Summary
holding that denying exemptions under the GPTA in that case did not violate equal protection under U.S. Constitution
Summary of this case from Hammoud v. Cnty. of WayneOpinion
Docket No. 56407.
Argued November 6, 1975.
Decided June 3, 1976.
Foster, Swift Collins, P.C., for plaintiff.
R. Bruce Laidlaw, Chief Assistant City Attorney, for defendant City of Ann Arbor.
Amici Curiae: DeVine DeVine (by Allyn D. Kantor) for Public Schools of the City of Ann Arbor.
Hackler, Londerholm, Speer, Vader Austin (by Eugene T. Hackler and Peter V. Ruddick) for the Michigan Non-Profit Homes Association and the American Association of Homes for the Aging.
The principal issue on appeal is whether a home for the aged, Hillside Terrace, owned and operated by plaintiff, is entitled to a statutory exemption from the payment of ad valorem property taxes for the tax years 1971-72 as property owned and occupied by a benevolent or charitable institution solely for the purposes for which said institution was incorporated. Plaintiff also maintains that the state is constitutionally required to extend to it the benefits of the separate exemption contained in § 7d of the General Property Tax Act. Finally, plaintiff asserts that it is a denial of equal protection to grant an exemption to the Anna Botsford Bach Home, which is owned and occupied by the Old Ladies Home Association of Ann Arbor, and to deny plaintiff the same exemption under §§ 7 and 9 of the General Property Tax Act.
Paragraph "Fourth" of § 7, being MCLA 211.7; MSA 7.7, of the General Property Tax Act read at times here relevant in part as follows: "Fourth, Such real estate as shall be owned and occupied by library, benevolent, charitable, educational or scientific institutions and memorial homes of world war veterans incorporated under the laws of this state with the buildings and other property thereon while occupied by them solely for the purposes for which they were incorporated. Also charitable homes of fraternal or secret societies." As amended by 1974 PA 358, § 1, eff April 1, 1975, that portion of § 7 now reads:
"Fourth, Such real estate or personal property as shall be owned and occupied by nonprofit theater, library, benevolent, charitable, educational, or scientific institutions and memorial homes of world war veterans incorporated under the laws of this state with the buildings and other property thereon while occupied by them solely for the purposes for which they were incorporated. Also charitable homes of fraternal or secret societies and nonprofit corporations whose stock is wholly owned by religious or fraternal societies which own and operate facilities for the aged and chronically ill, in which no part of the net income from the operation of such corporations inures to the benefit of any person(s) other than the residents." Although special reference is made in the amended statute to nonprofit corporations whose stock is wholly owned by religious societies which own and operate facilities for the aged, nevertheless the language added refers back to the words " charitable homes".
Likewise, at times here relevant, paragraph "First" of § 9, being MCLA 211.9; MSA 7.9, of the General Property Tax Act read as follows:
"First, The personal property of benevolent, charitable, educational and scientific institutions, incorporated under the laws of this state: Provided, That such exemptions shall not apply to secret or fraternal societies, but the personal property of all charitable homes of such societies shall be exempt." As amended by 1974 PA 83, § 1, that portion of § 9 now reads:
"(a) The personal property of charitable, educational, and scientific institutions, incorporated under the laws of this state. The exemptions shall not apply to secret or fraternal societies, but the personal property of all charitable homes of such societies and non-profit corporations which own and operate facilities for the aged and chronically ill, in which no part of the net income from the operation of such corporations inures to the benefit of any person(s) other than the residents shall be exempt."
Although less clear than with the amended § 7, it would seem that the added language in § 9 refers back to the words "the personal property of all charitable homes." It would appear, therefore, that the issue which confronts this Court, being essentially one of statutory construction, would not be less difficult under the statute as amended.
MCLA 211.7d; MSA 7.7(4a).
