Summary
In Dudley, we described the "gist of the petitions is that they allege a broad perversion of the entire process of granting exemptions, with the resulting deterioration of the tax base and imposition on petitioners of a hugely disproportionate share of municipal expenses" (id., at 550).
Summary of this case from Matter of Colella v. Board of AssessorsOpinion
Argued February 11, 1981
Decided April 30, 1981
Appeal from the Appellate Division of the Supreme Court in the Third Judicial Department, CON. G. CHOLAKIS, J.
Peter H. Bouman and George L. Ingalls for appellant in the first above-entitled proceeding. Robert Abrams, Attorney-General (Shirley Adelson Siegel and George M. Thorpe of counsel), for appellant in the second above-entitled proceeding.
Stephen L. Oppenheim for respondents.
The main issue on this appeal is whether individual taxpayers may, by way of an article 78 proceeding, challenge wholesale religious exemptions from taxation granted to other property owners. The Appellate Division held that in this situation the exclusive procedure for the challenge was article 7 of the Real Property Tax Law.
The instant litigation, as well as the litigation involved in two related appeals (see Town of Hardenburgh v State of New York, 52 N.Y.2d 536; and Matter of State Bd. of Equalization Assessment v Kerwick, 52 N.Y.2d 557 [both decided herewith]), came about as a result of the dramatic increase in the number of parcels of land accorded tax-exempt status by respondent Kerwick, the Assessor of the Town of Hardenburgh, in 1977. It is undisputed that this increase was due to the enrollment, en masse, of 88% of the town's landowners as officers in an allegedly religious denomination known as the Universal Life Church. It appears that all Universal Life Church members who sought an exemption received one. The facts in the petition, which for present purposes are assumed to be true, state that on April 27, 1977 Kerwick telephoned petitioner James Dudley and informed him that if he failed to become a Universal Life Church follower he, along with 12% of the remaining landowners, would have to pay the full $500,000 annual governmental expense of the town. Allegedly Kerwick also represented that as assessor, he intended to accept and approve all exemption applications filed by members of the Universal Life Church and that should petitioner Dudley desire to join he could do so at the town supervisor's house. Dudley refused.
Within four months of the filing of the assessment roll, Dudley commenced this article 78 proceeding seeking to challenge Kerwick's actions. Shortly thereafter, petitioner State of New York, a substantial landowner and taxpayer in the town, also brought an article 78 proceeding seeking essentially the same relief. In both proceedings, petitioners sued on behalf of themselves and other taxpayers similarly situated. Respondents moved to dismiss in both cases on various grounds including failure to state a cause of action, failure to join necessary parties and untimeliness. Special Term, treating the proceedings in a joint opinion, denied respondents' motions to dismiss and allowed the matter to proceed as a class action on behalf of all nonexempt property owners. The Appellate Division reversed, based on its conclusion that article 7 of the Real Property Tax Law was petitioners exclusive method to challenge the exemptions, and that the 30-day Statute of Limitations contained in section 702 of the Real Property Tax Law had run. We disagree.
Historical background and a practical construction of article 7 of the Real Property Tax Law indicate that it was designed by the Legislature as a remedy for the taxpayer who wishes to challenge an excessive or illegal assessment on property in which he has an ownership interest (Matter of Board of Educ. v Parsons, 61 Misc.2d 838, 842). It was not designed to reach the unusual situation encountered here, where taxpayers concede the propriety of their own assessments, but seek instead to challenge the assessor's action in granting wholesale exemptions to other properties within the town.
The ancestry of what is now article 7 can be traced back to the common-law writ of certiorari which allowed review of tax assessments only upon the limited grounds of an assertion of want of jurisdiction, or some basic illegality, as distinguished from errors in judgment on questions of fact or law (History of Tax Certiorari Proceedings, Fifthteenth Ann Report of N Y Judicial Council, 1949, pp 324, 325). The function of the common-law writ, however, was not broad enough to provide review of assessments on the grounds that they were excessive or unequal (People ex rel. Kendall v Feitner, 51 App. Div. 196, 199) and to remedy this perceived defect in the common law, the first statutory certiorari proceeding to review tax assessments was enacted in 1880 (L 1880, ch 269). The tax certiorari proceeding subsequently was made a part of the Tax Law in 1896 (L 1896, ch 908, §§ 250-264), and in 1909 it was enacted as article 13 of the Tax Law (L 1909, ch 62). In 1959, article 13 was superseded by the provisions of article 7, which, insofar as we are here concerned, was not designed to make any substantive change (see Governor's Memorandum, N Y Legis Ann, 1958, p 496; Kilmer, Introduction to the Real Property Tax Law, reprinted in McKinney's Cons Laws of NY, Book 49A, Real Property Tax Law [1960], p XXIII, at p XXXIII).
