City of East Orange v. Livingston Tp.

• Decision Date: 01 August 1968
• Docket Number: No. L--12129,L--12129
• Citation: 246 A.2d 178,102 N.J.Super. 512
• Parties: The CITY OF EAST ORANGE, a municipal corporation of the State of New Jersey, Plaintiff, v. TOWNSHIP OF LIVINGSTON, Township of Millburn, Borough of Florham Park, MorrisCounty, and Essex County Board of Taxation, Defendants.
• Court: New Jersey Superior Court

Page 512

102 N.J.Super. 512

246 A.2d 178

The CITY OF EAST ORANGE, a municipal corporation of the State of New Jersey, Plaintiff, v. TOWNSHIP OF LIVINGSTON, Township of Millburn, Borough of Florham Park, MorrisCounty, and Essex County Board of Taxation, Defendants.

No. L--12129.

Superior Court of New Jersey Law Division.

Aug. 1, 1968.

Jack Okin, Newark, for plaintiff City of East Orange.

Louis Bort, Livingston, for defendant Township of Livingston.

Harold M. Kain, Newark, for defendant Township of Millburn.

Robert Muir, Jr., Morristown, for defendant Borough of Florham Park (Mills, Doyle & Muir, Morristown, attorneys).

Charles H. Landesman, Deputy Atty. Gen., for defendant Essex County Bd. of Taxation (Arthur J. Sills, Atty. Gen., attorney).

HANDLER, J.S.C.

This is an action in lieu of prerogative writs brought by the City of East Orange against the Township of Livingston, Township of Millburn, Borough of Florham Park and the Essex County Board of Taxation. By its complaint plaintiff (hereinafter referred to as East Orange) seeks a judgment directing that defendant municipalities assess approximately 2500 acres of property owned by East Orange and located within their borders, generally known as the East Orange Water Reserve, as farmland pursuant to the Farmland Assessment Act of 1964, L. 1964, c. 48, N.J.S.A. 54:4--23.1 et seq. East Orange alleges that its Water Reserve has been actively devoted to agricultural use and that it submitted timely applications for its assessment as farmland to the assessors of the Townships of Livingston and Millburn (hereinafter referred to as Livingston and Millburn), which were rejected. In a second count it is alleged that the lands constituting the East Orange Water Reserve have been the subject of continuous tax appeals commencing with the tax year 1957, and that because of the uncertainty as to the outcome of these proceedings public projects, the implementation of a bond issue and budgetary planning concerning the use of these lands for recreational and educational purposes involving East Orange, Livingston and Millburn have been 'materially affected.' As a result, East Orange seeks a judgment directing that defendant municipalities assess all eligible lands within the East Orange Water Reserve as farmlands pursuant to N.J.S.A. 54:4--23.1 et seq., and to exempt from taxation all of these lands 'used for recreational and educational purposes'.

Defendant municipalities in general contend that the East Orange Water Reserve is used principally for the purpose and protection of a public water supply and deny that any portion thereof is entitled to be taxed specially under the Farmland Assessment Act of 1964, or that any of the property is entitled to exemption for recreational or educational uses. They further contend that the court is without jurisdiction because plaintiff has failed to exhaust its administrative remedies, and any judgment rendered by the court would constitute an advisory opinion or adjudication. Defendant Essex County Board of Taxation (hereinafter referred to as the county board) has taken no position on the merits of the controversy and asserts by way of separate defenses that the complaint fails to state a claim upon which relief may be granted; that there has been a failure to exhaust administrative remedies and that the court lacks jurisdiction; and further, it 'reserves the right to move for dismissal of the complaint' on these various grounds. In the pretrial order the pleadings were deemed amended to make more explicit the contentions of defendant townships that the property of East Orange was not devoted to recreational uses and that, even without regard to such use, it was not entitled to exemption; and further, that the defenses of estoppel and laches apply.

The challenge to the authority of the court to entertain the action because of plaintiff's failure to exhaust administrative remedies should be disposed of at the threshold of the case. East Orange, pursuant to N.J.S.A. 54:4--23.14, filed applications with the assessors of Livingston and Millburn on September 13 and 29, 1967, respectively, for the taxation of its property located in these municipalities on the basis of farmland for the 1968 tax year. ¹ The assessors of Livingston and Millburn rejected these applications.