The exemption claimed by plaintiff was denied by the Ann Arbor City Assessor. This action was affirmed by the Ann Arbor Board of Review, by the State Tax Commission, and by the Court of Appeals at 55 Mich. App. 725; 223 N.W.2d 324 (1974). We likewise affirm.
FACTS
Plaintiff is a Michigan nonprofit corporation whose purposes as set forth in article II of its articles of incorporation are as follows:
"To acquire or erect, and to equip, conduct, and maintain on the broadest Christian principles of service to humanity, nursing and convalescent homes, and homes for the aged, or other institutions for the care of the mentally and physically handicapped, the sick, disabled, aged or destitute persons.
"The purpose of the organization of this corporation is for the general welfare and not for profit and any income derived therefrom shall not be paid out on dividends to any person or corporation, but shall be used for benevolent, charitable and general welfare purposes, and only for the purposes of such institutions organized hereunder. Any receipts of this organization in excess of the expenses of purchase or erection and maintenance of said institution or institutions provided for herein shall be applied to the care of charity patients and to the equipment and enlargement of said institutions."
In addition to its Hillside Terrace facility, plaintiff has established and operates three other retirement centers: Olds Manor in Grand Rapids, Whittier Towers in Detroit, and Whitcomb Tower in St. Joseph. As of the date of the proceedings before the State Tax Commission, the Grand Rapids and Detroit Assessors had exempted the real and personal property used in connection with the Olds Manor and Whittier Towers facilities. The Whitcomb Tower facility had not yet been opened for operation.
The Hillside Terrace facility at issue was constructed between June 1968 and October 1969 at a cost of $2,742,953.30. It has been licensed by the State Department of Health as a home for the aged. The residence facility consists of 55 one- and two-bedroom apartments of which there are five basic designs, ranging from the most modest at 252 square feet to the largest at 504 square feet. Each apartment is equipped with air-conditioning, wall-to-wall carpeting, and safety features, and has a private bath attached. Other features of the residential complex include a central dining room, a library, a chapel, solariums, and areas for recreational activities. There is also a 23-bed health center which has been licensed as a nursing home.
Although contributions to plaintiff are deductible for Federal income, estate and gift tax purposes, there is no indication that contributions have ever been solicited or received by plaintiff for use in connection with Hillside Terrace. Construction and initial start-up costs were financed by bank mortgage loans and by the sale of debentures. The debentures are sold mainly through churches affiliated with the Michigan Baptist Convention, which also guaranteed the mortgage notes. The debentures are of several series, with maturities ranging from 90 days to 15 years, and bear interest from 5% to 8%.
Plaintiff's mortgage and debenture obligations are met by the fees charged to its residents. The fees of Hillside Terrace were structured with the aim that the facility would be self-supporting and self-liquidating. Each resident of Hillside Terrace pays, upon admission, a life-lease fee which, in 1970, ranged between $8,000 and $20,000. The amount of the life-lease fee is based on the size of the apartment rented. The average life-lease fee paid through 1970 was approximately $11,000. The residency contract provides that, in the event of death after occupancy, the life-lease fee and all other sums paid to plaintiff shall be forfeited to plaintiff. Amounts thus forfeited are not treated by plaintiff as income in the year of death, but are amortized over the deceased's actuarial life expectancy.
In addition to the life-lease fee, each resident pays a monthly service charge for daily meals, maid and bed-linen service. Dry cleaning and the laundry of personal apparel are specifically not included in this charge. The monthly service charge is likewise based upon the number of square feet in the apartment rented. During 1970, this fee ranged between $240 and $440 per month. The average monthly service charge was $283.
Each resident is provided 10 days of free care in the nursing center each year. This benefit may be accumulated to a maximum of 30 days. Physicians' fees, drugs, dental and optical care are extra.
Plaintiff offered testimony to the effect that during 1970 the monthly service charge to 4 of its 72 Hillside Terrace residents was reduced because of special consideration given to the financial status of these residents. The extent of the reduction was not made clear. Plaintiff also proved that there were two instances during 1970 where life-lease fees were waived.
