Catholic Charities of Diocese of Camden v. City of Pleasantville

• Decision Date: 07 April 1970
• Citation: 109 N.J.Super. 475,263 A.2d 803
• Parties: CATHOLIC CHARITIES OF the DIOCESE OF CAMDEN, Petitioner-Respondent, v. CITY OF PLEASANTVILLE, Respondent-Appellant, and Division of Tax Appeals, Department of the Treasury of New Jersey, Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 475

109 N.J.Super. 475

263 A.2d 803

CATHOLIC CHARITIES OF the DIOCESE OF CAMDEN, Petitioner-Respondent, v. CITY OF PLEASANTVILLE, Respondent-Appellant and Division of Tax Appeals, Department of the Treasury of New Jersey, Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued Feb. 16, 1970.

Decided April 7, 1970.

Lawrence S. Berger, Newark, for appellant (Lasser, Lasser, Sarokin & Hochman, Newark, attorneys, Sheppard A. Guryan, Newark, on the brief).

Martin F. McKernan, Camden, for respondent Catholic Charities of the Diocese of Camden.

Arthur J. Sills, Atty. Gen., for Division of Tax Appeals (Charles H. Landesman, Deputy Atty. Gen., of counsel), filed Statement in Lieu of Brief.

Before Judges GOLDMANN, LEWIS and MATTHEWS.

The opinion of the court was delivered by

LEWIS, J.A.D.

Respondent City of Pleasantville (herein city) appeals from a final judgment of the Division of Tax Appeals (herein Division). That agency reversed a decision of the Atlantic County Board of Taxation which sustained a 1967 local tax assessment on property of petitioner Catholic Charities of the Diocese of Camden (herein Catholic Charities). The Division also allowed an exemption for the tax year 1968, notwithstanding the failure of Catholic Charities to file an appeal from an assessment for that year. The determinations of the Division as to both years are challenged.

THE 1967 ASSESSMENT

The subject property, formerly the Glen Dale Nursing Home--a proprietary institution--was acquired by Catholic Charities in early 1966. After extensive renovations the new owner reopened the home under the name of Our Lady's Residence (herein Residence) and filed with the city assessor, pursuant to N.J.S.A. 54:4--3.6, an initial statement claiming exemption from taxation for 1967 on the grounds of religious and charitable use. There are no contentions concerning either the quantum of the assessment or the adequacy of the land for exemption purposes.

The following significant facts are undisputed. Catholic Charities was incorporated in 1940 under legislation entitled 'An Act to Incorporate Associations not for Pecuniary Profit' (see N.J.S.A. 15:1--1 et seq.). The certificate of incorporation states: 'The purpose for which this Corporation is formed shall be for religious and charitable purposes and for the moral, mental and physical improvement of men, women and children.'

Residence, operated under the aegis of the Diocese of Camden, is situated in Pleasantville on approximately five acres of land. The property was purchased by Catholic Charities for $731,400. The equipment, furnishings and renovations increased that total cost to approximately $804,450, which was financed by loans from the Diocese on a 'religious financing' basis, I.e., there was 'no formal drawing up of notes.'

The facility is used exclusively as a nursing home for the care of the aged, ill, infirm and convalescent. It has 106 beds and is maintained by 82 employees, including 15 registered nurses, 4 licensed practical nurses and 40 nurses' aides. At the time of the hearing $90 a week was the highest rate established for incoming patients. The charge to welfare and medicare patients was less than that amount According to the testimony of Father Herron, the assistant director of Catholic Charities, approximately 80 of the 106 occupants were welfare patients, 31 were classified as total care, ranging from complete senility to paraglyzation, 4 were intensive care patients and 51 were wheel-chair cases. Owing to the admission of patients with cancer or other terminal illnesses, there were 34 deaths during the preceding year.

Father Herron further testified, in substance, that all people, regardless of race, creed, color or ability to pay, are acceptable at Residence, and that, in fact, it seeks generally to admit the economically disadvantaged and those receiving public assistance or welfare, and especially those who are ill. To the extent necessary, it is subsidized by the charity of its parent organization, the Diocese of Camden.

