Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.
The Boroughs of Carteret and Sayreville and the Township of Woodbridge appeal from the August 30, 1955 judgment of the Division of Tax Appeals entered following its hearing for the purpose of revising and correcting the equalization table adopted by the Middlesex County Tax Board for the year 1955.
The assessors of the various municipalities of Middlesex County completed the assessments of the local real property for 1955 and filed the assessments lists with the county
tax board as required by N.J.S.A. 54:4-35. The county board, as the agency charged with the duty of supervision and control over the assessors (N.J.S.A. 54:3-16) is directed to:
"[A]nnually ascertain and determine, according to its best knowledge and information, the general ratio or percentage of full value at which the real property of each taxing district is assessed according to the tax lists laid before the board. It shall prepare an equalization table showing the assessed valuation of the real property in each district, the ratio or percentage, if any, by which the assessed valuation should be increased or decreased in order to correspond to true value, and the true value of the real property within the district as determined by it." N.J.S.A. 54:3-17.
In the discharge of this statutory obligation the county board found that the 1955 ratios of assessments to true value in the municipalities which are prosecuting the appeal, were as follows:
An arbitrary uniform level of 22% for county-wide equalization purposes was determined upon. It represents the median percentage between the lowest and the highest municipal ratios, namely, 13.6% in Piscataway Township and 30.9% in the City of New Brunswick. Appellants' assessment ratios (as well as those of all other municipalities in the county) were then projected to 100%, and in order to achieve the same relative level of true value throughout the county, 22% thereof was fixed for each as the aggregate assessments for equalization table purposes. The design of such procedure is to bring about a fair allocation of the county tax burden among the local governmental units.
Ten of the 25 municipalities appealed to the State Division of Tax Appeals. Full hearing resulted in affirmance of the ratios determined upon by the county board. A few changes were made which are not involved specifically in the problems now presented to us. The county board had left the aggregates undisturbed in seven municipalities where
the ratio of assessments exceeded or was close to 22%. With the exception of these seven, in constructing the table for purposes of equalization the county board listed the dollar totals of the assessment aggregates at 22% of the projected true value; that is, in the true value column of the table actually 22% of that value was set forth. In its revised table in the true value column the Division listed the dollar totals of all of the municipalities at the projected 100% of true value. This alteration follows more closely the literal meaning of the statute.
Twenty-two of the county's 25 municipalities have accepted the result. Only Carteret, Sayreville and Woodbridge bring the matter before us. They charge that the judgment of the Tax Division is arbitrary, capricious and based upon data insufficient to justify the conclusion reached as to ratios of assessments to true value.
The principles which guide and control the equalization function are thoroughly explained in the informative opinions of Justice Brennan in City of Passaic v. Passaic County Bd. of Taxation , 18 N.J. 371 (1955), and Borough of Little Ferry v. Bergen County Bd. of Taxation , 18 N.J. 400 (1955).
The statute calls upon the county board to determine "according to its best knowledge and information" the general ratio or percentage of the full value of real property in the taxing districts which is represented by the assessments, and to equalize the aggregates at full value in order equitably to distribute the tax burden among them. No specific plan or method for reaching that determination is prescribed. Any reasonable and efficient mode may be adopted. The process is legislative or quasi -legislative in character. The conclusions need not rest upon proof admissible under common-law rules of evidence, and an oversensitive regard for such rules is inconsistent with the practical and just discharge of the duty. City of Passaic v. Passaic County Bd. of Taxation, supra , at pages 386, 389.
Equalization of aggregates for the purpose under discussion is not required to be perfect. It is recognized as a
reasonable approximation, calculated to achieve the same relative valuations among the taxing districts so as to distribute the county tax burden fairly and to offset competitive undervaluation by local assessors. The aim is to minimize "so far as possible the unfair distribution of the county tax which is one result of varying average assessment ratios" among the municipalities involved. Id. , at page 381. A degree of imperfection is tolerated largely because individual assessments are not altered as the result of the table.
To facilitate the equalization procedure, it is important to develop methods of valuation which can be applied on a mass basis and which can be expected to produce a proportionate distribution of the tax burden. Id. , at page 395; Murray, " Improvement in Real Estate Taxation Through Assessment-Sales Studies ," 5 Nat'l Tax J. 86 (1952).
