Goldmann, Kilkenny and Collester. The opinion of the court was delivered by Goldmann, S.j.a.d.
[83 NJSuper Page 590] The Borough of Bogota appeals from final judgments of the Division of Tax Appeals, Department of the Treasury, affirming the dismissal by the Bergen County Board of Taxation of the complaints it had filed under the Omitted Assessment Act, N.J.S.A. 54:4-63.12 et seq. By those complaints Bogota had sought to have the county tax board determine that certain personal property had been omitted from the respective assessments made against Brewster Equipment Company (hereafter Equipment Company) and George M. Brewster & Son, Inc. (hereafter Brewster Company) for the tax years 1960 and 1961, and then fix and add of record the amount of such assessment of omitted property.
Equipment Company was incorporated under the laws of New Jersey in May 1956. Its principal office and place of business was in Bogota, where it shared the offices and premises of its "parent" corporation, Brewster Company, which was engaged in the business of contracting for public improvements. George M. Brewster, son of the president of the parent corporation, became president of Equipment Company. Brewster Company sold its construction equipment to the new company for $3,000,000. Simultaneously, and on May 1, 1956, a lease was executed whereby Equipment Company agreed to lease the construction equipment to Brewster Company as and when the latter had need and use therefor, the rental to be at the rates set out in the latest edition of the trade publication "Rental Rates for Construction Equipment," published by the Associated Equipment Distributors, Chicago, Ill. Brewster Company was to have first call upon any construction equipment available. Although most of Equipment Company's business was with Brewster Company, it did lease its equipment to other construction companies from time to time.
Edwin C. Ludwig was the Bogota assessor during the tax years in question and held that office from May 1, 1953 to June 30, 1962. He claims he had no knowledge of the existence of Equipment Company until early in 1961. The result was that no assessment was levied against that company's personal property for any of the years 1956 through 1961.
In 1960 the governing body of Bogota ordered a general revaluation of property, the new values to be effective in the tax year 1961. Bogota's original contract with Associated Surveys, the company which undertook the revaluation, called for a revaluation of all property. However, only real estate was revalued, the borough relying upon the personal property returns which taxpayers would make under L. 1960, c. 51, N.J.S.A. 54:4-1 et seq. Although the borough mailed out the necessary forms early in 1961, few taxpayers respondent
when they learned that the Legislature had postponed the operation of the act. The assessments for 1961 made in light of the revaluation resulted in the filing of more than 250 tax appeals. Whether it was this that brought into focus the matter of the personal property assessments of the two companies, or Ludwig's campaign for reelection as assessor, or both, the fact remains that these assessments were discussed by the governing body, borough counsel and Assessor Ludwig in the summer of 1961.
Sometime in July 1961 Ludwig called upon William J. Brewster, president of Brewster Company, and requested a schedule of equipment. Brewster said it was not his policy to do so but allegedly gave Ludwig a figure of $2,200,000 as the value of the property owned by Equipment Company and Brewster Company. Ludwig testified that Brewster did not give him a breakdown of the figure, either as to what portion was owned by each company, or what part represented personal and what part real property.
The result was that on August 22, 1961 Ludwig made written demand on the companies to produce for examination all their books and records listing tangible personal property, particularly noting such property as was exempt, these books and records to be presented at the office of the borough clerk on August 29. The matter was postponed until September 5, when both companies appeared by counsel. They questioned the purpose for which the information concerning the personal property was sought, and when Ludwig admitted that he was a candidate for reelection, they requested an adjournment until after the November election. Counsel for Bogota denied the request, whereupon the taxpayers withdrew from the hearing.
On September 29, 1961 the governing body of Bogota filed four complaints with the Bergen Board of Taxation, pursuant to N.J.S.A. 54:4-63.13 (section 2 of the Omitted Property Act, L. 1947, c. 413): two were directed toward Equipment Company, respectively covering the tax years 1960 and 1961, and two toward Brewster Company for the same tax years.
Each complaint alleged that personal property had been omitted for the tax year in question, consisting of (a) vehicular construction equipment registered with the Motor Vehicle Department of New Jersey; (b) other moving or movable construction equipment not registered with the Motor Vehicle Department, such as tractors, loaders, cranes, conveyors, trailers, etc.; (c) all machinery, attachments or equipment appurtenant to, part of, or used as an accessory for the personal property described in (a) and (b); and (d) all other tangible personal property. Each complaint alleged that notwithstanding that information as to the nature, location, extent, value and exempt status of the taxpayer's personal property had not been made available to the borough on demand, the personal property set out in Schedule A of the complaint, together with all accessory equipment, had been omitted from assessment for the tax year in question. The true value of that omitted property and equipment, after deducting such of it as the taxpayer could prove to be exempt, was said to be $3,000,000. The complaint demanded judgment determining that the property in Schedule A was omitted from assessment for the tax year and fixing and adding of record the amount of said assessment. Schedule A consisted of a three-page itemization of trucks, tractors, cranes and other equipment, the motor vehicle registrations of about half of them being listed. The list had been prepared from information obtained from the Motor Vehicle Department, conditional sales and chattel mortgages recorded in the Bergen County Clerk's Office, prequalification bids on construction jobs, and other sources. The $3,000,000 figure apparently reflected a Dun and Bradstreet rating and the $2,200,000 unspecific figure given Ludwig by Mr. Brewster.
