Holy Spirit Ass'n for Unification of World Christianity v. Tax Commission of City of New York

• Decision Date: 18 April 1978
• Citation: 62 A.D.2d 188,404 N.Y.S.2d 93
• Parties: In the Matter of HOLY SPIRIT ASSOCIATION FOR the UNIFICATION OF WORLD CHRISTIANITY, Petitioner, v. The TAX COMMISSION OF the CITY OF NEW YORK, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 93

404 N.Y.S.2d 93

62 A.D.2d 188

In the Matter of HOLY SPIRIT ASSOCIATION FOR the UNIFICATION OF WORLD CHRISTIANITY, Petitioner, v. The TAX COMMISSION OF the CITY OF NEW YORK, Respondent.

Supreme Court, Appellate Division, First Department.

April 18, 1978.

Lester Nelson, New York City, of counsel (David S. Ward, New York City, with him on the brief; Miller, Montgomery, Sogi, Brady & Taft, New York City), for petitioner.

Edith I. Spivack, New York City, of counsel (Russell D. Scott, New York City, with her on the brief; W. Bernard Richland, Corp. Counsel, New York City), for respondent.

Before LUPIANO, J. P., and BIRNS, LANE, SANDLER and SULLIVAN, JJ.

BIRNS, Justice:

In this Article 78 proceeding, transferred to this court by an order dated September 21, 1977, petitioner seeks to review a determination by the New York City Tax Commission denying petitioner's application under Real Property Tax Law § 421 for exemption from real property taxes for three of its buildings in New York City.

Insofar as pertinent, that section provides: " 1. (a) Real property owned by a corporation or association organized or conducted exclusively for religious . . . purposes, and used exclusively for carrying out thereupon . . . such purposes . . . shall be exempt from taxation . . .."

Petitioner, organized under the General Nonprofit Corporation Law of the State of California, ¹ acquired the three parcels in 1975 for which it seeks such exemption. It obtained the former Columbia University Club, located at 4 West 43rd Street. That property had an assessed valuation of $1,025,000 in the 1975-76 tax year. Its eight floors, the Tax Commission found, are used for sleeping quarters for members, offices of petitioner's national headquarters and of an affiliate, the International Cultural Foundation, ² space for a film department, public affairs press service, dining room and lecture room, and other areas used for prayer, conferences, study, assemblies and services. At the time of application for exemption some commercial income was generated from storekeepers on the ground floor whom petitioner was attempting to evict.

A second Manhattan property at 305 West 107th Street is a five story townhouse assessed at $34,000 that affords living and study quarters gratis for 11 members who attend nearby Columbia University and three other non-student members. The non-students proselytize, teach and administer the building. The students may conduct with school contacts "certain missionary type teaching". Prayer and worship services are conducted and sometimes lectures and discussions about the church take place at this property which petitioner considers a "church center".

The third parcel is located in the former Loft Candy factory at 38-38 Ninth Street, Long Island City, in Queens County. Assessed at $1,555,000, that property houses the petitioner's Publications Department where works related to church doctrine will be printed. In addition, church vehicles are repaired and various construction supplies and church archives are stored there.

In March 1976 petitioner filed its applications with respondent for tax exemption of these three properties. Almost a year later, in January 1977, respondent convened to consider the applications.

Testimony was heard, in a non-adversarial ³ context, in support and in opposition. Ultimately, the commissioners by a 4 to 3 vote rejected the exemption applications. The majority concluded that petitioner failed to meet the burden of establishing that petitioner was organized or conducted exclusively for religious purposes (Real Property Tax Law § 421(1)(a)). The majority found that "although the applicant association does in certain aspects bespeak of a religious association, it is in our opinion so threaded with political motives and activities that it requires us to deny the application . . . the political activity of the applicant is more than an incidental part of their operation." The dissenters considered themselves bound to accept petitioner's religious essence, and without power to delve into the validity of its beliefs. Neither opinion analyzed the second test of exemption whether the premises themselves were being used exclusively for petitioner's religious purposes.

Initially, we are confronted with a procedural question whether the proceeding was properly transferred to this court pursuant to CPLR § 7804(g). A transfer under that section is proper only where an issue is raised of "whether a determination made as a result of a hearing held, and at which evidence was taken, pursuant to direction by law is, on the entire record, supported by substantial evidence." (CPLR § 7803(4).) In this proceeding, the hearing before the Tax Commission was not held "pursuant to direction by law." Respondent's hearing was simply a matter of gathering information. Cf., N. Y. City Administrative Code § 165-1.0. No question of substantial evidence can, therefore, be tendered in the proceeding at bar where the test of review, instead, appears to be whether the rejection of tax exemption was arbitrary and capricious. 8 Weinstein-Korn-Miller, N.Y.Civ.Prac., pars. 7803.04, 7803.11.

