Plattsburgh College Benev. & Ed. Ass'n v. Board of Assessors of Town of Peru

CourtUnited States State Supreme Court (New York)
Writing for the CourtHAROLD R. SODEN
Citation43 Misc.2d 741,252 N.Y.S.2d 229
PartiesIn the Matter of the Application of PLATTSBURGH COLLEGE BENEVOLENT AND EDUCATIONAL ASSOCIATION, Inc., Petitioner, v. The BOARD OF ASSESSORS OF THE TOWN OF PERU, Clinton County, New York, Respondents, For a review of the assessment of certain real property in the said Town of Peru, Clinton County, New York.
Decision Date20 July 1964

Robinson & Holcombe, Plattsburgh, for Plattsburgh College Benevolent and Educational Assn.

Jerry, Lewis & Harvey, Plattsburgh, for Board of Assessors of Town of Peru.


Plattsburgh College Benevolent and Educational Association, Inc. brought this proceeding against respondent, Board of Assessors, to claim the benefit of the tax exemption provided by § 420 of the Real Property Tax Law for qualifying corporations or associations. The petitioner has paid the assessed 1963 school taxes under protest and these are the only taxes at issue. Both parties agree that petitioner is entitled to have its real estate exempted from taxation, including school taxes, if the petitioner proves, first, that it is a corporation organized exclusively for charitable and educational purposes and, secondly, that it actually uses the real property in question exclusively in furthering or carrying out one or more of such purposes. The respondent claims that the petitioner does not meet either of these requirements and that, therefore, the realty, located in the Town of Peru, Clinton County, New York, is not exempt from local taxation. The respondent has denied the petitioner's application for exemption.

On December 13, 1945, the petitioner was incorporated as a membership corporation of New York State. On May 25, 1950, the petitioner filed an Extension of Powers which gave it the authority 'to aid young men and women who are students at the State Teachers College at Plattsburgh, by assisting them in every possible way in their work, student living and extra-curricular activities * * *'. On June 7, 1963, the petitioner acquired the above captioned name after filing a Certificate of Change of Name.

In addition to the above cited powers, petitioner has the power to receive gifts, loans, bequests or funds donated to Plattsburgh State Teachers College and to ransfer the principal and/or the income to: (a) The State Teachers College at Plattsburgh, or (b) the New York State Dormitory Authority, or (c) to any purpose in connection with the welfare of the students and faculty as either the donor or the Association (petitioner) may see fit. As a guideline for the use of such funds, the corporate powers and purposes state that funds received are '* * * to be devoted to student scholarships, student loan funds, or other financial assistance to students, or such other purposes as may be of benefit to the students, the college in general, or the alumni association * * *'.

The Plattsburgh College Benevolent and Educational Association, Inc., herein called the petitioner, has its membership provisions set forth in the incorporating papers. The petitioner shall consist of not less than eleven nor more than fifteen persons and of those, two persons shall be selected from the administrative staff of the college; two shall be members of the faculty; one shall be a member of the alumni association; one shall be a member of the Board of Visitors; and, apparently three shall be the student presidents of the House of Delegates (a student organization comprized of the three upper classes). The college president is an ex-officio member. There was no proof as to the present proportion of faculty and administration to students or as to which group actually ran the Association.

From a reading of the corporate purposes and powers, it appears that the petitioner has final power to determine the use of donated funds in the absence of the donor's specific direction. Such power should be exercised within the guidelines above set forth but the last clause quoted, 'or such other purposes as may be of benefit to the students, college in general or the alumni association * * *.', allows a great deal of flexibility. It further appears that the petitioner has the exclusive power to determine what the 'welfare of the students and faculty' demands in allocating funds. This phrase also introduces an element of flexibility which may be much needed by petitioner in meeting the needs of the students and faculty.

The Certificate of Incorporation clearly indicates that the petitioner is a self-governing membership corporation which is entitled to operate entirely independent of Plattsburgh State Teachers College. The petitioner is not an educational institution but rather functions as an auxiliary to an educational institution. This would seem to be the reason for the broadly drawn corporate purposes and powers.