With but few exceptions above noted, ability to pay all fees is a factor determining whether an applicant will be admitted to Hillside Terrace. Although it is plaintiff's policy not to evict anyone because of that person's financial reverses, plaintiff's rules state that there is a corresponding responsibility on all residents to care properly for financial resources. To determine whether these resources are sufficient to begin with, each applicant is asked to make a rather complete disclosure of assets and income.
Based on the information disclosed on the application forms, plaintiff attempted to establish before the commission income and net worth averages for Hillside Terrace residents as of December 31, 1970. However, the data on which these averages were based contained a great number of exceptions and omissions. Many residents failed to disclose all assets, and others disclosed only the fact that assets exceeded a certain amount. Even by plaintiff's low estimates, average yearly income was $6,811 and average net worth was $74,274. One resident did disclose assets of over one-half million dollars, while seven others listed assets of over one-quarter million.
During plaintiff's fiscal years ending September 30, 1970 and 1971, the initial years of Hillside Terrace's operations, the facility lost $148,460 and $191,332 respectively. The losses may be accounted for by such nonoperational expenses as depreciation, amortization and interest. One of plaintiff's officers stated that if such losses continued, plaintiff would raise resident fees to eliminate the deficit. As previously noted, the fee structure had been designed so that the facility would be self-supporting and self-liquidating.
In addition to the financial restrictions upon admission, there are strict health requirements. Prior to admission, each applicant must submit to a physical examination. Applicants must be at least 65 years of age, must be in reasonably good health, and must be free of all contagious or objectionable diseases. Applicants must demonstrate ability to maintain themselves in apartments and take meals in the dining facility without the aid of nursing personnel.
I.
Exemption from taxation effects the unequal removal of the burden generally placed on all landowners to share in the support of local government. Since exemption is the antithesis of tax equality, exemption statutes are to be strictly construed in favor of the taxing unit. In examining the facts upon which each case will necessarily turn, a four-part test has evolved for claims based on paragraph "Fourth" of § 7 of the General Property Tax Act:
St. Joseph's Church v Detroit, 189 Mich. 408; 155 N.W. 588 (1915). Evanston YMCA Camp v State Tax Commission, 369 Mich. 1; 118 N.W.2d 818 (1962).
"(1) The real estate must be owned and occupied by the exemption claimant;
"(2) The exemption claimant must be a library, benevolent, charitable, educational or scientific institution;
"(3) The claimant must have been incorporated under the laws of this State;
"(4) The exemption exists only when the buildings and other property thereon are occupied by the claimant solely for the purposes for which it was incorporated."
Engineering Society of Detroit v Detroit, 308 Mich. 539, 550; 14 N.W.2d 79 (1944). See, also, Gull Lake Bible Conference Assn v Ross Township, 351 Mich. 269, 273; 88 N.W.2d 264 (1958).
If the four-part test is met, the fact that charges approximating cost are made for services and benefits offered by the exemption claimant does not alone defeat the exemption claim. On the other hand, exempt status requires more than a mere showing that services are provided by a nonprofit corporation.
See Gull Lake Bible Conference Assn, supra.
That plaintiff has satisfied parts one and three of the test above set forth is not in controversy. Regarding parts two and four, while it is clear that the purposes of plaintiff as set forth in its articles are benevolent, charitable, and general welfare purposes, we are of the opinion that Hillside Terrace was not occupied for what would traditionally be called charitable or benevolent objectives during the years in question. Basically, it may be said that charity or benevolence benefit the general public without restriction. On this record, it appears that the management of Hillside Terrace does not serve the elderly generally, but rather provides an attractive retirement environment for those among the elderly who have the health to enjoy it and who can afford to pay for it. Plaintiff's health and financial limitations on admission cannot be said to benefit the elderly as a general proposition. By purchasing a life-care contract at cost through plaintiff, the residents of Hillside Terrace have provided for themselves. Furthermore, we cannot presume that the Legislature intended to grant the claimed exemptions to these relatively favored individuals while at the same time granting only limited property tax relief to the less affluent elderly who rent or own modest homes. In the years here at issue, those taxpayers age 65 or over who met certain residency and income limitations could obtain only a partial exemption of $2,500 in state equalized valuation if their homestead did not exceed $10,000 in SEV. Under this statute, no revenue was lost to the local taxing unit since the partial exemption was subsidized by the state. At present, the limited senior citizen tax relief just described has been replaced by an allowance of special credits against state income tax liability for expenditures for rent and taxes. We are convinced that the Legislature has given no clear mandate to exempt elderly housing per se, and that there is no difference compelling exemption between the housing offered by plaintiffs and that sought to be affected by the above-described statutory schemes.