Article 13 was completely revised in 1949 to eliminate some anachronistic procedural formalities, but the substantive nature of the proceeding remained unchanged (Fifteenth Ann Report of NY Judicial Council, 1949).
It is clear then that the tenor of article 7 is to provide an expeditious procedure by which the numerous and expectable challenges by taxpayers of their own assessments can be resolved (Matter of Board of Educ. v Parsons, 61 Misc.2d 838, supra). It is reasonable in this situation that the Statute of Limitations be very short, because the taxpayer has before him, or can shortly assemble, all the pertinent facts demonstrating that his particular assessment is overvalued, illegal or unequal to others (Real Property Tax Law, § 706). Viewed in this light, Matter of Hellerstein v Assessors of Town of Islip ( 37 N.Y.2d 1) properly was brought as an article 7 proceeding, even though the taxpayer challenged the legality of every assessment on the roll, because such a wholesale challenge was a logical derivation of the taxpayer's challenge to the legality of her own assessment, on the ground that the assessor had failed to assess property in the taxing unit at full value (see Real Property Tax Law, § 306). But no such situation exists in this case, where the taxpayers concede the legality of their own assessments, where activities of the assessor which are challenged pertain to many other parcels on the assessment roll, and where the facts must be developed concerning a multitiude of specific exemptions. Such a challenge is outside the scope and intent of article 7 and, accordingly, the Appellate Division was incorrect in applying the 30-day Statute of Limitations contained in article 7.
It being clear that petitioners do not challenge governmental action with regard to their specific assessments, the question remains whether the activity challenged falls within the ambit of CPLR article 78. The gist of the petitions is that they allege a broad perversion of the entire process of granting exemptions, with the resulting deterioration of the tax base and imposition on petitioners of a hugely disproportionate share of municipal expenses. Without doubt petitioners have alleged a wrong; the question is whether they have a remedy.
In arguing that they do not, respondents placed great reliance on an 1893 opinion of this court in the case of Van Deventer v Long Is. City ( 139 N.Y. 133, 138) in which it was stated: "The question may be asked, what is the remedy of the taxpayer whose taxes are too high because some property has been omitted from the assessment roll? Where the omission is intentional he may prosecute the assessors criminally for taking a false oath to the assessment roll. His remedies may be very inadequate. But he is in the position of every citizen aggrieved by governmental action. He must appeal to public opinion and to the ballot, and use his efforts to procure the election of better or more competent assessors."
The inherent flaw in this statement is clearly reflected in the present case. There is little likelihood that the populace of the Town of Hardenburgh will exercise the ballot to remove respondent Kerwick. In this town, if the petitions are to be believed, the only assessor likely to be removed is not the one who acts to create the injustice, but instead one who terminates it. It is precisely this type of tyranny of the majority which the Van Deventer rule endorses and for this reason we deem the above-quoted language ill-advised, as well as inconsistent with the more recent trend of liberalizing the ability of taxpayers to challenge governmental action (see Boryszewski v Brydges, 37 N.Y.2d 361). Therefore, to the extent that Van Deventer is inconsistent with the result we reach in this case, it is expressly disapproved.
The dissenter's suggestion that the "tyranny of the majority" is the political norm misses the point. In no way do we suggest that the people's will as expressed in an election is to be circumvented by judicial proceedings. The issue of religious exemptions was never approved in Hardenburg — even if it had, approval by local referendum cannot justify actions of an assessor in direct contravention of State law. It is the Legislature, not the town assessor, which determines the qualifications for exemption. In this instance emphasis on the sanctity of the elective process is more appropriately placed on lawful enactments of the duly elected State Legislature.
The petitioners here have alleged far more than erroneous determinations regarding some of the property in the town. They accuse the assessor of virtually ignoring statutory guidelines in granting exemptions to Universal Life Church members. In this situation, if we hold he may do so with impunity, we would, in essence, give assessors unbridled authority to create new grounds for exemption as they please, by the device of warping those statutory exemptions presently in effect. It is axiomatic that the Legislature, not the assessor has authority to create grounds for exemption from taxation. When an assessor grants exemption from taxation in wholesale fashion indicating that he has arrogated this legislative power to himself, he cannot cloak himself with protection surrounding individual discretionary decisions, and relief by way of an article 78 proceeding will lie.
