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Thomas v. Kingsley

Decided: October 14, 1964.

EVERETT E. THOMAS AND DAWSON CONSTRUCTION CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFFS,
v.
WILLIAM KINGSLEY, ACTING DIRECTOR OF DIVISION OF TAXATION; UNION COUNTY BOARD OF TAXATION; G. ALDEN BARNARD, JAMES M. CRAWFORD AND CLARENCE POTTS, COMPRISING THE BOARD OF ASSESSORS OF THE TOWN OF WESTFIELD, DEFENDANTS, AND NEW JERSEY MANUFACTURERS ASSOCIATION, AND NEW JERSEY STATE CHAMBER OF COMMERCE, DEFENDANTS-INTERVENORS



Civil action. In lieu of prerogative writ.

Feller, J.s.c.

Feller

This is an action challenging the constitutionality of certain amendments to chapter 51 of the Laws of 1960. The said amendments are known as chapter 141 of the Laws of 1964, N.J.S.A. 54:3-17, 54:4-9, 9a to 9f, 11.

Plaintiffs contend that these amendments violate Article VIII, Section I, par. 1(a) of the 1947 New Jersey Constitution which provides as follows:

"1(a) Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value, * * * and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing district."

The constitutionality of chapter 51 has already been determined generally by the New Jersey Supreme Court in the case of Switz v. Kingsley , 37 N.J. 566 (1962). As stated above, this action concerns certain amendments to chapter 51 insofar as they relate to the taxing of business property in the State of New Jersey for the years 1965 and 1966. These amendments were passed by the Legislature in June 1964 and signed into law by the Governor in July 1964.

The complaint filed on behalf of plaintiffs sets out their contentions as follows:

"FIRST COUNT

1. The plaintiffs are the owners of certain taxable business personal property, situate within the Town of Westfield and bring these proceedings in behalf of themselves and all taxpayers of business personal property taxes within the Town of Westfield.

2. The defendant, WILLIAM KINGSLEY, is Acting Director of the Division of Taxation of the State of New Jersey.

3. The defendant, UNION COUNTY BOARD OF TAXATION, is an administrative agency of the County of Union.

4. The defendants, G. ALDEN BARNARD, JAMES M. CRAWFORD and CLARENCE POTTS, comprise the Board of Assessors of the Town of Westfield and as such are responsible for the assessment of taxes for the year 1965.

5. On or about June 26, 1964, the New Jersey Legislature passed amendments to Chapter 51, which amendments are known as Chapter 141 of the Laws of 1964. Said amendments were signed into law by the Governor of the State of New Jersey on or about July 8, 1964.

6. Chapter 141 of the Laws of 1964 amends R.S. 54:4-9 to provide that:

'Tangible personal property used in business and subject to taxation in this State shall be assessed and taxed at its taxable value as defined by law, at the general tax rate of the taxing district wherein such property is found or for the tax years 1965 and 1966 at the "adjusted personalty tax rate for such district," determined as hereinafter provided, whichever tax rate is higher, for the use of such taxing district, in the manner provided by this article.'

7. Under said law, the County Boards of Taxation, including the defendant UNION COUNTY BOARD OF TAXATION, are required to determine the aforementioned adjusted personalty tax rate for each taxing district for the years 1965 and 1966 in the following manner:

'First, for the tax year 1965, for each taxing district there shall be derived a fraction in which 1963 business personal property taxes in the district are the numerator and in which all 1963 property taxes in the district, real and personal, are the denominator.

Second, the fraction so determined in each district shall be multiplied by the total property tax levy in the district for the tax year 1965. Third, the dollar figure so determined shall be divided by the 1965 total taxable value of business personal property in the district and the resulting dollar figure shall be the 1965 adjusted personalty tax rate expressed in mills per dollar of assessed value.

'For the tax year 1966, first, there shall be derived a fraction calculated by multiplying the fraction derived in step first, above, by a fraction the numerator of which shall be the percentage of the fair value of all taxable property in the district which the fair value of taxable business personal property constitutes in the then current tax year, and the denominator of which shall be the percentage of the fair value of all taxable property in the district which the fair value of taxable business personal property constituted in the tax year 1965. Second, the fraction so determined shall be multiplied by the total property tax levy in the district for the then current tax year. Third, the dollar figure so determined shall be divided by the total taxable value of business personal property for the then current tax year, and the resulting dollar figure shall be the adjusted personalty tax rate expressed in mills per dollar of assessed value.'

