Bethany Baptist Church v. Deptford Tp.

• Decision Date: 07 June 1988
• Citation: 225 N.J.Super. 355,542 A.2d 505
• Parties: BETHANY BAPTIST CHURCH, Plaintiff-Appellant, v. DEPTFORD TOWNSHIP, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 355

225 N.J.Super. 355

542 A.2d 505

BETHANY BAPTIST CHURCH, Plaintiff-Appellant, v. DEPTFORD TOWNSHIP, Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Submitted May 9, 1988.

Decided June 7, 1988.

Jeffrey R. Bier, Haddonfield, for plaintiff-appellant (Jeffrey R. Bier, on the brief).

Albertson, Ward & McCaffrey, Woodbury, for defendant-respondent (Eugene J. McCaffrey, Jr., on the letter-brief).

Before Judges PETRELLA, BAIME and ASHBEY.

The opinion of the Court was delivered by

BAIME, J.A.D.

Bethany Baptist Church of Blackwood Terrace appeals from a judgment of the Tax Court upholding a determination of the Gloucester County Board of Taxation levying taxes on church property for the year 1984. The Tax Court's holding was predicated upon the fact that the property had been purchased by plaintiff after the October 1, 1983 assessment date, and prior to that time had been used for a nonexempt purpose. The trial court thus determined that the property was not immune from local taxes. Broadly stated, plaintiff contends on appeal that imposition of taxes on property used for religious activities to be paid from funds obtained through tithes and contributions runs afoul of the First Amendment's free exercise clause. We disagree and affirm.

We need not recount the facts at length. Reverend Frank T. Olsen, the pastor of the church, testified that he initially leased the subject property, which was then being used for a nonexempt purpose, in July 1982. In September of the same year, he founded the church on the property. Upon its formation, a constitution was adopted under which supervision of the church's activities is said to be "in the Lord Jesus Christ." The church has no board of elders or deacons. Instead, the pastor is the sole governing authority vested with the power to make decisions on behalf of the church.

On December 12, 1983, Pastor Olsen, on behalf of the church, entered into an agreement to purchase the property from its owners. The written agreement identified Bethany Baptist Church as the purchaser. Several days later, a certificate of incorporation of the Bethany Baptist Church of Blackwood Terrace was filed for the purpose of creating a jural entity to hold title to the property. The transaction was consummated on December 30, 1983, when a deed was filed listing the corporation as the title holder.

Although the exact chronology of events is in dispute, Pastor Olsen testified that immediately after the closing, he proceeded to the Office of the Deptford Township Tax Assessor and requested a tax exemption. He was told that because the property was not owned by the church on October 1, 1983, the tax assessment date, it would be necessary to pay taxes for the year 1984. This position was later adopted by the Gloucester County Board of Taxation.

In the proceedings before the Tax Court, Pastor Olsen explained that a foundational tenet of the church required monies obtained from tithes and contributions to be used only for religious purposes. We need not recite the biblical passages which apparently form the basis for the reverend's interpretation. Suffice it to say, the church harbors the view that funds solicited from the congregation belong to the deity and cannot be used to pay taxes.

Although the Tax Court did not challenge the sincerity of this belief, it nevertheless concluded that, by statute, the pivotal date for determining the grant of an exemption was October 1, 1983 of the preceding calendar year and that property purchased thereafter and used for a tax exempt purpose was subject to the burden of taxation. While the trial court did not directly pass upon plaintiff's constitutional challenge, it apparently concluded that the statutory mandate did not violate the First Amendment's free exercise clause. We consider these points in seriatim.

I.

Initially, we are in complete accord with the trial court's conclusion that property used for a nonexempt purpose on October 1, the assessment date, which is later transferred to an exempt owner, is nevertheless subject to taxation for the succeeding tax year. In other words, our statutes do not afford an exemption to an otherwise exempt owner who acquires property subsequent to the assessing date.

It is well-settled that property is tax assessable or exempt only with reference to its ownership and use on October 1 of the pre-tax year, the assessment date. See N.J.S.A. 54:4-23; N.J.S.A. 54:4-35. See also East Orange v. Palmer, 47 N.J. 307, 320, 220 A.2d 679 (1966); Ironbound Ed. & Cult. Ctr. v. Newark, 220 N.J.Super. 346, 354, 532 A.2d 258 (App.Div.1987), certif. den. 110 N.J. 200, 540 A.2d 192 (1988); City of Bayonne v. International Nickel Co., Inc., 104 N.J.Super. 45, 47, 248 A.2d 547 (App.Div.1968), aff'd 54 N.J. 94, 253 A.2d 545 (1969), app. dism. 396 U.S. 111, 90 S.Ct. 396, 24 L.Ed.2d 304 (1969); Shelton College v. Borough of Ringwood, 48 N.J.Super. 10, 11, 136 A.2d 660 (App.Div.1957); Jabert Operating Corp. v. City of Newark, 16 N.J.Super. 505, 508, 85 A.2d 216 (App.Div.1951); Catholic Relief Servs. v. So. Brunswick Tp., 9 N.J.Tax 25, 27-28 (Tax Ct.1987); Schizophrenia Foundation of N.J. v. Montgomery Tp., 4 N.J.Tax 662, 665 (Tax Ct.1982), rev'd on other grounds 6 N.J.Tax 431 (App.Div.1984); Grace & Peace, Etc. Church v. Cranford Tp., 4 N.J.Tax 391, 397 (Tax Ct.1982); Jackson Tp. v. Marsyll of B.B., Inc., 3 N.J.Tax 386, 389 (Tax Ct.1981); Holy Cross, etc. Church of God v. Trenton, 2 N.J.Tax 352, 356 (Tax Ct.1981); Greenwood Cemetery, etc. v. City of Millville, 1 N.J.Tax 408, 411 (Tax Ct.1980); Emanuel Missionary Baptist Church v. Newark, 1 N.J.Tax 264, 268 (Tax Ct.1980). By enacting N.J.S.A. 54:4-23, our Legislature has made it crystal clear that the use of the property on the October 1 assessment date determines whether or not it is to receive an exemption from taxation for the succeeding year.

