People ex rel. Attorney General v. Michigan Sanitarium & Benevolent Ass'n

115 N.W. 423, 151 Mich. 452, 1908 Mich. LEXIS 621
CourtMichigan Supreme Court
DecidedMarch 17, 1908
DocketDocket No. 36
StatusPublished
Cited by7 cases

This text of 115 N.W. 423 (People ex rel. Attorney General v. Michigan Sanitarium & Benevolent Ass'n) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People ex rel. Attorney General v. Michigan Sanitarium & Benevolent Ass'n, 115 N.W. 423, 151 Mich. 452, 1908 Mich. LEXIS 621 (Mich. 1908).

Opinion

Moore, J.

This is a certiorari proceeding to review the action of the circuit judge in overruling a demurrer to an information in the nature of a quo warranto. The following statement as to what is contained in the information is taken from the brief of one of the counsel for relator. It alleges:

“That on the 6th day of July, 1898, articles of association pursuant to, and in accordance with, provisions of Act No. 242 of the Public Acts of 1863, entitled An act for the incorporation of hospitals and asylums in cases where valuable grants or emoluments have been made to trustees for such purposes,’ and the acts amendatory thereto and supplemental thereof, were duly filed and recorded in the office of the secretary of this State by and at the instance of certain persons as incorporators, and said incorporators thereby formed .themselves into a corporate body pursuant to the act above mentioned, under the name of the Michigan Sanitarium & Benevolent Association, having its principal place of business at Battle Creek, Michigan; that the purposes of said alleged corporation were:

“ ‘To found a hospital or charitable asylum within the State of Michigan for the care and relief of indigent or other sick or infirm persons, at which institution may be received also patients and patrons who are able to and do pay for the benefits there received, and which institution shall devote the funds and property acquired and received by it from time to time from all sources exclusively to maintaining itself, improving its condition and facilities, extending its benefits and usefulness, and facilitating and promoting its purposes by such sanitary, dietetic, hygienic and philanthropic reforms and efforts as are germane or auxiliary thereto; all of its [454]*454said purposes being undenominational, unsectarian, philanthropic, humanitarian, charitable and benevolent, and in no manner, directly or indirectly, for private profit or dividend paying to any one.’

“That while said association formed under the said statute, and while operating and Conducting a charitable hospital and asylum to the extent of administering said trust, the building and grounds upon which it stands, while occupied for the objects and purposes specified, are exempt from taxation; that said association claims that all of its buildings and grounds and personal property are exempt from taxation, though the same is greatly in excess of that which is necessary for the administering of said trust, and said corporation has refused, and still refuses to pay the taxes levied upon its property by the assessor of the city of Battle Creek, covering the State, county, city and school taxes; that said corporation has ever since its organization exercised, and now exercises, certain franchises and privileges not conferred upon it by law and in violation of the act under which it is formed, and under its articles of association; that while claiming to maintain and operate a so-called charitable hospital said corporation has a thoroughly equipped sanitarium, ánd is patronized almost exclusively by patients abundantly able to pay for the care and treatment received; that said institution is not. conducted solely nor chiefly as a charitable institution, as is contemplated and required by the statute under which it is organized; that the charity claimed to be extended by such association, except in rare cases, is not to needy and worthy indigents, but consists in discounts and favors to those able to pay for the care and treatment received; that a majority of' the so-called charity patients are nonresidents of this State, in violation of the provisions of the statute under which said association is organized; that while said association claims to pay no dividends to its stockholders, yet as a matter of fact, it purchases its supplies largely from corporations and associations composed wholly or principally of the officers and managers of the association, and thereby such officers and managers derive and receive large befiefits and profits, contrary to the intent of the statute under which it is organized, and while said association claims to be undenominational and unsectarian, yet it makes discriminations in favor of certain patients by'reason of their affiliation with certain sects or religious [455]*455organizations, and for otller improper and unlawful reasons ; that prices charged by said association to its patients are not uniform and just, as contemplated and required by law, the prices charged some of its patrons being unjustly exorbitant, while others, financially able to pay for care and treatment, are cared for and treated without charge, or at a discount; that said association is not properly and lawfully administering the trust under which it claims to be operating, and in fact it has incurred indebtedness to the extent of several hundred thousand dollars, which it has attempted to secure by a lien in the way of a mortgage upon its property.

“The information further sets forth the manner in which the property was acquired by the present association from a former corporation known as the Health Reform Institute, which institution was before the formation of the present association carrying on the same business and at the same place as the present association is carrying on, and was formed under a statute of the State, but not formed under the statute which exempted it from taxation ; and that when the present association was formed by certain persons pretending to denote the aggregate sum of $7,000 to certain trustees for the purpose of founding the present association, and the property which was turned over to it by the Health Reform Institution is greater than said $7,000 mentioned; that the Health Reform Institute being formed under another statute of the State made no claim that its property either real or persona] was exempt from taxation, although it extended just as much charity as is extended by the present association.

“ The information further states that while the present association, respondent, purports and claims to have been formed under the statutes of this State, for the purpose of establishing a charitable hospital, it was not, in fact, formed for any such purpose, but was formed, and since its formation has been carrying on its business for the purposes of profit, and not for the purposes of charity and benevolence; and that while purporting and assuming to be a charitable institution does so principally for the purpose of withdrawing or shielding its property from taxation, and for the purpose of accumulating a large amount of property to be held free from taxation; that its general manager is Dr. John H. Kellogg, and his assistant is William K. Kellogg, said’two persons having charge and [456]*456control mainly of the management of the affairs and financial business of the institution; and that a great amount of the provisions and supplies of said respondent are caused by the said John H. and William K. Kellogg to be purchased of certain corporations and associations in which the said two named persons are. large stockholders, and the said corporations and associations are named in said petition; that said purchases of provisions and supplies from said corporations and associations are made by respondent at such high prices that a large amount of profits arise thereon to said corporations and associations from which said purchases are made, and these profits are divided among the stockholders of said corporations, a considerable amount of which is received by the said J ohn H. and William K.

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Cite This Page — Counsel Stack

Bluebook (online)
115 N.W. 423, 151 Mich. 452, 1908 Mich. LEXIS 621, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-ex-rel-attorney-general-v-michigan-sanitarium-benevolent-assn-mich-1908.