Petitioner's history bears out this conclusion. About 1951, when new residence halls and college unions were built at Plattsburgh and throughout New York State for the various teachers' colleges, comprising the State University of New York, an agreement was reached between the Dormitory Authority, the title holder, and the State University trustees to the effect that providing food and other services should be handled by the trustees or whomever they delegated. It could be operated by the trustees or it could be put up for bid. Plattsburgh undertook to form an independent membership corporation which, among other things, conducted a service of furnishing food to the students. As present this entails serving 21 meals a week throughout the student year of 35-36 weeks. The present enrollment approximates 1900 students. Some 1200 students are regularly served meals in addition to a la carte service in snack bars. The faculty, as well as the campus school children, also received their meals through this service. The campus school is conducted at Plattsburgh and is used in connection with the teaching program.

The various services conducted by the Association for the fiscal year ending June 30, 1963 showed the following net gains, or profits: Food, $54,371.37; bookstore, $10,497.13; juke boxes, $518.35; vending machines, $2,175.50; operation of Court Street property for faculty, $246.19. The last profit derived from the Nurses Educational Division, which is now being conducted by the State of New York, showed a profit of $20,048.49. The total cash balance of the Association as of June 30, 1963 (the year the Association purchased the Valcour property) from its various activities, was $85,608.28.

There has been no proof that petitioner has used its funds for scholarship purposes or student loans. No proof has been offered to establish that any service has been rendered to any student or faculty at or below cost.

Having presented the facts as to petitioner's history, legal purposes and powers, and actual membership, the court now turns to the real estate. The realty in question is located at Valcour, town of Peru, Clinton County, New York, and was referred to as the Heathcote Estate, Sibley Estate, Harbour Inn, etc. during the argument. Petitioner renamed it and calls it 'Valcour Educational Conference Center'. It will be called the Valcour property in this opinion.

The Valcour real property and furnishings involved in this proceeding were purchased by the Association from its cash profits in February, 1963, for a total sum of $98,350.00. The Valcour property is located about 4-5 miles south of the City of Plattsburgh. It consists of nine acres of land located between New York State Route #9 and the west shore of Lake Champlain. The only alterations to the main building by the Association were the replacement of windows, painting, and the removal of a bar, all of which cost $640.13. The main building provides space for lectures and conferences as well as sleeping quarters. The Association repaired the beach at a cost of $637.00 and the boathouse for $740.00. During the Summer of 1963, the Association allowed the faculty and their families beach, swimming, and recreational privileges and permitted the boathouse, at the time of the trial, to be used to store boats owned by the faculty.

The petitioner has offered proof that the Valcour property has been used at times for teachers' conferences, student meetings and by the alumni. Proof also shows that the property has been used by some of the faculty and some of the students for purposes more accurately classified as recreational.

The proof also shows that the Valcour property is not open to use by all the faculty, students or alumni but that only those who secure prior permission from the college president's office. It further appears that certain nearby residents are allowed to use the Valcour facilities. The petitioner has not proven what criteria the president's office employs in deciding which professor, student, alumnus, or nearby resident shall be allowed to use the Valcour property. The petitioner has not established the relationship between the felt need for screening and the furtherance of educational and charitable purposes.

This relationship becomes important in light of the petitioner's explanation of its purchase of the Valcour property. The petitioner contends that it decided to use its profits from the food service, the bookstore, the juke boxes, the vending machines and the rental of other realty to buy the Valcour realty because, in its judgment, the welfare of the students and faculty required an off-campus location away from telephones in an atmosphere conductive to relaxation and unhurried meditation on educational problems. If the screening criteria were set up to congregate only persons interested in the same or related fields, then, perhaps petitioner could justify this procedure as to faculty, students and even alumni.

The evidence provided at argument thus indicates that the petitioner has broad powers and purposes which fit it for a much needed role as an auxiliary to...

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