New York, S. & W. R. Co. v. Vermeulen

• Decision Date: 17 May 1965
• Docket Number: No. A--84,A--84
• Citation: 210 A.2d 214,44 N.J. 491
• Parties: NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD COMPANY, a New Jersey corporation, Appellant, v. Abram M. VERMEULEN, State Comptroller, Division of Budget and Accounting, Department of the Treasury, State of New Jersey, Respondent. STATE of New Jersey, Plaintiff-Respondent, v. NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD COMPANY, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 491

44 N.J. 491

210 A.2d 214

NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD COMPANY, a New

Jersey corporation, Appellant, v. Abram M. VERMEULEN, State Comptroller, Division of Budget and Accounting, Department of the Treasury, State

of New Jersey, Respondent.

STATE of New Jersey, Plaintiff-Respondent, v. NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD COMPANY,

Defendant-Appellant.

No. A--84.

Supreme Court of New Jersey.

Argued Feb. 16, 1965.

Decided May 17, 1965.

Vincent P. Biunno, Newark, for appellant (Lum, Biunno & Tompkins, Newark, attorneys).

Elias Abelson, Deputy Atty. Gen., for respondent (Arthur J. Sills, Atty. Gen., attorney).

The opinion of the court was delivered by

WEINTRAUB, C.J.

This case involves sundry attacks upon the constitutionality of the Railroad Tax Law of 1948, N.J.S.A. 54:29A--1 et seq.

Taxes for 1962 and 1963 levied against the New York, Susquehanna and Western Railroad Company (herein Susquehanna) being unpaid, the State Comptroller issued to the Clerk of the Superior Court a certificate showing the amount thereof, and upon that certificate the Clerk of the Superior Court entered among docketed judgments the amount so certified against Susquehanna. Susquehanna appeals from the issuance of the certificate and the judgment entry so made. We certified the matters before the Appellate Division considered them.

Both officials acted under the authority of N.J.S.A. 54:29A--57 which reads:

'As an additional or alternative remedy, the State Comptroller may issue a certificate to the Clerk of the Superior Court that a taxpayer is indebted under this or any former act for the taxation of railroads in such an amount as shall be named in such certificate, and thereupon the clerk to whom such certificate shall have been issued shall immediately enter upon his record of docketed judgments the name of such taxpayer, and of the State, the amount of the debt so certified, a short name of the tax, and the date of making such entries. The making of the entries shall have the same force and effect as the entry of a docketed judgment in the office of such clerk, and the State Comptroller shall have all of the remedies and may take all of the proceedings for the collection thereof which may be had or taken upon the recovery of a judgment in a civil action, but without prejudice to the taxpayer's right of appeal.'

At the time of the certificate and the judgment, administrative appeals were pending challenging assessments of Class II real property for the years in question. Following the judgment entry in question, Susquehanna, under protest, paid the full amount plus statutory interest of 1% Per month.

I

Susquehanna contends the statute by its treatment of Class II railroad property violates Art. VIII, § I, 1 of our State Constitution.

Class II property embraces all real property used for railroad purposes other than main stem. N.J.S.A. 54:29A--17. The railroad tax statute provides that all property used for railroad purposes shall be assessed by the State Tax Commissioner, N.J.S.A. 54:29A--7, and since each taxing district receives so much of the tax as is derived from the assessment of Class II property situated within the taxing district, N.J.S.A. 54:29A--24(a), the tax upon that class of property is a tax allotted and paid to taxing districts within the meaning of Art. VIII, § I, 1(a) of the Constitution which reads:

'Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value; and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing district.'

The railroad tax statute provides for the assessment of Class II property according to the same standard of value and at the general tax rate of the taxing district; hence the constitutional mandate is met in those regards. However, Susquehanna alleges the statute discriminates against Class II property in the following ways, thereby violating the requirement that property 'be assessed under general laws and by uniform rules':

(1) Taxes levied locally on nonrailroad real property are imposed on each parcel of land and are not a personal obligation of the owner, Borough of Wrightstown v. Salvation Army, 97 N.J.L. 89, 123 A. 607 (Sup.Ct.1922), whereas Class II railroad taxes are made a lien on 'the revenues and all the real and personal property' of the railroad within the State, N.J.S.A. 54:29A--54, and a 'debt' for which an action may be maintained, N.J.S.A. 54:29A--55.

