For reversal -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Weintraub, C.J.
The New Jersey Highway Authority (herein Authority) constructed the Garden State Parkway, an express highway, along which it erected a series of service areas containing restaurant and other facilities for the needs and convenience of the motorist. Some of these restaurants were operated by Walter Reade, Inc. (herein Reade) under an agreement with the Authority. The lands and buildings were assessed against Reade for local taxation. Reade pursued the administrative remedies without success. We certified its further appeals to the Appellate Division before argument there.
We note that Reade was also assessed with respect to its personal property used in the restaurant operations. Those assessments were not challenged. The assessments here involved relate solely to land and building, including fixed equipment, owned by the Authority.
The townships concede the properties are exempt from taxation against the Authority, but assert the assessments were authorized as against Reade by L. 1949, c. 177 (N.J.S.A. 54:4-2.3 et seq.). N.J.S.A. 54:4-2.3 reads:
"When real estate exempt from taxation is leased to another whose property is not exempt, and the leasing of which does not make the real estate taxable, the leasehold estate and the appurtenances shall be listed as the property of the lessee thereof, or his assignee, and assessed as real estate."
N.J.S.A. 54:4-2.8 provides the taxes so levied "shall * * * be a lien upon said leasehold estate and the lessee, or his assignee, shall be personally liable therefor."
Reade operated the facilities under what was labeled a "license" agreement. The prior operator held a like agreement, phrased however as a "lease." The townships contend the wording was changed to evade taxation. Reade, and the Authority speaking as amicus curiae, reply that the arrangement was always a "license" and that the correction was made because local assessors had seized upon a misnomer to invoke the statute cited above. We think it unnecessary to decide the true nature of the transactions. The reason is that we are satisfied the act creating the Authority intended an exemption even if the facilities were operated under a "lease" and hence the statute upon which the townships rely does not apply.
The Authority was created by L. 1952, c. 16 (N.J.S.A. 27:12B-1 et seq.). Section 4 designated the Authority "a body corporate and politic"; constituted it "an instrumentality exercising public and essential governmental functions"; and ordained that "the exercise by the Authority of the powers conferred by this act in the construction, operation and maintenance of projects shall be deemed and held to be an essential governmental function of the State."
Section 3(d) defines the "project" or "highway project" to include "service areas, service stations, service facilities." Section 5(o) empowers the Authority to make "all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers under this act." Section 14 authorizes the Authority to contract with others for "placing" on the project "gas stations" or "restaurants" and "to fix the terms, conditions, rents and rates
of charges for such use." This section adds that such "charges shall be so fixed and adjusted as to effectuate the purposes of this act and in any event to carry out and perform the terms and provisions of any ...