On appeal from a judgment of the Supreme Court, whose opinion is reported in 132 N.J.L. 601.
For the relators-appellants City of Jersey City, Alfred Pakenham, Marie A. Pakenham and William A. Nolan, Charles A. Rooney.
For the relators-appellants Township of Weehawken and Harry C. Moore, John N. Platoff.
For the relators-appellants the Town of West New York, Peter Dugan and Frances Dugan, Samuel I. Hirschberg.
For the relator-appellant the mayor and council of the City of Hoboken, John J. Fallon (Otmar J. Pellett, of counsel).
For the relator-appellant Town of Secaucus, Edward A. Smarak.
For the relators-appellants, Charles Hershenstein (Milton B. Conford, of counsel).
For the respondent-comptroller, Homer C. Zink, Walter D. Van Riper, Attorney-General (Herbert J. Hannoch and Benjamin C. Van Tine, of counsel).
For the respondent Board of Education of the City of Newark, Jacob Fox.
The opinion of the court was delivered by
CAMPBELL, CHANCELLOR. This is an appeal from a judgment of the Supreme Court entered upon an order discharging certain consolidated rules directing the State Comptroller to show cause why a writ of mandamus should not issue commanding him "to draw his warrant upon the Treasurer of the State of New Jersey for the distribution of interest which became due on taxes assessed against Class 2 railroad property and has been paid into the State Treasury, to the municipalities in which said Class 2 property was situated * * *."
The Supreme Court held (132 N.J.L. 601):
"The questions at issue are broadly two:
"I. Will the writ go against a state officer? This depends upon the question of whether R.S. 54:24-11, et seq., still controls the distribution of moneys derived from railroad tax payments.
"II. Are chapters 4, 5, 6 and 34 of Pamph. L. 1945, constitutional enactments?"
The members of the court found themselves "not completely in accord" upon the second question above stated and dismissed the consolidated rules to show cause, stating "The constitutionality of the statute is the main issue before us."
Consequently this appeal to this court under R.S. 2:83-15.
Following the decision of this court in Wilentz, Attorney-General, &c., v. Hendrickson, State Treasurer, &c., 135 N.J. Eq. 244, the delinquent railroads paid into the state treasury, as required by statute, $20,203,639.33 on account of principal of past due taxes and $15,276,373.33 in interest due and owing under R.S. 54:27-4, the correct amount of this latter item being in dispute between the railroads and the state at that time and is in litigation now. Certain other railroads are still in default as to principal or interest or both. The tax arrearages were for the years 1932 to 1940, inclusive.
The principal and interest on the past due Class I, III and IV railroad taxes were paid into the state treasury pursuant
to R.S. 54:24-6 and the paid principal of Class II railroad taxes was allocated and distributed by the State Treasurer and State Comptroller to the municipalities entitled thereto under R.S. 54:24-11 and 54:24-13. The State Comptroller refused to allocate and distribute to these same municipalities $8,076,047.60 which is the interest actually paid by the railroads on Class II taxes, and he challenged their right to it under R.S. 54:24-11 and 54:24-13 on the ground that these sections did not specifically authorize the distribution of it on the same basis as the principal of Class II taxes.
This impasse between the relators-appellants and the respondent-comptroller was reached late in 1944. Early in 1945, and subsequent to our judgment in Wilentz v. Hendrickson, supra, the legislature passed Pamph. L. 1945, chs. 4, 5, 6 and 34, the ostensible general purpose of which was a new and integrated statutory scheme for the allocation and distribution of the interest already paid and to be paid on such past due railroad taxes. The real and drastic change designed to be accomplished by the statutes is the diversion of all the interest, paid or unpaid and accrued on unpaid principal, of all Class II railroad taxes from the municipalities in which such properties are located and for whose purposes such taxes were assessed, levied, collected and dedicated by statute, R.S. 54:24-7 to 54:24-13 and to require that they be paid into the treasury of the state as general funds subject to use by the state or kept available for such other purposes as the legislature should determine.
The respondents, at the outset, raise two objections to the proceedings: (1) they are in fact a suit against the state which may not be maintained without its consent; (2) mandamus will not issue in a doubtful case.
