For the prosecutor, John B. Molineux.
For the defendants City of New Brunswick and John L. Snitzler, Paul W. Ewing (William D. Danberry, of counsel).
Before Justices Bodine, Heher and Perskie.
The opinion of the court was delivered by
HEHER, J. The question for decision is the validity of assessments for taxes for the years 1937 to 1941, inclusive, laid upon real and personal property of prosecutor, and a sale of its lands for taxes levied for the year 1939 and the certificate of sale issued pursuant thereto. Prosecutor is a "Greek Letter Society" organized on November 22d, 1887, under the provisions of chapter 111 of the laws of 1878 (Pamph. L., p. 175); and it claims an exemption from taxation for the years 1937 and 1938 under chapter 46 of the laws of 1936 (Pamph. L., p. 129), and for the years 1939, 1940 and 1941 by virtue of R.S. 1937, 54:4-3.26.
There was a voluntary payment of the taxes thus laid for the years 1937 and 1938; and considerations of sound public policy direct that the taxpayer shall be thereby precluded from assailing the assessments with a view to recovery of the taxes levied and paid. The municipality was warranted in assuming that the payment of the taxes constituted a recognition of the validity of the assessments, and to proceed on that hypothesis in the preparation of its budget for the ensuing year, and thereafter. To permit the taxpayer now to take the contrary course would run counter to sound principles of municipal economy and disserve the public interest. When the assessments were made, it was incumbent upon prosecutor, if it deemed the assessed property to be within the exempt category as defined in the act of 1936, supra, to invoke the procedure laid down in the law for the obtaining of relief in such circumstances. This it did not do. E contra, by the payment of the tax it conceded the non-existence of
grounds for exemption, or waived the right if it existed, and it will not now be heard to claim an exemption. Vide Campion v. City of Elizabeth, 41 N.J.L. 355; Davenport v. City of Elizabeth, 41 Id. 362; Fuller v. Elizabeth, 42 Id. 427; Norris v. Elizabeth, 51 Id. 485; Camden v. Green, 54 Id. 591. The case of St. Mary's Church v. Gloucester, 123 Id. 6, is not in point. There, the court was "not asked to do more than judicially declare what the parties" had "in effect stipulated, viz., that the assessments never had any validity because of the exemption." Here, exemption was not claimed until long after the taxes had been paid, and its validity was challenged by the municipality from the outset. This is not the case of a tax utterly void on its face, but rather of a failure to assert within the allotted time, and by the ordined mode, a right of exemption from a general property tax granted in special circumstances.
The existence of grounds for exemption is a mixed question of law and fact. For obvious reasons, exemptions from taxation are not favored, and so are strictly construed. Such renunciation of sovereignty is sustainable only on grounds of public policy, i.e., the service of an interest fundamentally public and not private. Exemptions not so grounded place an unequal and unjustifiable burden upon property taxed for the operation of government in the common interest. Apart from the criteria laid down in the statute, unless the exemption is founded on a " quid pro quo for the performance of a service essentially public, and which the state thereby is relieved pro tanto from the necessity of performing," it constitutes a "gift of public funds at the expense of the taxpayer," and is "indefensible both under our public policy of equal taxation and our constitutional safeguard against illegal taxation." Carteret Academy v. State Board of Taxes and Assessment, 102 N.J.L. 525; affirmed, 104 Id. 165. Equality is the basic principle of taxation, and a valid exemption therefrom must needs serve the common interest in substantial particulars. Dwight School v. State Board of Tax Appeals, 114 Id. 594; affirmed, 117 Id. 113. To the same effect is City of Camden v. Camden County Board of Taxation, 121
Id. 262; affirmed, 122 Id. 381. But for another and dispositive reason to be presently stated, there is no occasion to determine whether this particular property falls into the statutory category.
Invoking the case of Alpha Rho Alumni Association v. New Brunswick, 126 N.J.L. 233; affirmed; 127 Id. 232, prosecutor challenges the constitutionality of the provision of section 54:4-3.26 of the Revision of 1937 that nothing therein contained "shall be construed to permit the exemption of property owned directly or indirectly, or for the benefit of, organizations commonly known and designated as college clubs, or college lodges, or college fraternities." The basic statute exempts from taxation all property "used in the work or for the purposes" of "fraternal organizations or lodges, or any association or society organized on the lodge plan, or affiliated associations, whether incorporated or unincorporated," under certain circumstances. The case is not in point. There, the court dealt with an assessment made before the enactment of the Revision of 1937; and it was held that chapter 170 of the laws of 1937 (Pamph. L., p. 412), purporting to incorporate by amendment the like provision into chapter 46 of the laws of 1936, supra (the primary statute), was an "attempt * * * to impose a tax by classification of ownership and not of use," and ...