Majority
OPINION OF THE COURT
Kahal Bnei Emunim (Kahal) is a religious corporation which operates a religious and educational institution in Brooklyn, New York. It enjoys Federal income tax exemption under section 501 (c) (3) of the Internal Revenue Code (26 USC) and its Brooklyn property has been exempted from real estate taxes by the City of New York.
In November 1985 it purchased a summer camp in the Town of Fallsburg, Sullivan County, to be used by its students for study and recreation during the summer. It does not appear that this property had previously been exempted from real property taxes or that Kahal took any steps to secure or claim tax-exempt status for the property following its acquisition. Thus the property was assessed as being fully taxable for 1987 State and county taxes and school taxes for 1986/1987
Kahal did not apply for tax exemption for either 1987 or 1988. Consequently, "based upon [his] knowledge of the appearance^] of the property on the[ir] tax status date[s] [March 1, 1987 and March 1, 1988]” the Fallsburg Town Assessor placed the property on the tentative tax roll as fully taxable for both years. Kahal did not challenge the 1987 tentative assessment and that assessment listing the property as fully taxable became final on July 1, 1987. The 1988 tentative assessment was protested, however. Kahal filed a grievance with the Board of Assessment Review, but the grievance was dismissed[1] and the property was listed as fully taxable on the final assessment roll for 1988. None of these taxes were paid.
In July 1988, alleging that as a religious corporation it is entitled to exemption from real property taxes pursuant to Real Property Tax Law § 420-a, Kahal commenced this declaratory judgment action against the Town of Fallsburg, the Fallsburg Town Tax Collector and Sullivan County seeking a declaration voiding the tax assessments and liens imposed upon the subject real property pursuant to the 1987 and 1988 assessments, and declaring that property tax exempt so long as it is owned by Kahal and used for its corporate purposes.
The defendants Town of Fallsburg and the Fallsburg Town Tax Collector answered asserting as affirmative defenses the Statute of Limitations in respect to the 1987 assessment, Kahal’s failure to "make timely and complete applications for tax exemption as required by statute and regulations”, and that based upon the information available to him, the assessor
1 The record does not disclose the basis for the dismissal of this grievance.
I
Supreme Court denied Kahal’s summary judgment motion and granted summary judgment to the defendants, dismissing the complaint, concluding that the challenge to the 1987 assessment was barred by the Statute of Limitations and that by reason of its failure to make timely application upon forms prescribed by the State Board of Equalization and Assessment, Kahal failed to carry its burden of demonstrating its entitlement to exemption. The court also rejected KahaPs contention that under res judicata principles, the 1986 exemption barred defendants from assessing its property as fully taxable.
The Appellate Division affirmed Supreme Court’s grant of summary judgment to the defendants, but modified that court’s order to declare in favor of the defendants rather than dismissing the complaint. The Appellate Division agreed that the challenge to the 1987 assessment was time barred as not having been brought within four months of the final assessment and relying in part on its prior decision in Matter of St. Agnes Church v Daby ( 148 AD2d 31 ) rejected Kahal’s contention that defendants were barred by the stipulation settling the challenge to the 1986 assessment and that its property was automatically exempt pursuant to Real Property Tax Law § 420-a. That court concluded as it had in St. Agnes Church (supra) that applications for such exemptions are required in all cases except where an on-site inspection by the assessor reveals the tax-exempt status of the property and that "the property’s physical appearance on the respective status dates did not justify the conclusion that it was exempt” ( 161 AD2d 943 , 944). This Court granted leave to appeal and we now modify the order of the Appellate Division.
Kahal argues on this appeal that the courts below erred in concluding that its challenge to the 1987 assessment was time barred. It argues that because it is a religious corporation its property is fully exempt from real estate taxes and the assessor does not have jurisdiction to place its property on the tax rolls. Thus a challenge to the assessment of its property for purposes of taxation may be challenged at any time in a plenary action, and need not be commenced within the four-month time limitation imposed by article 78 of the CPLR. Kahal argues further that its entitlement to an exemption
II
While we agree with Kahal that its entitlement to exemption from taxation cannot be made to depend on the timely filing of an application, we conclude that a challenge to such an assessment must be made within the four-month time limitation applicable to proceedings pursuant to CPLR article 78.
A
We begin our analysis by observing that the Legislature has declared that "[a]ll real property within the state shall be subject to real property taxation * * * unless exempt therefrom by law” (RPTL 300).
Real Property Tax Law § 420-a expresses the Legislature’s intent in respect to the mandatory exemption of real property owned by nonprofit organizations enumerated therein and provides that:
"1. (a) Real property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes, or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes either by the owning corporation or association or by another such corporation or association as hereinafter provided shall be exempt from taxation as provided in this section.”
