Hellerstein v. Assessor of the Town of Islip, 37 N.Y.2d 1 (1975)

Real property must be assessed at its full market value for taxation purposes as required by Real Property Tax Law § 306, but courts may delay the implementation of this requirement to avoid significant disruption to existing tax procedures.

Summary

Hellerstein, a property owner, challenged the legality of Islip’s property tax assessments, arguing they violated Real Property Tax Law § 306 by assessing properties at a fraction of their full market value. While acknowledging the widespread practice of fractional assessments, the Court of Appeals held that § 306 mandates assessments at full market value. However, recognizing the potential for fiscal chaos, the court deferred the implementation of the full value requirement, allowing the town a reasonable time, not exceeding December 31, 1976, to transition to the new assessment method. This decision affirmed the statutory requirement for full value assessments while mitigating the immediate disruptive effects of changing long-standing practices.

Facts

Petitioner Hellerstein, a property owner in the Town of Islip, initiated a proceeding under Article 7 of the Real Property Tax Law, asserting that the town’s entire assessment roll was void. Her claim was based on the argument that assessments were not made in accordance with Section 306 of the Real Property Tax Law, which mandates that all real property be assessed at its full value. It was conceded that the assessments throughout the township were based on a percentage of market value, rather than full market value.

Procedural History

The Supreme Court, Suffolk County, dismissed Hellerstein’s petition. The Appellate Division, Second Department, affirmed the dismissal, citing McAlevey v. Williams as binding precedent, though noting cases from other states supporting the prohibition of fractional assessments. The case then reached the New York Court of Appeals by leave of the Appellate Division.

Issue(s)

Whether Real Property Tax Law § 306 requires that real property be assessed at 100% of its full market value, and if so, whether a court must immediately invalidate an assessment roll that does not comply with this requirement, potentially causing fiscal disruption.

Holding

Yes, because Real Property Tax Law § 306 mandates that all real property in each assessing unit be assessed at its full value, which means market value. However, the order directing the township to assess at full value should not go into effect immediately; the township should be allowed a reasonable time, not later than December 31, 1976, to make the transition.

Court’s Reasoning

The court acknowledged the long-standing, nearly 200-year-old, practice of fractional assessments in New York State, despite the statutory requirement for full value assessments. The court reviewed prior cases criticizing fractional assessments, such as Van Rensselaer v. Witbeck and People ex rel. Board of Supervisors v. Fowler, which condemned the practice as a violation of the statute and assessors’ oaths. However, the court also addressed cases like C.H.O.B. Assoc. v. Board of Assessors, which seemed to endorse fractional assessments by focusing on uniform percentages. The court rejected the argument that the creation of the State Equalization Board implied legislative approval of fractional assessments, emphasizing the Board’s role in ensuring equality among taxing units, not within them.

Quoting Matter of Wendell v. Lavin, the court stated, “[P]lain and clear provisions of a Constitution require no such aid; they are to be enforced and brought to life early or late, and must not be smothered by the accumulation of customs or violations.” The Court recognized the potential for fiscal chaos if it immediately invalidated the assessment roll. Citing Matter of Andresen v. Rice, the court stated it should not act “so as to cause disorder and confusion in public affairs even though there may be a strict legal right.”

Balancing the need to enforce the statute with the practical consequences, the court directed the township to implement full value assessments by December 31, 1976. This allowed the township time to adjust its procedures and avoid immediate disruption. In the interim, assessments could continue under the existing practice, and related tax levies, liens, foreclosures, and transfers would not be subject to challenge based on non-compliance with § 306.