                               The Attorney            General of Texas
                                                    A?:cil16, 1986
JIM MATTOX
Attorney General


Supreme Court Building         Booorable John B. 'L~lmes,Jr.             Opinion No. m-477
P. 0. BOX 12548                District Attoruay
AUSTIN,
     TX. 7871v254a             201 Fauuin, Suite 200                     Re: Construction of article
512,475-2501
                               Houston, Texas   77002                    1396-2.23A(E)(4), V.T.C.S.
TAX    9io/a74-1387
Teleco~ler   512/4750288
                               Dear Mr.   Holmes:
714 Jackson, Suite 700              In your letter you tell us that a reporter for the Houston Fact
Dallas. TX. 75202.4506
2141742.8944
                               requested access to certain financial records of the Eethodist
                               Hospital in Houston pursuant to article 1396-2.23A. V.T.C.S. The
                               hospital refused the reporter's request, and the reporter asked your
4824 Alberta Ave., Suite la0   office to proseculx! the hospital pursuant to article 1396-2.238(D).
El Paso, TX. 79905.2793        You have asked our opinion about the construction of several different
9151533-3484
                               clauses in article 1396-2.23A.

1001 Texas, Suite 700               The Texas Non-l?sofitCorporation Act provides:
Houston, TX. 77Oil2G3111
7i3223.5886                                  C. All records, books, and annual reports of
                                          the fimxcial activity of the corporation shall be
                                          kept at the registered office or principal office
808 Broadway. Suite 312
Lubbock, TX. 79401.3479                   of the corporation in this state for at least
8081747.5238                              three yeaxs after the closing of each fiscal year
                                          and sha1.l.be available to the public for in-
                                          spection and copying there during normal business
4309 N. Tenth, Suite S
McAllen, TX. 78501-1685
                                          hours. The corporation may charge for the reasou-
5121882.4547                              able expanse of preparing a copy of a record or
                                          report.
200 Main Plaza, Suite 400
San Antonio, TX. 782052797
                                             D. A corporation that fails to maintain
51212254191
                                          financial records, prepare an annual report, or
                                          make a f:lnancialrecord or annual report available
                                          to the :?nblic in the manner prescribed by this
An Equal Opportunity/                     article :Lsguilty of a Class B misdemeanor.
Affirmative Action Employer

                               Art. 1396-2.238(C), (D). Certain types of nonprofit corporations,
                               however, are excluded from the requirements of those provisions,
                               including

                                          religiow institutions which shall be limited to
                                          churches, ecclesiastical or denominational organi-
                                          zations, or other established physical places for



                                                         p. 2182
Honorable John B. Holmes, Jr. - Page 2 (JM-477)




         worship at which religious services are the
         primary activity and such activities are regularly
         conducted.

Art. 1396-2.238(E)(4).

     Methodist Hospital relied on the exemption for religious institu-
tions in refusing to grant the reporter's request for access to
financial records. In your'opinion, Methodist Hospital is reading the
exemption for religious institutions too broadly. Consequently, you
ask what type of nonprc,fit corporations are exempt under that
provision and whether Metbodist Hospital is within the scope of the
lxaxption.
     The language of the exemption for religicus institutiors raises
problems of statutory construction. Religious institutions exempted
under article 1396-2.238('S)(4), are limited to (1) churches; (2)
ecclesiastical or dcnomiuat~.onalorganizations; and (3) other csta-
bllshed physical places fm worship at which religious services are
the primary activity and st.chactivities sre regularly conducted. The
ordinary reading of the word "other" in the third category would
require a construction o:I both "churches" and "ecclesiastical or
denominational organizations" that would limit those categories to
"established physical placc!sfor worship." That construction does not
create a particular problem in regard to the category "churches." It
does, however, put a troul~llesoma limitation ou the category "eccle-
siastical or denominationa3.organizations."

     A brief submitted to us ou behalf of Methodist Hospital points
out that such a reading of "ecclesiastical or denominational organiza-
tious" would exclude the typical denominational organization.
Webster's Ninth New Collegiate Dictionary defines "denowinaticn~ as a
"religious organization uniting in a single legal and administrative
body a number of local congregations." Such au organization is
usually not itself an "estrblished physical place for worship," but it
usually'guides and supports worship services at other places. We
think that by using the category "ecclesiastical or denominational
organizations" the legislature clearly intended such organizations to
coma within the scope of the exemption for religious institutions.
The goal of statutory construction is to ascertain the inteotion of
the legislature. State v. Terrell, 588 S.W.2d 784, 786 (Tex. 1979).
To achieve the obvious legjyilativeintent, the exemption for religious
institutions must be give%. a construction somewhat broader than the
one required by strict gramatical construction. See State v. Terre11
(if legislative intent is clear, it must he fosed         even .if the
strict lauguage of the statute is not entirely consistent with that
intent).




                             p. 2183
--   Honorable John B. Holmes, Jr. - Page 3   (m-477)




          me brick submitted l'o us on behalf of Methodist Bospital en-
     courages a construction XE the exemption for "ecclesiastical or
     denominational organizatime"     that would include any nonprofit
     corporation "relating to" a religious institution. We do cot think
     that the legislature intended the exemption to be so broad.