Auditor General v R B Smith Memorial Hospital Assn, 293 Mich. 36, 38; 291 N.W. 213 (1940).
MCLA 211.7c; MSA 7.7(4), repealed by 1973 PA 20, § 2.
See MCLA 206.522; MSA 7.557(1522).
In so holding, we do not mean to be understood as saying that Hillside Terrace does not serve a valuable social purpose. The Michigan Non-Profit Homes Association and the American Association of Homes for the Aging, as amici curiae, draw our attention to the national policy of promoting programs and facilities which ease the "retirement shock" to which an ever increasing number of our aging are exposed. Our attention is also called to decisions of other jurisdictions, some of which have ruled in favor of exemption under the facts and constitutional or statutory language there in controversy. Within constitutional directions and limitations, our Legislature is free to exercise its exemption power as it chooses. Whether exemption from taxation of facilities such as Hillside Terrace would result in a benefit to the public commensurate with the loss of tax revenue is a legislative determination. Under our statute and under these facts, we cannot say that the Legislature intended that Hillside Terrace be exempt.
See the White House Conference on Aging Act, 72 Stat 1746, Public Law 85-908 (Sept 2, 1958).
See generally Anno: Homes for the Aged as Exempt from Property Taxation, 37 ALR3d 565-604.
United States Cold Storage Corp v Detroit Board of Assessors, 349 Mich. 81, 91; 84 N.W.2d 487 (1957). See, also, Const 1963, art 9, § 4, which exempts "[p]roperty owned and occupied by nonprofit religious or educational organizations and used exclusively for religious or educational purposes, as defined by law * * *".
II.
By 1966 PA 312, § 1, being MCLA 211.7d; MSA 7.7(4a), the Legislature did intend to subsidize an exemption for certain low-income senior citizen housing of modest design and material:
"(1) Housing owned and operated by a nonprofit corporation or association or by the state, any political subdivision thereof or instrumentality, for occupancy or use by elderly persons shall be exempt from all general property taxation by the state, city, village or county, or by any public body or agency.
* * *
"(4) `Nonprofit corporation or association' means any corporation or association incorporated under the laws of this state not otherwise exempt from general ad valorem real and personal property taxes operating a housing facility or project qualified, built or financed under section 202 of the national housing act of 1959, as amended." (Emphasis supplied.)
It is important to note that this exemption does not result in loss of revenue to the local taxing unit, since subsection 5 provides for reimbursement from the state directly to the local unit.
Plaintiff contends that this exemption must, of constitutional necessity, be made available to it. Plaintiff argues that subsection 4, by making the exemption depend upon Federal financing pursuant to § 202 of the National Housing Act of 1959, is an unconstitutional delegation of legislative authority to the Secretary of Housing and Urban Development.
The intent of the Legislature in enacting MCLA 211.7d is manifest. It would not be possible, without doing violence to that intent, to allow a facility such as Hillside Terrace to qualify under the statute by striking down subsection 4 while giving effect to the remaining portions of the exemption. Therefore, in view of our determination that resolution of the issue could have no effect on plaintiff's property tax liability, we decline to address the issue of the constitutionality of MCLA 211.7d.
III.
