North Syracuse Central School District v. New York State Division of Human Rights

OPINION OF THE COURT

Pigott, J.

At issue on these appeals is whether a public school district is an “education corporation or association” as contemplated by Executive Law § 296 (4). We conclude that it is not, and, therefore, the New York State Division of Human Rights (SDHR) lacks jurisdiction to investigate complaints against public school districts under that provision.

Procedural Background

The public school students in these proceedings filed complaints with the SDHR, claiming that their respective school districts engaged in an “unlawful discriminatory practice” under article 15 of the Executive Law (Executive Law § 290 et seq. [Human Rights Law]) by permitting their harassment on the basis of race and/or disability (Executive Law § 296 [4]).

Both school districts commenced a CPLR article 78 proceeding seeking a writ of prohibition barring the SDHR from investigating the complaints on the ground that a public school district is not an “education corporation or association” as contemplated by Executive Law § 296 (4). Supreme Court in Matter of North Syracuse Cent. School Dist. granted the petition on that ground; Supreme Court in Matter of Ithaca City School Dist. held otherwise, concluding that a school district is an “education corporation” that the SDHR could investigate.

*489At this point, the procedural paths of the appeals diverged. The SDHR appealed in the North Syracuse Cent. School Dist. matter, and the Appellate Division, Fourth Department, reversed, holding that the SDHR’s exercise of jurisdiction should have been challenged first during administrative review, not in a CPLR article 78 proceeding (83 AD3d 1472 [4th Dept 2011]).

The Ithaca City School District had withdrawn its appeal to the Appellate Division, Third Department. The parties proceeded to a hearing on the discrimination complaint before an administrative law judge, who concluded, among other things, that the district had permitted discriminatory conduct and awarded complainant and her mother $500,000 each. The Commissioner of Human Rights reduced each award to $200,000. The Ithaca City School District thereafter commenced a CPLR article 78 proceeding seeking vacatur and annulment of the SDHR’s determination.

Supreme Court annulled the SDHR’s determination, holding that it lacked the authority to hear and determine complaints against the district because a school district is not an “education corporation” under section 296 (4). The Appellate Division, Third Department, with one Justice dissenting, modified the mother’s award by reducing it to $50,000 and otherwise confirmed the determination. Relying on the legislative findings set forth in Executive Law § 290 (3) that the Human Rights Law was intended “to eliminate and prevent discrimination . . . in educational institutions,” the Appellate Division held that “public school districts are among the ‘educational institutions’ over which [the] SDHR has jurisdiction and that Executive Law § 296 (4) is the statutory mechanism by which it can seek to eliminate any discrimination by such school districts” (87 AD3d 268, 273 [3d Dept 2011]). This Court granted leave in both appeals.

Analysis

Executive Law § 296 (4) provides, in relevant part, that

“ [i]t shall be an unlawful discriminatory practice for an education corporation or association which holds itself out to the public to be non-sectarian and exempt from taxation pursuant to . . . [RPTL article 4] ... to permit the harassment of any student or applicant, by reason of his race . ... [or] disability” (emphasis supplied).

*490The parties acknowledge that there is no definition of “education corporation or association” in the Human Rights Law.

Given the absence of a definition, one Appellate Division looked to the General Construction Law for guidance (see Matter of East Meadow Union Free School Dist. v New York State Div. of Human Rights, 65 AD3d 1342, 1343 [2d Dept 2009] [holding that because a school district is a “municipal corporation” and therefore a “public corporation” under the General Construction Law, it could not be an “education corporation” within the meaning of Executive Law § 296 (4)]). That approach is a legitimate one given that the General Construction Law is “applicable to every statute unless its general object, or the context of the language construed, or other provisions of law indicate that a different meaning or application was intended” (General Construction Law § 110 [emphasis supplied]). On the other hand, application of the General Construction Law is problematic, however, because the provision at issue in the Executive Law was enacted 15 years prior to General Construction Law §§ 65 and 66—the provisions upon which the Appellate Division relied on in East Meadow Union Free School Dist.— and the SDHR, relying on the exceptions contained in General Construction Law § 110, contends that the Legislature never meant for those definitions to apply to Executive Law § 296 (4). We need not address whether the General Construction Law is applicable here, however, because there is independent basis, supported by legislative history, for our conclusion that a public school district is not an “education corporation or association.”

The SDHR asks this Court to adopt the Appellate Division’s rationale in Matter of Ithaca City School Dist. and liberally construe the “general purpose” of the Human Rights Law, which is to “eliminate and prevent discrimination ... in educational institutions” (Executive Law § 290 [3]), and conclude that a public school district is an “education corporation or association.” That argument, however, overlooks the basic premise that there must first be an underlying directive in the statute before this Court can apply such a construction. And it is evident from the legislative history that the term “education corporation or association,” the origins of which can be traced to the Tax Law, refers to only private, non-sectarian entities that are exempt from taxation under RPTL article 4.

