Conford, Kilkenny and Lewis. The opinion of the court was delivered by Lewis, J.A.D.
The Pingry Corporation, owner and operator of The Pingry School, a private day school for boys, located in the Township of Hillside, appeals from a series of final judgments of the Division of Tax Appeals, Department of the Treasury, of the State of New Jersey.
In 1962 the municipality rendered 14 tax bills to Pingry assessing for taxation all of its property. Upon appeals to the Union County Board of Taxation, the assessments were set aside as to the personal property and the several school buildings including seven faculty houses, but were retained as to certain lands, including the lots upon which the seven faculty dwellings were erected. Hillside thereupon appealed to the State Division of Tax Appeals, and Pingry cross-appealed.
The Division entered final judgments affirming the cancellation of the assessments on the personal property, tennis courts, residence of the property superintendent, the equipment shed buildings, and the main school building and its curtilage except for the assessment as to land in excess of the five-acre statutory limitation. Judgments were also entered reinstating the assessments on the seven faculty houses and affirming the assessments on the lots upon which they were situate. Pingry prosecuted separate appeals to this court from the several judgments respecting the faculty dwellings, land and improvements. Hillside did not appeal or cross-appeal.
By an appropriate order the Pingry appeals were consolidated.
Appellant's tax exemption claim, herein asserted, is predicated upon the contentions that (1) it is a nonprofit school within the meaning of N.J.S.A. 54:4-3.6, and (2) its faculty houses are actually used for school purposes. The amounts of the assessments in question are concededly not in dispute.
The pertinent language of N.J.S.A. 54:4-3.6 reads:
"The following property shall be exempt from taxation under this chapter: All buildings actually used for colleges, schools, academies or seminaries; * * * the land whereon any of the buildings hereinbefore mentioned are erected, and which may be necessary for the fair enjoyment thereof, and which is devoted to the purposes above mentioned and to no other purpose and does not exceed 5 acres in extent; * * * provided, in case of all the foregoing, the buildings, or the lands on which they stand, or the associations, corporations or institutions using and occupying them as aforesaid, are not conducted for profit * * *." (L. 1941, c. 243, p. 663, § 1, and note latest amendment L. 1964, c. 42, § 1) (Emphasis supplied)
There is a dual aspect to the sine qua non of that legislation. For schools to be tax-exempt they must function as non-profit organizations and their tax-free property must be "actually used for" school purposes. Exemptions of such a character when used "exclusively" for educational purposes are afforded constitutional protection. Constitution of 1947, Art. VIII, § I, par. 2.
The evidence presented at the hearing before the Division included certified copies of certificates of incorporation and amendments thereto, letters indicating that the school was exempt from United States income taxes, a schedule of comparative tuitions of Pingry with other schools, various auditors' reports, a summary of the school's faculty housing rental income, a tabulation of salary ranges, depositions of a certified public accountant and a former headmaster, now a school
consultant, and the testimony of the present headmaster, who was also the chairman of the finance committee of the board of trustees. No testimony was proffered on behalf of Hillside. Additionally, the parties entered into a 21-point stipulation of facts which stated, inter alia, (a) "the buildings belonging to the school were paid for from the proceeds of gifts and donations from individuals and charitable foundations"; (b) "on the basis of the annual auditor's reports * * * the school would show an operating deficit without the receipts of annual giving," and (c) "the availability of faculty housing has facilitated obtaining and retaining competent faculty members."
It appears from the record that The Pingry School has been in existence over 100 years. Prior to 1953 it was located in the City of Elizabeth, and thereafter in the adjoining Township of Hillside. The school was originally incorporated in 1892 in the form of a profit-making organization. But, in 1922, it became a nonprofit corporation under "An Act to Incorporate Private Schools" (L. 1922, c. 117, p. 210, now R.S. 15:11-9 to 15). It was reincorporated in 1962 under our statutes dealing with corporations not for pecuniary profit and, in particular, pursuant to R.S. 15:1-12. Pingry operates solely as a boys' day school and has a present enrollment of 535 students in grades 4 to 12. The school is managed by a board of trustees, currently 27 in number, who serve without remuneration.
In a landmark case, The Kimberley School v. Town of Montclair, 2 N.J. 28 (1949), a private day school organized as a nonprofit corporation under R.S. 15:1-1 et seq. had been denied exemption from taxation of its real and personal property, owned and used for school purposes, because it was not fundamentally charitable or philanthropic. On appeal our Supreme Court, in applying N.J.S.A. 54:4-3.6 to the facts there presented, expressly abandoned the judge-made "charitable or philanthropic" criterion which had been ...