Appeal of Pitney
| Decision Date | 04 November 1942 |
| Citation | 28 A.2d 660,20 N.J.Misc. 448 |
| Parties | Appeal of PITNEY et al. In re CENTRAL RAILROAD CO. OF NEW JERSEY. |
| Court | New Jersey Supreme Court |
20 N.J.Misc. 448
Appeal of PITNEY et al.
In re CENTRAL RAILROAD CO. OF NEW JERSEY.
New Jersey State Board of Tax Appeals.
Nov. 4, 1942.
[Copyrighted material omitted.]
Proceeding in the matter of the assessment and taxation of the property of and the assessment of franchise taxes against the several companies constituting the Central Railroad Company of New Jersey, used for railroad purposes in the State of New Jersey for the year 1942. From the assessments made, Shelton Pitney and Walter P. Gardner, trustees of the property of the Central Railroad Company of New Jersey, and the City of Jersey City appeal.
Order in accordance with opinion.
Joseph Autenrieth, of Newark, and William Hanlon, of New York City, for Central R. Co. of New Jersey.
David T. Wilentz, Atty. Gen., and Harry Walsh, Asst. Atty. Gen., for State Tax Commissioner.
Frank P. McCarthy, of Jersey City, for City of Jersey City.
WAESCHE, President.
This opinion and final determination will deal with the complaint filed by the Trustees of the property of the Central Railroad Company of New Jersey, and also with the complaint filed by the City of Jersey City. Both of these appeals seek relief from the assessments made by the State Tax Commissioner against the Central Railroad Company of New Jersey pursuant to Chapter 291 of the Laws of 1941 and the amendments thereto, N.J.S.A. 54:29A-1 et seq.
There are three generally recognized methods of valuation which might be used in arriving at the fair value of the parcels, assessment of which is here contested. These are: (1) value in the railroad use, as part of a transportation system; (2) value as indicated by sales of comparable lands; (3) value as indicated by the appraisal of disinterested experts in realty appraisal. Evidence and testimony have been presented relative to each of these factors and due consideration has been given to each.
With respect to value in use, the properties which are involved in this appeal constitute an integral part of the property of the Central Railroad Company of New Jersey. Their general location, use and area may be summarized as follows:
The Hudson River water front of the Jersey City Terminal of the Central Railroad Company of New Jersey begins at Johnson Avenue. From this point the west shore of the River continues in a relatively unbroken line in a southerly direction for approximately 1,100 feet. Then the shore line turns sharply westerly, nearly at a right angle, and runs for about 2,400 feet in an almost straight line, where it again turns abruptly and runs southwesterly and passes behind Ellis Island. The land under water along this water front which is owned by the Central Railroad and assessed by the State Tax Commissioner consists of approximately 172.5 acres.
The first 1,100 feet of the water front south of Johnson Avenue and piers 5, 6 and 7 have unrestricted access to the main channel of the Hudson River. Piers 9, 10, 11, 12, 13, 14, 15 and 18 are reached through a channel running back of Ellis Island which reaches the main channel of the Hudson River both to the north and to the south of Ellis Island. This channel is dredged to a minimum depth of approximately 18 feet and to a maximum width of about 400 feet. Silt tends to fill the channel and at depths below 20 feet the channel silts rapidly. Piers, 11, 12, 13, 14 and 15 are all immediately in the rear of Ellis Island. Pier 18 is located a little southwest of Ellis Island.
The first 1,100 feet of water front property south of Johnson Avenue is used almost exclusively by the ferries and freight car floats. Piers 6, 7, 10, 11, 12, 13 and 14 are used exclusively for handling lighterage freight. Pier 15 is a small pier used exclusively for loading live stock onto barges. Piers 9 and 18 are exclusively coal piers. There are no other piers along the water front of the Central Railroad Terminal in Jersey City. That part of the water front not used in connection with the piers is used for storing barges that are waiting to be loaded, for repairs to the marine equipment owned by the Central Railroad, and for other miscellaneous matters.
In its present condition no part of the water front of the Central Railroad Terminal in Jersey City could be used or is intended for use by ocean going vessels. More than two-thirds of this water front is certainly undesirable for such use, because the channel approaches to this portion of the water front from the main channel of the Hudson River would be very difficult: for ocean going vessels to pass through, and the cost to keep open such approaches would be costly to maintain.