Of course we recognize that there are several statutory exceptions to the general rule. For example, N.J.S.A. 54:4-3.6b states that an exemption may be continued without interruption when property is transferred from one exempt owner to another. See also Emanuel Missionary Baptist Church v. City of Newark, supra, 1 N.J.Tax at 268-269. Conversely, N.J.S.A 54:4-63.26 and -63.28 insure that the benefit of an exemption does not continue when property is conveyed from an exempt owner to a nonexempt owner.

We are concerned here with the reverse situation, i.e., the transfer of property from a nonexempt owner to an exempt owner. In this context, the Legislature's silence evidences an intention not to afford an exemption where, after the October 1 assessment date, property used for a nonexempt purpose is transferred to an exempt owner. While our research has disclosed no New Jersey appellate court decision on the precise issue, we note that the Tax Court, in an unbroken line of decisions, has declined to accord tax exempt status in these circumstances. See, e.g., Catholic Relief Servs. v. So. Brunswick Tp., supra, 9 N.J.Tax at 28; Atlantic Cty. New School, Inc. v. Pleasantville, 2 N.J.Tax 192, 194-195 (Tax Ct.1981); Holy Cross, etc. Church of God v. Trenton, supra, 2 N.J.Tax at 356. We are of the view that these decisions represent the correct approach, and we thus hold that tax exempt status depends on the confluence of use and ownership as of the assessment date. ¹

II.

We next turn to plaintiff's contention that the denial of tax immunity in the circumstances here is violative of its First Amendment rights. To reiterate, plaintiff contends that monies obtained from its congregants belong to the deity and, thus, the payment of taxes from such funds contravenes the church's right to freely practice its religious beliefs. We reject this contention.

Sundry rights are embedded in our organic law to prove their timeless worth. Primary among the hierarchy of constitutional goals is the protection of religious freedom and expression. Our history is replete with official pronouncements as to the value and invocation of religious guidance in American life. See Lynch v. Donnelly, 465 U.S. 668, 674-675, 104 S.Ct. 1355, 1359-1360, 79 L.Ed.2d 604, 611 (1984), reh'g den. 466 U.S. 994, 104 S.Ct. 2376, 80 L.Ed.2d 848 (1984). In that context, religious institutions have traditionally enjoyed a preferred and protected status, which has severely curtailed the permissible extent of governmental regulation in this area. Our Constitution specifically refers to the tax exempt status of property used for religious purposes, N.J. Const. (1947), Art. VIII, § 1, par. 2, and this broad exemption has been upheld by the United States Supreme Court against a claim that it violates the First Amendment's establishment clause. Walz v. Tax Commission, 397 U.S. 664, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970).

The free exercise clause of the United States Constitution, U.S. Const. Amend. I, and its New Jersey counterpart, N.J. Const. (1947), Art. I, par. 3, extend to all lawful conduct founded in religious belief. See Thomas v. Review Bd., Ind. Empl. Sec. Div., 450 U.S. 707, 713, 101 S.Ct. 1425, 1429, 67 L.Ed.2d 624, 631 (1981); Wisconsin v. Yoder, 406 U.S. 205, 220, 92 S.Ct. 1526, 1535, 32 L.Ed.2d 15, 27-28 (1972); Sherbert v. Verner, 374 U.S. 398, 402-403, 83 S.Ct. 1790, 1792-1793, 10 L.Ed.2d 965, 969-970 (1963); State v. Cameron, 100 N.J. 586, 606, 498 A.2d 1217 (1985) (Clifford, J., concurring); N.J. Bd. of Higher Ed. v. Shelton College, 90 N.J. 470, 482, 448 A.2d 988 (1982). The guarantee of religious freedom protects against more than direct governmental proscription of religious practices. See, e.g., Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213 (1940); N.J. Bd. of Higher Ed. v. Shelton College, supra, 90 N.J. at 482, 448 A.2d 988. Even facially neutral legislation may be constitutionally offensive if, as applied to a particular religious sect, it forces individuals to choose between abandoning their religious beliefs or...