122. Prairie Du Chien Sanitarium Co. v.

City of Prairie Du Chien

FACTS: Action begun September 18, 1941, by the Prairie du Chien Sanitarium Company, Inc., against the city of Prairie
du Chien to recover taxes paid under protest.

The plaintiff, successor to a private corporation, was reorganized and incorporated in 1940 under ch. 180, Stats., to
maintain a hospital and sanitarium. The property was acquired from its predecessor by purchase. The doctors receive no
salaries from the hospital but they are provided with heated, unfurnished offices in the hospital rent free and one meal a
day. They use all the facilities of the hospital without paying. In return they supervise the hospital and its personnel
without compensation. The hospital cares for county and municipal patients for a contract price which is less than cost.
These patients comprise about thirty per cent of the total and are treated by Dr. Sattot and Dr. Dessloch without charge.
The other patients in the hospital are the private patients of these two doctors and other doctors. They are charged at
regular rates, though about ten per cent of the total number of all accounts are not collected. The patients of Dr. Satter
and Dr. Dessloch pay the hospital a fee for the use of the operating room, and they are billed by the doctors for their
services. The hospital allegedly takes all patients applying for admittance except mental cases and people suffering from
contagious diseases. Except for the two medical directors, all of the employees of the hospital are paid regular wages.

Appellant paid the personal property and real-estate taxes under protest and sues to recover them, alleging that it is
exempt under sec. 70.11(4), Stats., as a "benevolent association."

ISSUE: W/N the hospital, in this case, is a benevolent association

RULING: NO. The admission of pay patients does not detract from the charitable character of a hospital if all its funds
are devoted exclusively to the maintenance of the institution as a public charity. Where rendering charity is its
primary object, and the funds derived from payments made by patients able to pay are devoted to the benevolent
purposes of the institution, the mere fact that profit has been made will not deprive the hospital of its benevolent
character.

However, in this case, an association or corporation claiming to be benevolent, in order to qualify its property for
exemption from taxation, must use it so free from connection with profits accruing to those owning it as clearly to be a
charitable institution. Hence the personal property, grounds, and buildings of a hospital are not exempt when members
of the owner association are using the hospital as an adjunct to their private business in such a way that it becomes a
source of substantial help in the matter of earnings to be derived from the practice of their profession. Even if we
assume that the hospital is a benevolent association, the property is used as much to advance the individual fortunes of
the surgeons who manage it as it is for charitable purposes. There can be little doubt that the hospital is maintained
primarily for the greater convenience and profit of the managing doctors in the practice of their profession. The doctors
may, and under their management and control of the hospital did, give without recovering pay therefor of their time
and skill in caring for people who did not pay for such care, but by reason of the use of the hospital in relation to their
private practice the benefits extended were those of the doctors and not a contribution to public welfare by a
benevolent association.