City of Newark v. West Milford Tp., Passaic County, A--88
| Decision Date | 28 April 1952 |
| Docket Number | No. A--88,A--88 |
| Citation | 9 N.J. 295,88 A.2d 211 |
| Parties | CITY OF NEWARK v. WEST MILFORD TP., PASSAIC COUNTY. |
| Court | New Jersey Supreme Court |
Joseph L. Lippman, Newark, argued the cause for the defendant-appellant and cross-respondent (Wallisch & Wallisch, Passaic, attorneys; Herbert H. Fine, Newark, of counsel).
Charles Handler, Newark, argued the cause for the plaintiff-respondent and cross-appellant (Vincent J. Casale, Newark, of counsel).
The opinion of the court was delivered by
This is an appeal of the Township of West Milford from a judgment of the Division of Tax Appeals, Department of an Treasury, fixing the assessment on certain watershed property owned by the City of Newark at $1,391,100 for the years 1948--49--50.
The appellant seeks to have the original assessments for each year as made by the local assessor restored. The City of Newark, on the other hand, cross-appeals claiming the assessment fixed is excessive and seeks to have it established at true value. These appeals have been certified here on our motion.
The assessments for the years 1948, 1949 and 1950 are involved and it was stipulated that the testimony for the year 1948 would constitute the record for the years 1949 and 1950 as well. The assessments for each of the years are as follows:
1948 -- $1,483,840
1949 -- 1,854,800
1950 -- 1,887,125
The land involved consists of 18,548 acres located in the Township of West Milford. On part of the property a reservoir is located but the rest of the property can be classified as watershed property and part of the Newark water supply system.
The property is assessed for local taxation pursuant to the provisions of R.S. 54:4--3.3, N.J.S.A., which provides Inter alia:
'* * * The lands of counties, municipalities, and other municipal and public agencies of this State used for the purpose and for the protection of a public water supply, shall be subject to taxation by the respective taxing districts where situated, at the true value thereof, without regard to any buildings or other improvements thereon, in the same manner and to the same extent as the lands of private persons, but all other property so used shall be exempt from taxation.'
Appeals were taken from all the assessments as originally fixed by the township to the county board of taxation and the assessments of the lands were affirmed. Thereafter the City of Newark took an appeal to the Division of Tax Appeals which entered three separate judgments reducing the value for each of the said taxable years to the figure for which the lands were assessed in 1947, $1,391,100.
The appellant-township's contention is that the Division of Tax Appeals disregarded the testimony before it and founded its judgment solely upon the tax history of the property, and it further argues that while the Division gave weight to the testimony of the expert Reidel, who testified for the City of Newark, they misapplied his testimony in applying it to the classifications and categories of land which in the aggregate make up this watershed property. They further argue that there is a presumption that each original assessment is legally correct and that the proof of the City of Newark failed to overcome or weaken this presumption.
The City of Newark, on the other hand, contends that the testimony in behalf of the Township of West Milford clearly indicates that its property was not assessed at true value according to the statute and the increase in the assessments for the years 1948--49--50 was not justified on the testimony given by the experts for the township, and that the true value of the property for tax purposes is the figure given by the City of Newark's expert as $590,117.
While it is within the power of this court under Article VI, Section V, paragraph 3 of the Constitution of 1947 and Rule 3:81--13 to exercise original jurisdiction and fix the assessment in question for the taxable years, this is a power which should not be exercised in the absence of imperative necessity which does not exist here. And for the further reason that an examination of the appendices and original transcript in this case clearly and definitely renders this impossible in view of the confused and contradictory state of the record, and the failure to apply what we deem to be controlling principles of taxation under the statute in question.
At the outset it should be noted that the statute applies only to the lands of the municipality and exempts its other property in the watershed.
