Bor. Of Edgewater v. Corn Prod.s Ref. Co.

• Decision Date: 29 January 1948
• Docket Number: No. 43.,43.
• Citation: 57 A.2d 39,136 N.J.L. 664
• Parties: BOROUGH OF EDGEWATER v. CORN PRODUCTS REFINING CO.
• Court: New Jersey Supreme Court

136 N.J.L. 664

57 A.2d 39

BOROUGH OF EDGEWATER

v.CORN PRODUCTS REFINING CO.

No. 43.

Court of Errors and Appeals of New Jersey.

Jan. 29, 1948.

Appeal from Supreme Court.

Proceeding by the Borough of Edgewater against the Corn Products Refining Company for a declaratory judgment with respect to liability arising from levy of local tax against lands taken in condemnation proceedings instituted by the United States. Judgment for defendant, 136 N.J.L. 220, 53 A.2d 212, and petitioner appeals.

Modified and affirmed as modified.

Milton T. Lasher, of Hackensack, for appellant.

Winne & Banta, of Hackensack (Walter G. Winne, of Hackensack, of counsel), for respondent.

HEHER, Justice.

This is a proceeding under the Declaratory Judgment Act. R.S. 2:26-66 et seq., N.J.S.A. The subject matter is the liability arising from the levy of the local tax for the year 1942 against lands of respondent taken in condemnation proceedings instituted by the United States under c. 307 of the Federal Act of 1931, 46 Stat. 1421 et seq., 40 U.S.C.A. § 258a et seq.

On October 1, 1941, the lands were assessed for local taxation pursuant to R.S. 54:4-1 et seq., N.J.S.A.; and on January 2, 1942, the local tax collector submitted to the landowner a preliminary tax bill for the first and second quarters of the tax year at the rate fixed for the previous year, amounting to $51,017.94, payable on February 1st and May 1st. This sum was paid on the ensuing January 6th, less a regularly established discount of 2% for payment in advance. On May 2, 1942, the United States instituted the condemnation proceeding by filing in the Federal District Court for the District of New Jersey a petition and declaration of the taking of the land in fee simple absolute for public use, and depositing in the court, to the use of the persons entitled thereto, the sum estimated to be just compensation for the land taken, and thereby and in virtue of section 1 of the cited statute, 40 U.S.C.A. § 258a, title to the land vested in the United States, and ‘the right to just compensation’ therefor vested in the persons entitled thereto, the compensation to be ‘ascertained and awarded in said proceeding and established by judgment therein.’ The court was empowered, upon the filing of the declaration of taking, ‘to fix the time within which and the terms upon which’ possession of the lands shall be surrendered. The final tax levy upon the land for 1942 was $56,162.61. The judgment for compensation subsequently entered was greater than the amount of the deposit.

The Federal District Court ruled that, although the United States acquired title to the land in fee simple, the title was subject to an inchoate lien for all unpaid installments of taxes for the year 1942 alleged to be due the taxing district, and thus a cloud was placed on the title by imposing the taxes upon the United States. United States v. 25,936 Acres of Land, D.C.N.J., 57 F.Supp. 383. The Circuit Court of Appeals reversed the judgment. 3 Cir., 153 F.2d 277, 279. It was there held that ‘the amount of compensation to be paid must be determined as if the property was in a single ownership and without reference to conflicting claims or liens;’ that a condemnation proceeding ‘is not a taking of rights of persons in the ordinary sense but an appropriation of the land or property itself,’ with all ‘previous existing estates or interests in the land * * * obliterated;’ and that ‘The condemnation award when made stands in the place of the land and the rights of all persons may be treated as though transferred to the award,’ and ‘Valid tax liens must be satisfied from the award.’ Whether or not the borough has a lien on the fund for the unpaid balance of the 1942 taxes levied was found to be a question of State law; and the cause was remanded for the litigation of the controversy in the State courts. There remains on deposit in the Registry of the Federal District Court sufficient of the compensation award to cover the amount of the conflicting claims.

This proceeding was thereupon commenced. The Supreme Court, 136 N.J.L. 220, 53 A.2d 212, concluded that the tax liability is divisible ‘proportionately to the respective periods of ownership during the tax year,’ and one-third of the whole tax is chargeable to the landowner whose title was condemned. The Borough appeals.

The primary insistence is that the making of the assessment for taxation on the prior October 1st fixed the liability of the land for taxes for the entire year, and this obligation is dischargeable only by payment of the amount of such taxes thereafter determined to be due.

The argument, in brief, is that under R.S. 54:4-1 et seq., N.J.S.A., the tax liability becomes ‘established’ as of the assessment date, even though the amount thereof ‘is not ascertainable until months thereafter,’ and the fixation (sec. 54:5-6) of December 1st as the date when the unpaid taxes becomes a lien upon the lands is merely in aid of the collection of delinquent taxes by establishing ‘a beginning point for the commencement of enforcement proceedings against delinquent taxpayers,’ and that ‘the lien which would otherwise have attached to the land was transferred to the fund in court.’ The case of Jersey City v. Montville, 84 N.J.L. 43, 85 A. 838, affirmed 85 N.J.L. 372, 91 A. 1069, is cited in support of this proposition. We take a different view.

Chapter 266 of the Laws of 1933, Pamph.L p. 716, § 7, R.S. 54:4-66, N.J.S.A., provides for installment payment of taxes on the first days of February, May, August and November, in default of which ‘they shall become delinquent.’ Here, the first two installments for the current year had been paid and there were no delinquent taxes when the United States acquired title to the lands. And, if we assume arguendo that there was then a lien upon the lands for the undetermined balance of taxes for the current year, the tax liability is nevertheless apportionable on a pro rata basis as provided by R.S. 54:4-56, N.J.S.A..

But it is said that section 54:4-56 is applicable only to ‘two successive owners inter sese,’ and has no reference to ‘a situation where the municipal authority was not the condemning authority.’ This point is obviously without substance. The statute is all inclusive as respects the passing of title in condemnation proceedings. It encompasses all ca...