Delaware, L. & W. R. Co. v. Neeld

• Decision Date: 11 March 1957
• Docket Number: No. A--28,A--28
• Citation: 23 N.J. 561,130 A.2d 6
• Parties: The DELAWARE, LACKAWANNA AND WESTERN RAILROAD COMPANY, Plaintiff-Respondent, v. Aaron K. NEELD, Director, Division of Taxation in the Department of the Treasury, State of New Jersey, City of Hoboken, City of Jersey City, City of Newark and Town of Secaucus, Defendants- Appellants.
• Court: New Jersey Supreme Court

Page 561

23 N.J. 561

130 A.2d 6

The DELAWARE, LACKAWANNA AND WESTERN RAILROAD COMPANY Plaintiff-Respondent, v. Aaron K. NEELD, Director, Division of Taxation in the Department of the Treasury, State of New Jersey City of Hoboken, City of Jersey City City of Newark and Town of Secaucus Defendants- Appellants.

No. A--28.

Supreme Court of New Jersey.

Argued Oct. 29, 1956.

Decided March 11, 1957.

John F. Crane, Deputy Atty. Gen., for appellant Aaron K. Neeld, Director, Division of Taxation (Grover C. Richman, Jr., Atty. Gen., attorney).

Herbert H. Fine, Newark, for appellant City of Hoboken.

Leo Rosenblum, Jersey City, for appellant City of Jersey City (James A. Tumulty, Jr., Corp. Counsel, Jersey City, attorney).

Augustus Nasmith, Newark, for respondent.

Vincent P. Torppey, Corp. Counsel, Newark, and Edward A. Smarak, Union City, joined in the brief as attorneys, respectively, for City of Newark and Town of Secaucus.

James Rosen, Newark, by leave of court, submitted a brief on behalf of the Township of Weehawken, as Amicus curiae.

The opinion of the court was delivered by

HEHER, J.

In purported compliance with the mandate of L.1952, c. 229, N.J.S.A. 54:29A--17, the defendant Director of the State Division of Taxation, some time prior to December 10, 1955, determined the 'true value' of Class II railroad property of the plaintiff Delaware, Lackawanna and Western Railroad Company situate in the cities of Hoboken, Jersey City and Newark and the Town of Secaucus, as of January 1, 1955, for the assessment of the 1956 tax; and the valuations were later sustained by the Director after hearing held under N.J.S.A. 54:29A--18 pursuant to petitions for review interposed by Lackawanna and the several defendant municipalities.

Lackawanna's petition for review charged that the assessments at true value were 'excessive' and 'not according to the same standard of value' governing the assessment of other real property within the municipalities, and the municipalities severally complained in their petitions that the valuations of Lackawanna's Class II real property were below true value.

In addition to the assessing function, the Director is required, L.1954, c. 86, N.J.S.A. 54:1--35.1, on or before October first in each year, to promulgate a 'table of equalized valuations to be used in the calculation and apportionment of distributions pursuant to the State School Aid Act of 1954,' N.J.S.A. 18:10--29.30 to 18:10--29.48. 'True value' for the purposes of the act, L.1954, c. 86, N.J.S.A. 54:1--35.3, 'shall be deemed to be valuation at current market prices or values, determined in such manner as the director may, in his discretion, select'; and he is directed to 'determine the ratio of aggregate assessed to aggregate true valuation of real estate of each taxing district'; and he 'may make such determination by reference to the county equalization table whenever he is satisfied that the table has been prepared according to accepted methods and practices and * * * it properly reflects true value or a known percentage thereof for the several taxing districts in the county,' and 'with respect to any and all taxing districts, may use the assessment ratios reported in the Sixth Report of the Commission on State Tax Policy (Trenton, 1953)' and 'consider such other assessment ratio studies as may be available'; and he 'may make such further and different investigations of assessment practices as he may deem necessary or desirable for the establishment of the assessment ratios required by this act.'

The equalization table promulgated by the Director October 1, 1955, pursuant to this statute, as adjusted January 6, 1956 by the Division of Tax Appeals, certifies the 'average' ratios of assessed to true value in the given municipalities: Hoboken, 70.80%; Jersey City, 62.61%; Newark, 52.51%; Secaucus, 30.54%. These ratios were determined by an analysis of sales of real property in the several taxing districts between July 1, 1954 and June 30, 1955, related to the assessments made by the local assessing authority.

