Lake End Corp. v. Rockaway Tp.

• Decision Date: 14 June 1982
• Citation: 448 A.2d 475,185 N.J.Super. 248
• Parties: LAKE END CORPORATION, Plaintiff-Respondent, v. TOWNSHIP OF ROCKAWAY, Defendant-Appellant, and GREEN POND CORPORATION and Green Pond Mountain Corporation, Plaintiffs- Respondents, v. TOWNSHIP OF ROCKAWAY, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 248

185 N.J.Super. 248

448 A.2d 475

LAKE END CORPORATION, Plaintiff-Respondent, v. TOWNSHIP OF ROCKAWAY, Defendant-Appellant, and GREEN POND CORPORATION and Green Pond Mountain Corporation, Plaintiffs- Respondents, v. TOWNSHIP OF ROCKAWAY, Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued May 17, 1982.

Decided June 14, 1982.

Robert Goldsmith, Morristown, for defendant-appellant (Wiley, Malehorn & Sirota, Morristown, attorneys; Fredrick J. Sirota, Morristown, of counsel and Robert Goldsmith on the brief).

Gary C. Algeier, Morristown, for all plaintiffs-respondents (Schenck, Price, Smith & King, Morristown, attorneys; Douglas S. Brierley, Morristown, on the brief).

Before Judges ALLCORN, FRANCIS and MORTON I. GREENBERG.

The opinion of the court was delivered by

FRANCIS, J. A. D.

This matter involves appeals by the Township of Rockaway from two judgments of the Tax Court. The same single issue is addressed in both appeals and we have therefore consolidated them on our own motion. In each instance Rockaway challenges the determination of the Tax Court as to the approach utilized by that court in evaluating a portion of each of the two taxpayers' acreage for property tax assessment purposes. Both tracts are situate in Morris County and generally surround Green Pond Lake in Rockaway Township. Lake End Corporation, one of the taxpayers, owns approximately 338 acres at the southerly end of the lake. Green Pond Corporation owns approximately 890 acres located on the northerly end of the lake. The holdings of these two taxpayers are generally contiguous in the vicinity of the lake. Some basic factual background as to each of the tracts, their acquisition and the manner in which certain leaseholds came about is appropriate.

Lake End Corporation

The property owned by Lake End Corporation consists of 338 acres situate on the southwesterly end of Green Pond Lake. The property is approximately three miles south of State Highway 23 and approximately ten miles north of Interstate Highway 80. The property consists of a large tract of woodland. The focal point of the property is Green Pond Lake, a natural lake approximately 2.5 miles long, encompassing slightly more than 500 acres. The lake is spring fed and is characterized by the township as being in excellent condition. Approximately one-fourth of Green Pond Lake, 125 acres, is owned by Lake End Corporation. The remainder of the property surrounding Green Pond Lake is owned by Green Pond Corporation, a lake community similar to Lake End and described hereafter.

Numerous residences have been constructed on the property, some of which appear to be substantial. The property is served by a private road, electric service and telephone service and police and fire protection. Water is provided by private wells and sewage is treated by on-site septic systems.

Lake End Corporation was established in 1924 to purchase the entire 338 acres. Its shareholders were the individuals who were then leasing parcels of property from the previous owners. After the corporation purchased the property, the corporation leased a designated lot to each of its shareholders for a period of 99 years. This relationship continues to the present. The owners of the 99-year leaseholds are the sole shareholders of the corporation.

Lake End Corporation property consists of three major segments:

(1) The developed residential area, consisting of approximately 63-64 acres;

(2) 105 acres leased to the United States Government and an additional 45 acres which separate the government-leased property and the residential lots, and

(3) 125 acres located under Green Pond Lake.

There is no dispute as to the improvements on the developed residential area. These have always been assessed to the leaseholders. The dispute concerns the land on which the improvements have been built, which is assessed separately to each of the respective corporations. Green Pond Corporation

and

Green Pond Mountain Corporation

Green Pond, ¹ the other taxpayer, owns approximately 890 acres located on the northerly end of Green Pond Lake. This acreage has been acquired in fragments through the years. Roughly three-fourths of the lake itself is owned by Green Pond. Of the remaining property owned by Green Pond, approximately 50 acres are occupied by some 255 homesites and it is this area or tract that is in dispute. As in Lake End, many of the residences constructed on these homesites are substantial. Another 20 acres in the "village area" contain such amenities as a recreational hall, tennis courts, Green Pond Yacht Club, beach and swimming areas, dock areas, a recreation field, a ball field and the Green Pond Store.

