Town of Morristown v. Woman's Club of Morristown

• Decision Date: 18 July 1990
• Citation: 577 A.2d 1309,242 N.J.Super. 654
• Parties: TOWN OF MORRISTOWN, Plaintiff-Respondent, v. WOMAN'S CLUB OF MORRISTOWN, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 654

242 N.J.Super. 654

577 A.2d 1309

TOWN OF MORRISTOWN, Plaintiff-Respondent, v. WOMAN'S CLUB OF MORRISTOWN, Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued April 23, 1990.

Decided July 18, 1990.

Clifford W. Starrett, for defendant-appellant (Schenck, Price, Smith & King, attorneys, Clifford W. Starrett of counsel; Sheilah O'Halloran, Morristown, on the brief).

Harry Haushalter, Deputy Atty. Gen., for intervenor, Atty. Gen. (Robert J. Del Tufo, Atty. Gen., attorney; Mary C. Jacobson, Deputy Atty. Gen., of counsel; Harry Haushalter, on the brief).

Thomas Olson, for plaintiff-respondent (McKirdy and Riskin, attorneys; Thomas Olson and Brian M. Hak, Morristown, on the brief).

Before Judges O'BRIEN, HAVEY and STERN.

The opinion of the court was delivered by

STERN, J.A.D.

This appeal involves the construction and constitutionality of N.J.S.A. 54:4-3.52 which provides:

Any building and its pertinent contents and the land whereon it is erected and which may be necessary for the fair enjoyment thereof owned by a nonprofit corporation and which has been certified to be an historic site to the Director of the Division of Taxation by the Commissioner of Conservation and Economic Development as hereinafter provided shall be exempt from taxation.

The Woman's Club of Morristown ("Woman's Club") appeals from a determination of the Tax Court, 10 N.J. Tax 309 (1989), holding that because the subject property is used "for commercial purposes," it did not "qualify for exemption" from local property taxation pursuant to N.J.S.A. 54:4-3.52. The Woman's Club claims that under the plain language of N.J.S.A. 54:4-3.52 the property is tax exempt irrespective of its use. The respondent Town of Morristown ("Morristown") asserts that the statutory exemption must be considered in light of the general constitutional requirement of uniformity of assessment and taxation, see N.J.S.A. Const. (1947), Art. VIII, § 1, p 1(a), that any exemption must be granted by the general laws, N.J.S.A. Const. Art. VIII, § 1, p 2, and that N.J.S.A. 54:4-3.52 is unconstitutional because it grants an exemption based upon the status of the property owner, not the use of the property. The Attorney General, as intervenor, pursuant to Rule 4:28-4(d), contends that, properly construed, the statute is constitutional. The Attorney General disagrees with the trial judge, however, to the extent his opinion would prohibit application of the exemption by virtue of any commercial use of the property, as opposed to its predominant use. In other words, the Attorney General agrees that the statute should be construed to save its constitutionality, but contends that the statute can be construed as constitutional if the property is used, to some degree, for a non-profit, non-commercial purpose.

There is no substantial challenge to the Tax Court's finding of standing in this case, and the facts are undisputed. See 10 N.J. Tax at 312-316. It is apparent that the Tax Court construed the statute as it did, in light of the maxim that "[t]he Judiciary is obliged to interpret legislation so that it will be constitutional." 10 N.J. Tax at 320; see also, e.g., N.J. Bd. of Higher Ed. v. Shelton College, 90 N.J. 470, 478, 448 A.2d 988 (1982). The Tax Court perceived that a different construction would run afoul of Art. VIII of the Constitution which provides, in relevant part, that:

ARTICLE VIII

Taxation and Finance

Section 1

1. (a) Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value, except as otherwise permitted herein, and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing district.

* * * * * *

2. Exemption from taxation may be granted only by general laws. Until otherwise provided by law all exemptions from taxation validly granted and now in existence shall be continued. Exemptions from taxation may be altered or repealed, except those exempting real and personal property used exclusively for religious, educational, charitable or cemetery purposes, as defined by law, and owned by any corporation or association organized and conducted exclusively for one or more of such proposes and not operating for profit.

The constitutional problem arises because of the perception that N.J.S.A. 54:4-3.52 provides an exemption based on the status of the property owner and that its constitutionality can be saved only by limiting the use of the exempt property so that the exemption turns upon the nature or use of the property.

