On appeal from the Supreme Court, whose per curiam is reported in 136 N.J.L. 220.
For the appellant, Milton. T. Lasher.
For the respondent, Winne & Banta (Walter G. Winne, of counsel).
The opinion of the court was delivered by
HEHER, J. This is a proceeding under the Declaratory Judgment Act. R.S. 2:26-66, et seq. The subject-matter is the liability arising from the levy of the local tax for the
year 1942 against lands of respondent taken in condemnation proceedings instituted by the United States under chapter 307 of the Federal Act of 1931. 46 Stat. 1421, et seq.; 40 U.S.C.A., §§ 258a, et seq.
On October 1st, 1941, the lands were assessed for local taxation pursuant to R.S. 54:4-1, et seq.; and on January 2d, 1942, the local tax collector submitted to the landowner a preliminary tax bill for the first and second quarters of the tax year at the rate fixed for the previous year, amounting to $51,017.94, payable on February 1st and May 1st. This sum was paid on the ensuing January 6th, less a regularly established discount of 2% for payment in advance. On May 2d, 1942, the United States instituted the condemnation proceeding by filing in the Federal District Court for the District of New Jersey a petition and declaration of the taking of the land in fee-simple absolute for public use, and depositing in the court, to the use of the persons entitled thereto, the sum estimated to be just compensation for the land taken, and thereby and in virtue of section 1 of the cited statute (40 U.S.C.A., § 258a), title to the land vested in the United States, and "the right to just compensation" therefor vested in the persons entitled thereto, the compensation to be "ascertained and awarded in said proceeding and established by judgment therein." The court was empowered, upon the filing of the declaration of taking, "to fix the time within which and the terms upon which" possession of the lands shall be surrendered. The final tax levy upon the land for 1942 was $56,162.61. The judgment for compensation subsequently entered was greater than the amount of the deposit.
The Federal District Court ruled that, although the United States acquired title to the land in Fee-simple, the title was subject to an inchoate lien for all unpaid installments of taxes for the year 1942 alleged to be due the taxing district, and thus a cloud was placed on the title by imposing the taxes upon the United States. United States v. 25,936 Acres of Land, 57 Fed. Supp. 383. The Circuit Court of Appeals reversed the judgment. 153 Fed. Rep. (2 d) 277. It was there held that "the amount of compensation to be paid must be determined as if the property was in a single ownership
and without reference to conflicting claims or liens;" that a condemnation proceeding "is not a taking of rights of persons in the ordinary sense but an appropriation of the land or property itself," with all "previous existing estates or interests in the land * * * obliterated;" and that "The condemnation award when made stands in the place of the land and the rights of all persons may be treated as though transferred to the award," and "Valid tax liens must be satisfied from the award." Whether or not the borough has a lien on the fund for the unpaid balance of the 1942 taxes levied was found to be a question of state law; and the cause was remanded for the litigation of the controversy in the state courts. There remains on deposit in the Registry of the Federal District Court sufficient of the compensation award to cover the amount of the conflicting claims.
This proceeding was thereupon commenced. The Supreme Court, in an unreported opinion, concluded that the tax liability is divisible "proportionately to the respective periods of ownership during the tax year," and one-third of the whole tax is chargeable to the landowner whose title was condemned. The borough appeals.
The primary insistence is that the making of the assessment for taxation on the prior October 1st fixed the liability of the land for taxes for the entire year, and this obligation is dischargeable only by payment of ...