At a hearing of the petition for review involving Lackawanna's Jersey City property, held January 18, 1956, the Director declared, in response to questions put by counsel, that he had assessed Lackawanna's Class II property in Jersey City 'at true value on the basis of the best information available to us for the purpose of determining assessments at true value'; that he conceived it to be his duty to 'assess Clas II railroad property according to full true value,' and he was not at liberty to 'apply the average ratio as promulgated in (his) Table of Equalized Valuations for 1955, either the original figures or the corrected figures,' and relief from 'any alleged discriminatory assessment which may result by the application of that general principle' could come only from the 'Division of Tax Appeals or the court.' And he said that 'we will not apply those ratios * * * to any railroad in any taxing district.'

And thereupon, January 20, 1956, before the time had arrived for the scheduled hearings concerning the assessments made in the other municipalities, this action was begun by the filing of a complaint, in which Hoboken, Jersey City, Newark and Secaucus were joined with the Director as defendants, alleging that the Director had failed in the performance of his duty to assess Lackawanna's Class II real property within the several municipalities '* * *according to the same standard of value and according to the common ratio employed in levying assessments * * *,' and thus the assessment 'at true value' constituted undue discrimination in violation of the 1947 State Constitution, Article VIII, Section I, paragraph 1, and the Federal Constitution as well, and seeking judgment affirming and declaring the Director's 'power and duty to make his initial valuations, to determine and correct his initial valuations and to make his final assessment' of Class II railroad property, for the purpose of assessing the 1956 tax, 'according to the average ratio of assessed to true value employed in levying assessments on other real property located within' the respective municipalities, and 'at less than true value, when necessary to prevent discrimination,' and commanding the Director to 'make his final assessment' in the several municipalities according to the ratios given in his promulgated equalization table.

The complaint was later amended to include a count charging the intentional assessment of real property within the defendant municipalities contrary to R.S. 54:4--1, N.J.S.A.

All defendants moved for summary judgment upon these grounds: (a) the Director has no jurisdiction to assess Class II railroad property at less than true value; and (b) Lackawanna had not exhausted its administrative remedies. Lackawanna countered with a motion to amend the complaint as indicated Supra, and for summary judgment upon the ground that there was no 'genuine issue of fact as to any material fact,' and it was entitled to prevail as a matter of law. Defendants' motion was denied; and the cross-motion was granted.

The judgment affirms that 'there are no essential facts in dispute'; that the Division Director 'has the power and duty to determine and correct his initial valuations and to make his final assessment' of Class II real property 'according to the average ratio of assessed to true value employed in levying assessments on other real property located within (the) defendant municipalities,' and 'at less than true value, when necessary to prevent discrimination,' and the refusal so to do contravened the cited provision of the 1947 State Constitution and the Fourteenth Amendment, and enjoins the Director to act accordingly and to make the 'final assessment' of the given property 'at the average ratio of assessed to true value' in the several municipalities 'as he has already determined exists with respect to other real estate' in these taxing districts, 'and as set forth in the Table of Equalization Valuations promulgated' by the Director October 1, 1955, pursuant to N.J.S.A. 54:1--35.1 et seq., 'as corrected by the Division of Tax Appeals,' i.e., according to the percentages of true value in each such municipality set forth ante.

The case is here by our certification of the joint appeal taken by the defendant Division Director and the four municipalities.

It is assigned for error that the Director 'has no authority under the statute or the Constitution to assess second-class railroad property at less than what he conceives to be its true value'; that '(d)iscrimination is a question of fact and this issue should not have been determined by summary judgment'; that the 'sales analysis is permissible only for the aggregate study required to be made in connection with the distribution of state school funds,' and 'true value' cannot be found 'merely by a study of sales'; and the action should be dismissed for failure to exhaust the administrative remedy.

The argument contra is that the 'constitutional mandates require and R.S. 54:29A--18 (N.J.S.A.) authorizes the Director to assess Class II railroad property at less than true value when necessary to prevent discrimination,' citing Baldwin Construction Co. v. Essex County Board of Taxation, 16 N.J. 329, 108 A.2d 598 (1954); that the 'uncontroverted facts established discrimination by the Director, as a matter of law,' and 'there were no genuine issues as to the material facts,' and 'there was no adequate administrative remedy'; and, finally, that the 'Director's ratios were conclusive upon him as a matter of law,' and Lackawanna 'is entitled to reduction to the common ratio found by the Director.'

The Director's reviewing jurisdiction under L.1948, c. 40, N.J.S.A. 54:29A--18, comprehends the correction of undue discrimination by reducing his own assessment to less than true value where necessary to achieve the equality of treatment and burden secured by constitutional precept....