Appeal of Kents 2124 Atlantic Ave., Inc.

• Decision Date: 09 January 1961
• Docket Number: No. A--23,A--23
• Citation: 34 N.J. 21,166 A.2d 763
• Parties: Appeals of KENTS 2124 ATLANTIC AVE., INC., Kents 1214 Atlantic Ave., Inc., and Vienna Delicatessen Co., from 1956 and 1957 Assessments by the City of Atlantic City.
• Court: New Jersey Supreme Court

Page 21

34 N.J. 21

166 A.2d 763

Appeals of KENTS 2124 ATLANTIC AVE., INC., Kents 1214

Atlantic Ave., Inc., and Vienna Delicatessen Co.,

from 1956 and 1957 Assessments by the

City of Atlantic City.

No. A--23.

Supreme Court of New Jersey.

Argued Oct. 10, 1960.

Decided Jan. 9, 1961.

David M. Perskie, Atlantic City, for appellants (Perskie & Perskie, Atlantic City, attorneys).

Daniel J. Dowling, Atlantic City, for respondent (Murray Fredericks, City Sol., Atlantic City, attorney; Daniel J. Dowling, Asst. City Sol., Atlantic City, of counsel and on the brief).

Herbert H. Fine, Newark, Sp. Tax Counsel for City of Hoboken, Leo Rosenblum, Jersey City, of counsel to Corp. Counsel of Jersey City, and Leon S. Milmed, Newark, Tp. Atty. for Weehawken Tp., filed a joint brief Amici curiae.

The opinion of the court was delivered by

WEINTRAUB, C.J.

The owners of three parcels of improved realty in Atlantic City appealed from tax assessments made for the years 1956 and 1957. Appellants charged that although the assessments were at less than full true value, nonetheless they exceeded the 'common level' of assessments in the taxing districts and demanded reductions to that level. The State Division of Tax Appeals held the required showing for relief had not been made. We certified the ensuing appeals on our motion before the Appellate Division of the Superior Court considered them. After oral argument, we remanded the matters for testimony to shed light upon the assessors' practices. The State Division of Tax Appeals held further hearings and pursuant to our mandate returned the supplemental record with its findings. The Division's ultimate conclusions remained the same. The cause was reargued on the basis of the augmented proofs.

The pivotal question is, what suffices to establish a basis for relief in a case such as the one before us?

We need not retell the story of unequal assessments of property for local taxation. See Switz v. Middletown Twp. 23 N.J. 580, 130 A.2d 15 (1957); Village of Ridgefield Park v. Bergen County Board of Taxation, 31 N.J. 420, 157 A.2d 829 (1960). The present case is another episode in the quest of the taxpayer for treatment commensurate with that given his fellow taxpayers within the municipality. The cases just cited hold a taxpayer may sue to compel future compliance by the local assessor with the statutory mandate for assessment at full true value. That remedy, however, does not repair a past injury. To the latter end, taxpayers have sought reductions to the percentage of true value at which other property in the taxing district was assessed.

I

The Development of an effective individual remedy for unequal assessment was delayed by Royal Mfg. Co. v. Board of Equalization of Taxes, 76 N.J.L. 402, 70 A. 978 (Sup.Ct.1908), affirmed 78 N.J.L. 337, 74 A. 525 (E. & A. 1909), which held that a taxpayer so aggrieved could not have his assessment reduced below the statutory standard of full true value but rather could obtain relief only by appeals designed to bring all other assessments up to that standard. Quite obviously that remedy was illusory. It was so held in Hillsborough Township, Somerset County, N.J. v. Cromwell, 326 U.S. 620, 66 S.Ct. 445, 90 L.Ed. 358 (1946), which reiterated the principle that a state must reduce an assessment to end a discrimination violative of the equal protection clause of the Fourteenth Amendment even though the result is assessment below the standard fixed by statute.

After Hillsborough, the issue reached this court in Baldwin Construction Co. v. Essex County Board of Taxation, 16 N.J. 329, 108 A.2d 598 (1954). There the County Board had directed an increase in the assessments of selected portions of ratables in certain municipalities. The court found that 'all lands throughout the affected municipalities were assessed by the local assessors according to a common ratio of value, making for equality and uniformity within the taxing district' (16 N.J. at p. 338, 108 A.2d at p. 603). Since the increases ordered by the County Board resulted in assessments above the 'common ratio' in 'discriminatory taxation violative of constitutional principle' (16 N.J. at p. 338, 108 A.2d at p. 603), the increases were struck.

