On appeal from the Hudson County Circuit Court.
For the plaintiff-respondent, Moskowitz & Reitman (Joseph Moritz, of counsel).
For the defendant-appellant, Nicholas S. Schloeder.
The opinion of the court was delivered by
BROGAN, CHIEF JUSTICE. This appeal is from a judgment of the Hudson County Circuit Court awarding possession of a chattel to the plaintiff in replevin against the municipal defendant. The complaint avers that on September 16th, 1941, the plaintiff was the owner of a certain steam shovel and entitled to its possession and that the defendant, Township of North Bergen, wrongfully took and retained same and has refused a demand for its return.
The answer avers that the chattel was owned by the Luckenback Trap Rock Co. and that on September 16th, 1941, the tax collector distrained the chattel for non-payment of personal taxes assessed against it which amounted to $3,699.81 and that pursuant to the levy and distraint the tax collector thereafter offered the chattel at public sale and that it was bid in by the Township. A further defense avers that from the time of the assessment of said taxes "a paramount lien arose in favor of the taxing district superior to the plaintiff's title acquired by the sale to it from the Luckenbach Company."
It is undisputed that the chattel in question was assessed for personal property taxes for the years 1931, 1932 and 1933 and that prior to the sale of the chattel to the plaintiff on September 16th, 1941, the municipality had not distrained the property for the collection of these taxes. The learned trial judge denied the defendant's motion for nonsuit and direction of verdict and granted plaintiff's motion for the direction of a verdict in its favor. Judgment was entered accordingly, hence the municipality appeals.
The question in the case may be simply stated as follows: Does a personal property tax ipso facto become a lien on the taxpayer's chattel by virtue of the assessment of the tax? The appellant taxing district here contends that it does. We are unable to agree with that contention. There is no case exactly in point and no statute has been cited to indicate that a tax on personal property is a lien thereon until proceedings are taken to enforce it. Certain of our cases, which will have attention later, and a provision of the statute, N.J.S.A. 54:4-60, seem to lend color to the appellant's argument, but we are satisfied that there is no substance in it. The case that undoubtedly started the trend toward the theory for which the appellant contends is Cranbury Township v. Chamberlain & Barclay, 6 N.J. Mis. R. 39. Therein a District Court judgment was affirmed by the Supreme Court and on appeal this court (105 N.J.L. 236; 143 A. 916) affirmed on the Supreme Court opinion. In that, as in the instant case, certain chattels were sold upon which taxes were due. But the difference between that case and this is that before the sale in the Cranbury Township case the chattels had been distrained for the unpaid personal taxes. The municipality brought suit and recovered a judgment against the purchaser for the unpaid taxes. We make no comment on this novel way of collecting taxes. Perhaps it was justified on a stipulation between the parties which submitted to the court the question of whether or not taxes due on personal property for which distress proceedings were had before the sale, created a lien paramount to the title acquired by the purchaser at a chattel mortgage foreclosure. The trial court held that in the circumstances a paramount lien arose
in favor of the municipality because of the distress proceedings prior to sale. That was the only question in the case. The Supreme Court and, as has been said, this court, affirmed. The Supreme Court, in its opinion, however, went beyond that issue and held that section 513, page 870, Revision of 1918 (now N.J.S.A. 54:4-58, in substance), was further authority for the Township's claim to the unpaid taxes. The Supreme Court said (referring expressly to section 513, supra, as it then stood): "We think this language is sufficiently explicit to constitute a tax or assessment, regularly levied in the first instance, against person or property, a first lien upon personal property." This statement was dicta, was an erroneous conception of the meaning of the statute and is overruled. Our law in the matter of collection of taxes is substantially the same now as it was in 1931, 1932 and 1933 when the assessments were placed on the personal property involved here by the taxing district.
The appellant sets forth the statute, upon which it relies, in its brief. The following provision is cited: (54:4-60) -- "The tax, assessment or water rate when so fixed shall be a first lien or charge upon the property and persons, and collectible in the manner provided by law, the same as if it had been legally levied, assessed or imposed in the first instance by the board or body attempting to make, impose or levy it. The court shall make a proper levy, imposition or assessment in all cases in which there may lawfully be an assessment, imposition or levy."
This section of the statute, in our opinion, has no relevancy at all to the question before us. This is not a case where it is said that the assessment in question was other than "legally levied, assessed or imposed in the first instance;" nor is there any occasion for the court to "make a proper levy, imposition or assessment in all cases in which there may lawfully be an assessment imposed or levied." The quoted excerpt is a part of the general statutory provision found under article 6, entitled "Completion and Review of Assessments" of Title 54 and beginning at N.J.S.A. ...