Finally, plaintiff contends that it has been denied the equal protection of the laws guaranteed by Const 1963, art 1, § 2, and US Const, Am XIV because it has been denied the exemptions which it seeks while the Anna Botsford Bach Home, housing 17 elderly women and owned and operated by the Old Ladies Home Association of Ann Arbor, has been exempted under §§ 7 and 9 of the General Property Tax Act. We agree with the Court of Appeals that the differences between the Bach Home and Hillside Terrace are readily apparent, and that the contention that plaintiffs must be classified like the Bach Home for purposes of exemption is without support on the record. The Bach Home was endowed by and is partially financed through charitable contributions. Annual operating deficits are met by withdrawals of principal and interest from its endowment fund, and by annual contribution drives. None of the Bach Home residents pays the actual cost of her care, and the various payment plans there in effect were not designed with that goal in mind. The overriding criteria for admissibility to the Bach Home is the applicant's inability to live without supervision. To be contrasted with Hillside Terrace's rigid health and financial requirements is the Bach Home policy of giving priority to those applicants who are unable to obtain comparable care elsewhere.
The Court of Appeals is affirmed. No costs, a public question being involved.
KAVANAGH, C.J., and LEVIN, J., concurred with FITZGERALD, J.
WILLIAMS, LINDEMER, and RYAN, JJ., took no part in the decision of this case.
Although it is agreed that tax exemption statutes are strictly construed in favor of the taxing unit, this generally accepted rule of law should not work to divert an exemption statute from its intended purpose toward meeting certain needs of society.
The facts of the case are well stated in Justice FITZGERALD'S opinion, but a few are of particular relevance to this dissent:
1. Those who may be admitted to the nonprofit church-affiliated home for the elderly, Hillcrest Terrace, must be over 65 years old. They need not be Baptists.
2. The residents have an average annual income of approximately $6,811 and plan to remain in the home for life or indefinitely. Although some have little, if any, income and others are more affluent, the home serves primarily the middle financial strata of the elderly.
3. Residents are not evicted if they cannot pay for the services rendered.
4. Some have been and purportedly will be admitted without payment of the "life lease".
5. Limited free care is available in the nursing center to any resident needing it.
6. The Michigan Baptist Convention has guaranteed the mortgage notes.
7. The home had been operating at a sizable loss at the time of this suit, although it is intended to be self-sustaining. If self-sustaining, the residents' fees must be adjusted higher. If the home is not tax-exempt, an estimated $55,000 annually in taxes will be added to the costs of residents. (There were 72 at the time of suit.)
For the tax years in issue (1971-1972), MCLA 211.7; MSA 7.7 exempted from property taxation:
"Such real estate as shall be owned and occupied by * * * benevolent, charitable, educational or scientific institutions * * *."
A 1974 amendment added the following provision:
"Also charitable homes of * * * nonprofit corporations whose stock is wholly owned by religious or fraternal societies which own and operate facilities for the aged and chronically ill, in which no part of the net income from the operation of such corporations inures to the benefit of any person(s) other than the residents." 1974 PA 358, § 1, eff April 1, 1975.
And MCLA 211.9; MSA 7.9 exempted:
"The personal property of charitable, educational and scientific institutions * * *"
A 1974 amendment added the following provision:
"The personal property of all charitable homes of * * * non-profit corporations which own and operate facilities for the aged and chronically ill, in which no part of the net income from the operation of such corporations inures to the benefit of any person(s) other than the residents shall be exempt." 1974 PA 83, § 1.
The relevant parts of the exemption statutes are phrased in the general terms of "charitable" or "benevolent" institutions. Exemption statutes are strictly construed. However, it does not follow that the construction of "benevolent", "charitable", "educational", "scientific" or other general exemptions should be carved in granite. This would restrict adjustments consistent with the changing perceptions of society.
