Devonshire Development Associates v. City of Hackensack

• Decision Date: 30 March 1981
• Parties: , 446 A.2d 201 DEVONSHIRE DEVELOPMENT ASSOCIATES, Plaintiff, v. CITY OF HACKENSACK, Defendant.
• Court: New Jersey Tax Court

Page 371

184 N.J.Super. 371

2 N.J.Tax 392, 446 A.2d 201

DEVONSHIRE DEVELOPMENT ASSOCIATES, Plaintiff, v. CITY OF HACKENSACK, Defendant.

Tax Court of New Jersey.

March 30, 1981.

Daniel Amster, Waldwick, for plaintiff.

Steven Muhlstock, Hackensack, for defendant (Melvin Gittleman, Hackensack, attorney).

EVERS, J. T. C.

Devonshire Development Associates (taxpayer) brings this motion for summary judgment which concerns the effect of N.J.S.A. 54:2-40.4 and N.J.S.A. 54:3-22(c) to (f) (hereinafter referred to collectively as chapter 123) on the limitation imposed by the jurisdiction of the county tax boards and the Tax Court, by Matawan v. Tree Haven Apartments, Inc., 108 N.J.Super. 111, 260 A.2d 235 (App.Div.1969). The facts follow.

Taxpayer filed a complaint in the Tax Court alleging that the Bergen County Tax Board (board) did not have the authority to increase the original assessments on a group of condominium units without the City of Hackensack (city) having filed an appeal from the original assessment. In the alternative, taxpayer's petition alleged discrimination. It claimed discrimination in contravention of the constitutional theory of discrimination as set forth in In re Appeal of Kents, 34 N.J. 21, 166 A.2d 763 (1961), as well as the discrimination relief set forth in chapter 123. ¹ Taxpayer's theory implied that "constitutional" as well as "statutory" discrimination are alternative causes of action. The county board increased the original assessment in accordance with chapter 123 without the presence of a municipal appeal. The taxpayer claims such action is ultra vires and prays for "judgment reversing the action of the Bergen County Board of Taxation." Taxpayer argues that Matawan prohibits the increase of an assessment beyond the original one in absence of an appeal by the taxing district from the original assessment. Chapter 123, according to the taxpayer, has not changed that rule.

The city argues that Matawan is in irreconcilable conflict with Fort Lee v. Hudson Terrace Apartments, 175 N.J.Super. 221, 417 A.2d 1124 (App.Div.1980), certif. den. 85 N.J. 459, 427 A.2d 559 (1980), and is therefore eviscerated if not overruled. Additionally, the city argues that the Tax Court or the county tax board may increase the assessment beyond the original assessment by virtue of chapter 123 despite the questionable vitality of Matawan. In order to put the issues in proper focus, a detailed analysis of Matawan must be undertaken.

In Matawan the taxpayer attacked a judgment of the Division of Tax Appeals (Division) that found the value of its property at $14,000 above the original assessment. The taxing district relied on N.J.S.A. 54:2-35 in order to sustain the action of the Division. This provision stated that any county tax board action may be appealed to the Division, "and it may review such action and proceedings and give such judgment thereon as it may think proper" (emphasis supplied). ² The court (108 N.J.Super. at 119, 260 A.2d 235) construed this provision as never having intended to allow an increase of an assessment "after the tax list had been reviewed, approved and returned by the county tax board, in the absence of an appeal or equivalent procedure, based upon timely notice to the party whose property was to be affected by the change." (Emphasis supplied). Emphasizing the importance of the notice requirement the court said:

To the extent here relevant, changes or alterations are to be made by the county tax board, acting in its appellate capacity, N.J.S.A. 54:3-21, in which case the requisite notice of any proposed upward revision would be contained in the petition of appeal filed by the taxing district. In the absence of such a notice a taxpayer should be entitled to assume that his assessment is not being challenged as too low. Many individual taxpayers appear pro se before county tax boards. Without such assumption, a taxpayer would never know when he would be required to retain counsel and submit expert testimony in defense of his assessment. The inevitable result would be to discourage appeals to the county tax board regardless of merit. [at 118, 260 A.2d 235]

In support of its vitality taxpayer correctly points to several Tax Court decisions that have adhered to the Matawan limitation. See Lamm Associates v. West Caldwell, 1 N.J.Tax 373 (Tax Ct.1980). Yet, the anomaly of Fort Lee v. Hudson Terrace Apartments, supra, remains and appears to be directly contrary to Matawan.