A consideration of all the applicable statutes, together with decisions of this court construing them, discloses that the duties imposed by these sections of the statute upon the State Comptroller are ministerial and do not involve any exercise of discretion by him as a state officer.
A suit against a state officer or agency to compel by mandamus, or similar process, the performance of official duties of a purely ministerial nature, involving the exercise of no
discretion is not a suit against the state and may be maintained without its consent, 59 C.J. 312, § 466; 38 Id. 659, § 198. It is the essence of a prerogative writ, such as mandamus, that it is an appeal to the crown or sovereign state to remedy whatever may be amiss in the conduct of its public affairs, because the administration thereof is not chargeable to the crown personally or the state, but is chargeable to the ministers or officers who are accountable to the people. The prerogative of the crown or state extends not to do any injury; for being created for the benefit of the people, it cannot be exerted to their prejudice. 3 Blackstone *255.
The reason for the rule that mandamus will lie against a state officer is that a sovereign state must be presumed to be willing that its laws shall be obeyed. Through its laws it speaks to its servants and commands them to do that which is required. Certainly those servants by their acts of disobedience do not represent or stand for the state. The action on mandamus, therefore, instead of being a suit against the state, is against its servants to compel them to do that duty, which by accepting office, they agreed to perform, 59 C.J. 312. Where the duty of a public treasury official is delineated and "charged by statute," the writ will clearly lie. Tapping on Mandamus *265.
This we conceive to be the situation here presented. Cf. Angle v. Runyon, Comptroller, 38 N.J.L. 403; Compton v. Anderson, Comptroller, 52 Id. 150; Willson v. Swain, Treasurer, 60 Id. 115; Trustees of Rutgers College v. Morgan, Comptroller, 70 Id. 460; affirmed, 71 Id. 663. In the very case relied on most strongly by the respondent-comptroller to support his arguments as to the proper construction of R.S. 54:24-11 and 54:24-13, Burlington County v. Martin, &c., Murray, Comptroller, et al., 128 N.J.L. 203; affirmed, 129 Id. 92, this court did not question that mandamus would lie against the State Comptroller. The Comptroller is an auditing officer and cannot question the validity of an act of legislation directing the payment of money by the state or disregard its authority, Angle v. Runyon, Comptroller, supra (at pp. 408, 409).
We hold, therefore, adversely to the contentions of the
respondent-comptroller on both of these preliminary objections.
With these questions disposed of we turn our attention to the other basic issues suggested, but not decided, by the Supreme Court.
The first is: Is the interest on delinquent taxes against Class II railroad properties a part of the tax and does it follow the principal?
We conclude that it is and does. This is conclusively disposed of by Wilentz v. Hendrickson, 135 N.J. Eq. 244, 256. The holdings of this court in Burlington v. Martin, 129 N.J.L. 92; affirming 128 Id. 203, and Wilentz v. Hendrickson, 135 N.J. Eq. 244, are not in conflict. Neither the class of tax nor the statutes are identical.
The interest follows the principal in a transfer inheritance tax and is wholly retained by the state. The amendment whereby the county of decedent's residence profits to the extent of five per cent. of the tax (54:33-10) does not include any part of the interest. The statute does not so provide. These statutes are not in pari materia and no legitimate argument could be advanced for that proposition. The former is a transfer inheritance tax statute; the latter a Railroad Tax Act providing for taxation of a certain class of railroad property.
That the interest follows the principal is a corollary of Wilentz v. Hendrickson, supra. The interest was compensation for the loss of the use of the principal and on this basis alone it follows the principal. There is nothing in the statutes to suggest a purpose to separate the two and make one disposition of the principal and another of the interest, but quite to the contrary. Since interest is compensation for loss of the use of the principal it inevitably follows that the interest belongs to him who has lost the use of his principal. A contrary construction would do violence to reason and logic.