The Legislature employs the separate designations of "benevolent" and "charitable" institutions from which we may infer separate meanings. There is little case law on the subject, and it is inconsistent. Although "benevolent" may well be more liberally interpreted than "charitable", this dissent is directed toward the more narrow meaning of the term "charitable", as proposed by the prevailing opinion.
The rule of strict construction is best viewed as requiring that the property claimed as exempt must be clearly within the exemption statute as interpreted by the courts. The nature of that interpretation should be reasonably related to the societal need at issue. It need not be severe or harsh. For example, I would approve the view of the North Dakota Supreme Court regarding strict construction of exemption statutes. In Evangelical Lutheran Good Samaritan Society v Board of County Commissioners, Ramsey County, 219 N.W.2d 900, 905 (ND, 1974), that Court stated:
"`The theory that the rule requiring strict construction of a tax exemption statute demands that the narrowest possible meaning should be given to words descriptive of the objects of it would establish too severe a standard. A liberal and not a harsh or strained construction is to be given to the terms "educational," "religious," and "charitable" in order that the true intent of the constitutional and statutory provisions may be realized. The judicial interpretation of such statute should always be reasonable.'"
The ultimate question which must be answered is: What factors should exist for designation of an institution as charitable or benevolent?
I believe that Michigan should follow the lead of other states and examine two criteria: (1) nonprofit status; and (2) beneficial interest to society.
A charitable or benevolent institution must be a nonprofit operation. However, the charging of fees equal to costs does not negate a nonprofit status.
In Fredericka Home for the Aged v San Diego County, 35 Cal.2d 789, 793; 221 P.2d 68, 70-71 (1950), the California Supreme Court stated:
"So the charge of fees by such an institution as a home for the aged will not necessarily prevent its classification as charitable if such sums `go to pay the expenses of operation and not to the profit of the founders or shareholders,' for all persons may `under certain conditions be proper objects of charity.'
* * *
" [T]he controlling consideration in determining whether an institution such as plaintiff should be classified as a charitable one is not whether a few or all of the recipients of its benefits may make reasonable contributions toward defraying the cost of such benefits, but whether such contributions as are made do not exceed what is required for the maintenance of the institution at a reasonable standard and are devoted to the purposes for which the institution was founded, which purposes, in the absence of the required contributions, would clearly be deemed to be charitable." (Emphasis added.)
Although the elderly here concerned have varying degrees of wealth, Field Manor v Los Angeles County, 188 Cal.App.2d 1, 20; 10 Cal.Rptr. 242 (1961) is applicable. The California Court of Appeals stated:
See also, State Board of Tax Commissioners v Methodist Home for the Aged, 143 Ind. App. 419; 241 N.E.2d 84 (1968); Bozeman Deaconess Foundation v Ford, 151 Mont. 143; 439 P.2d 915 (1968); Four Freedoms House v City of Philadelphia, 443 Pa. 215; 279 A.2d 155 (1971); Presbyterian Homes Tax Exemption Case, 428 Pa. 145; 236 A.2d 776 (1968).
"In the light of these authorities it seems clear that a home for the aged which caters to wealthy persons and furnishes them those services and care needed by the old and infirm, rich or poor, does not cease to be a charitable institution so long as its charges do not yield more than actual cost of operation; that it does cease to have that status when the occupants pay more than the cost to the home, thus resulting in a profit and converting it into a noncharitable institution."
I can say without reservation that plaintiff is a nonprofit organization.
Discussion of the second criterion might best be understood by first looking at what is not important for the charitable and benevolent designation. First, charity and benevolence are not limited to relief of poverty:
"The concept of charity is not confined to the relief of the needy and destitute, for `aged people require care and attention apart from financial assistance, and the supply of this care and attention is as much a charitable and benevolent purpose as the relief of their financial wants.'"
Fredericka, supra, at 792, quoting Estate of Henderson, 17 Cal.2d 853, 857; 112 P.2d 605, 607 (1941).
"`Relief of poverty is not a condition of charitable assistance. If the benefit conferred has a sufficiently widespread social value, a charitable purpose exists * * *.'"