Accordingly, Special Term should have determined the matter. ⁴ However, once transferred, this court should decide the proceeding, rather than retransfer it. Cf. Matter of 125 Bar Corp. v. State Liquor Auth., 24 N.Y.2d 174, 180, 299 N.Y.S.2d 194, 199, 247 N.E.2d 157, 160, and see Matter of Brown v. North Syracuse Cent. School Dist., 55 A.D.2d 813, 390 N.Y.S.2d 284; Matter of Willow Gardens Apts. v. Riker, 36 A.D.2d 892, 320 N.Y.S.2d 148; Matter of Fasani v. Rappaport, 30 A.D.2d 588, 290 N.Y.S.2d 279; 24 Carmody-Wait 2d, New York Practice § 145:354.

Although the circumstances in this case very nearly compel a departure from that procedure, we have decided to follow it even here, in the interests of minimizing the inconvenience to the parties and the delay in the ultimate resolution of petitioner's qualification for exemption from real property taxation of its three parcels. Even though we are retaining jurisdiction, it should be noted that the intrinsic nature of the proceeding is unchanged and that the standard for review remains the same whether the determination was arbitrary and capricious.

To sustain the determination of the Tax Commission that the real property involved is subject to taxation, it must appear, simply, (1) that petitioner is not organized or conducted exclusively ⁵ for religious purposes ⁶ or (2) even if so organized or conducted, that the properties under scrutiny are themselves not used exclusively for those purposes. In arriving at its determination, however, the Tax Commission may resort to a strict construction against the taxpayer seeking the exemption (Assn. of Bar, City of New York v. Lewisohn, 34 N.Y.2d 143, 153, 356 N.Y.S.2d 555, 561, 313 N.E.2d 30, 34; Powell's Reducing Realty Taxes 168 (3d ed. 1947)).

It has been said that this court sits in review of administrative determinations solely on the law (Matter of Gimprich v. Bd. of Ed., 306 N.Y. 401, 118 N.E.2d 578; People ex rel. Kennedy v. Brady, 166 N.Y. 44, 47-48, 59 N.E. 701, 702; 8 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 7803.10. But, where the record is not sufficient to permit an informed judgment as to whether the administrative body has acted arbitrarily or capriciously, and it appears that further factual exploration could supply defects in the proof, a remand for a hearing to develop the necessary data may be required. Matter of Mandle v. Brown (5 N.Y.2d 51, 177 N.Y.S.2d 482, 152 N.E.2d 511) presented an attack on civil service reclassification of attorneys in the City's law department. The record was deficient on which to judge the existence of a rational basis for the administrative determination that certain persons had, prior to reclassification, performed the duties assigned after reclassification. Despite agreement by the parties that no hearing was necessary, a remand to Special Term was directed. The Appellate Division, per Breitel, J. (4 A.D.2d 283, 287-288, 164 N.Y.S.2d 366, 370), had, however, imposed restrictions on the scope of that hearing:

In the conduct of such an inquiry, however, it is, generally, not the office of the court to take original evidence of the facts, either as they existed prior to reclassification, or as it is proposed they should exist subsequent to reclassification. This is a proceeding under Article 78. It concerns an administrative determination in the exercise of discretion, and such determination is sustainable if there be any rational basis for it. Put negatively: The court's power to review ceases if it appears that the action was neither arbitrary nor capricious; the court's function is not to re-determine the issue or to weigh the evidence the administrative agencies had before them. (Citations omitted)

Consequently, all that need be developed upon a judicial inquiry is the basis upon which the several administrative agencies acted, at the time they acted, in promulgating the reclassification and reallocation.

The Court of Appeals disagreed:

It is clear, however, that any competent and relevant proof petitioner may have, bearing on the triable issue here presented and showing that any of the underlying material on which the Commission based its determination has no basis in fact, would be admissible. (5 N.Y.2d at 65, 177 N.Y.S.2d at 491, 152 N.E.2d at 517.) ⁷

With respect to the case at bar, CPLR § 7804(h) provides:

If a triable issue of fact is raised in a proceeding under this article, it shall be tried forthwith. Where the proceeding was transferred to the appellate division, the issue of fact shall be tried by a referee or at a trial term of the supreme court and the verdict, report or decision rendered after the trial shall be returned to, and the order thereon made by, the appellate division.

That provision would seem to authorize the Appellate Division to remand for trial of...