand at 'all times when needed, w-el-tralimedl nurses, would liimprove the facilities off the inlsltilbution for daring for the sick. Hence we are of fh:e view, .and so hold, that the appellant cottporatiom is a ■ purely benevolent or charitable institution, orgianized and conducted without ainv view of private gain or profit; that it was organized and) is being conducted slclely for the relief oif public burdens and ¡for the advancement of the public good; and that its property upon which the tax in question' Avaisi .assessed and levied. .Avas being used exclusively for a charitable purpose, and therefore was net subject to taxation. The existence in a community of such an institution which 'adknits, oares1 foil*, and! gir^es medical aiidl to. blue pauper as well as thle prince, Avithout private gain bo itself, is a public charity in Ithe fuiltest ©ense. .Very fortunate, indeed, is the community which has situated in its midst such an institution, organized and conducted as is the one in question. It relieves the public from maintaining by taxation' sudh1 .an institution of its own. This is the basic reason for the exemption from taxation of the ,property of 'such institutions, when the same is used exclusively for tíre purpose's off charity. The casrr of State v. Board of Equalization, 16 S. D. 219, 92 N. W. 16, is net applicable to the circumstances of this case, as in that dase there was testimony to the effedt that the property taxed was used for other than 'charitable purposes. There was no such) testimony in this case.

The judgment and order appealed from are reversed, and the cause ranandled!, for further procedure In harmony Avith this decision.  