To be sure, in view of the public interest against frequent second-guessing of assessment decisions, the burden the petitioners must carry in this case is not slight. However, we need not decide at this juncture whether this burden has been met, and it suffices to note that petitioners have alleged a broad conspiracy involving arbitrary and bad-faith abuses of the exemption process.
There remains to be discussed the procedural context in which this challenge is to go forward. As stated previously, the Special Term permitted the petitioners to sue as a class on behalf of themselves and other similarly situated taxpayers. The Appellate Division, however, declined to rule on the propriety of this device because of its erroneous view that the proceedings were time barred. For this reason a remittal is necessary to provide the Appellate Division with an opportunity to exercise its discretion.
We are also presented with the question as to whether the persons who enjoyed the religious exemptions from taxation should be joined as parties. Because, in essence, petitioners seek to have this significant privilege revoked, we think it beyond any doubt that these persons are necessary parties (see CPLR 1001; City of New York v Long Is. Airports Limousine Serv. Corp., 48 N.Y.2d 469, 475; Siegel, New York Practice, § 132, pp 162-163). The petitioners have by their amended petition sought to join as a respondent class the exempted property owners. It is specifically recognized in CPLR 901 (subd a), that whereas joining respondents as a class may be appropriate, such joinder may present additional problems (see Siegel, New York Practice, § 146, pp 188-189). In any event, the intial determination in this regard is a matter of discretion which has not yet been exercised and is a matter to be addressed on remittal. Of course in the event that class treatment is found inappropriate, this does not rule out joinder in a more conventional fashion.
Joining respondents as a class may well pose a problem in this case in the event that further development of the record indicates that the situation of each exempted landowner poses differing facts reflecting on the legitimacy of the exemption.
Accordingly, the orders of the Appellate Division should be reversed, and the matter remitted to that court for further proceedings in accordance with this opinion.
The majority in this case has approved the use of CPLR article 78 as a vehicle for challenging the wholesale omission of certain real properties from the tax rolls of a small community. Outraged by allegations in the petitions suggesting a flagrant abuse of the religious tax exemption in the Town of Hardenburgh, the majority posits that there must be a judicial remedy for the individual property owners who suffer the consequences of the tax assessor's actions. As the majority recognizes, however, the rule articulated in Van Deventer v Long Is. City ( 139 N.Y. 133, 138) presents an insuperable obstacle to affording the petitioning taxpayers a remedy in this case. Thus, the majority concludes, that 88-year-old precedent must be disregarded. Because I believe that the Van Deventer rule represents a sound policy of judicial abstention and respect for the political processes, I must respectfully offer my dissenting views.
It should be made clear that I do not sanction the actions allegedly taken by the tax assessor in this case. At this point in the litigation, the only question before the court is whether the petitioners have a legal right to maintain the present proceeding. Thus, I base my dissent only upon my colleagues' decision to overrule the Van Deventer decision, in which this court unanimously held that a taxpayer may not maintain an action or proceeding to challenge the legality of the tax assessor's decision to omit certain properties from the tax roll even though the taxpayer claims that the assessor acted fraudulently.
It has been observed that "[g]reat cases like hard cases make bad law" (Northern Securities Co. v United States, 193 U.S. 197, 400 [HOLMES, J.]). The import of this oft-quoted maxim is obvious. Cases which present a particularly sympathetic set of facts or which have received a high degree of notoriety may often tempt courts and Judges to adopt legal rules that serve well for the moment but cannot withstand the test of time. I am afraid that this case presents a classic illustration of the phenomenon.
The allegations in the petitions, if believed, point to a truly egregious set of circumstances. The town tax assessor, it is alleged, authorized the removal of some 88% of the property within the Town of Hardenburgh from the tax roll on grounds of religious exemption. The exemptions were obtained, according to the petitions, by individuals who claimed adherence to a rather formless religion known as the Universal Life Church, an apparently nondenominational organization with few, if any, recognizable religious tenets. The net result of the tax assessor's action is that the 12% of the town's property owners who are not adherents have been asked to shoulder the tax burden for the entire town. It is this set of circumstances which has led the other Judges of this court to conclude, quite understandably, that there must be a judicial remedy to combat "the tyranny of the majority" (p 551).
