People ex rel. Roosevelt Hospital v. Raymond

The relator instituted this proceeding to review, and to have declared illegal, an assessment upon certain real estate belonging to it in the city of Hew York, for the year 1906. The following are the facts of the case. In 1863, James H. Roosevelt, a resident of the city of Hew York, died; leaving a will, by which he disposed of his real and personal estate. The residue of his personal estate he gave to trustees named, in trust for the establishment of a “ hospital for the reception and relief of sick and diseased persons and for its permanent endowment ”. He devised all of his real estate, subject to the payment of an annuity of §4,000, which has long since expired, to his executors; in trust to receive the rents and profits thereof for the use of a nephew and, upon his death without issue, to sell the same and to pay the proceeds to the trustees above referred to, towards the “ hospital endowment ”. He directed his trustees “ promptly to apply to the legislature of this state for proper acts to incorporate, secure and perpetuate said hospital ” and then provided that “ should such legislature, for two years next after my decease (and during two lives designated), refuse or neglect to grant a liberal charter for the safe organization, conduct and perpetuity of such hospital establishment”, the trustees were to pay over all of the trust fund to the government of the United States of America. The validity of the trust was questioned; but it wras sustained in the familiar case of Burrill v. Boardman, ( 43 N. Y. 254 ). The life of the nephew terminated some two months after the death of the testator and, thereupon, the trustees designated in the will memorialized

The commissioners of taxes and assessments of the city of New York have assessed the portion of the relator’s real estate for the purposes of taxation, upon the ground that none of its property was exempt, except as it came within the provisions for immunity, contained in subdivision 7 of section 4 of the G-eneral. Tax Law of 1896. Those provisions exempt the real property of such an institution, only, when “used exclusively for carrying out thereupon one or more of such

Upon the hearing at the Special Term, the court ordered that the assessment be stricken from the rolls and that the tax be canceled. Upon appeal to the Appellate Division, the order of the Special Term was reversed and the writ of certiorari, procured to be issued by the relator, was dismissed.

The relator, in appealing to this court from the determination of the Appellate Division, contends that it was not the intention of the legislature, in enacting the General Tax Law of 1896, to repeal the special exemption from taxation, which was contained in the relator’s charter, and that that provision was a promise to induce the transfer to the corporation of the property. At the Special Term it was considered that there was no substantial distinction between this case and the case of People ex rel. Cooper Union v. Wells, ( 180 N. Y. 531 ); where, upon quite similar facts, the assessment had been vacated. In the Appellate Division, a majority of the justices, upon the authority of certain decisions by this court, (Matter of Huntington, 168 N. Y. 399 ; Pratt Institute v. City of New York, 183 ib. 151; People ex rel. Cooper Union v. Gass, 190 ib. 323), held, in substance, that the passage of the General Tax Law was an exercise of the right reserved by the State Constitution to alter, or to repeal, all general laws, or special acts, authorizing the formation of corporations and that, as a comprehensive- enactment upon the subject of taxation and exemption, it, impliedly, repealed all prior acts, general or special. They say that, as the present statutory provisions for exemption do not extend to the real estate of a hospital, when leased to others, however the income may be

I am unable to agree in the view, which has been taken of the relator’s case. In my opinion, it is carrying presumption too far to say that, in enacting the General Tax Law, the legislature intended to repeal such an exemption from taxation as was granted "to the relator; however - valid the presumption, when entertained with respect to corporate charters generally, in which are lacking the peculiar features of the relator’s case. The decisions of this court, which are relied upon by the respondents, do not, and should not, conclude ns upon the questions now presented. In Matter of Huntington, ( 168 N. Y. 399 ), the state sought to collect a transfer tax upon a legacy given by Huntington’s will to this hospital, in 1900, and this court sustained the state comptroller’s claim. The reasoning, that the General Tax Law of 1896 was intended to provide for this particular class of immunities and that its enactment worked the repeal of greater and inconsistent exemptions contained in special and private acts, was correct, as applied to the facts of that case. The case is authoritative where the exemption contended for has relation to property conveyed without any express, or implied, condition, or to that which is donated to it, generally, in the course of its existence. We thero held that the General Tax Law was such a revision of, and substitution for, all former statutes, general and special, upon the subject of exemption from taxation, as to supersede and repeal them by implication. It was said of the statute that “the general rule of the liability to taxation of all property within the state was preserved, and the exemptions classified in such comprehensive phrase as to make all prior private and special exemptions unnecessary so far as the general act conferred the same exemptions as the special and private acts, and repugnant and inconsistent so far as the special and private acts conferred greater immunities and exemptions than the gen