Fifield, supra, at 11-12, quoting Henderson, supra, at 857.
"To qualify as a charity does not require that it have an exclusive relationship to the poor * * *."
Bozeman, supra, at 148.
Second, the high quality of the facilities and care should not affect charitable and benevolent status:
"It may be that appellants feel the standard of care, the excellence of accommodations, and the mode of life accorded by this facility, all reflected by the size of the occupancy and maintenance fees, and the physical plant and facilities available are inconsistent with the usual concept of charity. But `charity' to the law has a much broader meaning than that accorded it in common speech (15 Am Jur 2d, p 8)." Id 149.
Further, it is not agreed that the institution must open its doors indiscriminately to any elderly applicant regardless of health or financial condition in order to qualify as "charitable" or "benevolent". In fact, it might well be encouraged not to do so because better service may be provided. Here, plaintiff does not purport to be a nursing home staffed and equipped to care for the chronically ill, although it does provide free beds and nursing care for short-term illness. Although nonprofit, it does propose to be self-sustaining.
The second proposed criterion, beneficial interest to society, is not a novel idea. The Supreme Court of Montana recognized current social needs: "The scope of charity and the standards under which it is administered are not frozen by the past, but keep pace with the times and the new conditions and wants of society." Bozeman, supra, at 149.
The 2 Restatement Trusts, 2d, § 368, recognizes the following as charitable purposes:
"(a) the relief of poverty; "(b) the advancement of education; "(c) the advancement of religion; "(d) the promotion of health; "(e) governmental or municipal purposes; "(f) other purposes the accomplishment of which is beneficial to the community."
In the comments under § 368, the Restatement notes:
"The common element of all charitable purposes is that they are designed to accomplish objects which are beneficial to the community.
* * *
"A purpose is charitable if its accomplishment is of such social interest to the community as to justify permitting the property to be devoted to the purpose in perpetuity.
"There is no fixed standard to determine what purposes are of such social interest to the community; the interests of the community vary with time and place.
The Supreme Court of Pennsylvania also recognized the view of the Restatement:
"`"Whether a purpose is charitable must be ascertained from a consideration of all surrounding circumstances. A design to achieve objects beneficial to the community is common to all charitable purposes. * * * The concept of charity is continually broadening."'" Presbyterian Homes, supra, at 150.
Thus, the basic question in the instant appeal becomes: Is plaintiff of sufficient beneficial interest to society as to qualify as a charitable and benevolent institution?
The nonprofit status of plaintiff presents no problem.
The answer should be affirmative. Problems brought on by old age are rendered more acute by ever longer life expectancies and cause institutions such as plaintiff to be of beneficial interest to society. The Supreme Court of Pennsylvania has well expressed the reasons for such interest:
"Moreover, the social need of governmental and charitable caring for the aged, as well as the importance and necessity for such a benevolent public policy, have become widely recognized and accepted, as medical science in the United States constantly lengthens life expectancy with its resulting increase in the number of needy aged. The elderly, even those who are not completely incapacitated physically, suffer from loneliness, and from mental and physical infirmities which tend to increase as they grow older and their children leave the family home and their contemporaries move away or die. With each passing year, they usually become less and less able to cope with the day-to-day problems of life, including the management of their homes, their proper maintenance and support, and even, at times, their adequate nourishment; and they often live in fear and dread of illness or of some physical disability or possible poverty, or of just plain inability to adequately take care of themselves. It is certainly in the public interest and public welfare that homes and other facilities be established and maintained to relieve these worries and anxieties, these fears and sufferings, and this well-known inability of the aged to adequately care for themselves. Furthermore, it is a matter of common knowledge that pension plans, retirement benefits, and Government-supported programs for the support and care of the elderly greatly aid, but simply do not solve all of the underlying human problems of the aged." (Emphasis added.) Presbyterian Homes, supra, at 151.
