State Board of Equalization & Assessment v. Kerwick

*302Staley, Jr., J. (concurring in part and dissenting in part).

I concur in the affirmance of the judgment entered July 14, 1977, and concur in the reversal of the judgment entered March 23, 1979, only to the extent that it restores the real property exemptions for the year 1977 to the taxable portion of the assessment roll for that year.

I dissent from the majority opinion, and I recommend affirmance of the judgment entered April 25, 1978 and the judgment entered July 14, 1978.1 am unable to agree with the majority’s interpretation of article 2 of the Real Property Tax Law, concluding that SBEA’s power is limited to acting as a procedural oversight agency, that SBEA is prohibited from becoming an active participant in local assessment procedures, and that the exclusive remedy is pursuant to article 7 of the Real Property Tax Law.

The State Board of Equalization and Assessment was created by section 200 of the Real Property Tax Law as part of the Executive Department. Section 202 of the Real Property Tax Law provides for the powers and duties of the State board. Subdivision 1 of section 202 provides that the board, among other things, shall:

"(e) Have general supervision of the function of assessing throughout the state * * *
"(g) Furnish assessors with such information and instructions as may be necessary or proper to aid them in making assessments, which instructions shall be followed and compliance with which may be enforced by the board”.

Subdivision 2 of section 216 of the Real Property Tax Law provides, relative to SBEA, as follows: "Whenever it appears to the satisfaction of the board that any assessor or other public officer or employee whose duties relate to assessments has failed to comply with the provisions of this chapter or any other law relating to such duties, or the rules and regulations of the board made pursuant thereto, after a hearing on the facts, the board may issue its order directing such assessor, officer or employee to comply with such law, rule or regulation, and if such assessor, officer or employee shall neglect or refuse to comply therewith within the period of ten days after service on him of such order, the board may apply to a justice of the supreme court for a summary order to compel him to comply with such law, rule or regulation, and the justice shall have power to issue such order.”

In April, 1977, SBEA issued to all town assessors in the *303State of New York a memorandum of instruction concerning the status of the Universal Life Church.

In May, 1977, Robert Kerwick, Assessor of the Town of Hardenburgh, was served with a subpoena and a subpoena duces tecum for his attendance with certain books and records at a hearing before the SBEA. The subpoenas were issued pursuant to section 204 of the Real Property Tax Law. SBEA had commenced an investigation into exemptions from real property taxation that Mr. Kerwick and the other assessors had granted to individuals affiliated with the Universal Life Church, or its affiliated organizations.

The issuance of the subpoena and subpoena duces tecum was based upon SBEA’s belief that the guidelines issued to the assessors had been disregarded.

Following a futile legal challenge to the subpoenas, Mr. Kerwick, on June 22, 1977, appeared before SBEA with the subpoenaed books and records, represented by counsel. At that time, Mr. Kerwick gave sworn testimony with regard to exemptions from real property taxation which he had granted to various real property owners in the Town of Hardenburgh who claimed an exemption from said tax on the basis of affiliation with the Universal Life Church, or some affiliated organization.

Mr. Kerwick’s testimony and the tax rolls established that he, as Assessor of the Town of Hardenburgh in Ulster County, had granted 211 total real property tax exemptions on real estate owned by 211 members of the Universal Life Church.

The other assessors involved, Messrs. Wheeler, Hartelius and Lessor, voluntarily appeared before SBEA on July 7, 1977 with their books and records. Each of these assessors testified relating to exemptions from real property taxation they had granted to various real property owners in their respective towns who were affiliated with the Universal Life Church, or its affiliates.

At the July 7, 1977 hearing, the directors of real property tax service of Ulster County and Sullivan County testified concerning problems involved in granting or denying exemptions from real property taxation based upon religious exemptions. Mrs. Clara Williams, Assessor of the Town of Ramapo, testified that although 78 applications for real property tax exemptions were made by members of the Universal Life Church, she denied all of them because the properties were *304individually owned and did not otherwise qualify for such exemptions.

Mr. Robert Beebe, counsel to SBEA, presided as hearing officer at those hearings. On October 21, 1977, Mr. Beebe’s final report was submitted to the full SBEA. The hearing officer’s report concluded that the exemptions, granted by the assessors involved, to property owners claiming exemptions because of affiliation with the Universal Life Church, or its affiliates, had been improperly granted and were, therefore, illegal. The report further found that said real property should be removed from the totally exempt portion of the respective assessment rolls and returned to the taxable portion of those rolls.

SBEA reviewed the hearing officer’s report and further reviewed the hearing records, including the transcripts and exhibits. SBEA adopted the hearing officer’s reports and issued orders pursuant to section 216 of the Real Property Tax Law, directing compliance by the town assessors. These orders directed that each of the assessors prepare a petition to the appropriate Board of Assessment Review of his town for the proper corrections of the final assessment rolls of that town for the tax year 1977. These petitions would be in the form specified pursuant to provisions of section 553 of the Real Property Tax Law. The issuance of these orders was authorized pursuant to Resolution 77-92 of the SBEA. These orders were duly served upon each of the assessors on October 28, 1977.

