[This opinion has been published in Ohio Official Reports at
72 Ohio St.3d 217.]
WARMAN, AUDITOR, APPELLANT, v. TRACY, TAX COMMR.; MERCY MEMORIAL
HOSPITAL, APPELLEE.
[Cite as Warman v. Tracy, 1995-Ohio-45.]
Taxation—Real property—Residence owned by nonprofit charitable hospital and
occupied rent free by nonsalaried nuns employed by hospital—Residence
exempt from taxation, when—R.C. 5709.121, applied.
(No. 94-484—Submitted December 9, 1994—Decided May 17, 1995.)
APPEAL from the Board of Tax Appeals, No. 91-B-1272.
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{¶ 1} Appellee Mercy Memorial Hospital ("Mercy Memorial") is a fullservice hospital located in Urbana, Ohio. The hospital is a nonprofit charitable
institution owned by the Sisters of Mercy. The Sisters of Mercy is a religious order
associated with the Roman Catholic Church. The hospital itself is exempt from real
property taxation and is not the subject of this appeal.
{¶ 2} In 1985, Mercy Memorial purchased a two-story residential home
located at 911 Bon Air Drive, Urbana, Ohio. The home is located one block from
the hospital proper and is maintained as a rent-free living facility for the nuns
employed by Mercy Memorial. The nuns are paid no salary for their positions at
the hospital, but receive a small stipend for day-to-day expenses of operating the
household.
{¶ 3} On October 3, 1990, Mercy Memorial filed an Application for Real
Property Tax Exemption and Remission for tax year 1989, seeking a tax exemption
for the property at 911 Bon Air Drive. In the application, Mercy Memorial claimed
that "[t]his property is the residence for the Sisters of Mercy, who provide care and
comfort for the patients and employees of Mercy Memorial Hospital."
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{¶ 4} Appellant Bonnie Warman, Champaign County Auditor, reviewed the
application and recommended that it be denied. However, by entry dated August
28, 1991, the Tax Commissioner granted the application, stating, in part:
"This matter concerns an application for the exemption of real property
from taxation. The Tax Commissioner finds that the real property described above
is used as housing facilities and is exempt from taxation under R.C. 5709.12,
charitable.
"The Tax Commissioner orders that the real property described above be
entered upon the list of property in the county which is exempt from taxation for
tax year 1990, and that taxes, penalties and interest for tax year 1989 be remitted."
{¶ 5} Appellant appealed to the Board of Tax Appeals ("BTA"). The BTA,
applying R.C. 5709.12, 5709.121 and Cincinnati Nature Ctr. Assn. v. Bd. of Tax
Appeals (1976), 48 Ohio St.2d 122,
2 O.O.3d 275,
357 N.E.2d 381, found that the
subject property was exempt from taxation because it was used in furtherance of
the charitable purposes of the hospital and not with a view to profit. Accordingly,
the BTA affirmed the final order of the Tax Commissioner.
{¶ 6} The cause is now before this court upon an appeal as of right.
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Darrell L. Heckman, Champaign County Prosecuting Attorney, for
appellant.
John C. Newlin, for appellee.
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DOUGLAS, J.
{¶ 7} The BTA determined that the house owned by Mercy Memorial and
used as a residence for nuns employed by the hospital is exempt from real property
taxation. For the reasons that follow, we find that the decision of the BTA is neither
unlawful nor unreasonable. Accordingly, we affirm the decision of the BTA.
{¶ 8} R.C. 5709.12(B) provides, in part:
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January Term, 1995
"Real and tangible personal property belonging to institutions that is used
exclusively for charitable purposes shall be exempt from taxation." (Emphasis
added.)
{¶ 9} R.C. 5709.121 provides, in part:
"Real property and tangible personal property belonging to a charitable or
educational institution or to the state or a political subdivision, shall be considered
as used exclusively for charitable or public purposes by such institution, the state,
or political subdivision, if it meets one of the following requirements:
"…
"(B) It is made available under the direction or control of such institution,
the state, or political subdivision for use in furtherance of or incidental to its
charitable, educational, or public purposes and not with the view to profit."
(Emphasis added.)
{¶ 10} In Cincinnati Nature Ctr., supra, 48 Ohio St.2d 122, 125,
2 O.O.3d
275, 277,
357 N.E.2d 381, 383, this court determined that:
"To fall within the terms of R.C. 5709.121, property must (1) be under the
direction or control of a charitable institution or state or political subdivision, (2)
be otherwise made available 'for use in furtherance of or incidental to' the
institution's 'charitable … or public purposes,' and (3) not be made available with
a view to profit."
{¶ 11} In the case at bar, there is no dispute that the property in question
satisfies the first and third requirements for exemption outlined in Cincinnati
Nature Ctr. The subject property is under the direction or control of Mercy
Memorial, an eleemosynary institution, and is not maintained with a view to profit.
However, appellant challenges the BTA's finding that the subject property satisfies
the second requirement of R.C. 5709.121(B), to wit, that the property is used in
furtherance of or incidental to the hospital's charitable purpose.