The upland extending back from the water front which is used for second class railroad purposes and included in the area of the Jersey City Terminal of the Central Railroad consists of approximately 468.289 acres. This upland is used for various purposes. The sites for the Terminal passenger station, the Van Nostrand Place station, and station sheds are located on this land; and strips of this land are used for Johnson Avenue, Phillips Street and other streets. The round house, engine terminal, and engineman's house; large coal storage dumps, live stock runways, and vacant space for the storage of freight; the marine repair yards, live stock yards, and other various yards with their miles of trackage are all located on this upland. There are yards for receiving and sorting or classification of freight cars, and yards for the storage of empty and loaded freight and passenger cars; and there are also yards for repairing passenger and freight cars and for the repair of engines. There are also tracks leading to the piers on the water front.
It is obvious that most of the upland in no way contributes to a use that requires water front facilities, but on the contrary it is used for purposes that are quite independent of the water front. For instance, the land used for the storage of coal and freight; the land used for streets; the land used for stations and station sheds; the land where the round house, engine terminal, and engineman's house are located; the land used for the repair yard tracks, the receiving yard, and sorting or classification yard tracks, and the storage yard tracks does not require water front facilities. The water front of the Central Railroad Terminal in Jersey City is used only to transfer passengers and freight from the trains to boats—or vice versafor passage across the Hudson River to and from New York usually at the expense of the Central Railroad. The Hudson River is a barrier to convenient and easy access between New York and the Central Railroad Terminal in Jersey City. The water front of this Terminal adds nothing to the revenues of the Central Railroad. All the services rendered at the water front of the Central Railroad Terminal at Jersey City represent only cost in the transportation of passengers and freight across the Hudson River.
It has been repeatedly held that the property to be assessed, whatever may be its character, is to be taken and valued in the actual condition in which the owner holds it. State (Colwell, pros.) v. Abbott, 42 N.J.L. 111; State Board of Assessors v. Central Railroad of New Jersey, 48 N.J.L. 146, 148, 278, 4 A. 578; Williams v. Bettlc, 51 NJ.L. 512, 18 A. 750; Stevens Institute v. State Board, etc., 105 N.J.L. 99, 143 A. 356, affirmed 105 N.J.L. 655, 146 A. 919. On the assessing date, January 1, 1941, the land involved in this tax proceeding was used by the Central Railroad Company of New Jersey in the public service. Its use is limited by the government to railroad purposes and the government fixes the rates to be charged for the services rendered by the Railroad to which this land contributes. This limitation on the utilization of the land and the fixed rates charged for the services rendered through the use of the land necessarily affects its true value because "the value of a real property must be computed from its estimated future net income". "Valuation of Real Estate", by Babcock, p. 130. Land can have no value in and of itself. Its value depends upon the services it can perform to persons who may acquire it. The Central Railroad Company of New Jersey is in bankruptcy. For the year 1940 the Central Railroad of New Jersey operated
at a loss of $755,977, exclusive of interest on bonds, return on investment, reinvestment, and surplus for operations. For more than ten years prior to 1941, the Central Railroad's operating costs have greatly exceeded its revenues. In the case of Atlantic City v. State Board of Tax Appeals, 128 N.J.L. 278, 25 A.2d 423, the Supreme Court held that the fact that the net earnings of the Lafayette Atlantic Hotel Company had decreased over a period of years from a substantial profit to a large loss was evidence of the value of the real estate used in the business of that company.
There are reasons other than the economic depression which began in 1930 for this loss in the railroad's revenues. A large part of the business done by this Railroad is the transportation of coal from Wilkes Barre and other points in Pennsylvania to the Central Railroad Terminal in Jersey City. This coal business has fallen off approximately 30%, principally because of the substitution of oil, gas, coke and electricity for fuel and heating purposes. The transportation of freight by truck, and public travel by bus, automobile and airplane has also taken away much of the carrying business done by the railroad in former years. The Central Railroad Company of New Jersey is not the only railroad that has suffered severe losses due to the diversion of freight and passengers to other means of transportation. Many of the railroads of this country, between 1930 and 1941, became insolvent and passed into the hands of trustees in bankruptcy because of this loss of business. A few years ago the future of the railroads of this country presented a national crisis. The bulletin of...
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