The California courts also recognize the special needs of the elderly:
"The courts have long recognized and declared that charity is not limited to giving alms, is not confined to relief of the poor, may extend to the rich in areas where they are not able to care for themselves, and extends to those social objectives which promote the general welfare and would be served by the government in the absence of philanthropic enterprises such as homes for the aged. Historically, and well-nigh unanimously, the courts have found homes for the aged to be charitable institutions where conducted at cost or less. They have also recognized that man, especially the old, does not live by bread alone; that though he be able to pay for all material wants he nevertheless may be dependent upon his fellow man or the government to protect him from the haunting fear of loss of all his property with resultant poverty, fear of illness or other physical disability overtaking him with no one near to help, fear of the loneliness arising from absence of social contacts, fear of any of the tragedies of old age where there is no one standing by to help." (Emphasis added.)
Fifield, supra, at 11.
I fail to find legislative intent not to exempt plaintiff in the partial tax relief accorded senior citizens owning their own homes. MCLA 206.522; MSA 7.557(1522). The majority opinion concludes that a full exemption for plaintiff is inconsistent with such partial tax relief. However, the concerns for plaintiff and institutions of its kind are different from those concerns in MCLA 206.522, supra. The special needs of senior citizens are such that an institution such as plaintiff should be encouraged through property tax exemption as a charitable or benevolent institution. Many critical needs can only be met by such an institution.
Finally, it is notable that the Internal Revenue Service exempted plaintiff from income tax as a corporation organized for charitable purposes under Int Rev Code of 1954, § 501(c)(3). Rev Rul 72-124 applies to plaintiff:
"[I]t is now generally recognized that the aged, apart from considerations of financial distress alone, are also, as a class, highly susceptible to other forms of distress in the sense that they have special needs because of their advanced years. For example, it is recognized in the Congressional declaration of objectives, Older Americans Act of 1965, Public Law 89-73, 89th Congress, 42 U.S.C. § 3001, that such needs include suitable housing, physical and mental health care, civic, cultural, and recreational activities, and an overall environment conducive to dignity and independence, all specially designed to meet the needs of the aged. Satisfaction of these special needs contributes to the prevention and elimination of the causes of the unique forms of `distress' to which the aged, as a class, are highly susceptible and may in the proper context constitute charitable purposes or functions even though direct financial assistance in the sense of relief of poverty may not be involved.
"Thus, an organization, otherwise qualified for charitable status under section 501(c)(3) of the Code, which devotes its resources to the operation of a home for the aged will qualify for charitable status for purposes of Federal tax law if it operates in a manner designed to satisfy the three primary needs of aged persons. These are the need for housing, the need for health care, and the need for financial security.
* * *
"The need for financial security, i.e., the aged person's need for protection against the financial risks associated with later years of life, will generally be satisfied if two conditions exist. First, the organization must be committed to an established policy, whether written or in actual practice, of maintaining in residence any persons who become unable to pay their regular charges." 1 Internal Revenue Bulletin 1972, pp 145, 146-147.
The reasoning of Rev Rul 72-124 is in particular application to the instant case.
In short, I would find that, under the facts as well stated in the majority opinion, plaintiff is entitled to an exemption as a "charitable" or "benevolent" institution. The special problems of our increasing population of older Americans require that the exemption statute be interpreted to meet the needs of society as they exist.
At this writing, the young do not generally take into their homes older family members as was past custom. Although some may have enough money to exist alone, we now see life as embracing more than a roof over the head and food for the body. Not only the indigent and those physically or mentally disabled need our individual, legislative, or judicial compassion, but those who may be lonely, afraid or emotionally starved. There are those who cannot cope with the everyday chores of a house or an apartment and who suffer other physical and mental deprivations while alone. The persons or groups who, at no profit to themselves, provide for such needs under the circumstances of this case are engaged in a "charitable" or "benevolent" undertaking which is of particular benefit to the community.
I would find that plaintiff comes within the definition of the legislatively provided exemption, and, therefore, would reverse.