On appeal from the Department of the Treasury, Division of Taxation, Transfer Inheritance Tax Bureau.
For affirmance -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- Justice Heher. The opinion of the court was delivered by Oliphant, J. Jacobs, J. (concurring). Justice Brennan joins in this opinion. Wachenfeld, Burling, Jacobs and Brennan, JJ., concurring in result.
This appeal is from inheritance tax assessments levied against the Board of National Missions and the Board of Foreign Missions of the Presbyterian Church. The appeal, taken to the Appellate Division of the Superior Court, before argument there, was certified here on our own motion.
Isabel Wallace, the decedent here, died testate on December 11, 1948, and by the terms of her will and certain trust indentures she transferred to each of the appealing boards the sum of $33,934.32. The boards claimed before the Division of Taxation, Department of the Treasury, that they were educational institutions within the intendment of R.S. 54:34-4(d) and therefore entirely exempt from transfer inheritance taxes. The defendant, the deputy director of the Division of Taxation, held otherwise, determining that the boards fell within the category of transferees as set forth
in R.S. 54:34-2(b) as religious or charitable institutions and were therefore subject to a tax of five per cent on everything in excess of $5,000, as provided therein.
R.S. 54:34-2(b) levies a tax of five per cent on everything in excess of $5,000 on transfers of property to "churches, hospitals and orphan asylums, public libraries, Bible and tract societies, religious, benevolent and charitable institutions and organizations," while R.S. 54:34-4(d), as amended by L. 1948, c. 268, totally exempts transfers of property to or for the use of "educational institutions" provided that the exemptions shall not extend to transfers of property to educational institutions of other states, which do not grant the same exemption of transfers of property for the benefit of such institutions of this State. The State of New York grants this exemption.
The issue presented is, therefore, into which category do these boards fall; are they religious or educational institutions?
The Board of National Missions is a New York corporation and its purpose as stated in its charter is "the extension of Christianity and the Gospel of Christ in all its fullness and His service and all its implications in the United States of America and elsewhere as said general assembly (the governing body of the church) may direct by establishing and strengthening local churches, evangelism, organization and such special enterprises as may be deemed wise." In furtherance of its purpose the board owns and operates 24 boarding schools and 18 day schools throughout the United States, having an enrollment of 7,808, and in addition conducts Sunday schools and daily vacation Bible schools, the enrollment of the latter being 17,536. In addition the board maintains and operates missions, hospitals, dispensaries and community centers. It is said, and it will readily be conceded, that the program of this board is designed to improve and cultivate the religious, literary, social, physical, economic and recreational aspects of the population or community which it touches, and that all its activities are integrated
to bring the Gospel of Christ to the people in the mission fields and teach them to live as Christians.
The Board of Foreign Missions, likewise a New York corporation, was incorporated "for the purpose of establishing and conducting Christian missions outside the continental area of the United States of America, and the general diffusion of Christianity." The purpose of the board, as set forth in the affidavit of the chairman of its administrative committee, is likewise stated as "the general diffusion of Christianity," and all its activities, departments and projects are directed toward that end. The board operates or has a hand in operating 10,052 Sunday schools with an enrollment in excess of 723,000, and 1,775 elementary schools with an enrollment of over 150,000, also medical stations. In the field of its activity it seeks to build mental, physical and spiritual resources for the fullest self-realization by the individual, with complete development of character, personality and inspiration of nationals for the highest services of their community, their nation, their fellowmen and their God.
The general and basic argument of the appellants is that religious, benevolent and charitable institutions which are also educational institutions are exempt from transfer inheritance taxes. It is contended that the words "educational institutions" as used in the statute are not limited to schools and colleges in the ordinary sense but apply to any institution which carries on or performs an educational function. The two boards argue that the educational aspects of their activities are analogous to those performed by our leading Christian colleges in that they are endeavoring to prepare people to live their lives as Christians. They contend that teaching Christianity or religion is just as much educational as is the work and aim of the conventional school or college. They say in effect that their hospitals, dispensaries, community centers ...