(2) Taxes levied locally on nonrailroad real property are collectible only by sale of the specific parcel of real property, N.J.S.A. 54:5--19 et seq., whereas Class II railroad taxes may be collected by suit for the debt, as already mentioned in (1) above; by an action to enforce the lien against all property of the railroad, N.J.S.A. 54:29A--58; by appointment of a receiver to enforce the lien, N.J.S.A. 54:29A--61; and by the issuance by the State Comptroller of a certificate and the entry of the tax liability among docketed judgments in the Superior Court as was done in the present case pursuant to N.J.S.A. 54:29A--57.

(3) Delinquent taxes assessed locally on nonrailroad real property bear interest at a rate fixed by the taxing district, not in excess of 8% Per annum, R.S. 54:4--67, N.J.S.A., whereas delinquent Class II railroad taxes bear interest at 1% Per month, N.J.S.A. 54:29A--53.

(4) Susquehanna says the owner of nonrailroad real property assessed locally may withhold payment pending the outcome of an appeal from the assessment, for which proposition it claims support in Hahne Realty Corp. v. City of Newark, 119 N.J.L. 12, 194 A. 191, 112 A.L.R. 1179 (E. & A.1937), whereas a railroad must pay in full notwithstanding the pendency of an appeal, N.J.S.A. 54:29A--56, unless it is able to obtain a stay under N.J.S.A. 54:29A--38. The latter section provides that as a condition for prosecuting a proceeding in lieu of prerogative writ, a railroad shall pay the amount of taxes not in substantial controversy, which amount shall be fixed by the Superior Court if the parties disagree, the collection of the balance to be stayed until final determination in that court.

These alleged discriminations antedate both the Constitution of 1947 and the Railroad Tax Law of 1948. As we shall presently see, substantially equivalent treatment of Class II property was upheld under the tax clause of the prior Constitution, so that the question really is whether the present Constitution was intended to make a change in that regard. The history of the subject shows it was not.

In 1884 the Legislature enacted c. 101, 'An Act for the taxation of railroad and canal property,' which provided for the assessment by a State agency of all property used for railroad purposes. That statute divided railroad property into classes essentially as they are today and provided for a tax upon Class II property for the use of local government. The act was assailed under Art. IV, § VII, 12, added by amendment in 1875 to the Constitution of 1844, which read 'Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value.'

It was urged that this tax clause forbade such separate treatment of railroad property. The statute, however, was sustained, State Board of Assessors v. Central R. Co., 48 N.J.L. 146, 4 A. 578 (E. & A.1886), the court holding that property used for railroad purposes was a proper class for assessment for taxation.

The 1884 statute was amended by the Duffield Act of 1905 (c. 91) to provide that Class II property shall be taxed at the local municipal rate calculated after including in the municipal ratables the amount of the valuations of Class II property as determined by the State Board of Assessors. The statute, as thus amended, was attacked in Bergen 3 Dundee R. Co. v. State Bd. of Assessors, 74 N.J.L. 742, 67 A. 668 (E. & A.1907). The basis of the attack was pretty much the same as the one now before us. In the words of the opinion in that case (at p. 749, 67 A. at p. 671):

'It is argued that the Duffield act introduces into the tax system certain diversities as between different properties in the same taxing district that are listed in the general aggregate for the purpose of fixing the local rate and charged with the resulting rate of tax; and this on the ground that there are two sets of valuations, one fixed by the state board and the other by the local assessor, different kinds of return required from the taxpayer, different penalties for non-return, different dates for valuation, different modes of review, different modes of enforcement, and different rates of interest upon arrears. But similar infirmities (if they were such) inhered in the original act of 1884. Indeed, if the constitutional requirement of uniform rules necessitates an identity of procedure in such details as these, it would have subverted the entire scheme of the acts of 1884 and 1888.'

The court there made if clear that the tax clause left the Legislature free to prescribe appropriate machinery for the assessment and collection of taxes.

Shortly thereafter the Court of Errors and Appeals struck down a supplement to the railroad tax law under which Class II property would be assessed, like all other local property, by the local assessor, the thesis of the decision being that all property in railroad use was a single class for the assessment process and must be dealt with as such. Central R. Co. v. State Bd. of Assessors, 75 N.J.L. 771, 69 A. 239 (E. & A.1908). That case accordingly held invalid a statute which would deal with Class II property in a way for which Susquehanna here contends.

The point to be stressed for present purposes is that those early cases established the proposition that with...