The demarcation between tax exemption for public and certain private property dates back to 1896, when the Legislature enacted Tax Law § 4. That section expressly differentiated *491the tax-exempt status for “[pjroperty of a municipal corporation of the state held for a public use” (Tax Law § 4 [3], as added by L 1896, ch 908), i.e., school district property, from the tax-exempt status of

“[t]he real property of a corporation or association organized exclusively for the moral or mental improvement of men or women, or for religious, bible, tract, charitable, benevolent, missionary, hospital, infirmary, educational, public playground, scientific, literary, bar association, library, patriotic, historical or cemetery purposes, or for the enforcement of laws relating to children or animals, or two or more such purposes and used exclusively for carrying out thereupon one or more of such purposes” (Tax Law § 4 [7] [emphasis supplied]).

Subdivisions (3) and (7) of Tax Law § 4 plainly had different aims, with the latter addressing the tax-exempt status of private property ostensibly used to carry out a public purpose (see Problems Relating to Taxation and Finance, 1938 Report of New York State Constitutional Convention Committee, vol 10, at 198, 201-205). Indeed, the Legislature enacted Tax Law § 4 (7) to prohibit the granting of special real property tax exemptions to individual corporations, and to ensure that such corporations received such an exemption only if they used their property to provide a public service (id. at 201-205).

In 1933, the Legislature retained the language set forth in Tax Law § 4 (7), renamed it Tax Law § 4 (6) (L 1933, ch 470, § 3), and in 1935 added the following proviso: “No education corporation or association that holds itself out to the public to be non-sectarian and exempt from taxation pursuant to the provisions of this section shall deny the use of its facilities to any person otherwise qualified, by reason of his race, color or religion” (L 1935, ch 852, § 1 [emphasis supplied]). The language was added after the Legislature received a report from the New York State Commission for the Revision of Tax Laws (Tax Commission), which, in part, addressed tax exemptions for government-owned and privately-owned real property (1935 NY Legis Doc No. 62, at 35-59). The exemptions discussed in that report were embodied in Tax Law § 4 (id. at 40 n 15).

In its report, the Tax Commission observed that “[m]ost of the exemptions of privately owned real property resulted] from the enumeration and definition of specific public uses,” meaning *492that tax exemptions for private property were granted because the exempt property was being “used in doing what the government might otherwise be compelled to do, in fulfilling a responsibility which it has definitely undertaken,” or, what the Legislature deemed a “necessary public purpose” (1935 NY Legis Doc No. 62, at 44). Significantly, as relevant to this appeal, under the heading “Privately Owned Property Devoted to a Public Use,” the Tax Commission listed a number of private entities referenced in now-former Tax Law § 4 (6) (id. at 44-48 [emphasis supplied]). The similarities between the types of privately-owned exempt property delineated in the Tax Commission’s Report and Tax Law § 4 (6) are striking and hardly coincidental.

For instance, the Tax Commission, utilizing terms almost identical to those used in Tax Law § 4 (6), listed as tax-exempt the following private property owned by private organizations: religious property (“organized exclusively for religious, bible, tract, or missionary purposes, or for the moral or mental improvement of men or women”); charitable property (“owned by associations organized exclusively for charitable purposes”); fraternal and benevolent property (which “relieve[s] the state of part of its traditional burden of caring for the poor, aged, and helpless”); hospital property (which “protect[s]” the public health, “one of the most important of the necessary public purposes of the state”); occupational association property (property of “[h]ar association” and use of county fair grounds for agricultural exhibitions); and miscellaneous property (cemeteries and property owned by “patriotic” organizations) (compare Tax Law § 4 [6], with 1935 NY Legis Doc No. 62, at 44-48).

The most significant item demarcated in the Tax Commission’s list of private property subject to tax exemption was “[e]ducational [p]roperty,” to which the Tax Commission devoted an entire section (1935 NY Legis Doc No. 62, at 44). The Tax Commission noted that “[r]eal property owned by educational institutions is exempt only to the extent that the educational purpose is ‘exclusively’ carried out ‘thereupon,’ ” quoting from Tax Law § 4 (6) that “real property of a corporation or association organized exclusively for . . . educational . . . purposes” is tax exempt if “used exclusively for carrying out thereupon” such a purpose (1935 NY Legis Doc No. 62, at *49344).1 Indeed, it was acknowledged after the enactment of Tax Law § 4 (6) that “[w]ith the assumption by the public authority of the function of public education, the basis for the exemption of . . . non-profit making private institutions which carried an elementary and secondary educational work changed,” and the State “recognized . . . that [such] institutions were performing not merely a desirable public purpose but even a necessary one—a purpose which the government itself was serving” (Problems Relating to Taxation and Finance, 1938 Report of New York State Constitutional Convention Committee, vol 10, at 217). Because the government derived a benefit from the work of these institutions, i.e., it was relieved of the expense of providing education to students of private institutions, “[t]he least that the public authority could do as a recompense of the institutions for the services they were rendering and the money they were saving the authority was to free these institutions from taxation” (id.).