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{¶ 12} A review of the record supports the BTA's finding that the property
at 911 Bon Air Drive is used in furtherance of or incidental to the hospital's
charitable purpose. Mercy Memorial is owned by the Sisters of Mercy and is a
member of the Mercy Health System. The hospital's amended articles of
incorporation provide that "the corporation affirms that it exists and functions
pursuant to the teachings, disciplines, and laws of the Roman Catholic Church, and
that it will be guided by and proceed in accordance with such teachings, disciplines,
and laws." As a member of the Mercy Health System, the hospital is required to
employ nuns that have been assigned to Mercy Memorial by the Sisters of Mercy
provincialate. The hospital is also required to care for the Sisters of Mercy that
have been assigned to the hospital facility and to provide housing accommodations
for them.
{¶ 13} In the past, the nuns assigned to Mercy Memorial were housed in the
hospital facility. As the hospital expanded, it became necessary for the hospital to
provide the nuns with other housing accommodations. Thus, in 1985, Mercy
Memorial purchased the home at 911 Bon Air Drive as a permanent residence for
the nuns employed by the hospital.
{¶ 14} There are four nuns who occupy the subject property. Sister Edith is
Director of Pastoral Care for Mercy Memorial. Sister Mary Berding is the Director
of Mission. She is charged with the responsibility to educate the doctors and
employees of the hospital concerning the values of the Sisters of Mercy and the
Christian-oriented mission of the hospital. Sister Virginia, a registered nurse, is
Director of Patient Relations. Sister Marie Lipps is in charge of visiting patients at
the McAuley Center Nursing Home, a facility physically attached to the hospital.
The nuns are on call twenty-four hours a day, every day of the year. They perform
their duties in furtherance of the charitable mission of the hospital.
{¶ 15} R.C. 5709.121 provides for a property to be tax exempt when it is
used by an institution in furtherance of the institution's charitable purpose. Here,
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January Term, 1995
the property is provided for the use of nuns to facilitate the carrying out of their
duties and vows as Sisters of Mercy and as part of the professional team operating
Mercy Memorial. The hospital is required to employ the nuns and to provide
adequate housing accommodations for them as an incident to the operation of the
hospital. The use of the property as a residence for the nuns is necessary for the
hospital to accomplish its mission as a member of the Mercy Health System. Under
these circumstances, we find it difficult to envision a use of property that would be
any more related or incidental to the hospital's charitable purpose.
{¶ 16} Nevertheless, appellant contends that a tax exemption does not
apply, since the residence at 911 Bon Air Drive is located one block from the
hospital. Specifically, appellant cites Cincinnati Nature Ctr., supra, 48 Ohio St.2d
122,
2 O.O.3d 275,
357 N.E.2d 381, and Wellsville v. Kinney (1981),
66 Ohio St.2d
136,
20 O.O.3d 156,
420 N.E.2d 123, claiming that the fact that the residence is not
on hospital grounds is a fact of "huge legal significance" in determining whether
the property is exempt from taxation. We disagree.
{¶ 17} Again, the only significant question in this appeal is whether the
residence is used in furtherance of or incidental to the hospital's charitable purpose.
We find that it is. Moreover, Cincinnati Nature Ctr. and Wellsville clearly do not
require a denial of the exemption in this case.1 Despite appellant's protestations,
there is simply no requirement in R.C. 5709.12(B) or 5709.121(B) that a residence
owned by a charitable institution and used in furtherance of the institution's
charitable purposes must be located on the main grounds of the institution to be
1. In Cincinnati Nature Ctr. Assn. v. Bd. of Tax Appeals (1976), 48 Ohio St.2d 122,
2 O.O.3d 275,
357 N.E.2d 381, syllabus, this court held that "[h]ouses located on the tax-exempt property of a
nonprofit nature center which serve as residences for employees of the center and which are used
'in furtherance of or incidental to its [the center's] charitable, educational or public purposes and not
with the view to profit' are exempt from taxation under R.C. 5709.121." Similarly, in Wellsville v.
Kinney (1981),
66 Ohio St.2d 136,
20 O.O.3d 156,
420 N.E.2d 123, we upheld a tax exemption for
city-owned property that was used as a private residence by a cemetery caretaker and that was
located on public cemetery grounds.
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exempt from taxation. Likewise, there is no requirement that charitable activity
occur within the residential premises so long as the residence itself is used in
furtherance of or incidental to the institution's charitable purpose. Indeed, we
believe that granting a tax exemption in the case at bar is consistent with our holding
in Aultman Hosp. Assn. v. Evatt (1942), 140 Ohio St. 114,
23 O.O. 329,
42 N.E.2d
646, wherein this court recognized a tax exemption for property owned by a
nonprofit hospital association even though the subject property was used
exclusively to house nursing students and was located approximately two blocks
from the hospital proper.
{¶ 18} For the foregoing reasons, we affirm the decision of the BTA.
Decision affirmed.
MOYER, C.J., WRIGHT, RESNICK, F.E. SWEENEY, PFEIFER and COOK, JJ.,
concur.
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