City of Bayonne v. International Nickel Co.

• Citation: 248 A.2d 547,104 N.J.Super. 45
• Decision Date: 13 December 1968
• Docket Number: No. A--1400,A--1400
• Parties: CITY OF BAYONNE, Defendant-Appellant, v. INTERNATIONAL NICKEL CO., Inc., Plaintiff-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 45

104 N.J.Super. 45

248 A.2d 547

CITY OF BAYONNE, Defendant-Appellant, v. INTERNATIONAL NICKEL CO., Inc., Plaintiff-Respondent.

No. A--1400.

Superior Court of New Jersey

Appellate Division.

Argued Nov. 12, 1968.

Decided Dec. 13, 1968.

Nicholas A. Panepinto, Bayonne, for appellant.

Prospero DeBona, Jersey City, for respondent (Milton, Keane & DeBona, Jersey City, attorneys, John B. Wefing, Kearny, on the brief).

Arthur J. Sills, Atty. Gen., filed statement in lieu of brief on behalf of respondent, Division of Tax Appeals (Charles H. Landesman, Deputy Atty. Gen., of counsel).

Before Judges CONFORD, KILKENNY and LEONARD.

The opinion of the court was delivered by

CONFORD, S.J.A.D.

The City of Bayonne appeals the cancellation by the Division of Tax Appeals of a personal property tax levied by its assessor for the tax year 1965 on personal property of International Nickel Co. The taxpayer possessed taxable personal property, used in its business, in the Bayonne taxing district on January 1, 1964, the assessing date for 1965 taxes, N.J.S.A. 54:4--11 (as amended by L.1964, c. 141), but removed all of it from this State to the States of New York and West Virginia during the year 1964, so that none of it was in Bayonne on January 1, 1965 or thereafter.

The action of the Division was predicated on the theory that N.J.S.A. 54:4--1, providing for taxation of real and personal property 'within the jurisdiction of this State,' precluded the assessment for 1965 by a New Jersey taxing district of personal property which was physically beyond the borders of the State before the calendar year 1965 began. Bayonne contends that the status and location of the property on January 1, 1964, the statutory listing or assessing date for the tax year 1965, controls as to Bayonne's right to impose the tax for that year. The taxpayer responds that Bayonne's construction of the tax statute would render it invalid as violative of the due process clause of the 14th Amendment to the United States Constitution.

Our careful consideration of the arguments of the parties and our independent research lead us to the firm conclusion that the taxing district's appeal must be sustained and the assessment restored. The legislative intention is that property found in the taxing district on the statutory assessing date is taxable therein for the corresponding tax year, although removed therefrom subsequent to the assessing date. Our tax statutes, as thus construed, do not offend due process even where the removal antedates the so-called tax year.

I

A review of the pertinent legislation should be preceded by the observation that beginning in 1960 there was in this State a period of intense public controversy over, and a number of legislative amendments of the law in respect of the taxation of tangible personal property, especially, such as is used in business. See e.g., Switz v. Kingsley, 37 N.J. 566, 182 A.2d 841 (1962); Zito v. Kingsley, 92 N.J.Super. 37, 222 A.2d 130 (App.Div.1966). Detailed review of all of these enactments, several of which remained in suspension for varying periods of time, need not here be undertaken, as none of this legislation affects the basic principle we find to have characterized our tax law for decades, i.e., that the tax status of property, whether for purposes of exemption, valuation or assessing location, is fixed as of the assessing date, except where in some instances it has been specifically otherwise provided by the Legislature. See East Orange v. Palmer, 47 N.J. 307, 320--321, 220 A.2d 679 (1966).

N.J.S.A. 54:4--1, prior to amendment by L.1960, c. 51, called for the taxation of 'all property real and personal within the jurisdiction of this State (not expressly exempted or excluded)' annually at its true value, and recited that '(a)ll property shall be assessed to the owner thereof with reference to the amount owned on October first in each year, and the person so assessed for personal property shall be personally liable for the taxes thereon.'

N.J.S.A. 54:4--9, prior to the 1960 amendment, provided: 'The tax on all tangible personal property in this State shall be assessed in and for the taxing district where the property is found.'

The 1960 statute eliminated 'true value' as the basis for assessment of tangible personal property and introduced a new classification of taxable personal property used in business. The assessing standard for the latter was to be 'fair value,' presumed to be the net book value of the property 'as of the listing date.' L.1960, c. 51, §§ 4, 5. Later amendments provided for new and lower valuation bases and tax rates for assessment of various categories of tangible personalty used in business.

