On appeal from the Appellate Division of the Superior Court.
For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Vanderbilt, C.J.
[5 NJ Page 456] On March 9, 1949, the Passaic County Board of Taxation, acting in accordance with R.S. 54:3-17 to 19, approved an equalization table for the county for the year 1949 which set forth the assessed value of the real property in each of the county's sixteen taxing districts, as shown by the tax lists and duplicates filed with the County Board by the local assessors pursuant to R.S. 54:4-35, and the true value thereof as found by the County Board, which in the case of each of the twelve plaintiff taxing districts was an amount 10% in excess of the assessors' valuation. On the same day the County Board, as required by R.S. 54:4-55, certified as correct the tax lists and duplicates of all the taxing districts in the county without, however, having revised the tax lists and duplicates of the twelve plaintiff taxing districts to reflect the 10% increase in real property valuation shown on the equalization table. Thereafter the County Board prepared the table of aggregates as required by R.S.
54:4-52 and fixed the tax rate for each of the sixteen taxing districts.
In arriving at the tax rates, the total amount to be raised for county purposes was apportioned among the sixteen taxing districts on the basis of the ratio between the total net property valuation in the district and the total net property valuation in the county, both as shown by the table of equalization. Then to each district's share of county taxes as thus apportioned was added the amount to be raised within the district for municipal and school purposes and this sum was divided by the total net valuation of the property in the district as taken from the tax lists and duplicates certified by the County Board. The quotient was the tax rate for the district. Thus it is seen that the County Board used real property valuation as shown by the table of equalization, which reflected the 10% increase in the assessment of the twelve plaintiff taxing districts, for the purpose of apportioning to each district its fair share of the county tax burden, but used the tax lists and duplicates, which did not reflect the 10% increase, for the purpose of determining the tax rate within each district.
The twelve plaintiff taxing districts considered the rates as fixed by this procedure to be erroneous, claiming that R.S. 54:4-48 requires the County Board to have the 10% increase in valuation entered upon the tax lists and duplicates and that the failure to have this done resulted in the tax rates in each of the plaintiff districts being too high, thereby placing an undue tax burden upon personal and second-class railroad property and depriving the real property owner of his right to appeal from his increased taxes.
The position of the twelve plaintiff taxing districts is clearly illustrated by the following figures with respect to the City of Clifton, which is typical of all the plaintiffs. The tax list and duplicate for Clifton as filed by the assessor, contained assessments of $64,679,150 for real property; $7,811,700 for personal property; and $103,660 for second-class railroad property. After various statutory deductions amounting to
$2,083,150 there remained a total net valuation of $70,511,360 upon which county taxes would be apportioned in the absence of revision, correction or equalization by the County Board. The County Board, however, then increased the total real property valuation by 10% to $71,147,065, making the total net valuation of Clifton as shown in the table of equalization $76,979,275. By comparing this figure of $76,979,275 to $439,228,003, the total of all the valuations of all the taxing districts in the county as shown by the table of equalization, it was determined that of the $3,886,111.29 to be raised for county purposes Clifton's share was $681,081.42. By adding this amount to the $1,734,501.44 needed for schools and the $1,138,717.73 required for other local purposes, the total tax to be raised in Clifton proved to be $3,554,300.59. With these calculations by the County Board the plaintiffs herein have no complaint. The County Board then proceeded to determine the tax rate by dividing the sum of $3,554,300.59 by $70,511,360, as shown on the uncorrected tax list and duplicate, to arrive at a tax rate for Clifton of $5.04 per hundred dollars. If the County Board had corrected the tax list and duplicate as the plaintiffs claim they were required to do by R.S. 54:4-48, the sum of $76,979,275 would have been the divisor and the rate would have been only $4.62 per hundred dollars, a difference of 42 points.
With a tax rate of $4.62 the personal property owners in Clifton would have paid $32,809.14 less in taxes (42 points on a total valuation of $7,811,700) and the second-class railroad property owners would have paid $435.37 less (42 points on a total valuation of $103,660). Thus the plaintiffs assert that the effect of the higher rate was improperly to relieve the real property owners in Clifton of $33,244.51 in taxes and to shift that burden to other property owners in the city. Moreover, they contend that by increasing the tax rate rather than the assessed valuation of real property certain property owners may have lost the right to appeal from the tax increase. For example, if a parcel of real property had originally been assessed at its full true value of $10,000, and by virtue of the
10% increase that assessment were raised to $11,000, the property owner would have had the right to appeal on the grounds that his property was now assessed at more than true value.
Accordingly, on April 20, 1949, the twelve plaintiff taxing districts filed petitions with the Division of Tax Appeals seeking to have their tax rates, as certified by the County Board, set aside and corrected. The Division of Tax Appeals dismissed all the petitions on the ground that the appeal should have been taken to the County Board pursuant to R.S. 54:3-21. From this judgment all twelve of the plaintiff taxing districts appealed to the Appellate Division of the Superior Court, which, after granting permission for the taking of evidence under the provisions of Rule 3:81-9, held (1) that the plaintiff taxing districts had the right to appeal directly to the Division of Tax Appeals under R.S. 54:2-35, since R.S. 54:3-21 provided only for an appeal from an assessed valuation of property and the instant appeals were from the fixing of a rate of taxation; (2) that the rates had been incorrectly computed, since R.S. 54:3-19 and R.S. 54:4-48 were in pari materia, and the County Board should have corrected the tax lists and duplicates by entering the 10% increase in real property valuation prior to computing the tax rates; and (3) remanded the case to the County Board with instructions that appropriate debits or credits be made to each taxing ...