There can be no question that the determinations of the assessors of these taxing districts are appealable to the county board of taxation. N.J.S.A. 54:3--21; Hackensack Water Co. v. Division of Tax Appeals, 2 N.J. 157, 65 A.2d 828 (1949). Under R.R. 4:88--14 the court would ordinarily not be entitled to preempt the county board in exercising jurisdiction over this controversy in the absence of countervailing circumstances demonstrating forcibly that the 'interests of justice' require that administrative remedies be by-passed. Central R.R. Co. of N.J. v. Neeld, 26 N.J. 172, 139 A.2d 110 (1958) certiorari denied 357 U.S. 928, 78 S.Ct. 1373, 2 L.Ed.2d 1371 (1958).

Plaintiff contends that such circumstances obtain. In particular, it points to important and novel questions of law involving the construction of the Farmland Assessment Act of 1964 and the application of the act to a municipally-owned watershed. These considerations alone, however, would not be sufficient to sidestep the appropriate administrative agency. The resolution of these questions requires the taking of evidence and the finding of facts preliminary to an ultimate determination of the legal issues. A case in this posture must be regarded as within the competence of the appropriate administrative agency having jurisdiction to adjudicate the controversy. Roadway Express, Inc. v. Kingsley, 37 N.J. 136, 179 A.2d 729 (1962). Nevertheless, there should be a diligent assessment of all the circumstances to determine whether or not the interests of justice require an exception to the rule of exhaustion of administrative remedies. Waldor v. Untermann, 10 N.J.S.uper. 188, 76 A.2d 906 (App.Div.1950). The rule is essentially one of procedure for the proper administration of justice; it is neither jurisdictional nor absolute. Ibid.; Nolan v. Fitzpatrick, 9 N.J. 477, 89 A.2d 13 (1952); Ward v. Keenan, 3 N.J. 298, 70 A.2d 77 (1949).

Factors which might bear on the question of exhaustion of administrative remedies are relative delay and expense, possible prejudice to any of the litigants, the public interest, the nature of the issues, and the extent to which the discretion of the administrative agency should be invoked in an adjudication. Cf. Port of N.Y. Authority v. Essex Cty. Board of Taxation, 46 N.J. 51, 214 A.2d 705 (1965). Many of these factors are present here. The litigants are governmental bodies. The controversy involves directly and primarily the public interest. The issues raised by the complaint are novel. While there is evidence to be taken and facts to be found, there is not involved in the present action the issue of valuation of property for tax purposes. In this sense, therefore, the special expertise of the county board relative to tax valuation need not be involved in the adjudication of the issues in this case.

More importantly, the pretrial order especially required all defendants to bring by motion the defense based upon plaintiff's failure to exhaust administrative remedies and to bring such a motion sufficiently in advance of trial so that there could be a timely disposition thereof. The purpose of this provision in the pretrial order was made abundantly clear to all the parties at the time of the pretrial conference. It was to obviate the expense and effort of preparation and the investment of time which would otherwise be entailed in a trial if the complaint were not to be dismissed on this ground. Defendants failed to make such motions. Moreover, the county board, a party to the action and the administrative agency with statutory jurisdiction of the cause, disclaimed any interest in the controversy and did not itself move to have the matter dismissed or remanded on any grounds advanced in its answer, including failure to exhaust administrative remedies. As a result, there was a full plenary trial, consuming approximately three days, with the production of considerable expert and lay testimony and other evidence. Under these circumstances, the interests of justice dictate that the controversy be presently and expeditiously resolved on the merits by the court.

The defenses of estoppel and laches should be similarly addressed at the outset. It is asserted that East Orange is 'in laches' and is 'estopped' to claim that its Water Reserve is now taxable as farmland or otherwise exempt because it has acquiesced and consented for many years in the valuation, assessment and taxation of these lands as a watershed under N.J.S.A. 54:4--3.3. The doctrine of estoppel has been invoked in order 'to prevent manifest wrong and injustice,' but 'it is not applied to a governmental agency performing a governmental function to the same extent as it is against individuals and private corporations.' Feldman v. Urban Commercial Inc., 70 N.J.Super 463, 477, 175 A.2d 683, 690 (Ch.Div.1961); Vogt v. Borough of Belmar, 14 N.J. 195, 101 A.2d 849 (1954); Springfield Tp. v. Bensley, 19 N.J.Super. 147, 88 A.2d 271 (Ch.Div.1952). The collection of taxes is an essential governmental function and a municipality will not be estopped in the proper performance of this duty even though it may be required to reverse or modify a position previously taken. City of Bayonne v. Murphy & Perrett Co., 7 N.J. 298, 81 A.2d 485 (1951). That East Orange has heretofore not challenged or disputed the taxability of its Water Reserve under N.J.S.A. 54:4--3.3 in no way estops it from asserting a different legal position today. It does not seek to undo taxes paid for years past. The public interest will not suffer by permitting East Orange to press its contentions; indeed, the public interest might lie in that direction. ...