Appeal from the order of the Court of Common Pleas of Berks County, No. 246 August Term, 1968, in case of In Re: Determination of Board for the Assessment and Revision of Taxes Exempting from Real Estate Taxation for the Year 1968 Property of East Pennsylvania Conference of Seventh Day Adventists, Inc., Located in Tilden Township, Berks County, Pennsylvania.
D. Frederick Muth, with him Rhoda, Stoudt & Bradley, for appellant.
Clifford B. LePage, Jr., with him Terrence E. Connor, and Austin, Speicher, Boland, Connor & Giorgi, for appellee.
Judges Kramer, Wilkinson, Jr., and Mencer, sitting as a panel of three. Opinion by Judge Wilkinson.
The Hamburg Area School District has appealed from a decision of the Court of Common Pleas of Berks County, sustaining in part and dismissing in part the School District's appeal from a decision of the Board for the assessment and revision of taxes which, with some exceptions, had determined that the property of appellee, East Pennsylvania Conference Association of Seventh Day Adventists, Inc., was entitled to be exempt from taxation. We sustain the court below.
In 1953, appellee purchased what was known as the Blue Mountain Springs Dairy. On this substantial dairy farm, with two additional purchases made later, the appellee established the Blue Mountain Academy. The record shows that this stemmed from action taken in 1948 at the Conference Campground in Wescosville, Pennsylvania, when the constituency of the East Pennsylvania Conference of Seventh Day Adventists authorized the construction of an academy and pledged to support it. From the ground breaking in 1954 until
June of 1969, a short 15 years, the very remarkable effort of this religious group had developed a private "high school" with a net worth of $2,209,064.67. In all, 429 students, boys and girls, were enrolled, with 412 living in dormitories. The total tuition and fees produced $367,274.41 of a total gross income of $797,683.04. Total operating expenses were $827,412.49. This $29,729.45 deficit was made up by a subsidy of $24,999.96 and a special donation of $8,879.08 for a net position of $4,149.59. A reading of this record clearly supports the proposition that such sound operation of a charitable high school could only be the result of hard work by dedicated people interested in the improvement of youth for the betterment of mankind. For example, in this 15-year period, the Conference has donated $299,806.09 toward the cost of operation, and the faculty and staff annual salaries range between $4,400 and $5,500.
As the court below quite properly observed, the record does not present as clear a picture of the detailed operations as might be desirable. Nevertheless, there is more than sufficient evidence to support the court's decision. Indeed, our study of the cases would seem to support a more complete exemption than here granted, especially if some points in the record were amplified. For example, operation of the dairy farm with student help as part of the educational program with all "profits" placed back in the system does not put the dairy farm into the category of a department store or spaghetti factory, operated completely independently of the school.
Appellant relies chiefly on what it refers to as the leading cases to deny the exemption: In re: Ogontz School, 361 Pa. 284, 65 A.2d 150 (1949), and Appeal of the Woods Schools, 406 Pa. 579, 178 A.2d 600 (1962). These are leading cases for the proposition that when a school is founded and established as a private business
venture, it cannot change its nature to a public charity by merely transferring its assets to a nonprofit corporation. Indeed, the Woods Schools were started by its founder as a business venture with $175 in 1915, and she built it into assets worth approximately $500,000 by 1949. She transferred it to the nonprofit corporation in consideration of the payment of $168,599.66 due her, the assumption of $64,401.71 in obligations, and a life income of $15,000 annually, plus a house furnished and maintained, food, etc. In spite of this "burden", during the period of 1954-1958, when it paid $13,500 in real estate taxes, the school showed a net position of $468,478 before depreciation and $163,283 after depreciation. Salaries of the staff and faculty ...