For reversal and remandment -- Chief Justice Weintraub, and Justices Heher, Wachenfeld, Burling, Jacobs, Francis and Proctor. For affirmance -- None. The opinion of the court was delivered by Jacobs, J. Heher, J. (concurring in remand). Heher, J., concurring in result.
The defendant City of Passaic appealed to the Appellate Division from the judgment of the Division of Tax Appeals which cancelled the tax assessment for 1956 on the personal property owned by the General Electric Company and located in the warehouse operated by the Ejay Warehousing Company at 99 President Street, Passaic, New Jersey. We certified on our own motion.
The General Electric Company operates a plant at Bloomfield, New Jersey, where it manufactures air-conditioning equipment, water coolers and heat pumps. In 1954 it entered into an agreement with the White Warehousing Company for the trucking of merchandise from the Bloomfield plant and its storage at the Passaic premises which White had leased from Botany Mills, Inc. This agreement
related to the year 1955 and was assigned to Ejay Warehousing Company in May 1955. Thereafter a similar agreement for 1956 was executed directly by General Electric and Ejay. In 1955 and 1956 all of the air conditioning, water cooler and heat pump units which were manufactured at the Bloomfield plant were transferred to the Passaic warehouse. They were delivered daily to the warehouse in trucks operated by Ejay, and Ejay personnel handled their storage at the warehouse. However, General Electric did maintain an inspector whose responsibility was to check each unit at the warehouse immediately prior to its shipment to the customer. General Electric did no manufacturing at the warehouse but it did from time to time send its own employees to the warehouse to adjust or alter units to conform with newly adopted designs. No warehouse receipts were used but an I.B.M. card system was employed to record the units received and released by Ejay.
The record contains but little on the issue of whether Ejay's premises were operated as a bona fide public warehouse or as a business convenience for General Electric. Mr. Moreland, manager of manufacturing for the Bloomfield plant of General Electric, testified that because of the congested condition of its plant and the lack of floor space, General Electric decided to relieve itself of "the responsibility of storing and shipping" and to enter into the agreements with White and Ejay. Mr. Stump, vice-president and general manager of Ejay, testified that Ejay is owned by the Muscarelli family and that Mr. Muscarelli is in the construction business and is not financially interested in General Electric. He further testified that on October 1, 1955 there was approximately 100,000 square feet of warehouse space in Ejay's premises and that 99% of it was occupied by General Electric; the only other occupant of warehouse space was Coyle and McDonald, a rigging company affiliated with Ejay. The record is silent as to what activities, if any, Ejay ever engaged in towards soliciting warehouse business from the public generally or
towards making space available to meet any requirements of the public generally. Similarly it does not indicate how the storage rates charged to General Electric compared with the storage rates charged by public warehouses in the Passaic area or elsewhere in northern New Jersey.
In the fall of 1955 General Electric received from the assessor of the City of Passaic a communication relating to its personal property in the Ejay warehouse. It did not answer or file an account of its property (see R.S. 54:4-12) because its counsel had advised that the property was tax exempt under R.S. 54:4-3.20. Thereupon the assessor inspected the property at the warehouse and applying the 40% ratio which prevailed in the City of Passaic assessed it at $2,000,000. General Electric appealed to the county board of taxation which affirmed the assessment. General Electric then appealed to the Division of Tax Appeals which, after hearing, cancelled the assessment on the ground that the property was tax exempt under R.S. 54:4-3.20. The city appealed from the judgment of the Division of Tax Appeals and in support of its appeal advances the following contentions: (1) R.S. 54:4-3.20 is unconstitutional; (2) the Ejay premises did not constitute a warehouse within the intent and purpose of R.S. 54:4-3.20; (3) the judgment of the Division of Tax Appeals was not supported by appropriate findings (see Delaware, L. & W.R. Co. v. City of Hoboken, 10 N.J. 418 (1952)), and (4) the Division of Tax Appeals did not accord the initial assessment by the Passaic assessor the presumption of accuracy and validity to which it was entitled. See General Motors Corp. v. State Bd. of Tax Appeals, 125 N.J.L. 574, 575 (E. & A. 1940); Central R.R. Co. of N.J. v. State Tax Dept., 112 N.J.L. 5, 8 (E. & A. 1933), certiorari denied 293 U.S. 568, 55 S. Ct. 79, 79 L. Ed. 667 (1934).
R.S. 54:4-3.20 provides that all personal property stored in a warehouse of any person, co-partnership or corporation engaged in the business of storing goods for hire shall be exempt from taxation under chapter 4 of Title 54.
