People ex rel. Watchtower Bible & Tract Soc., Inc. v. Haring

• Decision Date: 23 November 1955
• Citation: 286 A.D. 676,146 N.Y.S.2d 151
• Parties: PEOPLE of the State of New York on the relation of WATCHTOWER BIBLE & TRACT SOCIETY, Inc., Relator-Appellant, v. Percy H. HARING, Carleton D. Knitz and John Smith, the Board of Assessors of Taxes of the Town of Lansing, Tompkins County, Respondents.
• Court: New York Supreme Court — Appellate Division

Page 151

146 N.Y.S.2d 151

286 A.D. 676

PEOPLE of the State of New York on the relation of WATCHTOWER BIBLE & TRACT SOCIETY, Inc., Relator-Appellant, v. Percy H. HARING, Carleton D. Knitz and John Smith, the Board of Assessors of Taxes of the Town of Lansing Tompkins County, Respondents.

Supreme Court, Appellate Division, Third Department.

Nov. 23, 1955.

Hayden C. Covington, Brooklyn, for appellant.

Charles H. Newman, Ithaca (Armand L. Adams, Ithaca, of counsel), for respondents.

Before FOSTER, P. J., and BERGAN, HALPERN, and ZELLER, JJ.

HALPERN, Justice.

The appellant brought this proceeding to review the assessment of taxes for the year 1954 upon a farm known as Kingdom Farm in the Town of Lansing, Tompkins County, New York, it being the appellant's contention that the farm was exempt from taxation under subdivision 6 of section 4 of the Tax Law as real property used exclusively for the carrying out of religious and charitable purposes.

The respondents moved to dismiss the petition under Rule 107 of the Rules of Civil Practice upon the ground that the issue sought to be raised in the proceeding had been adjudicated against the appellant in a prior proceeding. It appeared that, in 1947, the appellant had brought a proceeding claiming exemption from taxation for that year and that the proceeding had been decided against the petitioner at Special Term by Justice Coon, People ex rel. Watchtower Bible and Tract Society, Inc., v. Mastin, 191 Misc. 899, 80 N.Y.S.2d 323, and that no appeal had been taken from Justice Coon's decision. The Special Term in the present proceeding held that the allegations of the petition were insufficient to show a change of facts since the prior decision and therefore the Court granted the respondents' motion and dismissed the petition, with leave to the appellant to amend. Thereafter, the appellant served an amended petition but that too was dismissed. From the judgment entered upon the order of dismissal, this appeal has been taken.

As appears from Justice Coon's opinion in the prior proceeding, the facts in the case before him were as follows: The Kingdom Farm was a large farm, consisting of over 700 acres of land with numerous buildings. One building was used as a Bible School and that building, and the land upon which it stood, had been exempted from taxation without controversy. The remainder of the farm was operated in the ordinary fashion 'for the production of crops, livestock and farm products generally'. 191 Misc. at page 902, 80 N.Y.S.2d at page 325. A 'small and insignificant' part of the products of the farm was used as food for the students attending the Bible School. The major part of the products of the farm was shipped to Brooklyn, where it was used as food for the members of the appellant society who lived in a 'large seven-story brick hotel-type building in Brooklyn' and who worked in a large publishing plant in Brooklyn operated by the appellant for the publication of 'bibles, pamphlets, magazines and other literature dealing with religious subjects'. 191 Misc. at page 900, 80 N.Y.S.2d at page 324. These members of the appellant society were known as the Bethel family. The remainder of the farm products was sold to the public for cash. During the year ending August 31, 1947, the sale value of the products sold to the public was over $126,000.

Justice Coon found that the appellant was not entitled to exemption of the farm for two reasons: (1) The supplying of food to the Bethel family did not constitute an exempt use of the farm. Justice Coon reasoned that the supplying of food to the members of the society in Brooklyn was in effect 'compensation for their manual services in the publishing plant and offices' 191 Misc. at page 903, 80 N.Y.S.2d at page 326 of the society and that this did not entitle it to exemption of the farm upon which the food was produced. (2) The sale to the public was of such a large volume that it could not be regarded as merely incidental and this of itself deprived the appellant of any right to tax exemption.

