Appeals from the Order of the Court of Common Pleas of Allegheny County in case of Robert Morris College v. Board of Property Assessment, Appeals & Review, Allegheny County, Nos. 667, July Term, 1970 and 981, July Term, 1970.
Alan L. Ackerman, with him Frank J. Pohl, Michael R. Stabile, Jr., and Berkman, Ruslander, Pohl, Lieber & Engel, for appellant.
Sheldon L. Keyser, Assistant Allegheny County Solicitor, with him Francis A. Barry, Allegheny County Solicitor, Ralph Lynch, Pittsburgh City Solicitor, and Grace Harris, Assistant Pittsburgh City Solicitor, for appellee.
Bresci R. P. Leonard, with him Royston, Robb, Leonard, Edgecombe, Miller & Shorall, for intervenor.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Kramer.
This is an appeal from an Order and Opinion of the Court of Common Pleas of Allegheny County dismissing the appeals of Robert Morris College, appellant (Robert Morris) from two adverse decisions of the Board of Property Assessment, Appeals and Review of Allegheny County, appellee (Board). The Board denied the grant of appellant's requests for real estate tax exemption on property located in the second ward of the City of Pittsburgh (No. 819 C.D. 1971) and in Moon Township (No. 820 C.D. 1971). The desired exemptions affect tax liability commencing with the taxable
year 1968 and extend to the years thereafter. The appeals involving the realty at these two locations were consolidated for argument and disposition by both this Court and the lower court.
Robert Morris contends that owing to its non-profit corporate nature and its ongoing operation as an institution of higher learning (a college) entirely free from any private profit motive, in that no individual has any direct pecuniary interest in the revenues of the institution, it is entitled thereby to the constitutionally created, and legislatively implemented, real estate tax exemption granted to institutions of "purely public charity."
The record discloses that prior to 1962 the institution was a family-owned proprietary school. On March 20, 1962, it qualified as a Pennsylvania non-profit corporation operating under the name of "The Robert Morris School." On September 25, 1962, its Charter was amended for the purpose of changing its name to "Robert Morris Junior College" and empowering the college to grant associate degrees. On May 22, 1969, by virtue of additional amendments to the Charter and Articles, it became "Robert Morris College" empowered to grant degrees on the baccalaureate level. Pursuant to its 1969 Charter, it was authorized to operate as a college under the laws of the Commonwealth.
The statutes provide that a college must be a non-profit corporation and that it must further establish and maintain a protective endowment in the amount of $500,000 beyond all indebtedness and amounts invested in real and personal property. (Regulation 900, Department of Public Instruction, Bureau of Academic Standards and Services, and Non-Profit Corporation Law, Act of May 5, 1933, P.L. 289, 15 P.S. 7312) Robert Morris presently operates as an institution of higher learning duly certified by the Department of Public
Instruction of the Commonwealth. Accreditation by the Middle States Association of Colleges and Secondary Schools was achieved in 1968.
To facilitate a determination of the issues presented, it is necessary to have at hand a clear and concise picture of the fiscal history of the appellant college. The opinion of the court below sets forth an accurate narrative of those facts and we therefore adopt them and set them forth as follows:
"Prior to the incorporation of the appellant as a non-profit corporation, the Robert Morris School, a Pennsylvania corporation, along with three closely held associated corporations, conducted a proprietary school with J. R. McCartan, Sr., as its President and with other members of the McCartan family holding interests either in the Robert Morris School or in the closely held associated corporations known as the Beverly Cafeteria Company, The School Furniture, Inc., and R.M.S. Book Store. In 1962 the McCartans sold all of their stock in the aforementioned four corporations to the College, selling the school as a going business and it was this business which the College, upon its incorporation, continued to operate as 'The Robert Morris School.' The McCartans received $400,000.00 for their stock in the aforementioned four corporations, which corporations had no real estate holdings. In addition, the appellant assumed all of the liabilities of the McCartan corporations which approximated $385,000.00. A lease arrangement was also entered into between the appellant and Beverly Realty Company, a corporation whose stock was also owned by members of the McCartan family. Under this lease arrangement, the appellant rented the downtown center (Pittsburgh property) for approximately two years, during which time it paid a rental to the owner, Beverly Realty Company, of approximately $460,000.00, including utilities and taxes.
Subsequently, the appellant bought the stock in Beverly Realty Company, for which it paid the McCartans $239,000.00 and assumed corporate liabilities approximating $1,016,000.00. These obligations included a note payable to J. R. McCartan, Sr., in the amount of $38,000.00. J. R. McCartan, Sr., who had served as President of the proprietary Robert Morris School continued to serve as President of the successor-appellant from its incorporation until 1967. He also acted as Board Chairman until 1968. J. R. McCartan, Jr., also served on the Board from 1962 until 1968 and during the period of 1962-1963, he received $21,600.00 per year in salary. During his service with the College, J. R. McCartan, Jr., served as Financial Officer and for a time was a Vice President of the College. Beginning January 1, 1964, the appellants paid $6,000.00 per month to the J. R. McCartan Company under a management agreement. This arrangement continued until October 1, 1966. The College also purchased its Moon Township property from a third party in 1962 for a consideration of $650,000.00 and assumed an existing mortgage of $43,326.00. The consideration for the real estate and stock acquisitions by the College was obtained entirely through conventional financing, most of which was in the form of mortgages as well as ...