Barnes Hospital v. Collector of Revenue 646 S.W.2d 889 (Mo. Ct. App. 1983) Pudlowski, J. This appeal by Barnes Hospital involves taxation of Queeny Tower, a 17-story building connected to, used and owned by Barnes Hospital for the tax-exempt purposes of treating patients and providing them with care d services.an Washington University Medical School, whose teaching facilities are located within the Barnes Hospital complex and whose faculty members comprise the medical staff of the hospital, leases Queeny Tower from Barnes. The part-time faculty subleases offices in Queeny Tower from Washington University for use in their private practice as well as for use in their teaching, research and Barnes Hospital functions. . . .
The sole question raised is whether property owned by a tax exempt hospital and leased to the medical school for use by its faculty may be taxed where its part-time faculty members, also engaged in limited private practice, maintain their offices therein. . . . The first prerequisite for exemption is that the property be used exclusively for charitable purposes. Nowhere in its decision did the Missouri Supreme Court define the meaning of the statutory words used exclusively or purposes. Thus, the initial proviso of the qualification articulated first in Franciscan, the statutory phrase used exclusively, must be examined. The phrase could mean solely or entirely in its narrowest sense. We do not construe it in that sense. . . . . . . The statutory phrase used exclusively has reference to the primary and inherent use as against a mere secondary and incidental use. Our courts since Barnes have continued their reliance and acceptance of this definition. . . . The policy underlying the statute is to encourage charitable organizations. The meaning we attach to the language of the statute accords with the mandate in Barnes. Although it is the general rule that constitutional provisions exempting property are to be strictly construed, such provisions, though not subject to extension by construction or implication, are to be given a reasonable, natural and practical interpretation in light of modern conditions in order to effectuate the purpose for which the exemption is granted. . . .
For the foregoing reasons, the judgment of the trial court is reversed and the cause remanded with directions that the decree of August 24, 1978, remain in full force and effect and that appellants questioned property be removed from the tax rolls of St. Louis City and the City Collector be prohibited from levying tax or compelling payment thereon. All concur. Discussion Questions 1. How can the Greater Anchorage (Alaska) and Barnes Hospital (Missouri) courts take two nearly identical tax laws, apply them to situations with virtually identical facts, and arrive at opposite conclusions? Are their decisions fair? Chapter 12: Taxation of Healthcare Institutions 459 2. Which of the two interpretations do you find more persuasive? 3.
Would Barnes Hospital have been decided differently if the property in question had been owned by a for-profit company but leased to the hospital for the same purposes? 4. What if a parking garage with daily or hourly fees and used by employees, patients, families, and visitors were located on a parcel of land owned by and adjacent to the hospital property? Would that use be exempt in Alaska or Missouri? Would it matter who accrued the revenue from the parking garage or what fees were charged? Does your answer change if the garage could also be used by patrons of local businesses that are not related to the hospital? 3 sources per question.

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