Section 216 of the Real Property Tax Law gives the assessor served with an order of this type by SBEA 10 days within which to comply with said order. Therefore, November 7, 1977 was the date by which the assessors were to have complied with SBEA’s order. Subsequent to November 7, 1977, SBEA was advised that the assessors in the County of Ulster involved and the Assessor for the Town of Liberty in County of Sullivan had not complied with the orders of SBEA.

SBEA then commenced Proceeding No. 1, pursuant to section 216 of the Real Property Tax Law, to compel the assessors to obey the SBEA orders and to enjoin the levying and collecting of taxes on the respective towns based upon the 1977 assessment rolls until those orders were complied with.

On December 7, 1977, Special Term granted partial relief to SBEA, holding that where an assessor fails to comply with the provisions of law relating to his duties, SBEA may issue an *305order, after holding a hearing, directing compliance. Special Term concluded that the inquiries made by respondents and the evidence accepted by them in granting exemptions appeared to be totally inadequate, and directed the assessors to comply with the orders of SBEA. Special Term ruled that it could not enjoin the collection of taxes. However, it ordered the assessor to place the exempted properties on the 1978 assessment rolls, prior to the completion thereof, which had been improperly assessed on the 1977 assessment rolls. The date of Special Term’s decision, December 7, 1977, and its order, April 29, 1978, were prior to the date for completion of the 1978 assessment rolls.

The statutes relating to exemptions for religious organizations when read together make it clear that only certain enumerated categories of real property are entitled to such exemptions. The categories are: real property owned by a corporation or association organized and conducted exclusively for religious purposes (Real Property Tax Law, § 421); all real property held by any officer of a religious denomination (L 1958, ch 959; see Town of Hardenburgh v State of New York, 72 AD2d 192 [decided herewith]); real property owned by a minister of the corporation, priest or rabbi of any denomination when actually a resident and inhabitant of the State who is engaged in the work assigned to him by the church or by a religious denomination or cult (Real Property Tax Law, § 460); property owned by a religious corporation while actually used by the officiating clergyman thereof for residential purposes (Real Property Tax Law, § 462).

The evidence at the hearings indicates that the properties were owned by individuals where they resided, except for some parcels which were vacant land. The applications for exemption were accompanied by a copy of the covenant of the Universal Life Church and upon the further statements of the owners to the assessor that the properties were used for religious purposes. The exemptions were granted. There was testimony to the effect that services were held once or twice a month on the properties.

The testimony of all the assessors established (1) that title to the real property sought to be exempted by members of the Universal Life Church was neither in the Universal Life Church, nor in any religious corporation or organization; (2) that none of such real property was held in trust for the benefit of the members of the Universal Life Church, nor for *306any other religious organization; and (3) that such real property was not used exclusively for religious purposes.

None of the exemptions granted here qualify for exemption under these sections of the Real Property Tax Law providing for exemption from the real property tax. The exemption of real property from taxes for religious uses is strictly construed and the property owner claiming such exemption must prove that the property and the use thereof fall clearly within the exemption provisions of the respective sections of the Real Property Tax Law that authorize such exemptions (Matter of City of Lackawanna v State Bd. of Equalization & Assessment of State of N. Y., 16 NY2d 222).

The hearings conducted by SBEA constituted an administrative investigation to ascertain whether the tax exemptions so granted for certain real property owned individually by members of the Universal Life Church were legal and proper. Thus, on the issue of whether such exemptions had been properly granted, the objective of the hearing was to ascertain and determine the nature and type of such exemptions and whether such exemptions were authorized by law. Once the nature and basis had been established, the investigation had accomplished its purpose. Since the exemptions were admitted (both as to the nature and type of such exemption), the need for cross-examination on an admitted fact was unnecessary. Furthermore, since this was an administrative hearing as distinguished from a judicial hearing, the scope of judicial review is limited to whether there is any substantial evidence to support the determination. The determination of SBEA, based upon the hearing and findings of the hearing officer, is supported by substantial evidence, and should be confirmed (Matter of Liberman v Gallman, 41 NY2d 774).

The law is well settled that the administrative construction given statutes and regulations by the agency responsible for their administration, if not irrational or unreasonable, should be upheld (Matter of Morris v County Bd. of Assessors of Nassau County, 35 NY2d 624).

The orders of SBEA adopted pursuant to section 216 of the Real Property Tax Law directing compliance by the town assessors to the extent they relate to the assessment rolls for the year 1978 should be complied with, and the judgment entered April 25, 1978 should be affirmed.

Main, Mikoll and Herlihy, JJ., concur with Kane, J. P.;

*307Staley, Jr., J., concurs in part and dissents in part in a separate opinion.

Judgment, entered July 14, 1977, affirmed, without costs.

Judgment, entered April 25, 1978, reversed, on the law, and petition dismissed, without costs.

Judgment, entered July 14, 1978, modified, on the law, to the extent that the petition is dismissed as moot, without costs.

Judgment, entered March 23, 1979, reversed, on the law, and complaint and petition dismissed, without costs.