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                                  0          EXAS

                                 AUSTIN      aa. TEXAS



                                       March        8,   1957


Hon. William      J. Gillespie                Opinion       No.   WW-47
County Attorney
Lubbock    County                             Re:        Exemption     from ad valorem
Lubbock,    Texas                                        taxes of commercial      property
                                                         held in trust by the Board       of
                                                         Directors    of Texas  Technological
Dear    Mr.   Gillespie:                                 College   for student loan fund.

               You have requested          an opinion     of this office    on the above
captioned     subject   and have advised         us of the following       facts.      One -
tenth of an estate       was devised        to the Board      of Directors     of Texas
Technological      College     “as a revolving        trust fund to be loaned to
deserving      poor boys and girls         who may be endeavoring            to obtain their
education     in Texas     Technological       College     in Lubbock”.       On March        10,
1933, a Partitition       Order     was entered      by the 99th Judicial         District
Court partitioning       to the Board        of Directors      Lot 12, Block      134,
Original    Town of Lubbock,          to be used in accordance           with the bequest.
A deed to the Board conveying                an outstanding      19/128 interest       in the
property    was delivered        and recorded       in 1938.      The property       is
rented,   ‘and the Comptroller          of the College       has filed   an affidavit      with
the Tax Assessor-Collector              of Lubbock      County to the effect        that the
entire   net income      from     the property      has been used and is being used
in accordance       with the terms        of the trust.

              It is universally        recognized     that gifts to promote         education
constitute    charitable     gifts;   and it has been specifically         held     that a
gift in trust      to provide     loans    “to ambitious    and worthy     boys      and girls,
who are financially         unable to secure       an education      and would       otherwise
be deprived       thereof”    created     a charitable    trust.    Powers    v.     First  Nat.
Bank of Corsicana,          138 Tex.,      604, 161 S.W.Zd       273, 280, 281       (1942) and
authorities     cited therein.

               Since the property      in question    constitutes    the corpus     of a
ch,aritable    trust,  exe&ption     could only be accorded        under Section      7 of
Article     7150, enacted    in pursuance      to the constitutional     authorization
of Section     2 of Article    VIII to exempt      “institutions  of purely     public
charity”.      Section   7 reads    as follows:

                “Public   charities.    - All buildings    belonging    to
        institutions     of purely     public charity,   together    with
        the lands belonging          to and occupied    by such institu-
        tions not leased        or otherwise    used with a view to
        profit,    unless such rents and profits          and all moneys
        and credits      are appropriated      by such institutions
                                                                              . .    .




Hon.    William     J. Gillespie,      page    2 (WW-47)




        solely   to sustain    such institutions       and for the bene-
        fit of the sick and disabled         members        and their families
        and the burial of the same,           or for the maintenance         of
        persons     when unable to provide          for themselves,      whether
        such persons       are members       of such institutions       or not.
        An institution      of purely   public    charity    under this
        article   is one which dispenses          its aid to its members
        and others      in sickness    or distress,       or at death, without
        regard    to poverty    or riches      of the recipient,     also when
        the funds, property       and assets      of such institutions     are
        placed   and bound by its laws to relieve,             aid and
        administer      in any way to the relief         of its members      when
        in want, sickness       and distress,      and provide     homes for
        its helpless      and dependent    members         and to educate    and
        maintain     the orphans     of its deceased        members    or other
        persons.”

               The rule is well established                in this State that the property
exemption       granted    to “public       charities”      covers    only real property           and
the improvements          thereon       with a further        requisite     that the charity
must make an actual,             direct     and exclusive       use of the property            for
 charitable     purposes.        Property      actually     used for private        purposes       is
not exempted         even though the rental            income     arising     from    this private
 use may      go to charity.         Santa Rosa Infirmary            v. City of San Antonio,
Tex.Comm.App.,           259 S.W. 926 (1924); Masonic                 Temple      Ass’n     v. Amar-
 illo School     Dist.,   14 S.W.2d 128 (Tex.Civ.App.          1928, error       ref.);
 Benevolent      and Protective         Order      of Elks,    Lodge     151 v. The City of
Houston,      44 S.W.2d 488 (Tex.Civ.App.                1931, error       ref.);   City of
Longview       v. Markham         - McRee       Memorial       Hospital,      137 Tex. 178, 152
S.W.2d 1112 (1941); Markham             Hospital     v. City of Longview,            191 S.W.Zd
 695 (Tex.Civ.App.        1945, error         ref.);  Malone-Hogan          Hospital     Clinic
Foundation,       Inc., v. City of Big Spring,              288 S.W.Zd       550 (Tex.Civ.App.
‘1956, error       ref. n.r.e.).

           Under the facts    submitted    for our                consideration, no exemption
can be granted   in this case since     the charity                 does not make an actual,
direct and exclusive    use of the property    for                its charitable purposes.

                                           SUMMARY

               Rented     property   which is held by the Board      of
               Directors      of Texas   Technological   College in
               trust,   is not exempt     from   State and county ad
               valorem      taxes even though all the income      there-
               from    is being used as a student loan fund because
Hon.   William   J. Gillespie,   page   3 (WW-47)




             the charity   does not make an actual,   direct
             and exclusive    use of the property for
             charitable   purposes.

                                        Yours   very   truly,


                                        WILL     WILSON
                                        Attorney    General




APPROVED:

OPINION     COMMITTEE
H. Grady    Chandler, Chairman

MMP:   cs