The question in this case is not whether the legislature has repealed, by implication, in the enactment of the General Tax Law of 1896, all prior exemptions from taxation, contained in general statutes, or in special acts. That question, as a general proposition, is no longer open. We have decided it in the affirmative, for the reason that the presumption that the legislative body intended such a repeal is to be drawn from the comprehensive classification of the General Tax Law and from the circumstances attendant upon its enactment. The question before us is whether, when we regard the circumstances under which this particular charter ivas enacted, and when we consider the manner in which the legislature had induced the transfer of the testator’s estate towards the endowment of this corporation, we shall hold that the presumption of the legislative intent to repeal shall, nevertheless, obtain in its case. The reserved power to alter, or to repeal, the charter may be conceded ; but it is quite another thing to claim that the power has been exercised by the legislature, in view of the action previously taken by it to prevent the diversion of the testator’s property to other uses and to retain it for the endowment of this corporation, by the promise that it should be exempt from taxation. The same reason for entertaining the presumption that the power was intended to be exercised with respect to such a case does not exist. The construction, which the court has given to the General Tax Law of 1896, does not, in my opinion, oblige us to do violence to our sense of the peculiar justice of this case ; nor prevent us from taking that juster view of the action of the legislature in 1864, which forbids the presumption of an intended revocation of its act.

It will not do to hold that the reserved power to alter, or to repeal, a charter has been exercised by implication in a case, where to do so will result in the violation of a promise by the state, through which the conveyance of property was induced to a domestic benevolent corporation; which, except

The case of People ex rel. Cooper Union v. Wells, ( 180 N. Y. 537 ), is an authority in favor of this relator’s claim for exemption. The Cooper Union was incorporated under a special act in 1859, (chap. 279, Laws of 1859); which “ authorized ” Peter Cooper to convey to the corporation therein provided for certain premises, for the purpose of founding in the city of Hew York a public institution for the advancement of science, art, philosophy, letters and other educational, literary and benevolent purposes, therein set forth. The act provided that the corporate property, with which it should be endowed, should not be subject to taxation, while appropriated to uses in the act provided for. Thereafter, Peter Cooper conveyed certain property to the corporation and by his will provided for its endowment. After his death his trustees executed his testamentary purpose by transferring property in endowment of the Cooper Union. When the tax commissioners sought, in 1902, to assess a portion of it for taxation, upon the ground that it was leased out by the corporation for revenue, it was held, in a proceeding to review their determination, that the assessment was illegal. Although no opinion was written in this court, or at the Appellate Division, there was but the one possible ground for our decision and that was, substantially, as declared by Justice Bisoiiofe ; who decided the case at the Special Term. He held that “ the exemption was not a spontaneous concession, but was a direct condition to attach to the gift”. He observed that the statute held out an offer and the terms were to be accepted by Mr. Cooper’s delivery of a deed, which the act authorized him to make”. It was the controlling feature in that case, that terms held out by the special act of incorporation, in an exemption from taxation of property to be conveyed, presently or by way of

In 1907, the Cooper Union claimed, to be exempt from taxation, pursuant to an amendment in 1906 of the G-eneral Tax Law, by which-a recording tax was imposed upon mortgages offered for record ; but the claim failed in this court. The case was that of People ex rel. Cooper Union v. Gass, ( 190 N. Y. 323 ). In that ease, the - mortgage represented funds derived from other sources than from the endowments by Peter Cooper. The discussion in the opinion took a somewhat wider field than was presented by a mere consideration of the source of the fund, it is true, and embraced the question whether the charter provision constituted a contract which the state might not impair by legislation. With respect to that contention, it was held that, if a contract, it was one which was within the reserved right of the state to amend, or terminate. Some expressions of the opinion are at variance with the proposition necessarily decided in the prior Gooper Union case and with the view I am presenting, in its discussion of the relation of Peter Cooper to the act of incorporation; but they were not essential to the decision as to the liability of the property to that tax. The opinion was in line with the decisions, which have laid down the general rule that the Tax Law of 1896 repealed prior exemptions, contained in general, or in special, statutes. If the claim for exemption rested only upon the ground of a contract with the state, the opinion would sufficiently and ably answer it.

