These are five appeals from a decision of the Appellate Tax Board refusing abatements of taxes pursuant
Children's is a charitable corporation resulting from incorporation, consolidation, and mergers under St. 1869, c. 44; St. 1954, c. 261 and St. 1959, c. 283. In St. 1959, c. 283, § 5, powers are conferred "... to form with ... such other charitable corporations ... as may be mutually agreed upon, an alliance for, and otherwise to co-operate in, establishing, maintaining and operating a medical center and to render mutual services and operate one or more plants in common in connection with such medical center."
The real estate at 173-175 Ipswich Street, Boston, and the personal property therein were owned by Children's on January 1, 1961, and by Association, its successor in title, on January 1, 1962 and 1963.
The "evolution" of Association began in 1959 when Children's, Massachusetts General Hospital, and six other Boston hospitals formed a committee to investigate the establishment of a central laundry which would serve these hospitals on a cooperative basis. The groundwork for the formation of a cooperative laundry was established by St. 1954, c. 261, and St. 1959, c. 283. The committee analyzed many factors, concluding that in the locality the projected
On March 21, 1961, pursuant to the committee report, Association was incorporated under G.L.c. 180 by representatives of five hospitals.
The purposes of Association given in its articles of incorporation are: "To purchase, lease, construct, or otherwise acquire, equip, hold, maintain and operate one or more buildings, equipment and other facilities for the doing of laundry work, supplying linen for and rendering services only to private Massachusetts hospitals not operated for profit and licensed under the laws of the Commonwealth of Massachusetts; hospitals operated by the Commonwealth of Massachusetts or by any city, town, county or other governmental body in Massachusetts and medical schools in Massachusetts not operated for profit." Its articles of incorporation further provide that no part of the net earnings shall inure to the benefit of any individual, and that in the event of dissolution "its property shall be transferred to any non-profit organization."
The hospitals formed the alliance for the single purpose of getting their large volume of laundry processed on an economic, speedy, and sanitary basis. On July 1, 1960, Children's took title to the real estate for the purpose of a laundry. The dominant purpose of owning and occupying the realty by Children's was the operation of a laundry or holding it as a trustee until Association should be incorporated. Prior to January 1, 1961, Children's expended funds for the services of laundry management consultants, architects, and engineering advice, and made disbursements for renovations and other items relating to converting the property from a garage into a laundry plant. Actual occupation by Children's was made in the spring of 1960, prior to taking title, when two employees of Children's moved
By having Association do their laundry, the allied hospitals are relieved of investing the capital necessary to establish and maintain laundries of their own. Operating a laundry is an administrative burden. A laundry occupies valuable space which generally could be used for better purposes.
For its first fiscal year ending September 30, 1962, Association processed 9,400,000 pounds of laundry. For the fiscal year ending September, 1963, it processed 12,700,000 pounds.
Prior to January 1, 1961, Children's operated its own laundry at 300 Longwood Avenue, Boston. This was a two-story building having an area of about 5,000 square feet. It employed thirty-three persons and had an annual volume of about 2,000,000 pounds. It ceased to be used as a laundry in 1961 when the operation of Association began. The bulk of the volume of laundry done by Association from 1961 through 1963 was from the Massachusetts General Hospital. The latter hospital formerly had its laundry on the first floor and basement at its present hospital site. The laundry occupied about 13,000 square feet, and employed sixty-six persons, who operated on two shifts. It handled an average annual poundage of about five to five and one-half million pounds. In January, 1960, this laundry ceased operation, and its work was turned over to a commercial service until Association began operation.
General Laws c. 59, § 5, provides: "The following property shall be exempt from taxation:.... Third [as amended through St. 1957, c. 500, § 1], Personal property of a charitable organization, which term, as used in this clause, shall mean (1) a literary, benevolent, charitable or scientific institution ... incorporated in the commonwealth ... and real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized or by another charitable organization or organizations or its or their officers for the purposes of such other charitable organization or organizations; and real estate purchased by a charitable organization with the purpose of removal thereto, until such removal, but not for more than two years after such purchase...."
The exemption of personal property by § 5, Third, is broader than the exemption of real estate owned and occupied by a charitable institution for its corporate purposes. Assessors of Boston v. Lamson, 316 Mass. 166, 172. All personalty of a charitable corporation is exempt regardless of use. Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 335.