In Baldwin the court dealt with the issue on the premise that there was in fact a 'common level,' that is, a ratio to or percentage of full true value at which property generally was assessed in the municipality. Where in fact that is so, it is a simple matter to eliminate a disparity by reduction to that level. But experience indicates that except where a municipality has made a complete revaluation, parcel by parcel, and has implemented that work-product, a common level, in the sense of a single ratio to true value at which the great bulk of the ratables is assessed, cannot readily be shown if indeed one exists. Hence efforts have been made to prove a 'common level' by relying upon the average ratio determined by the State Director of Taxation pursuant to N.J.S.A. 54:1--35.1 or the general ratio found by the county board of taxation pursuant to R.S. 54:3--17, N.J.S.A. See Delaware, Lackawanna and Western R.R. Co. v. Neeld, 23 N.J. 561, 130 A.2d 6 (1957); City of Hoboken v. Jarka Corp., 26 N.J. 336, 139 A.2d 737 (1958); Union City in Hudson County v. Ormond Tool & Mfg. Co., 26 N.J. 494, 141 A.2d 58 (1958); North Bergen Twp. v. Venino, 45 N.J.Super. 143, 131 A.2d 792 (App.Div.1957); Jat Co. v. Division of Tax Appeals, 47 N.J.Super. 571, 136 A.2d 666 (App.Div.1957), certification denied, 27 N.J. 278, 142 A.2d 262 (1958).

The State Director's average ratio and the general ratio of the county board are primarily intended to meet the problem of Intermunicipal inequality. They are designed to establish the total true value of the aggregates of real property within each municipality, in the one case for the purpose of fixing a basis for the distribution to municipalities of State aid for education, and in the other to fix the basis for the allocation among municipalities of the burden of taxation for the support of county government. These ratios are found essentially by comparison of the selling prices of parcels of property with their assessed values. The State Director calculates the average ratio of the reported sales of real property in four classes: (1) vacant; (2) resident; (3) farm; and (4) 'other' (including commercial, industrial, apartment houses, etc.). The ratio is weighted to reflect the value of the parcels sold and the total aggregates in each class. By reference to the average ratio, the total assessed value as reported by local assessor is adjusted to full true value, the resulting figure serving as the basis for the allocation of State aid and the distribution of the county tax burden.

The question is whether the average ratio thus determined may be used to deal with the problem of Intramunicipal inequality. If the sales data used to find the ratio in fact revealed some percentage of true value about which the bulk of individual assessments tended to cluster, one might accept that percentage as the common level of assessments. But the underlying sales material may reveal no such central figure, but rather widely varying assessment ratios within each of the four classes of property referred to above. So, in the present case, the Director's Tables dated October 1, 1956 show an average ratio of 31.41% Based upon sales of vacant land at prices ranging in ratio to assessed value from 2.25% To 88%; sales of residential property at ratios of 4.13% To 86%; and sales of 'other' property at ratios from 5.13% To 79.38%. The Director's Tables dated October 1, 1957 show an average ratio of 31.40% On the basis of sales of vacant land ranging from 6% To 82.50%; residential property ranging from 4.21% To 64.77%; and 'other' property ranging from 9.14% To 129.12%. Inspection of the sales data discloses no single ratio at which it can be said that real property was generally assessed for the years in question. The assessors themselves, in their testimony upon the remand, disavowed consciousness of a specific ratio and portrayed the total picture as the hit-and-miss product of years of inattention.

It is clear the average ratio is not a handy tool with which one seated at a desk can bring all assessments to full true value. The reason, of course, is that since the individual assessments vary within a wide range, the inequities would be aggravated if all assessments were brought to full true value upon the assumption that they reflect a uniform percentage of that value. Switz v. Middletown Twp., supra (23 N.J., at p. 604, 130 A.2d, at p. 28); Delaware, Lackawanna and Western R.R. Co. v. Neeld, supra (23 N.J., at p. 574, 130 A.2d, at p. 13). Nothing short of complete revaluation, parcel by parcel, plus appropriate measures to keep the rolls current can achieve equality.

But although the average ratio is not thus serviceable to achieve across-the-board revaluation on the assessment rolls, the other question remains, whether it may nonetheless be fairly used to evidence a ratio to which an individual assessment substantially above it should be reduced.

II

Preliminarily we should explore the legal basis upon which a claim of unequal assessment should be tested.

Baldwin, in its stated terms, turned upon an application of constitutional principle with particular stress upon the federal view of the equal protection clause. The question is whether we may properly limit relief from unequal treatment to situations satisfying the requirement of the federal doctrine. We think we may not.

The equal protection clause does not bar Classification of real property for local taxation. Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 79 S.Ct. 437, 3 L.Ed.2d 480 (1959). The Federal Supreme Court has declined to interfere with classified treatment whether established by the express language of state law or by 'settled state practice.' Nashville, Chattanooga...