Association of the Bar of the City of New York v. Lewisohn, 34 N.Y.2d 143 (1974)
An organization is not entitled to a real property tax exemption merely because it provides a public benefit; it must be organized and conducted primarily for religious, educational, or charitable purposes.
Summary
The Association of the Bar of the City of New York and the Explorers Club challenged the revocation of their real property tax exemptions. The City of New York, acting under a state law permitting it to do so, revoked the exemptions, arguing that the organizations were not primarily charitable or educational. The New York Court of Appeals reversed the lower courts, holding that while both organizations provided public benefits, their primary purposes were not charitable or educational, and therefore they were not entitled to the exemptions. The court also upheld the constitutionality of the state law permitting the revocation of the exemptions.
Facts
The Association of the Bar of the City of New York is an organization dedicated to cultivating jurisprudence, promoting legal reforms, facilitating justice, and elevating professional standards. It maintains a law library and conducts activities through committees addressing judicial qualifications, grievances, legislation, and legal education. The Explorers Club promotes exploration and research in the earth sciences, maintains a library, provides grants for expeditions, and offers educational programs. Both organizations had previously enjoyed real property tax exemptions but were notified in 1972 that these exemptions were revoked under a new local law.
Procedural History
The Association of the Bar and the Explorers Club separately challenged the City of New York’s decision to revoke their real property tax exemptions. The Appellate Division sustained the organizations’ entitlement to the exemptions. The City of New York appealed to the New York Court of Appeals.
Issue(s)
1. Whether the properties of the Association of the Bar of the City of New York and the Explorers Club qualify for real property tax exemptions as properties owned by charitable or educational organizations.
2. If the properties do not qualify for exemption, whether the legislation permitting the return of the properties to the tax rolls violates due process or equal protection of the law.
Holding
1. No, because the organizations were not organized and conducted primarily for charitable or educational purposes.
2. No, because the state has broad discretion in selecting subjects for taxation and granting exemptions, and the classification was not palpably arbitrary.
Court’s Reasoning
The Court reasoned that to qualify for a tax exemption under section 421 of the Real Property Tax Law, an organization must be organized exclusively for religious, charitable, hospital, educational, or cemetery purposes. While the Association of the Bar provides public benefits through activities like judicial candidate screening and grievance processing, its primary focus is on the professional interests of its members. Similarly, the Explorers Club, while engaging in educational activities, is primarily focused on scientific exploration and research. The Court emphasized that public benefit is not the determining factor for exemption; the organization’s primary purpose is crucial. The Court also pointed to the legislative history of section 421, which indicated a legislative intent to stem the erosion of municipal tax bases by limiting exemptions. Regarding the constitutional challenge, the Court stated that the state has broad power to devise reasonable tax policies, and the classification distinguishing between organizations conducted primarily for religious, charitable, hospital, educational, or cemetery purposes and those conducted for scientific or bar association purposes was not arbitrary. The court quoted Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359 (1973), noting that “the State has great freedom in selecting the subjects of taxation and in granting exemptions”.