The city produced as a witness Jerry Godard, owner and administrator of the Golden Crest Nursing Home, a proprietary institution located in Atlantic City. That home has 208 beds, 115 employees, 8 registered nurses and 7 licensed nurses. Their rates range from $125 to $140 per week, plus additional charges for special services such as hand-feeding and therapy treatments. Godard's testimony accentuated the contrasting differences between the nonprofit functions of Residence and the profit motives underlying the operations of a proprietary nursing home. He testified, 'We're supposed to be profit making' and that the institution was 85% Occupied, with approximately 50% Welfare patients. We note this testimony under cross-examination:

Q. And do you take Welfare patients, initially as Welfare patients?

A. On occasion, we take Welfare patients, but in most cases, they are patients that were private patients or Medicare patients, and they became Welfare patients, and sometimes we take a Welfare patient in, in an emergency, if we have a bed open.

Q. But it is your practice to avoid, if possible, just taking, initially, people who are Welfare patients?

A. It isn't our practice at all.

If we have beds available, we will admit them, but we don't solicit them.

The Division, after analyzing the proofs, found that Residence was a nonprofit organization which welcomes welfare and distress cases 'for themselves,' and not for the purpose of keeping their beds occupied, 'as do private homes.' It also noted that, at Residence, 'the more helpless the patient, the more welcome he is,' and that compared with other nursing homes the rates charged generally less, while the wages paid for maintenance and care were higher. Although not a hospital, since it was not confined exclusively to the care of the sick, the institution was held to be qualified as a charity within the intendment of the statute.

Implicit in the opinion of the Division are findings that Residence performs a charitable function that benefits the public-at-large inasmuch as the burden of taxation is lessened by obviating the necessity on the part of government to construct facilities to accommodate the poor who are unacceptable to or who cannot afford the rates charged by nursing homes operating for profit. The Division observed, 'It is quite obvious that the basis of * * * Residence's concern is what service it can render without regard to profit whereas no home operated for profit could afford to do this,' and concluded:

* * * This home is apparently willing to take people not sought by profitmaking institutions. We feel that there is a demand in this community, as a matter of fact in any community, for some institution to engage in the operation of a nursing home without regard to the profit motive. We feel that the Diocese of Camden by reason of its concern for the welfare of people through the Catholic Charities established such a non-profit institution. We feel that this exemplifies 'charity' in the best sense of the word and comes within any proper legal definition of the word 'charity.' We do not think that the nursing home field should be left to profit making organizations only any more than we believe that the hospital field should be the sole preserve of profit making institutions. Accordingly we hold the home tax exempt.

Here the city argues (1) the exemption statute, N.J.S.A. 54:4--3.6, requires that property be used exclusively for charitable purposes if the owner thereof is to avoid paying its fair share of real estate taxes, and (2) the exemption claim is fraught with doubt.

The latest decisional pronouncements of our Supreme Court in dealing with the interpretation of N.J.S.A 54:4--3.6 are set forth in the Presbyterian Homes of the Synod of New Jersey v. Division of Tax Appeals, 55 N.J. 275, 261 A.2d 143 (1970). There it was held that Meadow Lakes Village, a retirement enterprise owned and operated by petitioner-appellant, was not entitled to tax exemption. That decision was rendered shortly prior to the scheduled argument on this appeal. Accordingly, we requested counsel to file supplemental briefs and to address their arguments to its applicability to the instant case. We have had the benefit of their respective views.

A brief summary of the crucial facts in Presbyterian Homes is in order. Tax exemption was sought by petitioner for Meadow Lakes, consisting of 103 acres with 23 apartment buildings representing 211 living units, most of which were garden-type apartments. The complex embraced a variety of recreational facilities and a medical health center. It was non-denominational and was not organized for profit. The total staff of employees numbered 207, of whom 11 were registered nurses.

The cost of the project exceeded $12,000,000, of which $4,450,000 was provided by 'founders fees' paid by the original residents; the balance was raised by a loan from the Presbyterian Homes' endowment fund and a federal grant. All residents are required to pay a founder's fee for the lifetime use of their respective apartments. The fees ranged from $12,000 to $43,000, in addition to which each resident paid for maintenance $205--$360 per month, depending upon the type of accommodations; notwithstanding these charges the operational expenses substantially exceeded income. Moreover, the residents were required to sign an agreement relating to privileges, obligations and petitioner's termination rights.

As stated by the court, Meadow Lakes provided luxurious retirement facilities to those who were able to pay. In concluding that petitioner was not entitled to the relief sought, either as a hospital or a charity, the court stated, 'We fail to see how any invidious discrimination would arise if, as petitioner describes itself in a brochure, Meadow Lakes with its 'gracious retirement living,' is denied tax-exempt status.' 55 N.J., at 290, 261 A.2d at 151.

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