Thus the Legislature has declared that only nonexempt real property shall be subject to real property taxes and that certain specified property shall be entitled to a mandatory exemption. In respect to property of a religious corporation,
Respondents argue however, and the courts below agreed, that in order to be entitled to such a mandatory exemption the religious corporation must have timely completed and filed an application for exemption on forms prescribed by the State Board of Equalization and Assessment (SBEA). The argument is that in enacting RPTL 202 (1) (h) which provides that the SBEA shall "[prescribe and * * * furnish to assessors * * * forms relating to assessments, including applications for exemption from real property taxation, which forms shall be used by the assessors and the use of which shall be enforced by the [B]card”, the Legislature intended to empower the Board to prescribe forms and promulgate regulations in respect to their use, in respect to all exempt property including that in the mandatory class.
In implementation of this alleged legislative empowerment, the SBEA has promulgated regulations which require that:
"(c) For each exemption which is entered on the tentative assessment roll, [the assessor must] retain in the office files either:
"(1) a properly completed application form whenever the State Board of Equalization and Assessment has prescribed an application form for exemption from real property taxation; or
"(2) if an application form for a nonprofit organization (mandatory class) exemption pursuant to section 420-a of the Real Property Tax Law has not been filed, a certified statement signed by the assessor that he or she has examined the property for which exemption has been granted and that all of the statutory requirements of section 420-a are satisfied.” (9 NYCRR 190-1.4 [c].)
Respondents conclude based upon RPTL 202 (1) (h) and 9
2 Although other subdivisions of RPTL 420-a set forth various qualifications such an organization must meet, no argument is made here that Kahal fails to meet any of those qualifications.
We disagree and reject these arguments. As noted above there is no provision in RPTL 420-a conditioning entitlement to a mandatory property tax exemption upon the filing of an application. The language is clear and unambiguous; the property described therein owned and used as therein provided "shall be exempt from taxation”. By contrast RPTL 420-b which relates to tax exemptions for a permissive class of nonprofit organizations provides that the real property of the organizations described therein shall be exempt from taxation only in the absence of a local law ordinance or resolution providing otherwise and that "[a]n exemption may be granted pursuant to [that] section only upon application made by the owner of the property on a form prescribed by the [State Board of Equalization and Assessment]”. (RPTL 420-b [7].) It is noted that in amending the Real Property Tax Law in 1981 (see, L 1981, ch 919) to, inter alla, renumber former section 420 as 420-a and to add section 420-b, including the provisions of subdivision (7) requiring the filing of an application for exemption, no such requirement was imposed in respect to exemptions under section 420-a. Thus it may reasonably be inferred that the Legislature did not intend to impose any such requirement in respect to mandatory class exemptions.
We hold therefore that the Legislature’s authorization to SBEA to prescribe and furnish to assessors forms relating to assessments "including applications for exemption from real property taxation” (RPTL 202 [1] [h]) did not give SBEA the authority to require the execution and filing of such forms as a condition to entitlement to an exemption as of right under RPTL 420-a (see, Matter of Thorgeirsdottir v New York City Loft Bd., 77 NY2d 951 , affg 161 AD2d 337 ). To the extent that the SBEA regulation embodied in 9 NYCRR 190-1.4 (c) purports to impose such a condition, it constitutes an illegal addendum to the statute which departs from and is inconsistent with the language of RPTL 420-a and the legislative
Indeed, an administrative agency may not promulgate a regulation that adds a requirement that does not exist under the statute. As we have only recently reiterated " ' "[administrative agencies can only promulgate rules to further the implementation of the law as it exists; they have no authority to create a rule out of harmony with the statute” ’ ” (Matter of McNulty v State Tax Commn., 70 NY2d 788 , 791, quoting Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471 , 480).
We conclude therefore that the courts below erred in granting summary judgment to defendants in respect to the 1988 assessment.
B
Kahal’s challenge to the 1987 assessment however was properly dismissed as being time barred.[3] Its argument that because its property is mandatorily exempt, the assessor lacked jurisdiction to place the property on the assessment roll as fully taxable and therefore the assessment is illegal and a nullity that may be challenged at any time in a plenary action, must be rejected.
Challenges to real property assessments which allege that the assessment is "excessive, unequal or unlawful, or that the real property is misclassified” (RPTL 706) normally must be asserted in a certiorari proceeding pursuant to article 7 of the Real Property Tax Law. Such a proceeding is the taxpayers’ exclusive remedy by which instances of illegality, overvaluation or inequality as to assessments may be asserted (RPTL 700; see, Niagara Mohawk Power Corp. v City School Dist., 59 NY2d 262 ). Implicit in such a challenge is a concession of the assessor’s jurisdiction over the property in question (Dun & Bradstreet v City of New York, 276 NY 198 , 206; Stabile v Half Hollow Hills Cent. School Dist., 83 AD2d 945 , 946).