8. Chapter 141 of the Laws of 1964 also amends R.S. 54:4-11 to provide that tangible personal property used in business shall be assessed at 65% of the common level for all 'machinery, implements, equipment and all other personal property used in business, other than inventories, farm machinery, farm livestock, crops and produce' and at one-quarter of the common level for inventories. For this purpose the defendant, WILLIAM KINGSLEY, Acting Director of the Division of Taxation, shall determine the common level which is defined as the 'unweighted average ratio of assessed to true value of real property in the taxing district * * * from data compiled for the purpose of Chapter 86, Laws of 1954 (N.J.S.A. 54:1-35.1 et seq).'

9. In the Town of Westfield, a municipality of the State of New Jersey, the adjusted personalty tax rate for Westfield will be higher than the general tax rate of the taxing district for the year 1965 and 1966, and hence, all owners of taxable personal property used in business, including plaintiffs, shall be assessed in accordance with the adjusted personalty tax rate.

10. The aforementioned legislative scheme is calculated to induce inequality among the taxpayers of the taxable personal property for the years 1965 and 1966 for several reasons, including but not limited to the following:

a) For the year 1963 the total tax levy and the business personal property taxes were based upon arbitrary methods of assessment by the various tax assessors throughout the State of New Jersey. As a result, the 1965 and 1966 assessments of taxable personal property which are based upon the ratio of the 1963 business personal property taxes paid to total tax levied will be arbitrary also.

b) The formula prescribed by Chapter 141 of the Laws of 1964 does not take into consideration the fact that for the years 1965 and 1966 the ratio of business personal property to the total taxable personal property can be different from the ratio established for 1963, depending upon whether there is an increase or a decrease of taxable property, both real and personal, within the municipality for the years 1965 and 1966.

c) Those taxpayers of business personal property situate in the municipality in which the general tax rate is higher than the adjusted personalty tax rate will pay disproportionately lower business personal property taxes than taxpayers who are assessed according to the adjusted personalty tax rate for the years 1965 and 1966.

11. Under Article VIII, Section 1, Paragraph 1, of the New Jersey Constitution, it is provided that:

'property shall be assessed for taxation under general laws and by uniform rules.'

Chapter 141 of the Laws of 1964 is violative of the aforementioned constitutional provision for the reasons set forth in Paragraph 10.

WHEREFORE, the plaintiffs demand judgment:

a) Determining that Chapter 141 of the Laws of 1964 is in violation of Article VIII, Section 1, Paragraph 1 of the New Jersey Constitution and is therefore unconstitutional.

b) Determining that Chapter 141 of the Laws of 1964 is null and void.

c) Enjoining all defendants from enforcing the provisions of Chapter 141 of the Laws of 1964.

d) For such other legal and equitable relief as may be appropriate in the premises.

e) Costs to be taxed.

SECOND COUNT

1. Plaintiffs repeat the allegations of Paragraphs 1 thru 10 of the First Count of the Complaint as though fully set forth herein at length.

2. Chapter 141 of the Laws of 1964 violates the Fourteenth Amendment of the Federal Constitution in that it deprives plaintiffs of the guarantees of due process and equal protection of the law, for the reasons set forth in Paragraph 10 of the First Count of the Complaint.

WHEREFORE, the plaintiffs demand judgment:

a) That Chapter 141 of the Laws of 1964 violates the due process and equal protection clauses of the Fourteenth Amendment of the Federal Constitution.

b) Determining that Chapter 141 of the Laws of 1964 is null and void.

c) Enjoining all defendants from enforcing the provisions of Chapter 141 of the Laws of 1964.

d) For such other legal and equitable relief as may be appropriate in the premises.

e) Costs to be taxed."

Defendants William Kingsley and the Union County Board of Taxation deny the allegations contained in paragraphs 10 and 11 of the first and second counts of the complaint and also deny that chapter 141 of the Laws of 1964 ...


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