SERRA RETREAT v. LOS ANGELES COUNTY (1949)

Plaintiff Serra Retreat is a California religious corporation organized, owned and operated exclusively for religious and charitable purposes, and not for profit; no part of its net earnings, if any there be, inures to the benefit of any person or individual. It has been duly exempted from rederal and state income, corporation, franchise, gift, estate, inheritance, social security and unemployment insurance taxes. Plaintiff, as owner and operator, is qualified for welfare exemptions from taxation pursuant to the provisions of sections 214, 251, 254, 254.5 and 259.5 of the Revenue and Taxation Code of the State of California.

All of the property, a single edifice known as Serra Retreat, described in plaintiff's complaint, is used exclusively for religious and charitable purposes, and not for the profit or gain of any person, and has been irrevocably dedicated to such uses.

In addition to recognizing plaintiff's qualifications for welfare tax exemption, defendant has granted such exemption to 78% of the property described in the complaint. Defendant has denied welfare exemption to 22% of plaintiff's property on the ground that this portion of the property involved herein is used to house four Franciscan priests who conduct the retreats and six lay brothers who do the necessary housekeeping, laundry, gardening and maintenance work.

Plaintiff's complaint alleged that the property here in question is operated ‘for the sole and exclusive purpose of dispensing charity and providing a place of religious reflection to which all persons regardless of race, color or creed may come to spend time in religious reflection and meditation, and to make a layman's religious Retreat for the purpose of giving spiritual benefits and improvement of character to those using said institution; a layman's Retreat lasts for fifty (50) hours, during which time absolute silence is kept by the laymen making the Retreat, and religious exercises and instructions are conducted by the Franciscan Fathers; said retreats are regularly given over weekends and at various times during the week.

‘That said Retreat House is open to the public at any and all times for use as a place of religious worship and meditation.’

Following an allegation of the daily schedule maintained by retreatants, the complaint further alleged:

‘That during the Retreats it is required as part of the religious activity that all retreatants remain constantly on the property, without radios, newspapers, telephone calls or visitors, and that they keep complete and absolute silence so as to be able to meditate upon the religious instructions and exercises without distraction or interruption; that the presence of all retreatants upon the property and the maintaining of strict silence by them constantly during the Retreat is essential to and an integral part of the Retreat.

‘No charge, stipend or fee is asked, made or collected for the use of said institution or for the board and room received by anyone desiring to use the same; said institution is supported entirely by voluntary, confidential offerings.’

Serra Retreat consists of a two-story and basement building with housing accommodations for fifty-five lay retreatants, four Roman Catholic Franciscan priests and six Franciscan lay brothers, in addition to chapel, library, kitchen, dining room, laundry and service quarters.

Plaintiff corporation paid the tax levied on the foregoing 22% of its property and commenced the instant action for refund thereof, alleging that the presence of priests and lay brothers is essential and incidental to the operation of the Retreat House. Defendant filed a demurrer on the ground that plaintiff's complaint failed to state facts sufficient to constitute a cause of action. The demurrer was overruled. From the judgment thereafter entered, defendant prosecutes this appeal.

This case is a companion case to those involving a similar question in regard to the exemption of housing of personnel of various hospitals, in which cases we have this day filed an opinion. Pasadena Hospital Ass'n v. Los Angeles County, 206 P.2d 936.

The sole question involved in this appeal is whether that portion of the property owned by a religious institution and used to house the foregoing priests and lay brothers is entitled to the welfare exemption. Const.Calif., Art. XIII, sec. 1c; Rev. & Tax.Code, sec. 214.

We are persuaded that the reasons actuating us to hold in the foregoing hospital cases that nurses' training schools and nurses' homes were of such nature and character as to be identical with the nature and character of the hospital, and therefore must be held as being used exclusively for hospital purposes and exempt under the welfare exemption, require us to hold in the instant case that the presence on the property of respondent of the priests and lay brothers is, under the allegations of the complaint, essential, indispensable and necessary to the conduct and operation of the religious and charitable activities of Serra Retreat.

The complaint alleges as a fact, and not as a conclusion of law, and it must therefore be accepted on demurrer as true, that none of the above mentioned priests or lay brothers receive any remuneration whatsoever for their services except room, board and maintenance, and that all work under a vow of poverty.

