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October 6, 1944


The opinion of the court was delivered by: FAKE

The government of the United States has taken and condemned certain real property situate in the Borough of Edgewater, New Jersey, owned by Corn Products Refining Company.

The issues now before the court arise on an application for a part of the fund deposited in court under the award. The Borough of Edgewater contends that the court should deduct from the fund and pay to the Borough the third and fourth installments of the taxes assessed for the year 1942. The Corn Products Refining Company denies the right of the municipality to enforce any such deduction from the award and asserts its right to the sum in question.

 Under the New Jersey law taxes are payable quarterly on the first days of February, May, August and November in each year. N.J.S.A. 54:4-66. On January 6, 1942, the company paid the first and second quarters in advance, thereby obtaining the benefit of a discount for prepayment; thus placing the company in the position of having paid the taxes beyond the date of taking on May 2, 1942, and clearing the same to July 1, 1942. At the time when this advance payment was made, the taxes for the current year had not yet been determined, and the amount paid was based on the amount assessed for the preceding year (1941), pursuant to N.J.S.A. 54:4-66.

 The Company has filed claims with the Borough for a refund for alleged overpayment of taxes, basing its claims on the ground that the taxes assessed for 1942 were less than those for 1941 and it should be reimbursed for the difference, and on the further ground that it was not chargeable with the amount paid in excess of an apportionment to May 2, 1942. Inasmuch as the issues thus raised bear upon funds not under the control of the court in this proceeding, no action will be taken here in direct relation to the issues there involved, and the company is left to pursue its remedy before the Borough.

 The major difficulty before the court bears upon the third and fourth quarterly payments which matured for payment on dates subsequent to the date of taking. While the problem may be thus briefly stated its solution, as will be seen, is fraught with considerable difficulty.

 It becomes essential at the outset to obtain as clear an understanding as possible with relation to the procedures and their effects under the New Jersey tax laws. Particularly is this so with relation to the specific date when taxes become liens, when they begin to run against the land, and when exemptions take effect.

 The New Jersey tax act, N.J.S.A. 54:4-1, provides that: "All property * * * within the jurisdiction of this State not expressly exempted from taxation * * * shall be subject to taxation annually. * * * All property shall be assessed to the owner thereof with reference to the amount owned on October first in each year * * *." The same statute, N.J.S.A. 54:4-56, provides that upon the taking of real estate under the power of eminent domain "* * * [the] owner of property to be acquired shall be liable for the payment of such proportion of the taxes for the current year * * * as the time between the previous January first and * * * the date the condemning body acquired its title bears to a full calendar year." This latter provision is known as the apportionment act. It has no effect whatever as to the extent of the lien for taxes and bears only on the liability for payment as between the owner and the condemning authority. Aside from this statutory provision, real estate taxes in New Jersey create no personal liability whatever against the owners of lands. City of Camden v. Allen, 26 N.J.L. 398; Borough of Wrightstown v. Salvation Army, 97 N.J.L. 89, 123 A. 607; Rutsen Estates v. Hudson County, 102 N.J.L. 265, 131 A. 637.

 The state act further provides, N.J.S.A. 54:5-6, that: "All unpaid taxes on lands * * * shall be a lien on the land on which they are assessed on and after December first of the year in which they fall due."

 Nothing else appearing it might seem reasonably clear that on the date of the taking in the instant case, to wit, May 2, 1942, neither the whole nor any part of the tax for the year 1942 had become a lien against the lands taken since the statute clearly fixes the date when the taxes specifically become a statutory lien and that date had not yet arrived.

 However, the problem cannot be quite so easily disposed of. Mr. Justice Swayze in Jersey City v. Montville Tp., 84 N.J.L. 43, 85 A. 838, affirmed 85 N.J.L. 372, 91 A. 1069, dealt with the tax law of the state as it was in the year 1911. Comparison of the various provisions of the tax act in force for that year with the provisions of the law in effect on May 2, 1942, discloses that, aside from the shifting of dates and the enactment of certain apportionment provisions, the statutory law remained substantially the same. In that case it appeared that on May 20, 1911, the property there involved, lying in the Township or Montville, was owned by a private corporation and the law provided that it should be assessed as of that date, just as it now provides that it shall be assessed as of October 1st of the preceding year. On October 10, 1911, the private corporation conveyed the property to Jersey City. The law at that time specifically provided that taxes became a lien on and after December 20th of the year in which they were assessed. Question arose as to whether the property so taken by nontaxable municipal corporation was exempt from taxation for the entire year of 1911. It appeared then as now that exempt property was separately listed and of course was not included in the base upon which the tax rate was ascertained. Mr. Justice Swayze, relying on Shippen v. Hardin, 34 N.J.L. 79, held that the law having expressly provided that property should be assessed on May 20th, the assessment must relate to that day and property could not be assessed in the name of one who became an owner subsequent to that day. He then considers the subject of exemption and clearly holds that exemption must also be considered as of that day. He said: "* * * land is not exempt because subsequently it passes to an owner who is exempt. * * * The fact that the property is exempt at some time before the tax is payable is not important. Under our statutory scheme, taxes are imposed not for a particular year, calendar or fiscal, but on a particular day. * * * That day in the case of the general property tax as May 20th." [ 84 N.J.L. 43, 85 A. 839] Moreover, he held that, even though the property passed to the nontaxable municipality before the current tax became a lien under the specific lien provision of the statute, the tax was nevertheless collectable out of the property. *fn1"

 In a later case dealing with the law as it was in the year 1931, and here again the law for present purposes was substantially the same as in the year 1942, Mr. Justice Case, speaking for the Court of Errors and Appeals, held that where the tax had actually been fixed in amount but had not as yet become a lien under the specific provision of the statute, the condemning authority was not justified in withholding from an award the amount of the tax prorated to the date of taking. Empress Mfg. Co. v. City of Newark, 109 N.J.L. 131, 160 A. 388, 389. *fn2"

 While it is true that the tax had not ripened into a lien under the specific statutory provision, yet it was in process of ripening. Although attention has been directed to the fact that the opinion does not deal with the question as to whether the tax would remain a cloud or inchoate lien against the property, subjecting the same to payment out of the land on conveyance by the City to a taxable party, the omission is fully justified since the City being the taxing unit does not find itself confronted with the same problem as that ...

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