          All the words in a provision should be considered in attempting
     to ascertain legislative Yntent. State v. Terrell, 588 S.W.2d 784
     (Tex. 1979). Although the phrase -ecclesiastical or de=ou&mtional
     organizations" Is vague, a reading of article 1396-2.238(E)(4) in its
     entirety makes clear that the legislature intended the exenptiolrfor
     religious institutions to te a narrow one. The phrase "ecclesiastical
     or denominatiooal organizations” appaars after the instruction that
     the definition of religioullinstitution "shall be limited to" certain
     things. The category "ecclesiastical or der;ominatior,slorganizations"
     is sandwiched between twz other categories that are limited tc
     nonprofit corporations whore primary function is to provide, guide, or
     further religious worship.    In other words, those categories are
     limited tc entities whose primary function is spiritual. Tbe phrase
     "ecclesiastical or denominilt:ional
                                       organizaclons" must be read in that
     context. Cf. Tax Code 511.20 (defining "religious organization" as
     one "organized and operated primarily for the purpose of engaging in
     religious worship or promot,lngthr spiritual development or well-being
     of individuals").

          Therefore, we think l%at the legislature intended the category
     "ecclesiastical or denominational organizations" to include only
     nonprofit corporations whoric:
                                  primary function is to provide, guide, or
     further religious worship e:ervices. The exemption was not intended
     for a nonprofit corporation that merely has an organizational connec-
     tion with a religious institution, or that has a chapel on its
     premises if the main funci:ionof the nonprofit corporation is some-
     thing other than providing, guiding, or furthering religious worship.
     Whether any particular nonprofit corporation comes within the exemp-
     tion in article 1396-2.23A(!E)(4)is a question of fact, which we are
     unable to decide, but it j..shighly unlikely that a hospital would be
     within the exemption.

          Your second questio:l is whether the records the reporter
     requested are available to the public under article 1396-2.23A. The
     reporter asked for access 1:~~
                                  the following information:

               all bank certif,Lcates of deposit purchased and
               sold by The Methodist Eospital in the last three
               years [including] the name of the bank where the
               CD's were bought, the date purchased, and the
               interest rate ar.d maturity of each CD . . . all
               land and equity transactions by The Methodist
               Flospital for t'Re last three    years . . . all




                                  p. 2184
Honorable John B. Holmes, Jr. - Page 4 (~~-477)




         expenses paid fcr work performed on or in the
         homes and residences of private individuals which
         was paid for by The Methodist Hospital . . . all
         expenses related t,o the Delhomme Conference Center
         paid for by The Methodist Hospital for the last
         three years . . . all loans and advances to
         physicians made by The Methodist Hospital for the
         last three years [including] the terms of the
         loans and advances . . . all minutes of hoard
         meetings regarding the financial activity of The
         Methodist Hospital for the last three years . . .
         [and1 all expenditures made by The Methodist
         Bospital for char,itablemedical care performed at
         The Methodist Hospital.

    The relevant sections of article 1396-2.238 provide:

            A. A corporation shall maintain current true
         and accurate financial records with full and
         correct entries made with respect to all financial
         transactions of the corporation, including all
         income and expenditures, in accordance with
         generally accepted accounting practices.

            B. Based on these records, the board of
         directors or trustees shell annually prepare or
         approve a report of the financial activity of the
         corporation for the preceding year. The report
         must conform to accounting standards as promul-
         gated by the American Institute of Certified
         Public Accountants and must include a statement of
         support, revenue, and expenses and changes in fund
         balances, a statement of functional expenses, and
         balance sheets for all funds.

            C. All records;,books, and annual reports of
         the financial activity of the corporation shall be
         kept at the registered office or principal office
         of the corporation in this state for at least
         three years after the closing of each fiscal year
         and shall he awilable to the public for in-
         spection and copying there during normal business
         hours. The corporation may charge for the reason-
         able expense of preparing a copy of a record or
         report.

            D. A corporation that fails to maintain
         financial record:%, prepare an annual report, or
         make a financial record or anruralreport available




                                p. 2185
Honorable John B. Holmes, L'r.-.Page 5      (JM-477)




           to the public i,x the n-amer prescribed by this
           article is guilt) of a Class F tiedemeanor.

     These provisions make clear that a nonprofit corporation that is
not exempt from the provisions of article 1396-2.23A must keep records
of all its financial transxtions and that it must make those records
available to the public. Most of the records the reporter requested
are clearly records of f::nancial transactions. Whether particular
portions of minutes constl.tutefinancial records is a fact question
that we cannot answer. Aho, the reporter's request for records of
all expenditures made for tbaritable medical care might pose problems.
A hospital presumably pro\%des charitable medical care by providing
treatment without expectation of payment. We cannot       say  whether
generally accepted accountLng principles would require a hospital to
keep a finaccial record of any such transaction. That is a question
of fact, which we cannot answer. Also, we do not address potential
conflicts that might arise between this statute and la& m&lug
certain records confidentic.1.

                                SUMNARY

              The ~exemption,for religious institutions in
           article 1396-2.23A(E)(4), V.T.C.S., applies only
           to nonprofit corporations whose primary purpose is
           to provide, guide!,or further religibus worship.




                                          Ll hfdl2.w
                                           Very truly your ,
                                                  .
                                                w
                                           JIM     MATTOX
                                           Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney Gtizvral

MARY KELLER
Executive Assistant Attonwy     General

ROBERT GRAY
Special Assistant   Attorney   General

RICK GILPIN
Chairman, Opinion Committee:

Prepared by Sarah Woelk
Assistant Attorney General




                                 p. 2186