The nature of the issue is best understood in light of the governing constitutional principles of taxation as explained by Chief Justice Vanderbilt in N.J. Turnpike Authority v. Washington Tp., 16 N.J. 38, 44-45, 106 A.2d 4 (1954):

... tax exemption statutes, if based on the personal status of the owner rather than on the use to which the property is put, run afoul of the tax article of the Constitution of 1947 which provides in part: "Property shall be assessed for taxation under general laws and by uniform rules," Const. Art. VIII, Sec. I, par. 1. The similar provision of the Constitution of 1844, Art. IV, Sec. VII, par. 12, that "Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value," has been soundly construed to prohibit such exemptions:

"The decisions construing this constitutional provision, in so far as they have sanctioned classifications as the basis for legislation, either for taxation or for exemption, have done so upon the express ground that such classifications were based upon features that inhered in the property itself, or in the purposes to which it or its usufruct was devoted. To substitute for property in such classifications the persons who own property, and then to base the proposed exemption upon the status or vocation or avocation of such persons, is without any constitutional warrant. Exemptions from taxation, therefore, of property, real or personal, that are based not upon any characteristic possessed by such property, or upon the uses to which it is put, but upon the personal status of the owners of such property, are void." Tippett v. McGrath, 70 N.J.L. 110, 113 (Sup.Ct.1903), affirmed 71 N.J.L. 338 (E. & A. 1904). [emphasis in original].

In light of the constitutional requirements, the Court in N.J. Turnpike Authority also made clear "[w]e must decline to give a construction to the statute under consideration that would render it unconstitutional." Id. 16 N.J. at 45, 106 A.2d 4. It is clear that the Tax Court endeavored to be faithful to this command.

However, in construing a statute we must ordinarily first consider its plain language and give the statute its ordinary meaning in the absence of any specific indication of legislative intent to the contrary. See Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123, 128, 527 A.2d 1368 (1987); Mortimer v. Board of Review, 99 N.J. 393, 398, 493 A.2d 1 (1985). We cannot speculate on legislative intent "[w]here the wording of the statute is clear." See Duke Power Co. v. Patten, 20 N.J. 42, 49, 118 A.2d 529 (1955).

Under the plain language of the statute there are only two requirements for exemption, (1) ownership by a non-profit corporation, and (2) certification of the property as an historical site by the Commissioner of the Department of Environmental Protection, as the successor to the former Commissioner of Conservation and Economic Development. ¹ There is no expressed statutory requirement that this property be used, predominantly or otherwise, in furtherance of its historical purpose. In considering legislative intent, we note that the existence of other exemption statutes which embody use requirements reveal that the legislature expressly adopted such requirements when it intended to do so. In light of these statutes, see and compare, e.g., N.J.S.A. 54:4-3.3, -3.5, -3.6, -3.10, -3.15, -3.24, -3.26, -3.27, most or all of which were enacted before N.J.S.A. 54:4-3.52, we believe that the Legislature would have provided for a use requirement or a provision with respect to the use of any income from commercial leasing of the premises, if it desired to do so. Accordingly, we agree with Woman's Club that the Tax Court added a requirement for exemption not embodied in the statute. Further, it is a well established maxim that while statutes are to be interpreted to save their constitutionality, the constitutional issue should not be addressed "unless absolutely imperative in the disposition of the litigation." Donadio v. Cunningham, 58 N.J. 309, 325-326, 277 A.2d 375 (1971); see also Ahto v. Weaver, 39 N.J. 418, 428, 189 A.2d 27 (1963); Grant v. Wright, 222 N.J. Super. 191, 197-198, 536 A.2d 319 (App.Div.1988), certif. den. 111 N.J. 562, 546 A.2d 493 (1988).

In Paper Mill Playhouse v. Millburn Tp., 95 N.J. 503, 472 A.2d 517 (1984), discussed by the trial judge in this case, the exemption in question arose under a different statute, N.J.S.A. 54:4-3.6, which required that the property be "actually and exclusively used" by a non-profit association or corporation for "moral and mental improvement" in furtherance of the tax exempt purpose. The Supreme Court considered questions of statutory construction and application, and held that the theatre was entitled to the exemption despite the fact that it retained surplus and occasionally ran financially successful productions. Id. at 520-21, 472 A.2d 517. Unlike Paper Mill Playhouse, here the statute in question does not contain a requirement as to use, exclusive or otherwise, or a prohibition on use of part or all of the premises for profit. See also The Kimberley School v. Town of Montclair, 2 N.J. 28, 65 A.2d 500 (1949), which also involves a construction of N.J.S.A....