The opinion of the court was delivered by: WORTENDYKE
These are five separate actions by railroad companies, owning Class II railroad property (N.J.R.S. 54:29A-17, N.J.S.A.) in certain municipalities in New Jersey, against those municipalities and against the Deputy Director of the Division of Taxation of the Department of the Treasury of the State of New Jersey. Each complaint charges violation of plaintiff's rights under the due process and equal protection clauses of the Fourteenth Amendment to the United States Constitution, by the assessment of plaintiffs' Class II real estate in the defendant taxing districts (1) at true value, (2) at a percentage of true value in excess of the average ratio of assessed to true value applied in assessing other real estate in the same municipality, and (3) at a percentage of true value in excess 'of the objective statistical common or general ratio' of assessed to true value of non-railroad property determinable as of October 1, 1959. The assessments complained of are also alleged to constitute unlawful interference with and an undue burden upon interstate commerce, in contravention of the commerce clause of Article I, § 8, cl. 3 of the same Constitution.
Asserted jurisdiction in this Court is predicated upon §§ 1331, 1332 and 2201 of Title 28 -- the involvement of a federal question and minimum requisite amount, diversity of citizenship (in all but one of the actions) and the appropriateness of a declaratory judgment remedy.
Defendant municipalities deny the charged discrimination. They plead (1) adequacy of State administrative and judicial remedy; (2) failure to state a claim upon which relief can be granted; (3) estoppel by judgment in Central Railroad Co. of New Jersey v. Neeld, etc., 1958, 26 N.J. 188, 139 A.2d 119; and (4) res judicata in Central Railroad Co. of New Jersey v. Neeld, etc., 1958, 26 N.J. 172, 139 A.2d 110, certiorari denied 357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d 1371.
Defendant Deputy Director, also denying discrimination, pleads (1) no violation of federal right; (2) res judicata; (3) lack of jurisdiction; (4) failure to state a claim upon which relief can be granted; (5) improper joinder of Kingsley as Deputy Director;(6) non-joinder of the State of New Jersey as an indispensable party; (7) sovereign immunity; (8) absence of justiciable controversy; (9) absence of federal question; (10) lack of diversity of citizenship; (11) adequacy of remedy under State law; and (12) lack of authority in this Court to enjoin assessment of tax under State law by reason of the provisions of 28 U.S.C. § 1341.
The alleged federal questions raised by the plaintiffs are disclosed in their contentions that the actions arise under the commerce clause, Article I, section 8, clause 3, of, and under the due process and equal protection clauses in section 1 of the Fourteenth Amendment to the Constitution of the United States. They seek declaratory judgments pursuant to 28 U.S.C. § 2201. It is alleged and conceded that the jurisdictional minimum prescribed by section 1331 is involved.
The complaint also quotes paragraph 1 of section I of Article VIII of the Constitution of New Jersey, 1947.
The law provides, and the complaint recites, a succession of four procedures for the review of the tax assessments of Class II railroad property in the State, as follows:
(1) A railroad taxpayer, claiming that error has been made in its Class II property valuations, may petition the Director for review thereof on or before the second Monday of January following the completion of the valuations. The Director is required to hold a hearing upon the petition and to make his determination thereon before March 15 following the filing thereof. On the latter date he is required to certify the value of the Class II property situate in each taxing district, with such corrections or changes as he shall have made, to the County Board of Taxation of the County in which the property is located, N.J.S.A. 54:29A-18. The County Board of Taxation is required to certify to the Director the general tax rate adopted for the taxing district in which the Class II railroad property is located,
and, by applying such rate to the valuations which he has determined, the Director thereupon assesses the annual tax upon the Class II railroad property.
(2) A further opportunity for review of a tax assessment of Class II railroad property is afforded by way of written complaint of the taxpayer to the State Board of Tax Appeals of New Jersey. Such a complaint must be filed on or before the third Monday of May following the making of the assessment. N.J.S.A. 54:29A-31. A hearing upon the complaint is provided, and, if it 'appear upon such hearing that any such assessment * * * is illegal, excessive, insufficient or that there has been illegal discrimination in the assessment,' the Board is required to correct, adjust and equalize the assessment. N.J.S.A. 54:29A-33. The Board must conclude its hearing on or before the first day of November following the filing of the complaint, and must certify its final determination to the State Tax Commissioner between the 5th and the 10th days of the same month. N.J.S.A. 54:29A-34.
(3) Yet another opportunity for review is afforded by the provision that the final determination of the Division of Tax Appeals may be contested by the taxpayer in a proceeding in lieu of a prerogative writ in the Superior Court of the State, N.J.S.A. 54:29A-36. If that Court in such a proceeding shall find that the final determination of the Division of Tax Appeals respecting the assessment 'is illegal, excessive, insufficient or that there has been illegal discrimination in the assessment,' the Court is required to 'correct, adjust and equalize such assessment * * * or refer same back to the director of the division, who shall correct, adjust and equalize the assessment * * * in accordance with the instructions or decision of the court.' N.J.S.A. 54:29A-37.
(4) An appeal from the decision of the Law Division of the Superior Court in an action in lieu of a prerogative writ lies to the Appellate Division of the Superior Court, and, under certain circumstances, the New Jersey Supreme Court may certify for review the decision of the Appellate Division. N.J.R.R. 4:88-7; New Jersey Const.1947, Art. VI, sec. V, par. 2.
The complaints further allege that the Director determined the true value of the railroads' Class II real estate for the tax year 1960 prior to December 10, 1959, and that the local assessor of each taxing district in which the Class II property is situated is required by law, 'after examination and inquiry, determine the full and fair value of each parcel of real property situate in the taxing district at such price as, in his judgment, it would sell for at a fair and bona fide sale by private contract on October 1 first next preceding.' N.J.S.A. 54:4-23. Plaintiffs charge that whereas the State Constitution and State law require all real estate, both that designated as Class II railroad property and other non-railroad property, to be assessed at true value, the assessors of the different taxing districts 'have for many years, including the tax year 1960, consistently, systematically, intentionally and notoriously failed to assess real estate within their respective taxing districts at true value as required by the aforecited laws of New Jersey.' Because a State law (N.J.S.A. 54:1-35.1 to 54:1-35.5) requires the Director to promulgate a table of equalized valuations setting forth the average ratio of assessed to true value of real estate in each taxing district, and because such a table for each of the years 1955 through 1959 discloses average ratios of assessed to true value in the different taxing districts ranging from 22.33% To 80.89%, plaintiffs contend that they are discriminated against by being called upon to pay a tax at 100% Of true value, for local governmental purposes, which is disproportionate to that assessed upon a lower proportion of true value, against the owners of non-railroad property in the same taxing district. Plaintiffs further allege that since 1954 the Director has consistently refused to reduce the assessments of their Class II real estate to the average ratio of assessed to true value as disclosed in the table of equalized valuations for each of the years aforesaid.
Upon the foregoing allegations, plaintiffs conclude that the Director's refusal to reduce his assessments of Class II railroad property to the average ratio of assessed to true value disclosed by the tabulation of equalized valuations promulgated by him imposes a discriminatory burden of taxation upon the plaintiffs, which deprives them of property without due process of law, and denies to them the equal protection of the law, in contravention of the Fourteenth Amendment to the Constitution of the United States. Plaintiffs further contend that such discrimination imposes an undue burden upon interstate commerce in violation ...