Jersey City v. State Bd. Of Tax Appeals

• Decision Date: 29 August 1945
• Docket Number: Nos. 210, 211, 213.,s. 210, 211, 213.
• Citation: 133 N.J.L. 202,43 A.2d 799
• Parties: JERSEY CITY et al. v. STATE BOARD OF TAX APPEALS et al.
• Court: New Jersey Supreme Court

133 N.J.L. 202

43 A.2d 799

JERSEY CITY et al.

v.STATE BOARD OF TAX APPEALS et al.

Nos. 210, 211, 213.

Supreme Court of New Jersey.

Aug. 29, 1945.

Certiorari proceedings by the City of Jersey City and others against the State Board of Tax Appeals and others, to review judgments of the State Board dismissing prosecutors' appeals from levies by the State Tax Commissioner on railroad property.

Reversed and causes remanded.

January term 1944, before PARKER, HEHER, and PERSKIE, JJ.

Charles A. Rooney and Charles Hershenstein, both of Jersey City, Raymond C. Connell, of Montclair, John J. Fallon, of Hoboken, John N. Platoff, of Union City, and Irwin Rubenstein, of West New York, for prosecutors.

David T. Wilentz, of Perth Amboy, John Solan, of Trenton, Maximillian M. Stallman, of Newark, Collins & Corbin, of Jersey City, Conover English and Raymond Schroeder, both of Newark, Katzenbach, Gildea & Rudner, of Trenton, Carpenter, Gilmour & Dwyer and Wall, Haight, Carey & Hartpence, all of Jersey City, Walter T. Margetts, Jr., of New York City, and Henry Lanahan, of West Orange, for respondents.

PERSKIE, Justice.

These are railroad tax cases. They involve the ‘railroad tax law of 1941.’ Three questions require decision:

1. Is the ‘railroad tax law of 1941,’ P.L.1941, Ch. 291, as amended by P.L.1942, Ch. 169, N.J.S.A. 54:29A-1 et seq., constitutional?

2. Are the provisions of R.S. 54:26-10, N.J.S.A., and section 34 of P.L.1941, supra, requiring the State Board of Tax Appeals to conclude its hearings on or before October fifteenth following the filing of the complaint (cf. R.S. 54-29A-34, N.J.S.A.) directory or mandatory?

3. Are prosecutors qualified to prosecute these writs?

The facts which give rise to the posed questions are substantially and briefly stated in what follows. The State Tax Commissioner (hereafter referred to as Commissioner), pursuant to the law prevailing it each time, made three separate computations of and levies for the taxes due from the railroad companies to the State, for the tax year of 1941, upon the property used by these railroad companies for railroad purposes.

The first was made on June 3, 1941, pursuant to R.S. 54:19-1 et seq., N.J.S.A. (Taxation of Railroad and Canal Companies). This computation was based upon the ‘average rate of taxation’ R.S. 54:24-2, N.J.S.A. for the year of 1941, of $4,818 on each one hundred dollars of valuation, as ascertained under R.S. 54:24-3, N.J.S.A., and resulted in a total tax against the railroads of $18,322,164.33.

The second was made on November 15, 1941, pursuant to P.L.1941, Ch. 291 (‘railroad tax law of 1941’). This computation, based upon the fixed statutory rate of $3 for each one hundred dollars of valuation, resulted in an ad valorem tax of $11,016,118,17, and based upon the prescribed statutory formula resulted in a separate franchise or excise tax of $4,163,108.43, or a total of $15,179,226.60.

The third was made on May 16, 1942, pursuant to P.L.1941, Ch. 291, as amended by P.L.1942, Ch. 169. This computation resulted in a franchise or excise tax of $4,026,812.90, which when added to the ad valorem tax of $11,016,118.17, fixed under P.L.1941, supra, totals $15,042,913.07. Thus the net face difference between the first and third computation is $3,279,233.26.

No useful purpose would be served in detailing each of the many appeals taken to the State Board of Tax Appeals by prosecutors allegedly consisting of aggrieved municipalities and citizens and taxpayers thereof, or to detail the many writs allowed by the Supreme Court, or to set down the many reasons asserted in support of either or both of the remedies invoked.

For, conceding all other reasons to be secondary, prosecutors applied for and were allowed rules limiting the issues first to be argued and reserving all other reasons. The issues so limited relate (1) to the first posed question, ‘excepting however any constitutional issue based upon contentions that the assessment of the property for the year 1941 purporting to have been made under Ch. 291 (P.L.1941) are not at true value,’ and (2) to the second posed question. The third posed question relates to respondents' challenge of prosecutors' right to be heard.

As to the First Question.