The rule to be applied, in my opinion, is that where the transfer of property, in endowment of a charitable corporation, was directly induced by a promise of an exemption from taxation, which was acted upon, it will not be presumed that the legislature, in passing a general law, operative in repeal of prior exemptions, intended to repeal any exemption awarded under such circumstances. In the case of Cooper Union v. Gass, the question presented was rightly decided and to confine its decision accordingly will introduce no confusion in the law. Any confusion of thought, with respect

Thus, while we adhere to the rule declared in the cases referred to, that the reservation of the right to alter, or to repeal, a corporate charter becomes a part of the charter of every corporation, whether under a general, or a special, statute, and that the General Tax Law of 1896 must be presumed to have been intended as a repeal of prior exemptions in the statutes, I think that we should, also, hold that the presumption will not he permitted, when to do so would be to impute to the legislature the intention to violate an express promise, operating to induce the person to whom made to transfer property in endowment of a corporation. The facts of such a case, as Judge Yann observed in his opinion in the Pratt Institute proceeding, with reference to the first Cooper Union case, make it “ clearly distinguishable ”.

I advise-that the order appealed from should be reversed and that the order of the Special Term should be affirmed; but, under the circumstances, without costs in this court against the respondents.

(dissenting). In 1896 the Tax Law was passed after it had been drafted, with much labor and upon long consideration, by the commissioners of statutory revision, for the purpose, as the legislature directed, of consolidating and revising the statutes “providing for the collection and assessment of taxes, and the exemption of property from taxation throughout the State.” (L. 1896, ch. 908 ; L. 1889, ch. 289, section 1, subd. 3.)

In 1898 we reviewed that act and held that it impliedly repealed a clause in a special statute exempting certain prop

In 1901 the Tax Law was again before us and a claim was made of exemption by special statute, but we held that it “ was such a revision and substitute for all former statutes, general and special, upon the subject of exémption from taxation as to supersede and repeal them by implication, thus repealing, among others, the provisions of the special acts which exempted the property of The Roosevelt Hospital and the Children’s Aid Society, and taking from these societies their special exemptions and leaving them in the class enumerated in subdivision seven, section four of the Tax Law.” (Matter of Huntington, 168 N. Y. 399 , 404; L. 1864, ch. 4, § 3.)

The appellant in the case now before us was one of the respondents in the case last cited, and the language quoted was used with reference to the self-same charter now relied upon to exempt it from the tax in question. In their return to the writ of certiorari herein the respondents state, “ that in

In 1905 we again reviewed the Tax Law and held that it repealed the exemption clause of a special statute, which incorporated an educational institution and exempted its property from local taxation. (Pratt Institute v. City of New York, 183 N. Y. 151 ; L. 1887, ch. 398.)

According to the record in that case, it was admitted by the demurrer to the complaint that the special act of 1887, then relied upon, was passed upon the application of Charles Pratt, the founder of the Pratt Institute, and the submission by him of plans he had formulated to the legislature; and, as it was further admitted, in reliance upon such charter “ and upon the compact so made between the State of Mew York and ”dhe corporation so organized, he promptly endowed the latter: with real and personal property of great value. While all its personal property was held to be exempt, as well as all its real property Used directly in its educational work, that which was leased for the purpose of revenue was held not ■ exempt, because the Tax Law had repealed the exemption clause of its charter. The construction adopted in Matter of Huntington (supra) was indorsed and reaffirmed. Referring to the Tax Law we declared that: “ Thus the legislature made all property taxable, except such as is exempt, and in declaring what is exempt it covered the case of educational institutions, such as the plaintiff, exempting all their personal property absolutely, and so much of their real estate as is used exclusively for carrying out thereon one or more of the cor- ‘ porate purposes, but not exempting real estate held as an investment only, even if the income was used for a corporate purpose. A general rule of taxation and exemption was laid

In 1907, for the fourth time, we considered the effect of the Tax Law upon special statutes providing exemption from taxation, and in the case then under consideration the form of the deed of endowment was prescribed in the charter itself, which expressly commanded that “ The premises and property mentioned in the said deed, and which shall at any time belong to or be held in trust by the corporation hereby created, or the trustees thereof, including all endowments made to it, shall not, nor shall any part thereof, be subject to taxation while the same shall be appropriated to the uses, intents and purposes hereby and in the said deed provided for.” Yet we held but twelve months ago that even that clause of exemption, enacted under circumstances showing with peculiar force the absolute and sweeping intention of the legislature, was lawfully repealed under its reserved power by the Mortgage Tax Act as to mortgages held by said institution, although no special statute was repealed by direct mention thereof. (People ex rel. Cooper Union v. Gass, 190 N. Y. 323 ; L. 1859, ch. 279, section 11.)

Thus four times since the passage of the Tax Law, twelve

The order appealed from should be affirmed, with costs. Cullen, Ch. J., Haight and Willard Bartlett, JJ., concur with Gray, J.; Hiscock and Chase, JJ., concur with Vann, J.

Order reversed, etc.