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

• Citation: 81 A.D.2d 64,438 N.Y.S.2d 521
• Parties: In the Matter of the HOLY SPIRIT ASSOCIATION FOR the UNIFICATION OF WORLD CHRISTIANITY, Petitioner, v. The TAX COMMISSION OF the CITY OF NEW YORK, Respondent.
• Decision Date: 05 May 1981
• Court: New York Supreme Court — Appellate Division

Page 521

438 N.Y.S.2d 521

81 A.D.2d 64

In the Matter of the 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.

May 5, 1981.

Lester Nelson, New York City, of counsel (Jeffrey W. Herrmann and Richard C. Ebeling, New York City, with him on brief; Miller, Montgomery, Sogi, Brady & Taft, New York City, attorneys), for petitioner.

Leonard Olarsch, New York City, of counsel (Carlos M. Velazquez, New York City, with him on brief; Allen G. Schwartz, Corp. Counsel, New York City, attorney), for respondent.

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

BIRNS, Justice.

This is the second occasion for us to consider this Article 78 proceeding by which petitioner seeks to review a determination by the New York City Tax Commission denying petitioner's application for exemption from real property taxes for three of its properties which were acquired in 1975. ¹ Petitioner's application rests upon an assertion that it is organized and conducted exclusively for religious purposes and that its properties are used for such purposes.

On the first occasion (Holy Spirit Assn. v. Tax Comm., 62 A.D.2d 188, 404 N.Y.S.2d 93) we held that although the proceeding was improperly transferred to the court because it did not involve a question of substantial evidence within the limitations of CPLR 7803, subd. 4, this court nevertheless would decide the proceeding rather than retransfer it. We were of the opinion that the test of review was whether the rejection of petitioner's claim for tax exemption by respondent Tax Commission was arbitrary and capricious (Holy Spirit Assn. v. Tax Comm., supra, p. 193, 404 N.Y.S.2d 93). As we could not make an appropriate determination on the insufficient record before us, we remanded the matter to a Special Referee for a full examination of the facts respecting petitioner's purpose and the actual use to which the subject properties were being devoted ( Holy Spirit Assn. v. Tax Comm., supra, pp. 197-198, 404 N.Y.S.2d 93).

Following the mandate of this Court the Special Referee conducted a hearing and rendered his report, appended hereto.

We have examined the Referee's report and reviewed the record. Upon such review we confirm the report insofar as it concluded that the Tax Commission's denial of tax exemption to petitioner's three properties was not "arbitrary or capricious".

In our previous opinion we noted that petitioner is organized under the General Nonprofit Corporation Law of the State of California. The properties which are now under review are as follows:

The former Columbia University Club, located at 4 West 43rd Street. That property had an assessed valuation of $1,025,000 in the 1975-1976 tax year. Its eight floors, the Tax Commission found, are used for sleeping quarters for its members, offices of petitioner's national headquarters and of an affiliate, the International Cultural Foundation, space for a film department, public affairs press service, dining room and lecture room; other areas are used for conferences, study and assemblies. One room is designated for prayer. At the time of application for exemption some commercial income was generated from storekeepers on the ground floor whom petitioner was attempting to evict. Those commercial tenancies have terminated, and petitioner occupies the entire premises.

A second Manhattan property at 305 West 107th Street is a five-story townhouse assessed in 1975-1976 at $34,000, which affords living and study quarters gratis for eleven members who attend nearby Columbia University and three other nonstudent members. The nonstudents proselytize and administer the building. The students may engage in prayer and "certain missionary type teaching." 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 in 1975-1976, that property houses 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.

I

Testifying at the Referee's hearing were members of the Unification Church, including Neil Salonen, its president. Representatives of five different religious or religiously affiliated organizations also testified on behalf of petitioner, as did Frederick Sontag, a Professor of Philosophy and "expert" on the Unification Church, and Margaret Deboe, an associate from an accounting firm employed by the Church. Two former members of the Church, Allen Wood and Robert Brandyberry, testified for respondent.

