Jersey City v. Martin

• Decision Date: 03 April 1941
• Docket Number: Nos. 16-20.,s. 16-20.
• Parties: JERSEY CITY et al. v. MARTIN, State Tax Commissioner, et al.
• Court: New Jersey Supreme Court

19 A.2d 40

126 N.J.L. 353

JERSEY CITY et al.

v. MARTIN, State Tax Commissioner, et al.

Nos. 16-20.

Court of Errors and Appeals of New Jersey.

April 3, 1941.

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Appeal from Supreme Court.

Proceedings by the City of Jersey City and the Mayor and Council of Hoboken against J. H. Thayer Martin, State Tax Commissioner, and others for writs of certiorari to review the legality of defendants' acts in apportioning among various municipalities the proceeds of taxes imposed on franchise and gross receipts of the New Jersey Bell Telephone Company, the Public Service Electric & Gas Company, and the Public Service Co-Ordinated Transport. From judgments of the Supreme Court, 125 N.J.L. 219, 15 A.2d 449, dismissing the writs, the prosecutors appeal.

Judgments affirmed.

Edward P. Stout, of Jersey City, for appellants.

Herbert J. Hannoch, of Newark, for respondent City of Elizabeth, and others.

John F. Evans, of Paterson, for respondent City of Paterson.

William Newcorn, of Plainfield, for respondent City of Plainfield.

Joseph T. Karcher, of Sayreville, for respondent Borough of Sayreville.

Herbert J. Hannoch and Morris Weinstein, both of Newark, of counsel, for respondents.

HEHER, Justice.

The insistence is that ch. 4 and S of the Laws of 1940, Pamph.L. pp. 21, 33, N.J.S.A. 54:31—15.14 et seq., 54:31—45 et seq., contravene Art. IV, sec. VII, placitum 12, of the State Constitution, N.J.S.A., directing that "Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value," and also sec. I of the 14th Amendment of the Federal Constitution, for "lack of uniformity and equality" in (a) the "scheduled property;" (b) the "unit values;" (c) the "classification of the taxpayers"; and (d) the "rates."

It is said that the cited provision of the State Constitution "goes hand in hand with the federal constitutional guarantee of equal protection of the laws," and that "the cardinal rule of uniformity in taxation under both state and federal constitutions is that the burden of taxation must be borne equally by all in a single class." The language of this state constitutional precept is found to be "broad" and "general," and not "limited to an assessment for the levy of taxes." The argument is made that "the valuation of property for taxing purposes includes the valuation of property for the apportionment of the taxes just as much as the valuation of property for the levy of taxes"; that "the words 'for taxes' include all branches of taxation—the levy of the tax, the collection of the tax, and the distribution of the tax"; that "the constitutional requirement of uniformity is destroyed by any departure from the general requirement in any phase of taxation"; and that "there must be uniformity in the initial valuation of the property, in the rate to be applied, in the collection of the taxes, and in the distribution of the taxes." And it is maintained that it is implicit in this particular constitutional mandate, construed according to "its spirit and intent," that the municipalities shall "receive a just and fair equivalent under a substituted tax for that which they would receive under the direct taxation of the property."

The "crux" of appellants' "attack on the statutes * * *, both under the state and federal constitutions," is stated to be "the inequality between the exemption and the apportionment provisions," in that the "property which is exempted is not included in the schedule of property to be valued," and "only a part of the property exempted is included," and "the part that is included is valued not as property is generally valued, but by applying fixed unit values, regardless of kind, character, condition, location, or true value." By way of elaboration, it is said that "validity can only attach to taxation systems which, notwithstanding the exemption provisions, insure equality in the burden by either providing a fair equivalent for the tax revenue to the municipalities which are deprived of their normal tax revenues, or by making the tax of statewide benefit to all"; and that the "tax revenue secured" by the statutes in question "is not for a statewide, general purpose, but is wholly for the municipalities' local purposes," and, such being the case, "unless a fair equivalent of tax revenue is insured to the municipalities which are deprived of their normal tax revenue by the exemption provisions of the statutes, then the constitutional requirement of uniformity and equality is not met, and the statutes should be condemned." Again, it is urged that, "if the result of the statute in question is a destruction of uniformity in taxation, the statute should be invalidated exactly as it would be if it provided for the assessment of the property in question in the first instance by a theoretical or arbitrary method instead of according to true value"; that "there can be no uniformity as required by the Constitution unless the valuation of property results from the exercise of honest judgment and according to ad valorem"; and that "legislative action which attempts to substitute a fanciful theory of valuation, based upon capacity, for sound and firmly-established methods," —termed "arbitrary unit values"—"is just as invalid under the constitution as administrative action of the same kind."