My colleagues' reliance upon "loaded" phrases such as this, however, cannot obscure the flaw in their analysis. Our democratic system of government is founded upon the notion that, in most instances, the views and wishes of the majority are entitled to prevail. Indeed, the "tyranny of the majority", which is decried by my colleagues in this case, is, in actuality, the norm in our political system. And, this is so even when a majority of the populace votes in such a way as to further its own parochial or financial interests and, in so doing, impairs the interests of the minority. The various bills of rights contained in the Federal and State Constitutions are the means we have chosen to check the prerogative of the majority when it wishes threaten to impede the fundamental freedoms of those individuals who happen to find themselves in the minority. Where none of these fundamental freedoms are involved and the laws are otherwise observed, however, there is no basis in law or logic for impeding the will of the majority. Hence, it is no objection to the Van Deventer rule to say that it "endorses" the "tyranny of the majority".
Underlying the Van Deventer rule is the simple and sound principle, which my colleagues seem to have overlooked, that there need not be a judicial remedy to right every perceived wrong among citizens. Some controversies, particularly those involving the formulation or implementation of public policies, are not readily amenable to judicial resolution. These controversies, often referred to as nonjusticiable or "political" questions, are best left for resolution in the political or legislative arena. As we previously have had occasion to note, "[t]he power of the judiciary is as subject to * * * limitations as is that of the co-ordinate branches of government, for the spectre of judicial tyranny is no more palatable to a free people than is the threat of an uncontrolled executive or legislative branch" (Saxton v Carey, 44 N.Y.2d 545, 549).
It is noteworthy that the problem which the other Judges of this court have chosen to address has already been remedied to a large extent without the need for resort to judicial intervention. In an apparent effort to close the "loophole" underlying the Hardenburgh situation, the Legislature has enacted an amendment to section 436 of the Real Property Tax Law which will have the effect of narrowing the availability of the religious tax exemption and, perhaps, preventing future Hardenburgh situations from arising (L 1978, ch 738; see Town of Hardenburgh v State of New York, 52 N.Y.2d 536 [decided herewith]). Thus, contrary to my colleagues' assertions, it simply cannot be said that the political process, represented in this case by the elected Legislature, is ineffectual in circumstances such as these.
I would also note that the majority's effort to justify its holding today by drawing an analogy to the liberalized standards for taxpayers' suits is unpersuasive. Our previous cases eliminating barriers to taxpayers' suits and allowing citizens to challenge certain governmental actions have all dealt exclusively with the narrow question of the individual's "standing" to assert an admittedly justiciable claim (see, e.g., Wein v Carey, 41 N.Y.2d 498; Matter of Dairylea Coop. v Walkley, 38 N.Y.2d 6; Boryszewski v Brydges, 37 N.Y.2d 361; Matter of Douglaston Civic Assn. v Galvin, 36 N.Y.2d 1; but see Wein v Comptroller of State of N.Y., 46 N.Y.2d 394 ). None of those cases, however, suggest any fundamental shift in the court's approach to the separate and distinct question of justiciability (Matter of Abrams v New York City Tr. Auth., 39 N.Y.2d 990; see Saxton v Carey, 44 N.Y.2d 545, supra). Thus, they provide no support for the majority's position in this case.
The majority's decision to overrule Van Deventer completely rather than attempting to distinguish that holding from the peculiar circumstances presented here is bound to give rise to certain unfortunate practical consequences which the majority does not appear to have anticipated in its writing. Specifically, now that the majority has decided that Van Deventer is no longer the law in this State, there is presumably nothing to prevent individual property owners from routinely bringing article 78 proceedings to challenge the tax assessor's decision to grant a tax exemption to one or more of their neighbors on grounds of illegality. Indeed, when stripped to its essentials, the holding of the majority is simply that article 78 may be used by a property owner to challenge the favorable tax treatment, in any form, accorded to another as long as the allegations in the pleadings "accuse the assessor of virtually ignoring statutory guidelines". I consider this situation to be a highly undesirable one, since although individual property owners rarely have a substantial financial stake in the amounts collected from their fellow taxpayers, petty jealousies and rivalries may lead them to utilize the procedure authorized in this case to bring vexatious lawsuits.
For all of these reason, I respectfully dissent and cast my vote to affirm the decision of the Appellate Division dismissing the petitions.
Judges JASEN, JONES, FUCHSBERG and MEYER concur with Judge WACHTLER; Judge GABRIELLI dissents and votes to affirm in a separate opinion; Chief Judge COOKE taking no part.
Order reversed, with costs, and matters remitted to the Appellate Division, Third Department, for further proceedings in accordance with the opinion herein.