Introduced into evidence, inter alia, were Reverend Sun Myung Moon's writings and a training manual for Church members.

The members of the Church testified as to their religious beliefs and their dedication to the teachings of Rev. Moon, the leader of the Church. They described also their activities for the Church and at the subject properties. They told of their prayer meetings, discussion groups, fund raising and evangelical duties.

Thomas Ward, a Church member residing at 4 West 43rd Street, initially testified that his associates engaged in no fund raising, but subsequently conceded that Church members had been requested to participate in "mobile fund raising". He also explained that members resident at the 4 West 43rd Street property were expected to engage in evangelical work. Deboe testified that the Unification Church did not actively fund any political or economic activities, but conceded that over $20,000 of petitioner's checks were made out to cash every month.

Through representatives of the United Jewish Appeal, Mormon Church, Baptist Church, Eastern Catholic Rite and the National Council of Churches petitioner sought to maintain that the Unification Church was a religious organization and that its political and economic activities were no different from those of other religious organizations.

Wood and Brandyberry testified as to their Church activities, which included fund raising and political ventures, and explained that people were mobilized from the Church and its various affiliates for a variety of political and economic purposes. The Referee credited the testimony of Wood and Brandyberry.

At the conclusion of the hearing, the Referee reported that petitioner's primary purpose is religious, but that petitioner's theology,

as expressed in Reverend Moon's writings, binds it to a course of political activity and that the subject properties were not used for religious purposes. The Referee cited several tenets of the Unification Church, such as the opposition to the separation of Church and State and the republican form of government--a position which he considered to be inherently political. The Referee found that much of petitioner's energy was directed towards political and economic activity, fund raising and recruitment. He discussed some of the activities engaged in by petitioner's "cadre", and rejected petitioner's claims that these were religious and not political activities. The Referee also concluded that Church members are often deployed in a number of other organizations affiliated with the Church, such as The Freedom Leadership Foundation, Professor's World Peace Crusade, Korean Cultural and Freedom Organization, International Cultural Foundation, Collegiate Association for the Research of Principles and the Christian Political Union, and that many of these organizations engaged in political activities. These political activities include the following:

1. A mass rally in Washington, D. C. in support of President Nixon at the time that the House of Representatives took up the issue of his impeachment;

2. A training program to indoctrinate Church leadership with respect to political issues, including the idea that Nixon had "providential standing" as president;

3. Maintaining an office in Washington, D. C. for political purposes;

4. Using the aforementioned affiliates to oppose certain legislation and to stage anti-communist and other political rallies.

He further found that not only are Church members engaged in fund raising and deployed in the many businesses held by the Church, such as International Oceanic Enterprises, Inc., News World Communications, Inc., One-Up Enterprises, Inc., but that Reverend Moon and Church officers, including the church president, Neil Salonen, held directorships and other offices in these corporations. The Referee concluded that Reverend Moon exerted centralized control over all the operations, and that Church members were regularly assigned to perform other duties.

The Referee reported that the building at 4 West 43rd Street served as a center for all petitioner's activities, religious and otherwise, that the building at 305 West 107th Street was used primarily for missionary activities, and that the property in Long Island City was used primarily for commercial purposes.

At the conclusion of his report, the Referee stated:

"The evidence at the hearing established that petitioner's religious purposes were intertwined with political and economic objectives that form an amalgam that is served by a cadre of full-time church-supported administrators and workers that are shifted at will by some undefined directive force from religious to other purposes. Under such circumstances, there is a rational basis for respondent's determination and substantial evidence to support that determination."

II

Petitioner challenges the conclusion of the Referee that the Tax Commission's denial of tax exemption to petitioner's three properties was not arbitrary or capricious. It is petitioner's claim that inasmuch as the Referee found that petitioner was organized primarily for religious...