The history of all these statutes clearly indicates a legislative intent to compensate municipalities for the loss of ratables used for railroad purposes. Originally the property a railroad could acquire and hold was limited by its charter. See Charter of New Jersey Railroad and Transportation Company,
limiting it to a main stem width of 66 feet and for each terminal three acres. Pamph. L. 1832, pp. 96, 98, 102. In the face of agitation starting in 1846, Pamph. L. 1855, ch. 52, p. 118, was enacted and authorized the railroads to acquire lands in excess of their charter grants but provided that the excess should be subject to taxes the same as other lands in the same city would be. As the railroads acquired such other properties there was great public agitation that they, too, should pay a fair share of the cost of local government which reached high points in 1846, 1869, 1870 and 1881.
The preamble of Pamph. L. 1873, ch. 450, p. 112, clearly states the legislative intent that the burden of local government should be shared by the railroads. The act of 1884, followed this pattern and intention. The 1896 Commission appointed by the Governor recommended that Class II railroad property should be taxed and the proceeds allotted to the local taxing districts. See Commission Report, pages 13-25. This said also that in all large cities throughout the country where railroad terminals are located, similar property is taxed and the tax turned over to local governments as compensation for the loss of ratables. The history and purpose of subsequent legislation, now found in the Revised Statutes of 1937, is set forth at length in Board of Assessors v. Central Railroad Co., 48 N.J.L. 146; Bergen and Dundee Railroad Co. v. State Board of Assessors, 74 Id. 742, 744; Central Railroad Co. v. State Board of Assessors, 75 Id. 120, 124; Id. 771, 773.
There is disclosed in all this history a legislative intent to compensate the local district for the loss of ratables. It follows, therefore, that the interest should follow the principal as compensation for the non-payment of the principal of the tax.
If such taxes, when due, are not promptly paid, the loss falls upon the particular municipality -- not the state. Therefore the compensation for the loss (interest), when paid, goes to remedy the situation resulting from delinquence. This is the common sense of the matter.
In Burlington County v. Martin, supra, the affirmance of this court was based primarily upon the ground that the
settled practical construction of the statute for over thirty years coupled with a delay of four years in asserting its rights did not justify the county's claim to interest, and that the prerogative writ of mandamus would not be awarded where such allowance would create disorder and confusion.
This we particularly pointed out in the Wilentz v. Hendrickson case which is controlling here.
In Wilentz v. Hendrickson, supra (at p. 256), this court speaking through Mr. Justice Perskie said: "The statute (R.S. 54:27-4, et seq.) fixes the quality of the interest charge; and we are not at liberty to make an essential distinction not found in the legislative expression. The interest, as it accrues, merges in what the statute itself denominates a 'debt' due [from the company] the state * * * for which an action at law or suit in equity may be maintained, and shall be a preferred debt in case of insolvency."
The depositions taken in the cause indicate that it has been a long standing practice to allocate and distribute the interest on the same basis as the principal of the tax. In the absence of a specific provision in the statute there could be no other rational construction thereof. Contemporaneous construction has given the force of law to the doctrine that the interest follows the principal. The duty was apparently so obvious that prior State Comptrollers followed the practice without question. The respondent-comptroller admits the practice and the effect of contemporaneous construction, but his position is that such action and practice were erroneous.
We hold to the contrary and that under the statute the interest is an integral and inseparable part of the tax debt and is to be distributed on the same basis as the tax principal for these reasons: (1) such a conclusion is compelling in the decision in Wilentz v. Hendrickson, supra, (2) in the absence of a specific provision to the contrary, no other rational construction of the statute is possible, (3) the uninterrupted contemporaneous construction placed upon these actions for years by the respondent-comptroller's predecessors in office is most persuasive in reaching this conclusion.
Most of the provisions of "An act for the taxation of railroad and canal property" (Pamph. L. 1884, ch. 101, p. 142)
as amended and supplemented were repealed by Pamph. L. 1941, ch. 291, as amended by Pamph. L. 1942, ch. 169, but the seventy-fourth section of these acts (R.S. 54:29A-74), provides that "Nor shall this act affect in any manner any distribution allotment or apportionment of tax receipts made or required to be made under any provision of law repealed by this Act." In such a situation the rule is that the pre-existing law stands unaffected.
We now turn to a consideration of chapters 4, 5, 6 and 34, Pamph. L. 1945.
Their intended effect is to divert and redistribute these interest funds. While the enactments are four in number they present one integrated plan and ...