The assessing date for the new tax category of tangible personal property used in business was changed by L.1960, c. 51, § 8 from the prior October 1 to the prior January 1, the act providing that January 1, 1961 'shall be the listing date with respect to taxes payable in the year 1962,' and correspondingly for subsequent tax years. (For convenience we use the term 'assessing date' rather than 'listing date' herein.) This scheme was carried forward through the tax year 1965 and thereafter by L.1964, c. 141, § 3 ('The taxable value shall be determined as of January 1, 1964, which shall be the listing date with respect to taxes payable in the year 1965,' and correspondingly for subsequent tax years).

Insofar as concerns the Place of taxation of tangible personal property used in business, the 1960 act (c. 51) retained the previous basic concept, and called for assessment thereof 'at the general tax rate of the taxing district wherein such property is found, for the use of such taxing district.' Section 7, amending R.S. 54:4--9. This concept as to the place of taxation was continued in L.1964, c. 141, above referred to, as was the long-existent rule of personal liability for such taxes of the 'person lawfully assessed.' (Section 1).

While apparently no New Jersey statute, past or present, can be found expressly to say, in so many words, that tangible personal property is assessable by that taxing district in which it is found on the assessing date, the whole tenor of the taxing statutes as of any given time in our modern history has spelled out that unmistakable intent. It was stated, for example, in Shillingsburg v. Ridgway, 69 N.J.L. 113, 54 A. 531 (Sup.Ct.1903), that 'visible personal property' is assessable at the place where found 'on assessment' (a then-current paraphrase for assessment' (a then-current paragraphse for 'assessing date,' 'tax date,' etc.). To the same effect see Tennant v. State Board of Taxes and Assessments, 95 N.J.L. 465, 113 A. 254 (E. & A. 1921) (syllabus). This has, to our knowledge, been the practical construction accorded the statutes, over the years, by the taxing authorities of this State on every level, and we are aware of no challenge heretofore to the principle that the statutory assessing date controls the incidence of the legal place of assessment of tangible personal property (subject to qualifying principles as to nontaxable Status of such property in the taxing district, as where only temporarily situated, or in transit in interstate or foreign commerce, etc., when found in such taxing district on the assessing date).

Indeed, we do not understand the taxpayer to challenge the foregoing, except in application to a case like this where the property in question has been removed from the state taxing jurisdiction prior to commencement of the calendar tax year. In such instance, so it is argued, the United States Constitution prohibits the levy even if the property was found there on the assessing date; consequently, the taxing statutes should be construed consonantly with the constitutional rule. We address ourselves to that argument.

II

Preliminarily, we observe that in none of the cases cited by the taxpayer or the Division of Tax Appeals is there a square holding supportive of the position asserted. Indeed, we find no prior case in which a court has been asked to determine that property found in a state on the assessing date fixed by the statutes thereof in reference to a particular tax year is constitutionally untaxable by that state or its political subdivisions because not present therein during the tax year.

We deal first with the New Jersey decisions relied upon by taxpayer. It quotes from Bogota v. Brewster Equipment Co., 83 N.J.Super. 586, 200 A.2d 629 (App.Div.1964):

'To allow Bogota to tax tangible personalty located in California, Utah, New York and Pennsylvania On October 1, 1959 and October 1, 1960 would result in a denial of due process of law--such property then being permanently located in those states and employed there in the prosecution of Brewster Company's business.' (at p. 606, 200 A.2d at 639; emphasis added)

The foregoing was written in reference to a holding that road construction equipment never within the boundaries of the State was not assessable by a New Jersey taxing district merely because the offices of the owner-corporation were situated there. It was held that the property in question was On the respective assessing dates physically located and intended for permanent use and disposal in other states--therefore had a taxable situs there and not in New Jersey. Actually, the reference to the assessing dates--October 1, 1959 and October 1, 1960--in the quoted excerpt from the Brewster opinion, is inferential that if the property were in New Jersey on the mentioned taxing dates, it would be assessable in this State. ¹

In N.Y. Central R. Co. v. State Dept. of Taxation, etc., 137 N.J.L. 288, 59 A.2d 859 (Sup.Ct.1948), cited by the Division and taxpayer, the court, while recognizing the general principle 'that the power of the state to tax is limited to subjects within its jurisdiction' (at p. 294, 59 A.2d at 862), was confronted only with the question whether floating equipment of the railroad taxpayer...