Given the foregoing, the “educational” property delineated in Tax Law § 4 (6) plainly referred to privately-owned property that was tax-exempt because it provided a public service; consequently, the use of the term “education corporation or association” in that same provision plainly referred to private, non-sectarian entities that owned “educational” property utilized for a public purpose. Although the corporations and associations delineated in Tax Law § 4 (6) provide different services, they share one thing in common: their property is privately owned and it is afforded tax-exempt status because those corporations or associations perform a public service that the government recognizes as worthy of special tax treatment (1935 NY Legis Doc No. 62, at 44-48).

In light of the legislative history surrounding the enactment of Tax Law § 4 (6), and given the circumstances under which the Legislature transferred the term “education corporation or association” from Tax Law § 4 (6) to Executive Law § 296 (4), we reject the SDHR’s assertion that “education corporation or association” applies to a public school district. In 1951, the *494Legislature created the State Commission Against Discrimination2 to “eliminate and prevent discrimination in employment because of race, creed, color or national origin” (Executive Law §§ 290, 293, as added by L 1951, ch 800 [emphasis supplied]). The following year the law was amended granting the State Commission the authority to also “eliminate and prevent discrimination ... in places of public accommodation, resort or amusement” (Executive Law § 290, as amended by L 1952, ch 285, § 1). As pertinent here, in 1958, the Legislature amended Executive Law § 296 (4) as follows:

“It shall be an unlawful discriminatory practice for an education corporation or association which holds itself out to the public to be non-sectarian and exempt from taxation pursuant to the . . . provisions of [RPTL article 4] to deny the use of its facilities to any person otherwise qualified, by reason of his race, color or religion” (L 1958, ch 960, § 23 [emphasis supplied]).

This language was taken almost verbatim from Tax Law § 4 (6).

The term “education corporation or association” is retained in Executive Law § 296 (4) to this day. The Human Rights Law is silent as to what constitutes an “education corporation or association,” but the fact that such language was taken directly from the Tax Law and moved to Executive Law § 296 (4) bespeaks the Legislature’s intention that the term was to have the same meaning in the Executive Law as it did in former Tax Law § 4 (6). Moreover, the use of the phrase “non-sectarian” was plainly included in Executive Law § 296 (4) to carve out an exception for parochial schools, while reserving for the SDHR the jurisdiction to investigate section 296 (4) complaints against private, non-sectarian education corporations or associations.

Public school districts are different from private, nonsectarian institutions and fall outside the purview of the SDHR’s jurisdiction relative to section 296 (4) claims. To be sure, school districts own tax-exempt property and serve a public purpose, but they do so as part of a public system, not a private one. And a public school district receives tax-exempt status by virtue of the fact that it is public, so there would never be any need for it to “hold[ ] itself out to the public to be non-sectarian” as, say, a private school.

*495The vicious attacks to which these students were subjected are deplorable, and our holding is not to be interpreted as indifference to their plight, since the merits of their underlying discrimination claims are not at issue on these appeals. Nor does our holding leave public school students without a remedy. In addition to potential remedies under federal law, public school students may file a complaint with the Commissioner of Education (see Education Law § 310). Moreover, in 2010, the Legislature enacted the “Dignity for All Students Act,” establishing article 2 of the Education Law, designed “to afford all [public school] students an environment free of any harassment that substantially interferes with their education, regardless of the basis of the harassment, and free of discrimination based on actual or perceived race, color, weight, national origin, ethnic group, religion, disability, sexual orientation, gender, or sex” (Sponsor’s Mem, Bill Jacket, L 2010, ch 482, at 21, 2010 McKinney’s Session Laws of NY, at 2051-2052; see also Education Law §§ 10-18 [eff July 1, 2012]). Although the SDHR lauded this legislation by acknowledging that it “addresses a myriad of harassment and discrimination issues that arise within a school context and its goals comport[ ] with the goals of the [Human Rights Law],” noticeably absent from its correspondence was any indication that it had previously handled similar claims of that nature arising in public schools (Letter from NY St Div of Human Rights, July 22, 2010, Bill Jacket, L 2010, ch 482, at 34).

Conclusion

Because a public school district is not an “education corporation or association” under Executive Law § 296 (4), the SDHR lacked jurisdiction to investigate the complaints filed by the students in these appeals.3

Accordingly, in Matter of North Syracuse Cent. School Dist., the order of the Appellate Division should be reversed, with costs, and the resettled judgment of Supreme Court reinstated. In Matter of Ithaca City School Dist., the order of the Appellate Division should be reversed, with costs, and the order of Supreme Court reinstated.

. The Tax Commission likewise stated that tax-exempt “[e]ducational [p]roperty” also included “[p]roperty belonging to associations organized for scientific, literary, public playground and library purposes” (compare 1935 NY Legis Doc No. 62, at 44, with Tax Law § 4 [6]). Such language distinctly tracks the language of Tax Law § 4 (6) as it existed in 1935, and such associations were plainly meant to be included as “education . . . association^].”

. This name was changed to the New York State Division of Human Rights in 1968.

. Given our holding, we do not address the separate jurisdictional issue raised by the North Syracuse Central School District that the Appellate Division erred in concluding that it should have exhausted its administrative remedies before commencing its CPLR article 78 proceeding.