Safeway Trails, Inc. v. Furman

• Decision Date: 03 February 1964
• Docket Number: No. A--42,A--42
• Citation: 41 N.J. 467,197 A.2d 366
• Parties: SAFEWAY TRAILS, INC., a corporation of the State of Maryland, Plaintiff- Respondent and Cross-Appellant, v. David D. FURMAN, Attorney General of the State of New Jersey and head of the Department of Law and Public Safety; Ned J. Parsekian, Acting Director, Division of Motor Vehicles, and John A. Kervick, State Treasurer of New Jersey, Defendants-Appellants and Cross-Respondents. The GREYHOUND CORPORATION, a corporation of the State of Delaware, Plaintiff-Respondent and Cross-Appellant, v. John A. KERVICK, Treasurer of the State of New Jersey, and Ned J. Parsekian, Acting Director, Division of Motor Vehicles, Department of Law and Public Safety of the State of New Jersey, Defendants-Appellants and Cross-Respondents. LINCOLN TRANSIT CO., Inc., a corporation of the State of New Jersey, Hill Bus Co., a corporation of New Jersey, Rockland Coaches, Inc., a corporation of the State of New Jersey, Manhattan Transit Company, a corporation of the State of New Jersey, Hudson Bus Transportation Co., Inc., a corporation of the State of New Jersey, Somerset Bus Co., Inc., a corporation of the State of New Jersey, DeCamp Bus Lines, a corporation of the State of New Jersey, and Westwood Transportation Lines, Inc., a corporation of the State of New Jersey et al., Plaintiffs-Respondents and Cross-Appellants, v. Ned J. PARSEKIAN, Acting Director, Division of Motor Vehicles, Department of Law and Public Safety of the State of New Jersey, Defendant-Appellant and Cross-Respondent.
• Court: New Jersey Supreme Court

Page 467

41 N.J. 467

197 A.2d 366

SAFEWAY TRAILS, INC., a corporation of the State of

Maryland, Plaintiff- Respondent and Cross-Appellant, v. David D. FURMAN, Attorney General of the State of New Jersey and head of the Department of Law and Public Safety; Ned J.

Parsekian, Acting Director, Division of Motor Vehicles, and

John A. Kervick, State Treasurer of New Jersey,

Defendants-Appellants and Cross-Respondents.

The GREYHOUND CORPORATION, a corporation of the State of

Delaware, Plaintiff-Respondent and Cross-Appellant, v. John A. KERVICK, Treasurer of the State of New Jersey, and Ned J. Parsekian, Acting Director, Division of Motor

Vehicles, Department of Law and Public Safety of the State

of New Jersey, Defendants-Appellants and Cross-Respondents.

LINCOLN TRANSIT CO., Inc., a corporation of the State of New

Jersey, Hill Bus Co., a corporation of New Jersey, Rockland

Coaches, Inc., a corporation of the State of New Jersey,

Manhattan Transit Company, a corporation of the State of New

Jersey, Hudson Bus Transportation Co., Inc., a corporation

of the State of New Jersey, Somerset Bus Co., Inc., a

corporation of the State of New Jersey, DeCamp Bus Lines, a

corporation of the State of New Jersey, and Westwood

Transportation Lines, Inc., a corporation of the State of

New Jersey et al., Plaintiffs-Respondents and Cross-Appellants, v. Ned J. PARSEKIAN, Acting Director, Division of Motor

Vehicles, Department of Law and Public Safety of

the State of New Jersey,

Defendant-Appellant and

Cross-Respondent.

No. A--42.

Supreme Court of New Jersey.

Argued Dec. 2, 3, 1963.

Decided Feb. 3, 1964.

Alan B. Handler, Deputy Atty. Gen., for defendants-appellants and cross-respondents (Arthur J. Sills, Atty. Gen., Alan B. Handler, Newark, on the brief).

Merritt Lane, Jr., Newark, for plaintiff-respondent and cross-appellant, The Greyhound Corp. (McCarter & English, Newark, attorneys, Ross B. Abrash, Newark, on the brief).

William A. Roberts, Washington, D.C., for plaintiff-respondent and cross-appellant, Safeway Trails, Inc., etc. (Harrison & Jacobs, Newark, attorneys, Roberts & McInnis, Washington, D.C., of counsel and on the brief, George M. Eichler, Jersey City, joining in the brief).

George M. Eichler, Jersey City, for plaintiffs-respondents and cross-appellants, Lincoln Transit Co., Inc., etc., and others.

The opinion of the court was delivered by

PROCTOR, J.

This appeal consists of three consolidated actions involving the interpretation and validity of the Interstate Busses Excise Tax, N.J.S.A. 48:4--20. The question raised is whether the statute which imposes an excise tax of 1/2 cent per mile on interstate autobuses operated over the highways of this State applies to mileage traveled over the New Jersey Turnpike and Garden State Parkway, and if so, whether the statute as applied violates the Commerce Clause of the Federal Constitution and the Equal Protection Clause of the Fourteenth Amendment.

Lincoln Transit Co. and other autobus companies filed a petition for a declaratory judgment in the Superior Court, Appellate Division, against Ned J. Parsekian, Acting Director, Division of Motor Vehicles, Department of Law and Public Safety of the State of New Jersey. Safeway Trails, Inc., filed a complaint in lieu of prerogative writ in the Superior Court, Law Division, against David D. Furman, Attorney General of the State of New Jersey, Parsekian, and John A. Kervick, State Treasurer of New Jersey. Greyhound Corporation filed a complaint for injunctive relief and a declaratory judgment in the Superior Court, Chancery Division, against Kervick and Parsekian. The Appellate Division ordered that these three actions, in which basically the same relief was being sought, be consolidated and transferred to the Superior Court, Law Division, for trial.