It was enacted to place our public warehouses on an equal competitive footing with those of our neighboring states where no personal property taxes were imposed. See Jersey City v. Liggett & Myers Tobacco Co., 14 N.J. 112, 113 (1953); see also the record in Schwartz v. Essex County Board of Taxation, pp. 167-192 (Court of Errors & Appeals, vol. 1710 (1943)). Its constitutionality was sustained in Schwartz v. Essex County Board of Taxation, 129 N.J.L. 129 (Sup. Ct. 1942), affirmed 130 N.J.L. 177 (E. & A. 1943), and it has been applied in many reported decisions. See Maritime Petroleum Corp. v. City of Jersey City, 1 N.J. 287 (1949); Dearborn Chemical Co. v. Division of Tax Appeals, 135 N.J.L. 580 (Sup. Ct. 1947); Crown Can Co. v. Division of Tax Appeals, 135 N.J.L. 517 (Sup. Ct. 1947); Pattison & Bowns, Inc., v. Saddle River Tp., 129 N.J.L. 135 (Sup. Ct. 1942), affirmed 130 N.J.L. 177 (E. & A. 1943); Halligan & McLellan, Inc., v. State Bd. of Tax Appeals, 122 N.J.L. 551 (Sup. Ct. 1939); City of Newark v. Blanchard Lumber Co., 21 N.J. Misc. 12 (St. Bd. Tax App. 1942); City of Newark v. Weyerhaeuser Timber Co., 18 N.J. Misc. 560 (St. Bd. Tax App. 1940); Blanchard Lumber Co. v. City of Newark, 18 N.J. Misc. 32 (St. Bd. Tax App. 1939); cf. Jersey City v. Liggett & Myers Tobacco Co., supra; Borough of Edgewater v. Connoil Corp., 4 N.J. Super. 338 (App. Div. 1949). The appellant now seeks reconsideration of the holding in the Schwartz case, although it does not submit any materials which were not presented to the former Supreme Court and the Court of Errors and Appeals when they sustained the constitutionality of R.S. 54:4-3.20.
The New Jersey Constitutions of 1776 and 1844 were silent on the subject of taxation. See Neeld, "Taxation -- The Tax Clause," 2 Proceedings of the Const. Conv. of 1947, p. 1685 (1951). In 1875 the Constitution of 1844 was amended by the addition of a clause to the effect that "property shall be assessed for taxes under general laws, and by uniform rules, according to its true value." Art. IV, § VII, par. 12. Elsewhere in the country, the courts had divided
on the issue of whether such an equality and uniformity clause forbade all tax exemptions (see 1 Cooley, Taxation, § 273, p. 580 (4 th ed. 1924)); our courts, however, soon aligned themselves with those holding the view that the clause did not prohibit the Legislature from providing for tax exemptions so long as there was proper basis and reasonable classification. Cf. State Board of Assessors v. Central R.R. Co., 48 N.J.L. 146, 279 (E. & A. 1886); Stratton v. Collins, 43 N.J.L. 562, 564 (Sup. Ct. 1881). In the Stratton case Justice Dixon pointed out that the equality and uniformity clause did "not require all property to be taxed" and that it left "the legislative power of selecting the subjects of taxation as untrammeled as it ever was." See 43 N.J.L. at page 564. And in the Central R.R. case Chancellor Runyon had this to say (48 N.J.L. at page 279):
"The constitutional provision requires that, not only that the assessment shall be under general laws, but that it shall be by uniform rules also. It does not require that all property shall be assessed for taxes, but that property, when assessed for taxes, or in other words, such property as shall be assessed for taxes, shall be assessed under general laws, etc. Certain property has been exempt from taxation ever since the amendments to the constitution were adopted, and such exemption has received the judicial sanction. The property is of the same kind as that which is taxed, but the use to which it is devoted -- the purposes of religion, education, benevolence, etc., -- makes it a class and justifies the exemption.
The constitutional provision does not take away from the legislature the power of selecting the subjects of taxation. State v. Runyon, 41 N.J.L. 98; State v. Collins, 43 N.J.L. 562. But it does require that all the members of the class selected shall be included in the taxing law, and that the rule applied thereto shall be uniform as to the whole of the class, and that the assessment shall be made at the true value of the property constituting the class; and if these requirements are answered by the law, it is not in conflict with the constitutional provision."
See also Essex County Park Commission v. Town of West Orange, 77 N.J.L. 575, 577 (E. & A. 1909); Trustees for Support of Public Schools v. Inhabitants of City of Trenton, 30 N.J. Eq. 667, 677 (E. & A. 1879); City of Camden v. ...