Division of Tax Appeals v. Ewing Tp.

• Decision Date: 09 February 1962
• Docket Number: No. A--15,A--15
• Citation: 178 A.2d 229,72 N.J.Super. 238
• Parties: DIVISION OF TAX APPEALS, Conrad Kundl and Lena Kundl, Petitioners-Respondents, v. TOWNSHIP OF EWING, Respondent-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 238

72 N.J.Super. 238

178 A.2d 229

DIVISION OF TAX APPEALS, Conrad Kundl and Lena Kundl Petitioners-Respondents, v. TOWNSHIP OF EWING, Respondent-Appellant.

No. A--15.

Superior Court of New Jersey, Appellate Division.

Argued Dec. 18, 1961.

Decided Feb. 9, 1962.

A. Jerome Moore, Trenton, for appellant.

Edward J. Leadem, Trenton, for respondents.

Before Judges GAULKIN, KILKENNY and HERBERT.

The opinion of the court was delivered by

HERBERT, J.S.C. (temporarily assigned).

On October 1, 1959 Conrad and Lena Kundl owned 95 1/2 acres of land in Ewing Township. The assessed value placed upon that land for the tax year 1960 by the local assessor was $35,810, a figure which reflected the township's use of an assessing ratio of 25% Of true value. When Mr. and Mrs. Kundl appealed to the Mercer County Board of Taxation they got no reduction, but upon taking their case to the State Division of Tax Appeals, they obtained a judgment reducing the assessment to $14,325.

The township has now brought to us for review the judgment of the State Division, and contends that the original assessment was proper and should not have been reduced. As the record contains numerous references to the value of each acre of the land, it may be noted that the original assessment was based upon $1,500 an acre and the reduced figure set by the State Division upon $600 an acre, both of these unit values having been translated into the respective assessments by using the township's established 25% Ratio.

The land in question is a farm on which the Kundls live and which Mr. Kundl has worked for about 15 years. It is located on the Ewingville Road in an area where use of property for residential subdivisions is increasing rather rapidly. The case turns upon the standards of value to be applied. Should the farm be valued at what another farmer might pay for it if he intended to use it and keep it as a farm, or should its valuation for tax purposes reflect prospects of sale for residential plots? The proper answer to this question is not influenced by the provision which was added to our tax statutes in 1960 (N.J.S.A. 54:4--1, as amended by L.1960, c. 51 p. 444) and which reads in part:

'In the assessment of acreage which is actively devoted to agricultural use, such value (the assessable taxable value prescribed by law) shall not be deemed to include prospective value for subdivisions or nonagricultural use.'

We are considering here an assessment made as of October 1, 1959, and are not concerned with the effect of the subsequently-enacted statute or with a recent ruling that it is unconstitutional. See Switz v. Kingsley, 69 N.J.Super. 27, 173 A.2d 449 (Law Div.1961).

However, the sentence we have quoted from the Laws of 1960 states the rule which Mr. and Mrs. Kundl seek to have used in the valuation of their farm for tax purposes. There expert witness, Mr. Bachman, valued the farm at $400 an acre. At the ratio of 25% Of true value, which was being used by the township in assessing as of October 1, 1959 for the year 1960, Mr. Bachman's appraisal would have produced a total assessment of $9,550 on the 95 1/2 acres of land. He relied, when testifying on direct examination, upon six sales of farm properties which brought prices ranging from $183 to $572 an acre. None of the properties sold was in Ewing Township, although all were in Mercer County. Mr. Bachman went on to testify that in the preceding four years there had been 151 sales 'in this area,' that he had examined each and every one of those sales and had ruled out the great majority of them as not being comparable because they 'were not for agricultural purposes.'

On cross-examination Mr. Bachman conceded that the 'Kundl farm has a potential use for residential development in the future.' He said that in 1957, as a broker, he sold 62 acres of farm land for residential development at a price of $800 an acre, which land was within a half-mile of the Kundl farm; and that three sales were made in 1958 of land in the same vicinity at prices ranging from $1,529 an acre to $3,065, these sales being also for other than farm use. He also testified that a portion of the Kundl farm had been bought from Mr. and Mrs. Kundl as the site of a church or parochial school at $3,000 an acre, and another portion had been bought by the school board of Ewing Township at $3,500 an acre. The church or parochial school sale took place shortly after the 1959 assessment date.

The expert witness for the township, Mr. McCampbell, valued the Kundl land at $143,250, or $1,500 an acre. It was his opinion that the highest and best use of the property would be for residential development, and he pointed to recent sales of lands in the immediate vicinity for such purposes at prices in excess of $1,500 an acre.

Mr. Kundl took the stand in support of his own case, but only to say that his property is actually used as a farm and had been so used by him for 15 years, and to testify to his intention to go on farming the property until the end of his life. He also said that the prices of the plots sold by him and his wife to the Diocese of Trenton and to the township school board were in each case the amounts offered by the purchaser.

We conclude that the Division of Tax Appeals applied erroneous principles when it reduced the land assessment from $35,810 to $14,325. The approach to the problem used by the Division is shown by the following quotations from the opinion which the Commissioner delivered orally at the close of the hearing:

'He (Mr. Kundl) produced an expert, a Mr. Bachman, who took the sales in the area which were farm sales and came up with a value of $400 per acre. It was admitted by Mr. Bachman that there were other sales at much higher figures, at probably figures which might justify this assessment, but Mr. Bachman stated that these figures were figures which comprehended a use as a subdivision, and suburban or urban use, not an agricultural use.

In viewing this case, we come back to, as we do often in tax law, to many conflicting principles: One principle was presented that all lands shall be assessed equal; another principle is that land shall be assessed in the use to which it is put by the taxpayer on the assessing day. I hold, and I feel very strongly, that this latter rule must be paid attention to, and that it must govern our disposition of cases such as this. The farmer does not ask that the community be urbanized. Of course, he quite frequently profits from it, as the taxpayer has in this case. In view of the advancing costs in the community, I am inclined to go somewhat higher, despite my feeling in principle with the taxpayer, than the taxpayer's expert has gone. I will accordingly hold that the land is valued for the purpose of assessment at $600 an acre, which will make the true value of land at $57,300, and at the rate that the community is assessing, the assessment will be reduced to $14,325.'

Title 54, chapter 4, section 23 of the Revised Statutes, as amended by L.1943, c. 120, p. 353, § 3, was in effect on October 1, 1959, N.J.S.A., the assessing date. Though later changed somewhat by L.1960, c. 51, § 25, p. 445, the section, before that change, read 'The assessor shall ascertain the names of the owners of all real property situate in his taxing district, and after examination and inquiry, determine the full and fair value of each parcel of real property situate in the taxing district at such price as, in his judgment, 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, as hereinafter required.'

A portion of R.S. 54:4--1, as amended by L.1947, c. 413, § 14, p. 1287, which was in effect on October 1, 1959, N.J.S.A., is also pertinent:

'All property real and personal within the jurisdiction of this State not expressly exampted from...