As part of the operation, the Supreme Court declared that the board may take official notice of the Sixth Report of the Commission on State Tax Policy (1953) and:
"* * * [m]ay properly consult and rely upon official records of real estate transactions and draw inferences of true values of properties from revenue stamps on recorded deeds, cf. N.J.S.A. 54:3-22, or the amounts of mortgages on such properties, and may consult appraisals in the files of mortgage lending institutions or of such agencies as the Veterans Administration or the Federal Housing Administration. And the sampling need be merely reasonable in light of the purpose and not exhaustive * * *. The boards may also, and should, take official notice and give consideration to the real estate average assessment ratios for municipalities of the county as determined by the Director of the Division of Taxation pursuant to N.J.S.A. 54:1-35.1 et seq. [the 'school aid ratios']." Borough of Little Ferry v. Bergen County Bd. of Taxation, supra , 18 N.J. , at page 405. (Emphasis ours)
The only condition upon the use of such information is that the municipalities be informed that it is being consulted and considered and be given an opportunity to meet it. Little Ferry case, supra , at page 405.
When the equalization table has been issued and is brought before the Division of Tax Appeals by a municipality, its function is the same as that of the county board. Upon a showing "merely of error by the county board as
to the aggregate of any one of the taxing districts" the state body must undertake the task of revising and correcting the table. City of Passaic v. Passaic County Bd. of Taxation, supra , 18 N.J. , at page 393.
However, after review of the table, the action of the Division is presumed to be correct and the courts will not interfere in the absence of an affirmative showing that it was arbitrary, capricious or unreasonable. State, Weehawken Twp., Pros. v. Roe , 36 N.J.L. 86 (Sup. Ct. 1872); see Carls v. Civil Service Commission , 17 N.J. 215 (1955).
Appraisal of the reasonableness of the decision of the Division must be engaged in with the realization that "[t]rue parity of the aggregates of the several municipalities cannot really be achieved without elimination of the inequities among individual assessments within all municipalities of the county." Passaic case, supra , 18 N.J. , at page 379.
It is a matter of universal knowledge that equalization between individual assessments within the taxing district is the heart of the real estate taxation problem. Murray, "Improvement in Real Estate Taxation," supra , at page 86. "Average assessment ratios are at best only estimates of the assessment experiences for individual properties * * *. Even the most accurate average suggests a uniformity of experience within taxing districts which does not exist * * *. These variations are serious and widespread. * * *" Sixth Report, supra , quoted in the Passaic case, supra , 18 N.J. , at page 380. Exactitude can be accomplished by the uniform application of any common assessment standard, whether it be true value or some other rule. In our State the Legislature has willed that the measure shall be true value and both the assessors and the courts must act accordingly.
The only completely adequate way to equalize assessments is to make them equal in the first place. Equalization among municipalities within a county for a limited purpose is no substitute for good local assessments conformable to the legislative will. Murray, "Improvement in Real Estate Taxation," supra , at page 87. However, it has been said
that the supervisory interest of the State and county through the medium of equalization is being reflected in an improvement in the quality of local assessments. Myers and Stout, "Recent Trends in Property Tax Equalization ," 3 Nat'l Tax J. 179, 186 (1950); and see Lee, "State Equalization of Local Assessments ," 6 Id. 176 (1953).
These preliminary observations bring us to a consideration of the equalization table under attack.
At the outset of the hearing before the Division of Tax Appeals, the panel announced to counsel that notice would be taken of:
(1) The Sixth Report of the Commission on State Tax Policy;
(2) Information relating to the 1954 or 1955 reports of the Director of Taxation;
(3) Studies and information described as material in the Passaic and Little Ferry cases;
and that evidence would be received concerning the study of sales which had taken place in the county.
The proof adduced disclosed that in the early summer of 1952 at the direction of the State Tax Division the county board called together all of the assessors and informed them that an equalization table would be prepared for 1953 and that sales ratio studies were going to be utilized in order to fix a ratio of assessments to true value to be applied in the 25 municipalities in the county.
Pursuant to this plan, in June of that year the board engaged Mrs. Ethel Yahnell as a tax research analyst to make the sales studies. She was still so employed at the time of the hearing before the panel. In the intervening period equalization tables, which reflected her work, were issued for 1953 and 1954.
In July 1954 the board sent a letter to all assessors referring to the inequality in assessments within and between municipalities, and directing them to increase their assessments to at least 22% of true value. The letter reported also on the comparative ratios for the first half of 1954 as indicated by the current sales study and suggested their use as a guide for the 1955 assessments.
The ratios set forth for the appellants were: