City of Newark v. Fischer, A--34

• Decision Date: 12 November 1951
• Docket Number: No. A--34,A--34
• Citation: 8 N.J. 191,84 A.2d 547
• Parties: CITY OF NEWARK v. FISCHER.
• Court: New Jersey Supreme Court

Page 191

8 N.J. 191

84 A.2d 547

CITY OF NEWARK v. FISCHER.

No. A--34.

Supreme Court of New Jersey.

Argued Oct. 22, 1951.

Decided Nov. 12, 1951.

Frederick C. Vonhof, Newark, argued the cause for appellant.

Vincent J. Casale, Newark, argued the cause for respondent (Charles Handler, Newark, attorney).

Sackett M. Dickinson, Trenton, argued the cause for the Trustees for the Support of Public Schools of the State of New Jersey (Theodore D. Parsons, Trenton, attorney).

The opinion of the court was delivered by

WACHENFELD, J.

This appeal, certified here on our own motion, is from a judgment of the Division of Tax Appeals. The question is whether a real estate tax may be levied against a vendee in possession under an executory contract for sale when legal title to the premises is in a public body exempt from taxation.

The Trustees for the Support of Public Schools acquired the property by foreclosure in 1935. One of the tenants occupying factory space at the time was a firm in which the defendant Fischer was a partner. In December 1937 the Trustees entered into a contract for the sale of the premises to Fischer which provided, Inter alia, that he would remain in possession until the closing of title. The date fixed for closing in the contract was October 2, 1942, almost five years later, and the purchase price was $44,000, of which $5,000 was payable on the execution of the contract, $8,000 in equal installments on the first day of October 1938, 1939, 1940, and 1941, $9,000 on delivery of the deed, and the balance of $22,000 by purchase money mortgage given to the Trustees. Fischer was to pay the Trustees interest at the rate of four per cent annually on the unpaid portion of the purchase price, this amount to be in addition to the principal payments stated above.

It was agreed in the contract that: 'Taxes, if any, on said premises prior to the date of passing title, shall be paid by the party of the first part (the Trustees), and insurance premiums, and taxes, if any, shall be adjusted, apportioned and allowed as of the day of delivery of said deed.'

The Trustees further agreed: 'If at the time for the delivery of the deed, the premises or any part thereof shall be or shall have been affected by an assessment or assessments which are or may become payable in annual installments of which the first installment is then due or has been paid, then for the purpose of this contract all the unpaid installments of any such assessment, including those which are to become due and payable after the delivery of the deed, shall be deemed to be due and payable and to be liens upon the premises affected thereby and shall be paid and discharged by the seller thereof, upon the delivery of the deed.'

The closing of title was first delayed because it was discovered that a small triangular piece was not covered by the mortgages through which the Trustees acquired title in the foreclosure action. A bill to quiet title resulted in a decree favorable to the Trustees on January 10, 1944.

Meanwhile the Trustees and the purchaser had executed an agreement extending the time for closing to October 1, 1943. Fischer professes himself ready, willing and able to close title at any time, but a continuing controversy over tax assessments on the property and the extensive litigation resulting from it have delayed consummation of the transaction up to the present. The Norbet Corporation, successor in interest to Fischer, remains the vendee in possession under an executory contract for sale, legal title still being vested in the Trustees.

The city levied assessments against the property in the name of the Trustees for the years 1935 to 1943 with the exception of 1938 and 1939, when no levy was made. The assessments for the other years were set aside in Trustees for Support of Public Schools v. Murphy, 130 N.J.L. 434, 33 A.2d 570 (Sup.Ct.1943). Assessments against the property levied in Fischer's name for the years 1944 and 1945 were cancelled by the county board of taxation as there was no statutory provision under which to levy an assessment against a vendee in possession.

In 1946 the Legislature amended R.S. 54:4--1, N.J.S.A., by adding: 'An executory contract for the sale of land, under which the vendee is entitled to or does take possession thereof, shall be deemed, for the purpose of this act, a mortgage of said land for the unpaid balance of purchase price.'

Fischer contested the 1946 assessment levied under this act and in the subsequent litigation, Norbet Corp. v. City of Newark, 135 N.J.L. 314, 51 A.2d 541, 542 (Sup.Ct.1947), affirmed 137 N.J.L. 301, 59 A.2d 624 (E. & A. 1948), it was held the assessment made by the city was authorized by the 1946 amendment and hence was proper and valid and would not be disturbed. The plaintiff therein specifically did 'not seek shelter under the prior tax immunity of the Trustees' but contended that, under the executory contract for the purchase of the property, it had no taxable interest. The Trustees were not a party to the action but filed a brief in the Court of Errors and Appeals as Amici curiae urging the invalidity of the tax.

In 1947 an assessment on the property was again made in the name of Fischer. It was cancelled by the county board and the city appealed to the Division of Tax Appeals. The case ultimately reached this court, which held that the original appeal by the city was not taken within time and should have been dismissed. City of Newark v. Fischer, 3 N.J. 488, 70 A.2d 733 (1950).

In 1948 the city once more levied the assessment in Fischer's name and its right to do so is the subject of the present controversy. The county board cancelled the assessment but was reversed by the Division of Tax Appeals. Fischer appealed its judgment to the Appellate Division and, prior to hearing, the case was certified here.

Reversal of the judgment is urged on three grounds: first, that a vendee in possession under an executory contract to purchase is not subject to assessment; second, that he has no taxable interest, legal or equitable, in the lands; and, finally, that the city, having failed to make a timely appeal from the cancellation of the 1947 assessment, is estopped from levying assessments for 1948 and 1949 by the provisions of R.S. 54:3--26, N.J.S.A.

The Trustees for the Support of Public Schools protest the assessment on the ground it is not authorized under R.S. 54:4--1, as amended, N.J.S.A., because, if the statute were held to govern the transaction presently under consideration, the Trustees would, under the terms of their contract with Fischer, be obliged to pay the taxes, in violation of the constitutional mandate contained in article VIII, sec. IV, par. 2, forbidding the expenditure of the funds of the Trustees for any purpose other than the support of free public schools.

The first ground advanced has already been disposed on in Norbet Corp. v. City of Newark, supra. The appellant concedes the decision in that case is dispositive of the argument here made but we are asked to reconsider and overrule the former holding. No new theory or authorities are submitted other than those already considered. The reason again relied upon is the introductory statement to the 1946 amendment of R.S. 54:4--1, N.J.S.A., setting forth that the bill had 'as its purpose the taxation of properties purchased on long-term contracts from the federal government.' This, it is contended, so narrows its scope and effect that the amendment is not applicable to property purchased from state agencies.

We are unmoved by the argument, as was the Court of Errors and Appeals. The act is clear on its face and the courts are not free to give it a restrictive meaning based upon an introductory statement.

In Quackenbush v. State, 57 N.J.L. 18, 29 A. 431, 432 (Sup.Ct.1894), the court said:

'It is well settled that where the intention of the legislature is clearly expressed in the purview or body of the act the preamble...