In this court, review pursuant to G.L.c. 58A, § 13, is in accordance with the standards set forth in the State Administrative Procedure Act. G.L.c. 30A, § 14 (8). State Tax Commn. v. Sears Roebuck & Co. 344 Mass. 471, 472. One aspect of review here is that a general finding stands if supported by subsidiary findings but is set aside if inconsistent with them. Assessors of Boston v. Garland Sch. of Home Making, 296 Mass. 378, 383-384. Assessors of Boston
Respecting the 1961 tax, the finding that Children's bought the real estate for the purpose of a laundry to be operated by itself or to hold as trustee for Association seems conclusive. In our view, it is not important which it was. If the operation was to be by Children's, this would seem to fall within the express finding: "If ... Children's ... bought and operated this Ipswich Street property for its own use and had no connection with any hospital, other than those mentioned in [c. 283 of] the Acts of 1959, it would appear on those facts alone, that it would be entitled to an exemption." If the realty was to be "held in trust" for Association, it should fall within that express phrase in § 5. But the tax board's decision purports to deny that Association is a charitable corporation by findings that "its dominant purpose or dominant use and activity is the doing of laundry work and supplying of linen for certain private Massachusetts hospitals or governmental agencies,"
It is fallacious to base the denial of an exemption to Children's in 1961 upon the truism that "a charitable institution cannot have an exemption upon real estate that it holds in trust but for a purpose other than that for which it was organized." See, for example, Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 337. Rightly viewed, the real estate on Ipswich Street is not held for a purpose other than that for which the hospitals were organized. The report of the tax board concedes that Children's and all other hospitals mentioned in the pertinent legislative acts are or were charitable organizations which would fall within the provisions of G.L.c. 59, § 5, Third, while operating as a medical center. Likewise,
Also, laundry work, as is well known, and as has been substantially found in these appeals, is an indispensable feature of hospital operation. To attempt to dispose of it altogether by denominating it a minor purpose is equivalent to saying that the whole is not composed of one of its most important parts. It unsoundly fragmentizes the component activities of a hospital.
It should not be fatal to be incorporated to perform laundry work in this circumstance. Association is not engaged in a commercial activity. The record is meager, but there is no finding, and no evidence warranting a finding, that the allied hospitals do not contribute to the operation of their joint laundry on a nonprofit basis. The statement in the assessors' brief that the work was "at least" on a cost basis is not sustained by the record. It is not significant that the allied hospitals had to some extent (unstated in the record) a contractual relation with Association. The assessors also state in their brief that laundry done by members of the Vincent Club
The tax board report states: "It is doubtful that the
Concededly, the laundry plant of each hospital before the foundation of the alliance was an integral part of the hospital, and the real and personal property owned by each, even if devoted to the purposes of a laundry, was exempt from taxation. Under the conclusions of the tax board and the supporting contentions of the assessors, the simple fact that the five hospitals for sound business reasons and purposes of economy have combined their laundries in a single physical unit in the name of a new corporation, formed to effectuate their purposes, has destroyed the individual exemption of each.
The final statement of the tax board's decision is: "We are therefore of the opinion that the character of those participating in the benefits of the laundry facilities involved in these appeals is not of great materiality in resolving
The assessors' brief contains the comment that Association "more closely resembles a mutual benefit society than a charitable organization." See Minns v. Billings, 183 Mass. 126, 128. The undoubted facts are, however, that all the hospitals in the alliance and Association are charitable corporations, and that the ultimate class of beneficiaries is the general public.
The assessors rely on several statements usually found in cases denying an exemption. An exemption is a matter of special favor or grace and to be recognized only where the property falls clearly and unmistakably within the express words of a legislative command. Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 716. We are of opinion that that condition is satisfied. They also rely upon the statement that the burden is on the taxpayer to show that it is entitled to the exemption claimed. Old Colony Trust Co. v. Commissioner of Corps. & Taxn. 331 Mass. 329, 345. State Tax Commn. v. Blinder, 336 Mass. 698, 703. In the present appeals that burden is fully discharged by basic facts and by necessary inferences from certain findings of the tax board. It is true that taxation is the general rule, and exemptions are to be strictly construed. Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 332, and cases cited. But the enhancement of tax receipts is not of itself sound reason to deprive these appellant taxpayers of their exemption.
One argument in the assessors' brief which does not carry conviction is that Association "merely does laundry work
We are of opinion that Association is a public charity where the dominant purpose for which it was incorporated is to conduct an important hospital function by a cooperative effort of the charitable organizations named or authorized in its charter. Although, as the assessors' brief points out, no decision of this court has previously dealt with a corporation such as Association, our view finds support in analogous cases. See Assessors of Boston v. Lamson, 316 Mass. 166, 168-169, 173-174; Assessors of Boston v. Vincent Club, 351 Mass. 10, 13. See also Harry Alan Gregg, Jr. Family Foundation, Inc. v. Commissioner of Corps. & Taxn. 330 Mass. 538, 542-544.
The decision of the Appellate Tax Board is reversed, and the abatements of the taxes for 1961, 1962, and 1963 are to be granted with interest and costs, including costs of appeal.