Alpha Rho Alumni Ass'n v. City of New Brunswick

• Decision Date: 21 January 1941
• Docket Number: No. 263.,263.
• Citation: 126 N.J.L. 233,18 A.2d 68
• Parties: ALPHA RHO ALUMNI ASS'N v. CITY OF NEW BRUNSWICK et al.
• Court: New Jersey Supreme Court

18 A.2d 68

126 N.J.L. 233

ALPHA RHO ALUMNI ASS'N

v. CITY OF NEW BRUNSWICK et al.

No. 263.

Supreme Court of New Jersey.

Jan. 21, 1941.

Dissenting Opinion Feb. 20, 1941.

HEHER, J., dissenting.

Certiorari proceeding by Alpha Rho Alumni Association against the City of New Brunswick and others, to review a judgment of the State Board of Tax Appeals affirming a tax assessment by the city on property of the prosecutor.

Proceedings and assessment set aside.

Argued May term, 1940, before CASE, DONGES, and HEHER, JJ.

R. E. & A. D. Watson, of New Brunswick, for prosecutor.

Paul W. Ewing and William D. Danberry, both of New Brunswick, for defendants.

DONGES, Justice.

The writ in this case brings up a judgment of the State Board of Tax Appeals affirming an assessment by the City of New Brunswick, for taxes for the year 1938, on land, building and personal property of prosecutor. Prosecutor is a Greek letter society, incorporated December 30, 1936, under an act to incorporate associations not for pecuniary profit. It owns and maintains a building at No. 114 College avenue, in the City of New Brunswick, where from 28 to 32 active members are rented rooms at $156 each for eight and a fraction months and are furnished meals at a charge of $1.30 per day. Members are required to pay a fee of $25 on initiation, a national fee of $7 a year while in college and current dues of $8 a month of the college year to the local chapter. Alumni members pay $10 per year dues and make contributions to the society from time to time to meet deficits in operation.

The basic question is whether prosecutor's property is exempt from taxation under Chapter 46 of the laws of 1936 (P.L. p. 129, N.J.S.A. 54:4-3.26), and, if so, whether the provision, originally adopted June 3, 1937, P.L. 412, N.J.S.A. 54:4-3.26, is unconstitutional. That provision is as follows: "Nothing herein contained shall be construed to permit the exemption of property owned directly or indirectly, or for the benefit of, organizations commonly known and designated as college clubs, or college lodges, or college fraternities."

The State Board held that it would not pass upon the constitutionality of the act of 1937, but, inasmuch as prosecutor clearly came within its provisions, exemption was denied.

Chapter 46 of the Laws of 1936 provides: "1. The following property shall be exempt from taxation under the act to which this is a supplement, namely: All real and personal property used in the work and for the purposes of one or more fraternal organizations or lodges, or any association or society organized on the lodge plan, or affiliated associations, whether incorporated or unincorporated; provided, that the legal or beneficial ownership of such property is in one or more of the said organizations, lodges, associations or societies; and provided, further, that no part of such property is used for pecuniary profit."

This act was declared valid in City of Camden v. Camden County, etc., 121 N.J.L. 262, 2 A.2d 40, affirmed 122 N.J.L. 381, 5 A. 2d 688.

The primary question is: Does prosecutor qualify for exemption under the last mentioned act —

In the record submitted to the State Board of Tax Appeals and made a part of the record here, it was stipulated by the parties as follows: "That all of the real and personal property of the said petitioner assessed as aforesaid, is used in the work and for the purpose of a fraternal organization or lodge or association or society organized on the lodge plan, and that the legal and beneficial ownership of all such property is in said organization, lodge, association, or society and that no part of such property is used for pecuniary profit, unless payment to the said fraternal organization by members for a room when used for sleeping purposes by members, for one or more weeks is 'use for pecuniary profit' within the meaning of the statute. The amount received goes into the general treasury of the fraternal organization and is used to defray a part of its operating costs. It is not conducted or intended to be conducted for profit. It is operated at a loss and its yearly deficits are made up by contributions from members, and a few friends. No person has any pecuniary interest in the fraternal organization, no dividends, or profits are paid or intended to be paid, as the work of the said fraternal organization is carried on by the personal sacrifice and voluntary service of its members and the amount received for the use of a room is insufficient to defray the fair costs of maintaining the same and is less than the average amount charged by Rutgers College for its various dormitory rooms. No charge is made for the occasional use of any of its rooms."

