Princeton University Press v. Borough of Princeton

• Decision Date: 30 June 1961
• Docket Number: No. A--121,A--121
• Citation: 35 N.J. 209,172 A.2d 420
• Parties: PRINCETON UNIVERSITY PRESS, Petitioner-Appellant, v. BOROUGH OF PRINCETON, Respondent-Respondent.
• Court: New Jersey Supreme Court

Page 209

35 N.J. 209

172 A.2d 420

PRINCETON UNIVERSITY PRESS, Petitioner-Appellant, v. BOROUGH OF PRINCETON, Respondent-Respondent.

No. A--121.

Supreme Court of New Jersey.

Argued April 25, 1961.

Decided June 30, 1961.

George H. Barlow, Trenton, for petitioner-appellant (Katzenbach, Gildea & Rudner, Trenton, attorneys; Albridge C. Smith 3rd, Princeton, of counsel).

Peter T. Bacsik, Princeton, on the brief and of counsel, for respondent-respondent (John F. McCarthy, Jr., Princeton, attorney).

The opinion of the court was delivered by

SCHETTINO, J.

The issue before us is whether the property of Princeton University Press (hereafter referred to as the Press) is tax exempt within the meaning of N.J.S.A. 54:4--3.6.

The Borough of Princeton assessed a tax for land, improvements and personalty for 1957. The Mercer County Board of Taxation denied petitioner's claim of exemption. This action was affirmed by the Division of Tax Appeals on the ground that the property of the Press was not used exclusively for the moral and mental improvement of men, women and children as required by the statute. The Press appealed and, while the matter was pending in the Appellate Division, we certified it.

An examination of the purposes, structure and activities of the Press is necessary for a disposition of the question. The Press was incorporated in 1910. The certificate specifically states that the Press is not incorporated for pecuniary profit and the corporation was formed under the laws applicable to non-profit organizations. R.S. 15:1--1, N.J.S.A. Its purposes as stated in its certificate have remained unchanged.

'The purposes for which this association is formed are, in the interests of Princeton University, to establish, maintain and operate a printing and publishing plant, for the promotion of education and scholarship, and to serve the University by manufacturing and distributing its publications.'

The structure, activities and financial situation of the Press reveal the extent to which the association adheres to these purposes. The membership consists essentially of past, present and Ex officio members of its Board of Trustees and the various committees of the Press. The main function of its membership is to elect the Board of Trustees, a policy-setting body. The Board itself consists of not more than fifteen individuals, nine of whom are trustees, alumni, of faculty members of Princeton University. It meets five times annually. Subordinate to the Board of Trustees are the officers of the Press and various committees which outline Press policy in their respective fields. The Editorial Board, which determines whether material is publishable, is appointed by the President of the University and has five members all of whom must be on the University faculty. The Finance Committee, which provides financial management and supervision, has six members, four of whom are affiliated with the University.

The reason for this close relationship between the Press and the University is clear. As noted, the Press must act 'in the interests of' the University and must 'serve the University'. Additionally, the deed which granted the Press its original land and building specifically provides for a reversion to the University if the Press ceases to act in or serve the University's interests.

The activities of the Press are diversified. A portion of its output consists of scholarly works selected, printed and distributed by the Press. The research for these works is not necessarily done at Princeton, nor need the author be affiliated with Princeton. The Press also publishes the 'Princeton Alumni Weekly,' which reports the activities of University alumni and plays a part in University fund-raising endeavors. The 'Weekly' also contains informative articles on subjects of interest to alumni.

In contrast to its publishing endeavors, the Press engages in activity which can be classified as purely printing work. The Press engages in this printing operation to offset the losses incurred publishing scholarly works. The profit realized from the printing represents a form of subsidy to scholarly publishing. The printing includes work for Princeton University such as examinations, letterheads, billheads, football programs, pamphlets and catalogs.

The remaining printing is done for a variety of educational institutions, not affiliated with Princeton, and for other nonprofit organizations. Among the educational institutions are Rutgers University, Stanford University, The Lawrenceville School, Sweet Briar College and Mount Holyoke College. In the year from August 1957 to July 1958 the relative sales breakdown was as follows: scholarly publishing, 46%; the Alumni Weekly, 9%; Princeton University printing work, 21%; outside printing, 24%.

Profit and loss figures are available for the period, 1947--1957. During the years 1947--1954 the publishing activities operated at a loss, which loss, however, was made up by the printing work of the Press. The combined profit and loss figures for that period show that the Press made a profit in every year except in 1952 and 1953.

During the years 1955--1957, however, the financial picture brightened considerably. Both the publishing and the printing phases of the Press's activity operated at a substantial profit. The combined profits for each of these years were in the ninety thousands. The overall financial picture shows that the Press began with a balance of $101,515.51 in 1947 and climbed to $641,231.83 in 1957, resulting in an earned surplus of $539,716.32 for the eleven-year period.

Petitioner claims that under the language of N.J.S.A. 54:4--3.6 it is entitled to a tax exemption. The pertinent portions of the statute are as follows:

'The following property shall be exempt from taxation under this chapter: * * * all buildings actually and exclusively used in the work of associations and corporations organized exclusively for the moral and mental improvement of men, women and children, or for religious, charitable or hospital purposes * * * the land whereon any of the buildings hereinbefore mentioned are erected, and which may be necessary for the fair enjoyment thereof, and which is devoted to the purposes above mentioned and to no other purpose * * * the furniture and personal property in said buildings if used in and devoted to the purposes above mentioned; * * * provided, in case of all the foregoing, the building, or the lands on which they stand, or the associations, corporations or institutions using and occupying them as aforesaid, are not conducted for profit, except that the exemption of the buildings and lands used for charitable, benevolent or religious purposes shall extend to cases where the charitable, benevolent or religious work therein carried on is supported partly by fees and charges received from or on behalf of beneficiaries using or occupying the buildings; provided, the building is wholly controlled by and the entire income therefrom is used for said charitable, benevolent or religious purposes.'

The fundamental approach of our statutes is that ordinarily all property shall bear its just and equal share of the public burden of taxation. As the existence of government is a necessity, taxes are demanded and received in order for government to function. 51 Am.Jur., Taxation, § 9, p. 42. Statutes granting exemption from taxation represent a departure and consequently they are most strongly construed against those claiming exemption. Township of Teaneck v. Lutheran Bible Institute, 20 N.J. 86, 90, 118 A.2d 809 (1955); Julius Roehrs Co. v. Division of Tax Appeals, 16 N.J. 493, 497--98, 109 A.2d 611 (1954); Trenton v. State Bd....