The four complaints obviously lacked the specificity called for by N.J.S.A. 54:4-63.13, which requires that an omitted property complaint "shall specify the property alleged to have been omitted and the particular year of the assessment." Duke Power Co. v. Essex County Board of Taxation , 122 N.J.L. 589, 590-591 (Sup. Ct. 1939), affirmed per
curiam 124 N.J.L. 41 (E. & A. 1940); Green v. Passaic County Board of Taxation , 131 N.J.L. 13, 16 (Sup. Ct. 1943) -- both dealing with the predecessor of the present statute, N.J.S.A. 54:3-20.
Upon receipt of the complaints the county tax board scheduled for November 4, 1961 the summary hearing required by N.J.S.A. 54:4-63.14. The borough subpoenaed the executive officers of the two corporations to appear before the board with the records not previously produced. The companies appeared, but without the records, whereupon the borough moved that the board exercise its power under N.J.S.A. 54:3-22 to compel compliance. The board ordered the production of all company records pertaining to the personal property and equipment in question. Each of the companies then filed records of their depreciable assets, as of October 1, 1959 and October 1, 1960. The county board made these records available to counsel representing the borough, who then filed supplemental complaints listing all the equipment in the schedules, without regard to their ownership by one or the other company, nature, location, use or exempt status.
After an extended hearing on December 14, 1961 the county tax board dismissed the complaints at the close of the borough's proofs. In so doing, it made the following rulings, among others: the borough had the burden of proving what personal property, if any, had been omitted; all construction equipment licensed by the State and upon which a registration fee had been paid were "motor vehicles" and therefore exempt from taxation under R.S. 54:4-3.21; the borough had failed to specify in the complaints and supplemental complaints the property alleged to have been omitted; it had failed to produce evidence of just what personal property had been omitted, and the borough had therefore failed to establish a prima facie case.
N.J.S.A. 54:4-63.23 provides that judgments of a county tax board "assessing omitted property" may be reviewed by the Division of Tax Appeals. Because the borough was uncertain as to whether an appeal could be taken from a county
tax board judgment dismissing an omitted assessment proceeding, if filed concurrent appeals in the Appellate Division and in the Division of Tax Appeals. Additionally, because the county tax board was considered as having essentially local functions to perform, the borough instituted proceedings in lieu of prerogative writs in the Law Division. By consent of all parties, the Law Division action (Docket L-10098-61 PW) was stayed pending the outcome of the other appeals. Similarly, the appeals to the Appellate Division (Dockets A-445-61, A-446-61 and A-447-61) were dismissed with the direction that their subject matters be heard and decided in the course of any appeal that might be taken from judgments of the Division of Tax Appeals.
The Division subsequently heard the testimony of witnesses produced by the borough on December 11 and 20, 1962 and January 31, 1963. Those witnesses included Harold Freet, vice president, secretary and director of Equipment Company; George M. Brewster, president and director of that company; Assessor Ludwig; Theodore Saunders, cost analyst, assistant secretary and director of Brewster Company; J. Alex Mackenzie, office manager, assistant secretary and assistant treasurer of Brewster Company, and Stewart Davis of Equipment Company. The testimony given by Freet, Brewster, Saunders and Davis was particularly enlightening as to the nature, location, use, value and exempt status of the personal property of the companies.
The Division dismissed all four appeals at the close of the borough's case. The hearer held that the Division had jurisdiction to review the action of the county board by virtue of N.J.S.A. 54:2-35. We agree. That statute provides that "any action or determination" of a county tax board may be appealed to the Division. He also noted that much of the testimony was irrelevant, such as whether the omitted assessment proceedings were politically inspired; whether Equipment Company had failed to inform the borough of its existence
and the extent and value of its personal property; and whether the admission of value ($2,200,000) made by William J. Brewster two years after the assessment date bore upon the personal property assessable for 1960. We are in accord with these observations. (1) The motivation for the omitted assessment proceedings, although suspect, is irrelevant. (2) Equipment Company had no obligation to inform the borough of its existence nor, under R.S. 54:4-12, as amended by L. 1945, c. 163, § 4, the then applicable act, to report the extent and value of its personal property unless requested to do so on application of the assessor. (Such reports would be required under L. 1960, c. 51, § 10, further amending R.S. 54:4-12. And see L. 1963, c. 9, § 3, supplementing L. 1960, c. 51; N.J.S.A. 54:4-2.39.) Finally, (3) as noted, the $2,200,000 figure not only had no demonstrable application to the tax years 1960 and 1961, but was undifferentiated as to company and as to whether the property was real or personal.
As the Division hearer observed, the question before him was whether personal property subject to taxation for either year had been omitted from the tax rolls -- not whether it had been inadequately or incorrectly assessed. Where an assessor makes an assessment and files it with the county tax board, a presumption arises that it is correct. If his action is then affirmed by the county tax board, a further presumption attaches which cannot be overturned by the Division on appeal, in the absence of credible and substantial proof establishing that the assessment was incorrect. We agree with the Division hearer that the borough did not have the benefit of those presumptions on appeal to the Division. There was no legal assessment to be reviewed, and no administrative finding by the county tax board that personal property had been omitted from assessment. Accordingly, the hearer correctly ruled that the borough, unaided by any presumption in its favor, had the burden of proof of showing that personal property of either or both companies had been omitted.
On the basis of the extensive record before him, the Division hearer found that the borough had not, by the introduction
of credible evidence, sustained its burden of establishing that personal property belonging to Equipment Company, "specified in nature," was omitted from the Bogota assessment rolls for the tax year 1960, and therefore affirmed the action of the county tax board. And after taking the further testimony of Saunders, produced as a witness by the borough, he reached the same conclusion with regard to Equipment Company for the tax year 1961, stating ...