However, where the challenge is that the taxing authority
3 No issue as to Kahal’s having received timely notice of the assessment is raised.
The "void” assessment may be challenged in an article 78 proceeding or in a declaratory judgment action (see, Matter of Watchtower Bible & Tract Socy. v Lewisohn, 35 NY2d 92 [improper withdrawal of prior exemption]; Troy Towers Redevelopment Co. v City of Troy, 51 AD2d 173 , affd on opn below 41 NY2d 816 ; Lee and LeForestier, Review and Reduction of Real Property Assessments in New York § 10.09 [2d ed]). Kahal’s argument that such a declaratory judgment action is governed either by those cases which hold that an equity action to "clear a cloud on title” may be brought at any time or by the "catch-all” six-year limitation of CPLR 213 (1) is without merit. In Solnick v Whalen ( 49 NY2d 224 , 229) we noted that that six-year limitation does not "automatically or necessarily governQ all such actions.” Rather we pointed out that if an examination of the substance of the relationship out of which the claim arises "reveals that the rights of the parties sought to be stabilized in an action for declaratory relief are, or have been, open to resolution through a form of proceeding for which a specific limitation period is statutorily provided, then that period limits the time for commencement of the declaratory judgment action.” (Id., at 229-230; see also, Press v County of Monroe, 50 NY2d 695 .)
It is not disputed that a challenge to a "void” assessment may properly be brought in an article 78 proceeding, "a form of proceeding for which a specific limitation period is statutorily provided.” Thus Kahal’s challenge to the 1987 assessment, to have been timely, must have been brought within four months from the time that the 1987 assessment became final as required by CPLR article 78.
Finally we note that inasmuch as the courts below determined, as a matter of law, that Kahal was not entitled to tax exemption for 1988 because of its failure to timely file an application, no issue was raised as to Kahal’s entitlement to the exemption otherwise. Since we conclude that that legal determination was error, we modify the Appellate Division and grant summary judgment to Kahal in respect to that 1988 assessment. Thus we need not consider the argument raised by Kahal as to the res judicata effect of the 1987 stipulation.
Accordingly, the order of the Appellate Division should be modified, without costs, by granting in part plaintiff’s motion for summary judgment, denying in part defendants’ cross motion for summary judgment, and declaring plaintiff’s property exempt from real property taxation for the year 1988, and, as so modified, affirmed.
Chief Judge Wachtler and Judges Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur.
Order modified, etc.
Cases cited
- Walz v. Tax Commission 24 NY2d 30 p. 195
- Walz v. Tax Commission of New York 397 US 664 p. 195
- Diocese of Rochester v. Planning Board 1 NY2d 508 p. 195, p. 197
- Niagara Mohawk Power Corp. v. City School District 59 NY2d 262 at 269 p. 195, p. 196, p. 197, p. 204, p. 205
- K. Capolino Design & Renovation, Ltd. v. Assessors of Yonkers 138 Misc 2d 811 p. 195, p. 198
- Troy Towers Redevelopment Co. v. City of Troy 51 AD2d 173 p. 195, p. 196, p. 197, p. 205
- Young Men's Christian Ass'n v. Rochester Pure Waters District 37 NY2d 371 p. 195, p. 196, p. 197
- Crusade for Christ, Inc. v. Town of New Lebanon 50 Misc 2d 774 p. 195, p. 196
- Crusade for Christ, Inc. v. Town of New Lebanon 36 AD2d 247 p. 195, p. 196
- Crusade for Christ, Inc. v. Town of New Lebanon 31 NY2d 765 p. 195, p. 196
- Stabile v. Half Hollow Hills Central School District 83 AD2d 945 at 946 p. 195, p. 196, p. 197, p. 204
- Glickenhaus Foundation v. Board of Assessors 40 AD2d 1059 p. 195, p. 196