Again, as in Lake End, the property is served by electric and telephone service and has police and fire protection. Water is provided by private wells and sewage is treated by on-site septic systems. It is served by paved roads. A number of roads maintained by the township traverse the corporation's area in the vicinity of the homesites. Other interior roads are owned and maintained by Green Pond.

Green Pond has similar origins to that of Lake End. Originally some campers negotiated long-term leases with the owners of the property in the northern section of the lake and constructed summer cottages. Thereafter, in 1921 they formed a corporation, Green Pond Corporation, which leased the land from the then owners and in turn leased it back to the shareholders of the corporation. In addition, another corporation, Green Pond Mountain Corporation, purchased the lands in 1970. Green Pond Mountain Corporation and Green Pond Corporation, while separate entities, both share the same directors and staff. Green Pond Mountain Corporation has leased the purchased land back to Green Pond Corporation, which in turn has leased the property to its individual shareholders for 99 years in much the same fashion as Lake End. Some shareholders in the Green Pond Corporation hold a fee interest in property adjacent to that owned by Green Pond Mountain Corporation. These latter holdings are not involved herein.

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The issue before us involves only the 64-acre residential portion of the Lake End tract and the 50-acre residential portion of the Green Pond tract. The former tract contains 83 residential plots along the southerly portion of the lake and on a peninsula which juts into the lake. There are 65 leaseholds covering 70 of the 83 plots; the remaining 13 of them are entitled in Lake End. All of these plots are shown on a map referred to as the "Boomer" map on file in the corporate offices. The Green Pond tract contains 255 homesites, also delineated on maps held by the corporation.

The exact nature of the question presented as to these two residential tracts is best articulated in the contentions presented by each of the parties and the conclusion reached by the Tax Court.

The township contends that each of the tracts has been, in effect, subdivided by the creation of the individual 99-year leaseholds and the use actually put to the individual leasehold plots. Accordingly, it is contended, each of the plots should be assessed individually rather than as part of the acreage making up the whole tract.

Lake End and Green Pond maintain that the tracts in question are part and parcel of the total acreage and should, therefore, be combined with the remaining acreage and assessed as one single large tract.

The Tax Court in its approach, declined to employ the technique advanced by the township. The judge's comment in the Lake End decision is explanatory of his reasoning as applicable to both tracts:

Viewed in this posture I conclude that, at least with respect to the homesite section of the tract, the technique employed by township's witness is unacceptable. It represents the jigsaw puzzle technique referred to by the court in City of Newark v. West Milford Township [9 N.J. 295, 88 A.2d 211].

The court did determine, however, that some of the acreage within each tract was more valuable than other acreage and assigned varying values to the differing tracts. In Lake End the judge assigned a value of $2,000 an acre to the 69-acre residential area and the 124-acre lake area owned by the corporation. He assigned lesser values to the acreage leased to the Federal Government and the 45 acres abutting that leasehold. His approach in Green Pond was essentially the same.

We are of the opinion that the position taken by the township is the correct one. Our State Constitution requires that property "shall be assessed for taxation under general laws and by uniform rules." N.J.Const. (1947), Art. VIII, § 1, par. 1. The relevant implementing statutes are N.J.S.A. 54:4-1 et seq. N.J.S.A. 54:4-1 is inclusionary to promote uniformity and equality. It provides, in relevant part:

All property real and personal within the jurisdiction of this State not expressly exempted from taxation or expressly excluded from the operation of this chapter shall be subject to taxation annually under this chapter. Such property shall be valued and assessed at the taxable value prescribed by law.

N.J.S.A. 54:4-23 provides:

All real property shall be assessed to the person owning the same on October 1 in each year. 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 1 next preceding the date on which the assessor shall complete his assessments....

The mandate of the Constitution of 1947, as implemented by the statutes, is equality in the distribution of the burden of government among the owners of taxable real property. Switz v. Kingsley, 37 N.J. 566, 571, 182 A.2d 841 (1962). All taxable property is to bear its full, equal...