Appellant's contention that the welfare exemption law must be strictly construed was answered by us in the foregoing hospital cases, wherein we held, in substance, that the rule of strict construction should never be applied to the exclusion of the rule of reasonableness, or so as to render the exempting language so narrow and restricted as to defeat the apparent legislative intent. The general terms in a statute will be limited in their scope to avoid an interpretation which leads to injustice, oppression and absurd consequences.

The exemption of property used exclusively for religious purposes, like the exemption of property used exclusively for nonprofit charitable hospitals, is grounded on sound legal principles and the truly American philosophy of government.

As was said by the court in State ex rel. Eveland v. Erickson, 44 S.D 63, 182 N.W. 315, 316, 13 A.L.R. 1189, 191:

‘Thus we see how, during the whole history of our nation, religion and education have been recognized as the foundation pillars of American civilization. We question whether the rule of strict construction should ahve any place in determining the intention of those who framed and who adopted those provisions of our Constitution relating to exemptions of property used for religious or educational purposes; it would almost seem to us that, in the light of the other provisions to which we have referred, it might well be held that a liberal rather than a strict construction should be applied to our constitutional and statutory provisions in relation to exemption from taxation of property used for school and religious purposes. But, even if the rule of strict construction is to be adhered to, yet, as was said by the court in State ex rel. [Spillers] v. Johnston, 214 Mo. 656, 113 S.W. 1083, 21 L.R.A., N.S., 171: ‘Strict construction must still be a reasonable construction, the product of right and clear thinking, or else reason is no longer the life of the law. * * * In getting at the meaning of the constitutional and statutory exemptions, courts, while applying the rules of strict construction, yet take the road the guidepost of common sense points.’'

In support of its contention that the portion of the property herein used for housing the prests and lay brothers is not within the welfare exemption, appellant directs our attention to many cases, but practically all of them involve the question of whether church rectories and parsonages are exempt under statutes exempting buildings used exclusively as places of worship. We are not here concerned with the interpretation of constitutional provisions granting exemption to churches, such as section 1 1/212, Article XIII, of the Constitution of California. It is noteworthy that the California constitutional provision exempting churches from taxation speaks of buildings and property used solely and exclusively for religious worship, while the welfare exemption statute now before us speaks of property used exclusively for religious purposes. In construing exemption statutes it is easy to fall into error through a consideration of the mere use as distinguished and disconnected from the purpose of the use of the property. Thus, the primary uses of a church edifice and a rectory or parsonage, when considered without reference to the purposes with which such uses may be connected, may be the same, and yet the primary purposes lying back of such uses may be entirely different. In the church exemption constitutional and statutory cases relied upon by appellant, relating to rectories and parsonages, the primary purpose of the uses to which the property was put was the housing of the pastor or the minister and his family, and the exemptions were sought under statutes which exempted only places used for public worship.

However, in the case now engaging our attention, both the primary use and the purpose of the entire building is entirely and exclusively religious. Appellant's action in exempting 78% of the property amounts to a concession that the primary purpose and use of the institution in question is exclusively religious. The admitted allegations of respondent's complaint explicitly show that the presence on the property of the priests and lay brothers is absolutely necessary to effectuate the primary purpose and use of the property to conduct the retreat, during the progress of which the physical and temporal needs of the retreatants are cared for as well as their spiritual needs. In other words, without the priests and lay brothers being on the property it would not be a retreat house. The presence of the priests and lay brothers on the property here in question is not at all comparable or analogous to the residence of a church pastor or minister in a rectory or parsonage.

It should also be remembered that, as a prerequisite to securing the welfare exemption from taxes, respondent was first required to and did in fact irrevocably dedicate to religious and charitbale uses all (not merely 78%) of the property for which the exemption is sought.

Under the rule that it is the primary purpose to which property is put that determines whether it is exempt from taxation, exemption is not to be denied when, as here, the property is devoted primarily to a religious purpose, and where, in order to realize and implement that primary purpose, it may be used in part for another purpose. People v. Jessamine Withers Home, 312 Ill. 136, 143 N.E. 414, 34 A.L.R. 628; School of Domestic Arts & Science v. Carr, 322 Ill. 562, 153 N.E. 669.

It therefore follows that since respondent's entire property has been irrevocably dedicated to religious and charitable purpose, and is devoted in its entirety exclusively to religious purposes, it is entitled to 100% welfare exemption, and the trial court was correct in overruling appellant's general demurrer.

The judgment is affirmed.

WHITE, Presiding Justice.

DORAN, J., concurs. (DRAPEAU, J., did not participate. DOOLING, J., assigned, deeming himself disqualified, did not participate.)