- Bertholf v. Cisco 72 Misc 2d 901 p. 195
- In re the Estate of Eckart 39 NY2d 493 p. 196
- Heyert v. Orange & Rockland Utilities, Inc. 17 NY2d 352 p. 196
- People v. Hobson 39 NY2d 479 p. 196
- Maxton Builders, Inc. v. Lo Galbo 68 NY2d 373 p. 196
- Higby v. Mahoney 48 NY2d 15 p. 196
- Plattsburgh College Benevolent & Educational Ass'n v. Board of Assessors 43 Misc 2d 741 p. 196
- Faculty-Student Ass'n v. City of Albany 17 Misc 2d 404 p. 196
- Plattsburgh State Teachers College Benevolent & Educational Ass'n v. Barnard 9 Misc 2d 897 p. 196
- Elmhurst Fire Co. v. City of New York 213 NY 87 p. 196
- Sisters of the Resurrection v. Daby 129 Misc 2d 879 p. 196, p. 197, p. 198
- New York Botanical Garden v. Assessors of Washington 55 NY2d 328 p. 196, p. 197, p. 198
- National Bank of Chemung v. City of Elmira 53 NY 49 p. 196
- Ogden City v. Armstrong 168 US 224 p. 196
- New York Botanical Garden v. Assessors of the Town of Washington 80 AD2d 170 p. 196
- Religious Education Ass'n v. City of New York 123 Misc 2d 786 p. 196
- Mullane v. Central Hanover Bank & Trust Co. 339 US 306 p. 196, p. 197
- Mennonite Board of Missions v. Adams 462 US 791 p. 196, p. 197, p. 198
- St. Luke's Hospital v. Beame 47 Misc 2d 71 p. 196
- Buffalo Hebrew Christian Mission, Inc. v. City of Syracuse 33 AD2d 152 p. 196, p. 198
- Faith Church of God Full Gospel Mission, Inc. v. Gingold 54 Misc 2d 296 p. 196
- De Forest v. Walters 153 NY 229 p. 196, p. 197
- Smith v. Reid 134 NY 568 p. 196, p. 197
- City of Rochester v. Chiarella 58 NY2d 316 p. 197
- St. Agnes Church v. Daby 148 AD2d 31 p. 197, p. 200, p. 203
- Faculty-Student Ass'n of State University College at Buffalo, Inc. v. Town of Lyndon 137 Misc 2d 1057 p. 197, p. 198, p. 203
- Snowpine Village Condominium Board of Managers v. Town of Great Valley 144 Misc 2d 1049 p. 197
- Laurenson v. City of New York 143 Misc 2d 216 p. 197
- Feig v. Board of Assessors 69 Misc 2d 322 p. 197
- Schoener v. Lissauer 107 NY 111 p. 197
- Cameron Estates, Inc. v. Deering 308 NY 24 p. 197
- Press v. County of Monroe 50 NY2d 695 p. 197, p. 205
- Andresen v. Rice 277 NY 271 p. 197
- Solnick v. Whalen 49 NY2d 224 at 229 p. 197, p. 205
- World Plan Executive Council-United States v. Town of Fallsburg 92 AD2d 1047 p. 197
- First National City Bank v. City of New York Finance Administration 36 NY2d 87 p. 197
- Town of Hardenburgh v. State 52 NY2d 536 p. 198
- Dudley v. Kerwick 52 NY2d 542 p. 198
- State Board of Equalization & Assessment v. Kerwick 52 NY2d 557 p. 198
- Buffalo City Cemetery v. City of Buffalo 46 NY 506 p. 198
- City of Lackawanna v. State Board of Equalization & Assessment 16 NY2d 222 p. 198
- Association of the Bar of New York v. Lewisohn 34 NY2d 143 p. 198
- F. O. R. Holding Co. v. Board of Assessors of Town of Clarkstown 45 AD2d 875 p. 198
- F. O. R. Holding Co. v. Board of Assessors 35 NY2d 959 p. 198
- People ex rel. Untermyer v. McGregor 183 Misc 218 at 269 p. 198
- People ex rel. Untermyer v. McGregor 295 NY 237 p. 198
- Pace College v. Boyland 11 Misc 2d 387 p. 198
- Pace College v. Boyland 4 NY2d 528 p. 198
- Swedenborg Foundation, Inc. v. Lewisohn 40 NY2d 87 p. 198
- Watchtower Bible & Tract Society of New York, Inc. v. Lewisohn 35 NY2d 92 p. 198, p. 205
- Albano v. Kirby 36 NY2d 526 p. 198
- Kahal Bnei Emunim & Talmud Torah Bnei Simon Israel v. Town of Fallsburg 161 AD2d 943 at 944 p. 200
- Williams Institutional Colored Methodist Episcopal Church v. City of New York 300 NY 716 p. 204
- McNulty v. New York State Tax Commission 70 NY2d 788 at 791 p. 204
- Finger Lakes Racing Ass'n v. New York State Racing & Wagering Board 45 NY2d 471 at 480 p. 204
- Dun & Bradstreet, Inc. v. City of New York 276 NY 198 at 206 p. 204, p. 205
- Hewlett Associates v. City of New York 57 NY2d 356 at 363 p. 205