In Hudson Terrace the Appellate Division held that the Division erred in applying the average ratio of assessments to true value in the taxing district as determined by the Director of the Division of Taxation without proof that there was no common level of assessments for the year in question (1976). In computing the value of the improvements for the year 1976 the court found an assessment figure higher than the original assessment. The court did not even mention Matawan, or the limitation imposed by that case, in its published opinion. Accordingly, it would be error for this court to simply ignore Matawan on the basis of Hudson Terrace, even though on motion for rehearing the Appellate Division denied the application, remarking that:

SUPPLEMENTAL: The petition for rehearing is denied. See N.J.Constitution 1947, Art. VII, § I, par. 1; N.J.S.A. 54:4-23; Samuel Hird & Sons, Inc. v. Garfield, 87 N.J.Super. 65, 75 (App.Div.1965); Hackensack v. Rubinstein, 37 N.J. 39, 52 (1962); Rek Investment Co. v. Newark, 80 N.J.Super. 552, 557-558 (App.Div.1963).

The above-cited cases in the Appellate Division order were all cited in Matawan and are clearly distinguishable. Consequently, on this argument alone Matawan cannot be circumvented. See Campbell v. Schlaifer, 88 N.J.Super. 66, 210 A.2d 781 (App.Div.1965). While a trial court need not necessarily agree with the opinions of appellate tribunals, it cannot disregard them. Reinauer Realty Corp. v. Paramus, 34 N.J. 406, 415, 169 A.2d 814 (1961), and Lewandowski v. National Grange Mut. Ins. Co., 149 N.J.Super. 591, 374 A.2d 489 (Law Div.1977). The Supreme Court is the final arbiter, and an intent to alter settled law of this State cannot be attributed to the appellate courts in absence of express, clear disapproval of existing law and a definite repudiation of decisions establishing that law. Russ v. Metropolitan Life Ins. Co., 112 N.J.Super. 265, 270 A.2d 759 (Law Div.1970).

The essence of chapter 123 is found in two separate provisions which govern such causes of action on the county tax board and Tax Court levels.

N.J.S.A. 54:3-22 pertains to actions at the county tax board level and provides in pertinent part:

...

* * *

c. Whenever the County Board of Taxation is satisfied by the proofs that the ratio of the assessed valuation of the subject property to its true value exceeds the upper limit or falls below the lower limit of the common level range, it shall revise the taxable value of the property by applying the average ratio to the true value of the property except as hereinafter provided. [Emphasis added] d. If the average ratio is below the county percentage level and the ratio of the assessed value of the subject property to its true value exceeds the county percentage level, the county board of taxation shall reduce the taxable value of the property by applying the average ratio to the true value of the property.

e. If both the average ratio and the ratio of the assessed value of the subject property to its true value exceed the county percentage level, the county board of taxation shall revise the taxable value of the property by applying the county percentage level to the true value of the property.

f. The provisions of this section shall not apply to any appeal from an assessment of real property taken with respect to the tax year in which the taxing district shall have completed and put into operation a district wide revaluation program approved by the Director of Taxation pursuant to Chapter 424, Laws of 1971 (C. 54:1-35.35 et seq.)

N.J.S.A. 54:2-40.4 pertains to Tax Court actions and is essentially identical to the county tax board provisions. The only appreciable difference is that N.J.S.A. 54:2-40.4 states that chapter 123 relief is not appropriate where "a reassessment program approved by the county board of taxation", in addition to cases where a district wide revaluation, has taken place.

The core of chapter 123 is found in N.J.S.A. 54:1-35a and N.J.S.A. 54:1-35b, which establish the statistical formula for an action grounded in discrimination. These sections define the key terms "average ratio" as "that ratio promulgated by the Director of the Division of Taxation pursuant to N.J.S.A. 54:1-35.1 et seq. as of October 1st of the year preceding the tax year," and the "common level range" as "that range which is plus or minus 15% of the average ratio for that district". ³ The director of the division of taxation is directed, on or before April 1st in each year, to determine the average ratio and common level range.

Chapter 123 was in large part a legislative response to the problem of proving a discriminatory assessment in cases where Kents relief is sought. (In re Appeal of Kents, 34 N.J. 21, 166 A.2d 763 (1961)). The elements of a Kents action were succinctly set forth in Continental Paper Co. v. Ridgefield Park, 122 N.J.Super. 446, 300 A.2d 850 (App.Div.1973):

... In order to make out a case of actionable discrimination, these elements must be proved: (1) that the real property generally in the municipality was assessed at less than true value; (2) what the common assessment level was and (3) the true value of the subject property upon which the common level percentage would operate. Reading Co. v. Woodbridge Township, 45 N.J. 407, 426 (1965); Matawan v. Tree Haven Apartments, Inc., supra, 108 N.J.Super. at 116 ; Feder v. Passaic, 105 N.J.Super. 157, 160 (App.Div.1969). If there is no common level shown and there is none which the...