From the very beginning, property used for railroad purposes has occupied and continues to occupy a separate classification, from all other property, in the field of taxation. The particular or special use to which railroad property has been and continues to be put is the basis which supports both its separate classification and the legislative power to impose a separate tax to be paid on property so classified and used. When, as here, the separate classification is proper and embraces all property in that classification a law which taxes the property so classified may provide what tax the railroad companies, owners of the separately classified property, shall pay, and in what way it should be assessed provided that the assessment of their property is made ‘under general laws, and by uniform rules, according to its true value.’ Art. IV, sec. VII, par. 12, State Constitution, N.J.S.A. That has been and is the settled law of this State. State Board of Assessors v. Central R. R. Co., 48 N.J.L. 146, 4 A. 578; cf. Bergen & Dundee R. R. Co. v. State Board of Assessors, 74 N.J.L. 742, 67 A. 668 (Duffield Act of 1905 [N.J.S.A. 54:19-2, 54:23-1 et seq., 54:24-7 et seq.]); Central R. R. Co. v. State Board of Assessors, 75 N.J.L. 120, 67 A. 672; Central R. Co. of New Jersey v. Baird, 75 N.J.L. 771, 69 A. 239 (Perkins Acts of 1906 [N.J.S.A. 54:19-2, 54:23-1 et seq., 54:24-1 et seq.]).

However morally persuasive may be the philosophy underlying the contentions made that there can be no constitutional justification (cf. Art. I, par. 16, and Art. IV, sec. VII, par. 12, State Constitution), under our system of spreading the burden of taxation equally on all property, for imposing a lesser tax burden on property used for railroad purposes than is imposed on other property, that contention is logically inconsistent and legally without merit. It is inconsistent with the admission that property used for railroad purposes may properly be separately classed and runs afoul of the aforestated cases. Equality of the burden upon all taxable property can only be attained if and when there shall be but one general tax law applicable alike to all taxable property irrespective of its particular use. That, however, continues to be the ‘Dream unrealized.’

Central R. R. Co. of New Jersey v. State Tax Department, 112 N.J.L. 5, 15, 169 A. 489, certiorari denied 293 U.S. 568, 55 S.Ct. 79, 79 L.Ed. 667. There is no constitutional objection either to the classification or rate features to the legislation in question. Nor can there be any objection to the separation of the franchise tax from the ad valorem tax. Jersey Central Power & Light Co. v. Asbury Park, 128 N.J.L. 141, 24 A.2d 526, affirmed, Jersey Central Power & Light Co. v. Monmouth County Board of Taxation, 129 N.J.L. 253, 29 A.2d 139. As to future taxation for which it was designed, the legislation, upon its face, is free from constitutional restraint. As to the tax year of 1941 it is not free from such constitutional restraint.

The legislature is supreme in its exclusive filed of taxation. For in a sense all taxes levied for State, county or municipal purposes are state taxes. But this supremacy is subject to its irrepealable contracts and constitutional restraints. State Board of Assessors v. Central R. R. Co., supra; cf. Jersey City v. Martin, 126 N.J.L. 353, 360, 361, 19 A.2d 40.

As to the tax year of 1941, the legislation in question clearly contravenes Art. 1, par. 20, of our State Constitution which provides: ‘No donation of land or appropriation of money shall be made by the state or any municipal corporation to or for the use of any society, association or corporation whatever.’

For a little over a third of a century prior to the effective date (July 22, 1941) of the ‘railroad tax law of 1941,’ property used for railroad and canal purposes was taxed pursuant to R.S. 54:19-1 et seq., N.J.S.A., which has for its source P.L.1888, Ch. 208, as amended and supplemented. Under that law, R.S. 54:19-1 et seq., the Commissioner on or before the first day of June following his compilation of valuations and within ten days thereafter, was obliged to serve a statement upon the treasurer of each railroad company showing, inter alia, the amount levied against such company. R.S. 54:27-1, N.J.S.A. The amount as shown by this statement became due and payable on any day between June first and December first following R.S. 54:27-2. If any part of these taxes remained unpaid on December first following the levying thereof such taxes were ‘considered in default’ and bore interest. They were a ‘lien paramount to all other liens upon all the lands and tangible properties and franchises of the (railroad) effect on June first of the year in which it effect on June first of the year in which it was payable and it was * * * ‘a debt due from the company to the state * * * for which an action at law or a suit in equity may be maintained and * * * (it was) a preferred debt in case of insolvency.’ R.S. 54:27-4. The State admitedly had a vested right to the taxes as first computed under R.S. 54:27-4. Wilentz v. Hendrickson, 133 N.J.Eq. 447, 33 A.2d 366, affirmed 135 N.J.Eq. 244, 38 A.2d 199.

It was in this posture of the railroad tax law that the legislature, on July 22, 1941, passed P.L.1941, Ch. 290, and later amended by P.L.1942, Ch. 241, N.J.S.A.App.A:4-7.1 et seq. (Railroad Settlement amended by P.L.1942, Ch. 169 (‘railroad tax law of 1941’). It is conceded-in fact urged-by respondents, that Ch. 291 of P.L.1941, ‘took up the matter (of railroad taxation) where Ch. 290 (P.L.1941) left off,’ and that P.L.1941, Ch. 291, ‘should not and can not be fairly construed without reference to its companion act Ch. 290 (P.L.1941).’ We concur.

We...