Subsequently, and after the decision of this court in Phi Zeta of Lambda Chi Alpha Fraternity v. City of New Brunswick et al, 123 N.J.L. 237, 8 A.2d 553, the prosecutor produced a number of witnesses, who were examined by counsel for prosecutor and cross-examined by counsel for respondents, which depositions are part of the record in this court. The testimony so produced supports the stipulation in detail.

It is unquestioned that the prosecutor is an association or society on the lodge plan. It appears beyond doubt that the prosecutor qualifies as a fraternal organization or lodge, being organized to assist its members and to promote moral, intellectual and social benefits.

In Webster's New Dictionary a "fraternity" is defined as "a body of men associated for their common interest, business or pleasure; a brotherhood; society; specifically. * * * b. A fraternal society, association, or order. * * * d. In American colleges, a student organization, either a nationally chartered society comprising many affiliated chapters or a single chapter in one institution, formed chiefly to promote friendship and welfare among the members, and usually having secret rites and a name consisting of Greek letters."

The United States Circuit Court of Appeals, Fifth Circuit, in First National Bank in Dallas v. Commissioner of Internal Revenue, 45 F.2d 509, 511, said: "Fraternal organizations may be described generally as social in their nature, and designed not exclusively for charitable purposes but for the enjoyment of their members in many ways. 5 R.C.L. 372."

In Re Mason Tire & Rubber Co., 56 App. D.C. 170, 11 F.2d 556, 557, the Court of Appeals of the District of Columbia defined a "fraternity" thus: "Any society organized for the accomplishment of some worthy object through the efforts of its members working together in brotherly union, especially if it be organized not for selfish gain, but for the benefit of the membership or for the benefit of the membership and men in general, is a fraternal organization in the popular acceptation of the term. See Fraternal Society, Standard Dictionary, and Webster's New Dictionary." Citing National Union v. Marlow, 8 Cir, 74 F. 775, 778, where it was said: "We must accordingly assume that the words 'fraternal-beneficial' were used in their ordinary sense,— to designate an association or society that is engaged in some work that is of a fraternal and beneficial character. According to this view a fraternal-beneficial society, within the purview of the Missouri statute, would be one whose members have adopted the same, or a very similar, calling, avocation, or profession, or who are working in unison to accomplish some worthy object, and who for that reason have banded themselves together as an association or society to aid and assist one another, and to promote the common cause. The term 'fraternal' can properly be applied to such an association, for the reason that the pursuit of a common object, calling, or profession usually has a tendency to create a brotherly feeling among those who are thus engaged." Western Funeral Benefit Ass'n v. Heimlich, D.C, 2 F.2d 367.

Is the property used for pecuniary profit? In State v. Allen, 189 Ind. 369, 127 N.E. 145, exemption of property of a Greek letter fraternity connected with a college was involved. The opinion holds:

"The complaint also alleges: 'That the dominant use of said premises during all of said time was a lodging and boarding house use.'

"This allegation in the pleading is but an assertion of the pleader which the other allegations clearly contradict. Because some members of this fraternity board and sleep in this building, and pay what it costs to run the building, does not make the dominant use boarding and lodging. Every human being must eat and sleep to live; but this does not make the dominant purposes of life eating and sleeping."

It has been held that charges for services to members, which do not result in profit to someone, do not constitute operation for profit. In Institute of Holy Angels v. Bender, 79 N.J.L. 34, 74 A. 251, it was said: "But clearly the charge for board would not make the...