We apprehend that the purpose and intent of the statute, R.S. 54:4--3.3, N.J.S.A., is to distribute the tax burden of the taxing district equably between the municipality owning watershed lands and the lands of the other taxpayers of the district. It subjects such lands to taxation at their true value on the same terms and conditions as the lands of the other taxpayers in the district are subjected to. The scheme is essentially different from the method of taxing property of private companies Cf. Millville Water Co. v. City of Millville, 84 N.J.L. 411, 86 A. 449 (E. & A.1913).
The statute impliedly prohibits an assessment of such lands as part of an integrated utility with the resultant increment to the value of such lands because of their integrated use. An assessment on such a basis necessarily would result in a higher valuation and would burden the municipality owning the watershed property with a disproportionate share of the tax burden of the taxing district. Since under the statute the lands as such cannot be sold at a private sale by private contract as hereinafter pointed out, and since also a sale of such a vast tract is ordinarily a practical impossibility, any valuation placed upon such lands on a theoretical sale basis would in all probability result in a valuation much lower than the value of the aggregate of comparable lands of private persons. In this second instance a disproportionate share of the tax burden would necessarily fall or be visited upon the other taxpayers in the district.
The operation of a watershed and reservoir such as we have here is the exercise of a proprietary function by the municipality owning it. This proprietary function is strictly regulated by statute and all actions with respect thereto on the part of the municipality are subject to related statutory provisions, among which are R.S. 40:62--47 to 40:62--105, N.J.S.A. and R.S. 58:1--1 to 58:17--6, N.J.S.A., where applicable.
We know of no statutory provision, and none has been pointed out to us, whereby a municipal owner of a watershed property could become a willing seller of an entire reservoir and watershed, within the meaning of that phrase as used in cases relating to taxation.
The statute requires that such lands shall be subject to taxation 'at the true value thereof * * * in the same manner and to the same extent as the lands of private persons.' The statute was and is consistent with Article IV Section VII, paragraph 12, Constitution (1844) and Article VIII, Section I, paragraph 1, Constitution (1947). The phrase 'at true value' has a constitutional and historical meaning in the law of taxation of this State. True value is the consideration of the market value of the property at a fair and bona fide sale at private contract. True value of property of any kind is in essence the value it has in exchange for money. Hackensack Water Co. v. Division of Tax Appeals, 2 N.J. 157, 163, 65 A.2d 828 (1949).
Since the lands must be assessed in the same manner and to the same extent as lands of private persons, the assessments are required to be made pursuant to R.S. 54:4--23, N.J.S.A., under which the test is what 'it would sell for at a fair and bona fide sale by private contract on October first next preceding the date on which the assessor shall complete his assessments * * *.' By its very terms R.S. 54:4--3.3, N.J.S.A. is expressly In pari materia with R.S. 54:4--23, N.J.S.A.
It is not possible to measure with mathematical precision the value of the lands here assessed because comparable property of private water companies are rarely the subject of sale and their assessment is based upon additional factors not here present. Hackensack Water Co. v. Division of Tax Appeals, supra, 2 N.J. at page 163, 65 A.2d 828; cf. Borough of Haworth v. State Board of Tax Appeals, 127 N.J.L. 67, 21 A.2d 309 (Sup.Ct.1941). The lands here in question cannot be sold by private contract, and because of the vast acreage involved there are few if any comparable holdings in the hands of private persons. So it follows that the assessment of these lands cannot be fixed with any degree of mathematical exactness but must be fixed by a reasonable and equable comparison with the true value of smaller comparable holdings of private persons. A reasonably approximate and comparable true value based upon the same principles of taxation applicable to these holdings of private persons will be a ompliance with the statutory direction.
Property to be assessed must be valued in the actual condition in which the owner holds it, Trustees of Stevens Institute of Technology v. State Board of Taxes and Assessment, 105 N.J.L. 99, 143 A. 356 (Sup.Ct.1928), affirmed 105 N.J.L. 655, 146 A. 919 (E. & A.1929), and if part of the property is held as a farm, the question would not be what would any particular part bring on sale, if separated, but what the whole thing would bring at private sale, since the...
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