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Volume 2 - Opinions of Counsel SBEA No. 38

Opinions of Counsel index

Fraternal organization exemption (subordinate lodge) - Real Property Tax Law, § 428:

Real property owned by a subordinate lodge of a fraternal organization is not entitled to a real property tax exemption.

Our opinion has been requested concerning the taxable status of subordinate lodges of fraternal organizations.

Section 428 of the Real Property Tax Law provides as follows:

“§ 428. Fraternal organizations; entire net income for education and relief of members

“Real property owned by any fraternal corporation, association or body created to build and maintain a building or buildings for its meeting or meetings of the general assembly of its members or subordinate bodies thereof and for the accommodation of other fraternal corporations, associations or bodies, the entire net income of which real property is exclusively applied or to be used to build, furnish and maintain one or more asylums, homes or schools for the free education or relief of its members or for the relief, support and care of the worthy and indigent members thereof, their wives, widows or orphans, shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.” (Emphasis supplied)

          The courts have held that exemptions from taxation are not favored and are to be strictly construed. To be sustained they must be expressed in clear and unambiguous language and appear to be indisputably within the intention of the Legislature. No exemption will be permitted to be established by any doubtful implication (People ex rel. Andrews v. Cameron, 140 App. Div. 76, 124 N.Y.S. 949, aff’d 200 N.Y. 585, 94 N.E. 1097; People ex rel. Delphian Lodge v. Cahoon, 179 App. Div. 287, 166 N.Y.S. 347; People ex rel. Mizpah Lodge v. Burke, 228 N.Y. 245, 126 N.E. 703; People ex rel. Young Men’s Association v. Sayles, 32 App. Div. 197, 53 N.Y.S. 67, aff’d 157 N.Y. 677, 51 N.E. 1093).

The language of section 428 clearly indicates that the type of “fraternal corporation, association or body” which is entitled to an exemption thereunder is one which has a “general assembly of its members or subordinate bodies thereof”. Such language clearly contemplates the Grand Lodge of a fraternal corporation, association or body and not individual subordinate lodges thereof. This conclusion has been consistently substantiated by the courts in New York when called upon to determine the exempt status of various fraternal organizations under section 428 (See, People ex rd. Mizpah Lodge v. Burke, supra; People ex rel. Masonic Hall of Association of Saratoga Springs v. White, 218 App. Div. 38, 217 N.Y.S. 657, aff’d 244 N.Y. 564, 155 N.E. 898; People v. Farrell, 130 Misc. 142, 223 N.Y.S. 660.)

A brief look at the legislative history of present section 428 sheds additional light on the logic of such a conclusion.

The legislative history of section 428 discloses that it was first enacted as a special act (L. 1871, c. 249) exempting from taxation the real property of the Masonic Grand Lodge of New York which was organized pursuant to Chapter 272 of the Laws of 1864 and whose object is stated in section 4 of such law as follows:

“It shall be the object of the corporation hereby created to build and maintain a masonic hall in the city of New York, for the meetings of the grand lodge or general assembly of masons, and for accommodation of other masonic bodies or associations; and out of the funds derived from the rent or income thereof, or other sources, to build, establish and maintain an asylum or asylums. . . .”

This exemption would apply so long as the entire income from that property shall be exclusively used for “charitable and benevolent purposes”.

This special exemption continued for many years with minor amendments until 1903, when a general exemption law was enacted (L.1903, c.204). The general statute, by combining, substantially, the same language of the special act and section 4 of Chapter 272 of the Laws of 1864, except substituting the word “fraternal” for the word “Masonic”, exempted the real property of any fraternal corporation, association or body meeting the statutory requirements (See, the Supreme Court opinion in People ex rel. Trustees of Masonic Hall and Asylum Fund v. Miller, 164 Misc. 726, 1 N.Y.S.2d 267). This provision effectuated the State’s policy of eliminating special exemptions, in connection with the recodification of the Laws in 1896, and in accordance with the constitutional amendment in 1901.

Thus, since the special act of 1871 applied only to the Grand Lodge of the Masonic organization, the use of the identical language in the 1903 act would indicate a clear legislative intent to provide such an exemption only to comparable components of other fraternal organizations and not to all subordinate lodges of such organizations.

In the case of People ex rel. Masonic Hall Association of Saratoga Springs v. White, supra, the court was asked to determine the exempt status of a corporation formed under the Benevolent Orders Law to acquire and hold real property for the identical purposes and objects stated in section 428 of the Real Property Tax Law (then subdivision 7 of section 4 of the Tax Law). In denying the exemption, the Appellate Division stated at page 41:

“We think it was not the kind of fraternal corporation referred to in subdivision 7 of section 4 of the Tax Law, [Later subdivision 6, section 4 of the Tax Law, now section 428 of the Real Property Tax Law]. It has no general assembly of its members. It has no subordinate bodies. It has no such membership as might require the maintenance of an asylum, home, or school for their free education or relief, or for the relief, support, and care of worthy and indigent members, their wives, widows, or orphans. Said provision of the exemption statute evidently contemplates a fraternal corporation, association, or body with a large membership, and which charters subordinate lodges; in short, a real fraternity, as distinguished from a mere landlord corporation, such as the relator was incorporated to be.”

A like conclusion has been reached in People ex rel. Mizpah Lodge v. Burke, supra, where the court held at pages 248, 249:

“. . . Corporations or associations may be created for the purpose of building and leasing such a meeting place as the statute contemplates, but mere subordinate lodges of fraternal orders are not created for that purpose. The disposition of the net income to charitable purposes does not help the case. Relator’s enterprise is charitable rather than mercenary, but it is not the kind of charitable enterprise that comes within the letter of the statute. If it had been the intention of the Legislature to exempt from taxation all lodge buildings the net income of which was devoted to charitable purposes, it would doubtless have expressed such intention without the use of unnecessary or ambiguous words.”

Accordingly, in view of the foregoing, the real property owned by a subordinate fraternal lodge is not entitled to an exemption from real property taxation under section 428 of the Real Property Tax Law.

September 27, 1960