The argument is that, "true value" of the physical property not being an element of the statutory formula, the apportionment thereby effected would not be just and equitable, and so would run counter to the constitutional provisions adverted to and "disregard the spirit and intent of the decision of this court" in Mayor and Council of City of Hoboken v. Martin, 123 N. J.L. 442, 9 A.2d 332. There, it was contended that there was an unlawful delegation of power to the Tax Commissioner; here, it is said that the statutes under review "do not furnish" the Commissioner "with a 'standard, plan or rule,' but, instead, fix ultimate valuations, leaving to the State Tax Commissioner only the task of making calculations." These apportionment provisions do not, we are told, take the category of "true legislation," since that term "implies the determination of standards and principles for the guidance of the administrative department of the government." In fine, it is maintained that, "if the result disturbs or may disturb equality in the burden of taxation, the statute is constitutionally objectionable," since "uniformity in taxing implies equality in the burden of taxation, and this equality of burden cannot exist without uniformity in all of the essential steps in taxation," and these statutes "should be condemned because of procedural departure from the usual method of valuation by local assessors."

The impositions laid upon the utilities by the statutes under review are not "property" taxes within the intendment of the cited provision of the State Constitution, but rather excises or license fees levied on gross receipts for the exercise of corporate franchises and the privilege of using public streets and highways. State Board of Assessors v. Central R. R. Co., 48 N.J.L. 146, 271, 4 A. 578; Johnson v. Borough of Asbury Park, 58 N.J.L. 604, 33 A. 850, affirmed 60 N.J.L. 427, 39 A. 693; North Jersey Street Ry. Co. v. Jersey City, 73 N.J.L. 481, 63 A. 833, affirmed 74 N.J.L. 761, 67 A. 33; Phillipsburg Horse Car R. R. Co. v. State Board of Assessors, 82 N.J.L. 49, 81 A. 1121; Bergen Aqueduct Co. v. State Board, etc, 95 N.J.L. 486, 112 A. 881; Salem & Pennsgrove Traction Co. v. State Board, 97 N.J.L. 386, 117 A. 401, affirmed 98 N.J.L. 570, 119 A. 926; Eastern Pennsylvania Power Co. v. State Board, etc, 103 N.J.L. 281, 135 A. 677; Standard Underground Cable Co. v. Attorney General, 46 N.J.Eq. 270, 19 A. 733, 19 Am.St. Rep. 394; Patton v. Brady, 184 U.S. 608, 22 S.Ct. 493, 46 L.Ed. 713; New Jersey Bell Telephone Co. v. State Board, 280 U. S. 338, 50 S.Ct. 111, 74 L.Ed. 463. This constitutional direction lays no restraint upon the sovereign authority in the making of such exactions; and the exercise of the power is in nowise restricted, "save only by the need of conforming to that essential quality of taxation that, when a class of persons or things is selected for taxation, the tax must be imposed upon individuals of the class under a rule of uniformity." State Board of Assessors v. Central R. R. Co., supra [48 N.J.L. 146, 4 A. 591]. See, also, North Jersey Street Ry. Co. v. Jersey City, supra; Salem & Pennsgrove Traction Co. v. State Board, supra; Eastern Pennsylvania Power Co. v. State Board, etc, supra.

Moreover, the issue here concerns the apportionment among the several municipalities of excise charges levied and collected by the State; and the principles governing the levying of taxes have no relation to their distribution by the sovereign. State Board of Assessors v. Central R. R. Co., supra; Mayor and Council of City of Hoboken v. Martin, supra; Collingswood Sewerage Co. v. Collingswood, 91 N.J.L. 20, 102 A. 901, affirmed 92 N.J.L. 509, 105 A. 209; Oliver v. Washington Mills, 11 Allen 268, 93 Mass. 268; Trenton v. New Jersey, 262 U.S. 182, 43 S.Ct. 534, 67 L.Ed. 937, 29 A.L.R. 1471; Williams v. Mayor, etc, of Baltimore, 289 U.S. 36, 53 S.Ct. 431, 77 L.Ed. 1015. "Every system of taxation consists of two parts,—one the levying of taxes, the imposition of taxes on persons or property; the other, the assessment and collection of taxes. The first is a legislative function, controlled by constitutional prescriptions; the other—the assessment and collection of taxes—is mere machinery by which the legislative purpose is effectuated." Township of Bernards v. Allen, 61 N.J.L. 228, 39 A. 716, 719. The constitutional provision that property shall be assessed for taxes according to its true value, and by uniform rules, "relates only to the assessment of taxes, and in that respect it concerns only such equalization of the burdens of taxation...