For reversal and remandment -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman, Clifford and Schreiber. For affirmance -- Judge Conford. The opinion of the court was delivered by Schreiber, J. Conford, P.J.A.D., Temporarily Assigned, dissenting.
[72 NJ Page 394] This case concerns the tax exempt status of a 63.4 acre tract of land in Jefferson Township owned by the Boys' Club of Clifton, Inc. (Boys' Club), a non-profit organization. The property had been acquired in 1966 and was tax exempt until its assessment for the years 1971 and 1972. The Boys' Club appealed to the Morris County Tax Board which affirmed the assessments. On the basis of a stipulated set of facts, the State Division of Tax Appeals reversed. The Appellate Division reversed and remanded for the presentation of a full evidential record and a decision based on that record. After a hearing, the State Division of Tax Appeals again found that the property was exempt. On appeal the Appellate Division reversed. 137 N.J. Super. 136 (1974). We granted certification. 70 N.J. 143 (1976).
The factual and legal issues concern N.J.S.A. 54:4-3.6, which governs exemption of property of non-profit organizations.*fn1
The statute in pertinent part reads as follows:
The following property shall be exempt from taxation under this chapter: . . . all buildings actually and exclusively used in the work of associations and corporations organized exclusively for the moral and mental improvement of men, women and children, . . . all buildings owned by a corporation created under or otherwise subject to the provisions of Title 15 of the Revised Statutes and actually and exclusively used in the work of one or more associations or corporations organized exclusively for charitable or religious purposes, which associations or corporations may or may not pay rent for the use of the premises or the portions of the premises used by them; . . . 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; the furniture and personal property in said buildings if used in and devoted to the purposes above mentioned; . . . 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, except that the exemption of the buildings and lands used for charitable, benevolent or religious purposes shall extend to cases where the charitable, benevolent or religious work therein carried on is supported partly by fees and charges received from or on behalf of beneficiaries using or occupying the buildings; provided, the building is wholly controlled by and the entire income therefrom is used for said charitable, benevolent or religious purposes.
Generally, the statute exempts from taxation: (1) the building(s) actually and exclusively used for one of the
designated purposes; (2) the land on which the building(s) is located provided the land is necessary for the fair enjoyment of the building(s), is devoted to a designated purpose, and does not exceed five acres; and (3) the building(s) or the land is not used for profit and the organization is not a profit making institution.
The Boys' Club of Clifton was organized under Title 15 to promote the health, social, educational, vocational and character development of boys. In 1962 it acquired 33.25 acres of land, including a lake, in Jefferson Township. Intending it for a campsite, the club constructed approximately 28 buildings which consisted primarily of a mess hall, infirmary, recreation hall, bathhouse, eleven boys' cabins and four cabins for the staff. The Township designated this tract as lot 15, Block 307, and exempted the buildings and land from local real property taxes.
Finding that the camp could not be operated adequately because of the limited land acreage, the Boys' Club acquired two adjoining properties in 1966, one consisting of 63.4 acres and the other .45 acres. The larger tract has been designated lot 1A, Block 320. The Executive Director explained that the additional property was "absolutely necessary" for its program "to get these youngsters into a natural surrounding to conduct such programs as hiking, conservation, perhaps to get the youngsters to appreciate God and natural surroundings and conduct a variety of nature programs." He emphasized that the acreage was "necessary in order to reach the objectives and aims of the organization." With the annexation of the additional parcels, the campsite consisted of approximately 100 acres. Having satisfied the American Camping Association's requirement that there be one acre of land per camper, the Boys' Club was then accredited by the Association.
The camp was in full operation during eight summer weeks. The schedule was broken down into four two-week periods, approximately 100 different boys attended each term.
Between six to twelve campers slept in each of the dormitory cabins.
Snow Bowl, Inc. carried on a ski program in the vicinity of the camp area. Between November 1972 and March 1973, it rented some of these cabins on lot 15, Block 307 for living quarters for its staff at a time when the facilities were not used or needed by the Boys' Club. On one occasion in 1972 some 25 youngsters who had been skiing under the auspices of Snow Bowl, Inc. used the cabins for temporary overnight housing. Snow Bowl, Inc. paid Boys' Club $5,000 for the use of the cottages in the 1972-1973 winter.
In addition to Snow Bowl, Inc. college groups were permitted to use the area for ecology and nature studies. On these occasions Boys' Club charged $12.00 per person per weekend for reimbursement of its costs. Church groups were also permitted to occupy the facilities.
In 1970, the camping operation lost $3200; in 1971 the camp operated at a loss in excess of $15,000; in 1972 camp expenditures exceeded income by $1850.
Initially we note that the question of tax exempt status is directed only at lot 1A, Block 320. The Township has not assessed lot 15, Block 307 for either of the years in question, 1971 and 1972, and apparently concedes its tax exempt status. Lot 1A, Block 320, being a vacant tract, can only attain tax exempt status, however, on the basis of the buildings located on lot 15. N.J.S.A. 54:4-3.6 makes it quite clear that the only land which may be exempt is that on which a building is erected and which "may be necessary for the fair enjoyment" of that building.
The Appellate Division, relying on Sisters of Charity v. Cory, 73 N.J.L. 699 (E. & A. 1907), held that lot 1A was not tax exempt, since it was acquired four years after lot 15. The Boys' Club has requested that we review the Cory decision. A summary of its facts and holding is therefore in order.
The Sisters of Charity lived in a building in which they also conducted a school. They occasionally purchased additional
adjoining tracts of land until the total acreage comprised 316 acres. The land was farmed and the produce was consumed by the Sisters and the students. The Court of Errors and Appeals reasoned that the exemption applied only to "the land whereon the building is erected" and not to the subsequently purchased acreage. It held:
If it [the charity] acquires a tract of land and erects thereon a building which it devotes to uses exclusively charitable, and afterwards purchases other lands which it devotes to the same uses, such after-acquired property, whether it be adjacent to or located at a distance from the original building, is not within the exemption provision. [ Id. at 703].
We no longer subscribe to this view. The fortuitous circumstances which determine the date that properties are acquired should not determine tax status. Suppose a church had been erected on a tract of land, part of which was paved for parking purposes. Undoubtedly the entire tract would be tax exempt. Yet, if the same parking area had been acquired after the church had been erected, could the Legislature have intended that the subsequently acquired tract was not entitled to exemption? We think not. We recognize that generally statutes granting exemptions from taxation are strongly construed against those seeking exemption, Princeton Univ. Press v. Princeton, 35 N.J. 209, 214 (1961), but that principle does not justify distorting the language or the legislative intent. Pingry Corp. v. Hillside Tp., 46 N.J. 457 (1966). Justice (then Judge) Sullivan in interpreting the words "actually and exclusively used" which appear in N.J.S.A. 54:4-3.6 wrote in Princeton Tp. v. Tenacre Foundation, 69 N.J. Super. 559, 563 (App. Div. 1961):
However, the basic inquiry always is the legislative intent as expressed in the statute. To that end the construction, while strict, must always be reasonable, and the words are not to be given a rigid scholastic interpretation when it appears that they were used in another sense. The rule of strict construction must never be allowed to defeat the evident legislative design.
We are satisfied that the Boys' Club acquisition of lot 1A, Block 320, four years after it had purchased lot 15, Block 307, does not destroy its claim for tax exemption.
The statutory prerequisites for exemption, as previously indicated, involve (1) exclusive use of the building(s) and land; (2) need and quantity of land; and (3) ...