In the amended petition in the present proceeding, there is no allegation of any substantial change of circumstances with respect to the first ground of Justice Coon's decision. So far as appears from the amended petition, the way in which the farm was used for the production of food for the Bethel family in 1954 was substantially the same as in 1947. In fact, the use of the farm for that purpose has increased, the number of members in the Bethel family in Brooklyn having increased from 200 to 400. However, the amended petition does allege a substantial change of facts with respect to the second ground of the decision. The amended petition alleges that 'There was no extraordinarily large amount of surplus sold or substantial sales of produce by petitioner during the taxable year involved as in the Mastin case' and it is further alleged:

'The amount produced on the premises is used primarily to supply the table requirements of the members of the petitioner's institutions; and production for this purpose does not permit an exact and precise balance between such needs and the quantities produced resulted in an incidental surplus that was not substantial but which was small.'

The Special Term held that the allegations of the amended petition, purporting to show a change of circumstances since 1947, did not constitute allegations of fact but were merely 'conclusions of the pleader'. We take a different view as to the sufficiency of the allegations. They seem to us to be sufficient as allegations of ultimate fact to show a change of circumstances with respect to the nature, purpose and extent of the surplus produced on the farm, which was offered for sale to the public. Concededly, the doctrine of res judicata does not apply if the facts alleged in the second proceeding are different from those in the first. The affidavits submitted by the respondents controvert the new allegations in the petition but, of course, if that were all that was involved, the issues could not be decided upon affidavits but they would have to be framed for trial under Rule 108 of the Rules of Civil Practice or the motion to dismiss would have to be denied with leave to the respondents to set up res judicata as a defense in their answer. Barker v. Conley, 267 N.Y. 43, 195 N.E. 677.

The defect in the appellant's position on this point is, however, that the allegations showing a change of facts relate only to one of the grounds of the prior decision. Concededly, there is no allegation of a change of facts with respect to the other ground, which Justice Coon had held to be adequate in and of itself to justify the denial of the exemption of the appellant's farm.

Where the prior decision, relied upon as the basis for the defense of res judicata, rests upon alternative grounds, the prevailing view seems to be that the prior decision is res judicata as to both grounds and may be invoked to bar the relitigation of either ground. Restatement of Judgments, § 68, Comment n; Sheldon v. Edwards, 35 N.Y. 279; MacAffer v. Boston and Maine Railroad, 268 N.Y. 400, 197 N.E. 328; But see comment 65 Harvard Law Review 820, 845.

Under this principle, the issue of whether the supplying of food to the Bethel family is an exempt use could not be relitigated and Justice Coon's decision upon that issue would have to be held to be res judicata, if the doctrine of res judicata were held to be applicable at all to issues of the kind here involved.

This brings us to the principal question in the case, whether the doctrine of res judicata is applicable to the granting or denial of an exemption from taxation where the right to the exemption depends upon the nature of the use of the property at the time of the proposed assessment. We should note first of all that we are here concerned with that aspect of res judicata which is referred to as collateral estoppel, Restatement ofJudgments, §§ 68-72; Scott, Collateral Estoppel by Judgment, 56 Harvard Law Review 1, rather than with the effect of a former adjudication as a bar to the relitigation of the same cause of action. The assessment for one year is a separate and different cause of action from the assessment for another year. 'Each annual proceeding is separate and distinct from every other'. People ex rel. Hilton v. Fahrenkopf, 279 N.Y. 49, 52-53, 17 N.E.2d 765, 766. However, despite the fact that the causes of action are different, an issue which was actually litigated and decided in one proceeding may not be relitigated between the same parties in another proceeding. That is the substance of the doctrine of collateral estoppel. 'The estoppel is limited in such circumstances to the point actually determined.' Schuylkill Fuel Corporation v. B. & C. Nieberg Realty Corp., 250 N.Y. 304, 307, 165 N.E. 456, 457.

It is elementary that the doctrine of collateral estoppel is not applicable unless the issue in the second proceeding is identical with that in the first. In necessarily follows from this principle that the doctrine of collateral estoppel cannot apply to a claim of charitable or religious exemption where the granting or denying of the exemption depends upon...