Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.
This is an appeal by the Township of North Bergen, the Town of Kearny, the Borough of East Newark and the City of Bayonne from a judgment of the State Division of Tax Appeals revising the tax equalization table adopted by the Hudson County Board of Taxation for the year 1955. See N.J.S.A. 54:3-17. Bayonne rests its case on the briefs and arguments of North Bergen and Kearny. There was no answering brief except that submitted by the City of Jersey City.
The equalization table, as revised by the Division, is based upon an analysis made by the Hudson County Tax Board of all sales of real property in the county between October 1, 1951 and December 31, 1954 (the parties do not consider how long a period should have been used. See Guide for Assessment-Sales Ratio Studies, Report of the Committee on Sales Ratio Data, National Association of Tax Administrators , 3 (1954)). Analyses of a somewhat corresponding nature were being conducted by other county boards, all under a program sponsored by the Director of the Division of Taxation.
The Hudson board in making its analysis excluded from consideration all sales made by or to a public body (Guide for Assessment-Sales Ratio Studies, supra , 6; cf. Davis v.
Division of Tax Appeals , 135 N.J.L. 250 (Sup. Ct. 1947)), or a fiduciary, or by one person to another person of the same surname. Then the board checked (it was said) "most" of the remaining sales in the period by communicating with the parties to the transaction or their attorneys, endeavoring thereby to eliminate sales not made at arm's length, sales involving personalty as well as realty and generally all sales not serviceable for the purposes of the study. Further see Guide for Assessment-Sales Ratio Studies, supra , 6-10, 34, 35.
After making these exclusions, there remained 12,872 sales out of all those taking place in the county during the 3 1/4 years above mentioned. The real properties involved in the 12,872 sales were then classified, according to municipality, in the following categories (which had been devised by the Director of the Division of Taxation): (1) vacant land; (2) residential property for the use of four families or less; (3) farm property (there seems to be none in the county outside of Secaucus); and (4) all other property, including chiefly apartment houses and industrial and commercial properties.
When the board was communicating with the parties to a sale or their attorneys, as above stated, it also sought to obtain the sales price and at the same time to verify that price by ascertaining the amount of the liens on the property at the time of the sale. For, the amount of the liens, added to the amount of the consideration indicated by the federal revenue stamps on the deed, constitutes the sales price (26 U.S.C.A. § 3482) that was used in the analysis. By checking with the parties and attorneys, an attempt was apparently made to detect any "over-stamping" -- that is, the affixing of stamps in an amount greater than the law requires, in order to create an impression of a sales price higher than the true price. See Guide for Assessment-Sales Ratio Studies, supra , 12, 48.
The board next computed the ratio between the sales price of each of the 12,872 properties and its assessed value; and then considering each of the municipalities separately, it
found the average of all ratios in each of the three categories within that municipality (the category for farm property may be disregarded for the purposes of this case). The average ratio of the category was then multiplied by the total assessed value of the real property in that category within the municipality (the amounts of the total assessments in each category were supplied to the board by the local assessors on forms prepared by the State Director and designated SR-3); and the figure thus obtained was held by the State Division to be the true value of the properties in that category within the municipality. The Division added these figures in the three categories within the municipality in order to find the true value of all the property in the municipality.
The table below, dealing with the five municipalities above mentioned, shows in the first column the ratio between the assessed value of all real property in the municipality and the true value of the same as computed by the Division as above stated. The county board had added to this ratio a certain percentage -- or (in the case of Hoboken and also, to the extent of .01%, Jersey City) subtracted a certain percentage therefrom -- in order to create a so-called cushion because of "information available to us in the back of our heads as to the value of property in the County."
Ratio of Total Assessed Values to Total True Values
Hudson County Board's State Tax Director's
Tax Board's final Policy 1954 table
computation determi- Com'n., in connection
based solely nation Sixth with State
on its sales including Report School Aid
North Bergen 53.12 57 51 50.5
East Newark 49.40 52 53.8