Salorio v. Glaser

• Citation: 414 A.2d 943,82 N.J. 482
• Parties: John SALORIO, Robert Coe and John D. McGarr, Jr., Plaintiffs-Appellants, v. Sidney GLASER, Director of the Division of Taxation, Department of the Treasury of the State of New Jersey, Defendant-Respondent.
• Decision Date: 26 March 1980
• Court: United States State Supreme Court (New Jersey)

Page 482

82 N.J. 482

414 A.2d 943

John SALORIO, Robert Coe and John D. McGarr, Jr., Plaintiffs-Appellants, v. Sidney GLASER, Director of the Division of Taxation,

Department of the Treasury of the State of New

Jersey, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Nov. 14, 1979.

Decided March 26, 1980.

Adrian M. Foley, Jr., Newark, and Max Gitter, New York City, a member of the New York Bar, plaintiffs-appellants (Connell, Foley & Geiser, Newark, attorneys; Max Gitter and Mark C. Morril, New York City, members of the New York Bar and Adrian M. Foley, Jr., and Kevin J. Coakley, Newark, of counsel and on briefs).

Stephen Skillman, Asst. Atty. Gen., for defendant-respondent (John J. Degnan, Atty. Gen., attorney; Stephen Skillman, Asst. Atty Gen., Herbert K. Glickman and Joseph C. Small, Deputy Attys. Gen., on brief).

The opinion of the Court was delivered by

PASHMAN, J.

I

This case presents for review the constitutionality of the Emergency Transportation Tax (ETT) Act, N.J.S.A. 54:8A-1 et seq.

Plaintiffs, ¹ three New York residents who commute or have commuted from their homes in New York to work in New Jersey, claim that since the ETT is paid solely by New York residents, it impermissibly discriminates against them in violation of the Privileges and Immunities and Equal Protection Clauses of the Federal Constitution. U.S.Const., Art. IV, § 2, cl. 1; Amend. XIV, § 1. The State argues that imposition of the tax is justified by the existence of a "transportation emergency."

Plaintiffs filed suit in the Superior Court, Chancery Division, on June 8, 1977, seeking declaratory and injunctive relief from imposition of the tax. They also demanded damages in the amount of all monies paid to New Jersey pursuant to the ETT. ²

The taxpayers and the State filed cross motions for summary judgment. On plaintiffs' motion, the court agreed to hear the matter as a summary proceeding without oral testimony pursuant to R. 4:67. Taking issue with plaintiffs' contention that the tax statute was facially unconstitutional under Austin v. New Hampshire, 420 U.S. 656, 95 S.Ct. 1191, 43 L.Ed.2d 530 (1975), the State requested an opportunity to develop and introduce evidence that a "transportation emergency" justified the disparate treatment of non-residents. The parties took depositions of the plaintiffs and various State officials. The State also submitted documentary material regarding a 1962 taxation accord between New York and New Jersey (hereinafter the Accord).

In a letter opinion, the trial court declared the tax constitutional. According to the court, the sole issue presented by the plaintiffs under the Privileges and Immunities Clause was "whether or not the Austin case is dispositive of (the validity of) the legislation." Finding that a transportation crisis did in fact exist, and comparing the total tax liabilities of New Jersey residents to that imposed by New Jersey on commuters from New York, the court concluded that the criterion of "substantial equality" enunciated in Austin was satisfied. See 420 U.S. at 665, 95 S.Ct. at 1197, 43 L.Ed.2d at 537. The court further held that even if there were no distinctions between the present case and Austin based on the states' justifications for their respective taxes, the 1962 Accord was sufficient to validate New Jersey's taxation scheme.

Addressing plaintiffs' claim under the Equal Protection Clause, the court noted that in economic matters a statute need only bear some rational relation to a legitimate governmental objective. In the area of tax policy, the Legislature enjoys particularly broad discretion. Having found a proper governmental purpose, the court sustained the tax. The court did not determine whether the Act was unconstitutionally applied by reason of misappropriation of ETT receipts. Noting that the Act itself "contains the internal safeguards" to insure that tax monies would be spent exclusively to alleviate the State's "transportation emergency," the court remanded plaintiffs to the remedies provided by the statutory scheme. It accordingly entered judgment in favor of the State.

Plaintiffs appealed from the judgment of the trial court. While the appeal was pending unheard in the Appellate Division, plaintiffs filed a motion for direct certification pursuant to R. 2:12-2. This Court granted plaintiffs' motion 81 N.J. 269, 405 A.2d 814 (1979). We now vacate the trial court judgment and remand the matter for proceedings consistent with this opinion.

II Standing

An initial question arises as to plaintiffs' standing to bring this action. The record discloses that each of the plaintiffs either has paid or continues to pay emergency transportation taxes to New Jersey. ³ However, since New York grants its residents a credit for income taxes paid to other states, any reduction in tax liability to New Jersey will result in an equal increase in tax liability to New York. See infra at 950. Thus plaintiffs would not gain financially from a judgment in their favor. Emphasizing this apparent lack of economic harm and the fact that the State of New York is financing the present litigation, the State argues that plaintiffs do not have sufficient interest in the case and that New York is the "real party in interest."

Despite the fact that plaintiffs' total tax obligation may remain unchanged, we conclude that they have standing to challenge the constitutionality of the ETT. It is important to recognize that New Jersey State courts are not bound by the "case or controversy" requirement governing federal courts, U.S.Const., Art. III, § 2. See Crescent Park Tenants Ass'n v Realty Eq. Corp. of N. Y., 58 N.J. 98, 107-108, 275 A.2d 433 (1971). Our State Constitution contains no analogous provision limiting the subject-matter jurisdiction of the Superior Court. See N.J.Const. (1947), Art. VI, § 3, par. 2. This Court remains free to fashion its own law of standing consistent with notions of substantial justice and sound judicial administration. We therefore find it unnecessary to consider whether federal standing requirements have been met. ⁴

We have consistently held that in cases of great public interest, any "slight additional private interest" will be sufficient to afford standing. New Jersey State Chamber of Commerce v. New Jersey Election Law Enforcement Comm'n, 82 N.J. 57, 68-69, 411 A.2d 168 (1980); Home Builders League of South Jersey, Inc. v. Tp. of Berlin, 81 N.J. 127, 132, 405 A.2d 381 (1979); Terwilliger v. Graceland Memorial Park Ass'n, 35 N.J. 259, 268, 173 A.2d 33 (1961), aff'g 59 N.J.Super. 205, 215, 157 A.2d 567 (Ch.Div.1960); Elizabeth Federal Savings & Loan Ass'n v. Howell, 24 N.J. 488, 499, 132 A.2d 779 (1957); Al Walker Inc. v. Bor. of Stanhope, 23 N.J. 657, 660-666, 130 A.2d 372 (1957); Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 476, 86 A.2d 201 (1952), cert. den., 344 U.S. 838, 73 S.Ct. 25, 97 L.Ed. 652 (1952); cf. Hudson-Bergen County Retail Liquor Stores Ass'n v. Bd. of Comm'rs of Hoboken, 135 N.J.L. 502, 52 A.2d 668 (E & A 1947). A sufficient private interest exists in this case. If successful, plaintiffs would enjoy the benefit derived from the use of any funds recovered from the State of New Jersey prior to the time such monies may have to be remitted to New York. As New York residents, they would also share in the possible beneficial effect that a resulting increase in tax revenue to New York might have on future New York tax rates. ⁵

As the trial court noted, the United States Supreme Court has rejected the State's theory that New York and not the plaintiffs is the "real party in interest." In Pennsylvania v. New Jersey, 426 U.S. 660, 96 S.Ct. 2333, 49 L.Ed.2d 124 (1976), Pennsylvania alleged that this State's Transportation Benefits Tax, N.J.S.A. 54:8A-58 et seq., ⁶ was unconstitutional under the Privileges and Immunities Clause of Article IV and the Equal Protection Clause of the Fourteenth Amendment. ⁷ Finding no justiciable controversy, the United States Supreme Court denied Pennsylvania's motion for leave to file an original complaint. The Court held that the only direct injury to the plaintiff states resulted from decisions by their legislatures to extend tax credit for income taxes paid by their residents to the defendant states. Without resolving Pennsylvania's claims that the Transportation Benefits Tax Act violated the Privileges and Immunities and Equal Protection Clauses, the Court responded:

The short answer to these contentions is that both Clauses protect people, not States. (426 U.S. at 665, 96 S.Ct. at 2335, 49 L.Ed.2d at 129)

New York similarly attempted to challenge the ETT in an original action in the United States Supreme Court, New York v. New Jersey, 429 U.S. 810, 97 S.Ct. 48, 50 L.Ed.2d 70 (1976) but the Court denied its motion for leave to file an original complaint, citing Pennsylvania v. New Jersey, supra. New York, therefore, cannot be the real party in interest in this case; its role in financing the litigation is irrelevant to plaintiffs' standing to bring suit.

We conclude that as a matter of New Jersey law, the interests asserted by plaintiffs are personal to them and justiciable in the present suit. ⁸

III

The Statutory Scheme

The enactment of the ETT in 1961, L.1961, c. 32, was preceded by extensive studies and hearings on the transportation problems facing the New Jersey-New York metropolitan area. See Report of the Project Director of the Metropolitan Rapid Transit Commission (1957) (hereafter Metropolitan Transit Commission Survey ); Public Hearings on Assembly Bills No. 16 & 115 and Senate Bill No. 50 before New Jersey Legislature Assembly Committee on Federal & Interstate Relations and Assembly Committee on Highways, Transportation & Public Utilities (November 24 & December 3, 1958); Joint Report of the New Jersey Legislature Assembly Committee on Highway, Transportation & Public Utilities and the Committee on Federal and Interstate Relations on A-16, A-115 and S-50 (1...