For the prosecutor, Saul A. Wittes.
For the respondent City of Newark, Thomas L. Parsonnet (Vincent J. Casale, of counsel).
For the respondent C-O Two Fire Equipment Company, Pitney, Hardin, Ward & Brennan (John R. Hardin and Arthur J. Martin, Jr., of counsel).
Before Justices Bodine, Heher and Wachenfeld.
The opinion of the court was delivered by
WACHENFELD, J. The issue presented is the validity of the determination by the Division of Tax Appeals that a tract of land and building owned by the City of Newark and leased for private purposes are tax exempt. The authority of the city to enter into such a lease is not questioned.
The City of Newark on August 13th, 1941, leased 8.58 acres of vacant and unimproved industrial land which it owned in the city to the C-O Two Fire Equipment Company, a private manufacturing company, for 50 years at an annual rental of $5,000. The company agreed to construct on the land at its own expense a factory building of an agreed minimum size which was to become the property of the city upon erection. An option is given to the company to purchase the demised premises at any time during the term of the lease for $10,000 per acre, which would amount to $85,800. In case of partial loss, all insurance money except for repairs is to be the property of the company, and in case of total loss, the company may abandon the lease and keep all the insurance money after payment to the city of 1/50 thereof for each year the lease has run. The city has agreed not to exercise its right of eminent domain and in the event of condemnation by a higher authority during the term of the lease, the condemnation award for the building is to be paid to the company.
The company erected and now operates a modern factory on the land for purely commercial purposes, carrying on its books the building as a fixed asset worth $441,542.63 as of December 1st, 1942. According to the records of the city, the land is assessed for $42,900 and the building for $250,000, both exempt from taxes as municipally owned.
Prosecutor, a citizen and taxpayer of Newark, appealed the exemption for the year 1943 and the Division of Tax Appeals found the exemption to be within statutory authority. It may be parenthetically noted the premises are within the boundary of the Newark airport and seaport, which as of March 22d, 1948, have been leased to the Port of New York Authority and the lease herein concerned canceled, with a new lease between the Port Authority and the company substituted. Accordingly, the Port Authority, which intervened in this proceeding as a party respondent, has asked and was permitted to withdraw.
For the taxable year 1943 R.S. 54:4-1 provided all property within the state not expressly exempted was subject to taxation. R.S. 54:4-3.3 sets forth the following exemptions:
"The property of the United States, and, except as otherwise provided by article 1 of this chapter (Sec. 54:4-1 et seq.), the property of the state of New Jersey; and the property of the respective counties, school districts and taxing districts, when located therein and used for public purposes, or for the preservation or exhibit of historical data, records or property shall be exempt from taxation under this chapter, but this exemption shall not include real property bought in for debts or on foreclosure of mortgages given to secure ...