Following trial the Law Division held that the New Jersey Turnpike and Garden State Parkway were not highways within the meaning and intendment of N.J.S.A. 48:4--20 and that the highway-use tax imposed by the statute was improperly applied to and collected from the plaintiffs for mileage traveled over those roads and should be refunded. Defendants were enjoined and restrained from enforcing the tax with respect to mileage traveled by interstate autobuses over the New Jersey Turnpike and Garden State Parkway. Safeway Trails, Inc. v. Furman, 76 N.J.Super. 90, 183 A.2d 788 (Law.Div.1962). The court later held that plaintiffs were not entitled to interest upon the refund of the tax monies. Safeway Trails v. Furman, 77 N.J.Super. 26, 185 A.2d 245 (Law Div.1962). Defendants appealed from the judgment below, and the plaintiffs filed joint cross-appeals from that portion of the judgment which denied interest on the tax refunds.

The plaintiffs, common carriers of passengers, operate their autobuses over the highways of this State on both intrastate and interstate journeys. They travel extensively over either the New Jersey Turnpike or the Garden State Parkway. As interstate autobus operators plaintiffs are subject to the provisions of N.J.S.A. 48:4--20 which, prior to amendment in December 1962, ¹ provided:

'Every person owning or operating an autobus which is operated over any highway in this state for the purpose of carrying passengers from a point outside the state to another point outside the state, or from a point outside the state to a point within the state, or from a point within the state to a point outside the state shall pay to the commissioner of motor vehicles, as an excise for the use of such highway, one-half cent for each mile or fraction thereof such autobus shall have been operated over the highways of this state, except that no excise shall be payable for the mileage traversed in any municipality to which such owner or operator has paid a monthly franchise tax for the use of its streets under the provisions of section 48:4--14 of this title.'

N.J.S.A. 48:4--20 has been in effect since May 7, 1934. L.1934, c. 68.

The Legislature by the New Jersey Turnpike Authority Act (L.1948, c. 454, as amended and supplemented by L.1949, cc. 40 and 41; N.J.S.A. 27:23--1 et seq.) provided for the creation of the Turnpike which became available to the public in the latter part of 1951. The Garden State Parkway was established pursuant to the New Jersey Highway Authority Act (L.1952, c. 16; N.J.S.A. 27: 12B--1 et seq.) and became available in the summer of 1954. Both projects were authorized 'in order to facilitate vehicular traffic and remove the present handicaps and hazards on the congested highways in the State, and to provide for the construction of modern express highways embodying every known safety device including center divisions, ample shoulder widths, longsight distances, multiple lanes in each direction and grade separations at all intersections with other highways and railroads * * *.' N.J.S.A. 27:23--1, 27:12B--2. In short, the statutes contemplated the creation of express highways superior to existing roads which would provide safer, faster, and more convenient travel in and through the State.

The New Jersey Turnpike and the Garden State Parkway were constructed by and are operated and controlled by the New Jersey Turnpike Authority and the New Jersey Highway Authority, respectively, in accordance with the authorizing legislation. Each authority was established in the State Highway Department as a body corporate and politic and each constitutes 'an instrumentality exercising public and essential governmental functions,' whose activities in the exercise of its authority 'shall be deemed and held to be an essential governmental function of the State.' N.J.S.A. 27:23--3, 27:12B--4. Each authority is comprised of three members appointed by the Governor with the advice and consent of the Senate. Ibid.

The statutes creating these Authorities provide for the sale to the public of the Authorities' bonds to finance the construction of the projects. The statutes authorize the Authorities to fix and collect tolls and other charges for the use of such projects. The operations of both Authorities are designed to be financially self-liquidating. The statute contemplates that upon payment of all bonds and notes, the Turnpike shall become part of the State Highway Department, to be operated free of tolls. N.J.S.A. 27:23--16. The State has guaranteed the punctual payment of the Highway Authority (Parkway) bonds and has provided for the funding of this guarantee. This Court has recognized that the property and roads of the Highway Authority are held for the State. Behnke v. New Jersey Highway Authority, 13 N.J. 14, 29, 97 A.2d 647 (1953).

In 1950 in response to a request from the Division of Taxation, the then Attorney General issued Formal Opinion No 78--1950 in which he advised that interstate autobus operators would not be subject to the 1/2 cent a mile tax provided by N.J.S.A. 48:4--20 for mileage traveled on the Turnpike. In his view the excise tax was intended to compensate the public for the cost and construction of public road; the Turnpike Authority Act provided its own means of financing all expenses of the project; and therefore the Turnpike project was not a 'highway' within the intendment of N.J.S.A. 48:4--20. In accordance with this opinion, no excise taxes were levied on mileage traveled by interstate autobuses over the Turnpike, and later for similar reasons, the Parkway. In 1960, however, Attorney General Furman issued Formal Opinion No. 11--1960 in which he determined that the New Jersey Turnpike was a 'highway' for the purpose of N.J.S.A. 48:4--20 and that the application of the highway excise tax to interstate buses using the Turnpike would not be violative of constitutional guarantees. Pursuant to this ruling, the Acting Director of the Division of Motor Vehicles, on June 1, 1960, notified interstate autobuses using the Turnpike and Parkway that they would be required to report such mileage to the Division of Motor Vehicles and would be required to pay a...