Gaulkin, Foley and Collester. The opinion of the court was delivered by Collester, J.A.D.
The cities of Clifton and Paterson appeal from a judgment of the Division of Tax Appeals in the Department of Treasury (hereafter "Division") which revised and corrected the county table of equalized valuations as promulgated by the Passaic County Board of Taxation (hereafter "county board") for the year 1963. The effect of the judgment was to change the ratio of assessed to true value of taxable real property in the City of Passaic (hereafter "Passaic") from 40.13% as fixed by the county board, to 43.93% as established by the sales ratio study of the State Director of the Division of Taxation (hereafter "Director").
The facts are not in dispute. On January 15, 1963 the county board, pursuant to N.J.S.A. 54:3-17, issued a preliminary county equalization table for the year 1963. The table listed the assessed value of real property in Passaic at the sum of $74,428,850, a ratio of assessed to true value of 40%, and an aggregate true value of $186,072,125. With the exception of Passaic, the equalization table was in all respects (with only immaterial variations) identical with the table of equalized valuations prepared by the Director on October 1, 1962 for use in the calculation and apportionment of state school aid to be granted to municipalities.
At a meeting with representatives of the municipalities of the county held on January 25, 1963, in accordance with N.J.S.A. 54:3-18, and at subsequent meetings, Passaic objected to the ratio of assessed to true value of 40%. It contended that the ratio of 43.93% established by the Director should be used. It argued that the ratios contained in the Director's
table of equalized valuations had been adopted and used by the county board for all municipalities within the county except Passaic and that the ratio of 40% set by the county board was discriminatory. On March 7, 1963 the county board adopted the equalization table fixing the ratio for Passaic at 40.13%. Passaic appealed to the Division of Tax Appeals, seeking a review and revision of the table pursuant to N.J.S.A. 54:2-37.
The controversy before the Division centered upon the sale by Botany Industries, Inc. of one of Passaic's largest industrial plants to one A. A. Rosen on August 1, 1961 for the sum of $2,199,750. The Director's sales ratio study included the Botany sale as a bona fide sale of Class 4 real property (industrial, commercial, income producing, &c.). Based on the 1961 assessment of $2,074,450 and the sales price of $2,199,750, the ratio of the sale was 94.29%. Use of this ratio resulted in an over-all ratio of assessed to true value of real property for Passaic at 43.93%.
The county board had rejected the ratio resulting from the Botany sale, and reduced the ratio of the sales price to the assessment from 94.29% to 76.23%. Although in all other instances of sales of property the county board accepted the relation between the sales price and the assessment used by the Director, in the case of the Botany property it used the relation between the sales price of $2,199,750 to $1,335,925, the amount to which the 1961 assessment had been reduced by a consent judgment entered on October 26, 1962 by the Division of Tax Appeals.
The Division held that the action of the county board in using the proportion between the sales price of the Botany property and the 1961 assessment as reduced by the consent judgment, instead of the assessment as originally certified, was legally unjustifiable. It further held that "in the absence of sound evidence to support the action of the County Board of Taxation, less injustice may result from the application of the uniform and objective sales ratio study [of the Director] than
from the use of the unsupported judgment of the County Board, no matter how impartially derived." It concluded that the action of the county board constituted an abuse of administrative discretion and entered judgment amending the county equalization table by fixing the ratio of assessed to true value for Passaic at 43.93%, the ratio as established in the Director's table.
The statutory duty of a county board of taxation is to ascertain and determine, "according to its best knowledge and information," the general ratio or percentage of full value at which the real property of each taxing district is assessed according to the tax lists laid before the board. It is required to prepare an equalization table showing the assessed valuation of real property in each district, the ratio or percentage, if any, by which the assessed valuation should be increased or decreased in order to correspond to true value, and the true value of real property within the district as determined by it. N.J.S.A. 54:3-17. After the equalization table is finally confirmed by the board, the valuations of real property in each district as equalized are deemed to be the true valuations of such property in computing the total ratables of each district for the apportionment of county taxes. N.J.S.A. 54:3-19.
The statute does not specify any plan or method for arriving at equalization in the county table. Any reasonable and efficient mode may be adopted. Passaic v. Passaic County Board of Taxation , 18 N.J. 371, 385 (1955); Carteret v. Division of Tax Appeals , 40 N.J. Super. 439, 446 (App. Div. 1956). The aim of the equalization process is to minimize, so far as possible, the unfair distribution of the county tax burden which is one result of varying ...