Appeals, Nos. 382 to 386, inclusive, and 401 to 419, inclusive, Oct. T., 1960, from order of Court of Common Pleas of Bucks County, Dec. T., 1958, Nos. 56 to 79, inclusive, in re appeal of the Woods Schools from orders of Board of Assessment and Revision of Taxes of Bucks County. Decree affirmed.
Walter J. Collins, Jr., with him David F. Maxwell, and Obermayer, rebmann, Maxwell and Hippel, for appellant.
Sidney T. Yates and John W. Dean, 3rd, for township school district and township, appellees.
Donald W. Vanartsdalen and Frederick T. Bebbington, for borough school district and borough, appellees.
Samuel S. Gray, Jr., County Solicitor, for county, appellee.
Abraham L. Freedman, with him Seymour Kurland, for all appellees.
Before Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ. (rhodes, P.j., absent).
[ 195 Pa. Super. Page 533]
The appellant, which operates a school for "exceptional" children and a research center, seeks a charitable exemption from local taxation for all of its real estate.
The right of exemption requires the institution to be one "of purely public charity" under Article 9, § 1, of the Constitution and also to come within the terms
[ 195 Pa. Super. Page 534]
of the Act of May 21, 1943, P.L. 571, Art. II, § 202 (72 PS § 5453.202) which exempts "all hospitals ... and institutions of learning, benevolence or charity ... founded, endowed and maintained by public or private charity: Provided, That the entire revenue derived by the same be applied to the support and to increase the efficiency and facilities thereof, the repair and the necessary increase of grounds and buildings thereof, and for no other purpose."
The court below held that under these provisions the research institute was tax exempt but the balance of the property used for the school was not because (1) the tuition charged to the students paid the entire costs of its operation and maintenance, together with a surplus which was applied to the use of the research center and (2) very few of the students paid less than the full cost of the education they received.
The appellant is a non-profit corporation. The school which it operates in Bucks County is renowned for its success in educating disturbed and handicapped children. The school was founded by Miss Woods as a privately owned institution in 1915. It was financially successful, was incorporated in 1943, and was a very flourishing institution when it was converted to a non-profit corporation in 1949. In the course of these transfers, Miss Woods donated her entire interest in the school to the appellant, subject to the payment of a salary to her of $15,000. per year for life, together with a house and all her living expenses. As the court below stated: "In its present form, appellant was 'founded' by a series of transactions, the net effect of which was an outright gift by [the foundress] in excess of $500,000. Even if we make the unwarranted assumption that the salary and other benefits received by her from 1949 to 1956 [the date of her death] were not earned by her, there would still be a clear gift by her to the appellant of at least $400,000."
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Tuition in the case of almost all students pays the cost of their education and treatment and leaves a surplus. A Child Study and Treatment and Research Institute has been established and is being in part maintained out of the surplus revenues of the school. Private charitable gifts of at least $140,000. have been nade to the institution and the Federal Government has made a grant of $176,250. to the research institute.
Judge FULLAM'S full and illuminating discussion has considerably lightened our labors in this case. He denied the exemption to the school property upon the authority of the Ogontz School Tax Exemption Case, 361 Pa. 284, 65 A.2d 150 (1949), which held that an educational institution will be denied exemption when its earned income exceeds its cost of operation, if that earned income consists entirely of tuition charged to the students, almost all of whom pay the full cost of their education.
The appellant argues that the holding in the Ogontz case must be considered in the light of the subsequent decision in the Hill School Tax Exemption Case, 370 Pa. 21, 87 A.2d 259 (1952), which the appellant argues, lays down the rule that the only prerequisites to the tax exemption of land necessary for the occupation and enjoyment of a private educational institution are: (a) charitable work; (b) a public institution; (c) foundation and maintenance by public or private charity and (d) no motive of private profit. In the Hill School case the Court said that while an educational institution to qualify for exemption must be free of any motive of private profit, it may receive some payment for its services. It distinguished the Ogontz case, supra, in that the Ogontz ...