Gaulkin, Foley and Collester. The opinion of the court was delivered by Foley, J.A.D.
This is an appeal from an assessment made by the Division of Tax Appeals, Department of the Treasury (Division), on a beach front property and improvements owned by respondent Shark River Hills Beach Corporation (taxpayer).
The premises are known as Block 402, Lot 14, Riverside Drive, Neptune Township. The local assessor valued the property for tax purposes at $56,500, $53,000 on the land and $3,500 on improvements. On appeal by the taxpayer, the Monmouth County Board of Taxation reduced the assessment to $33,500, $30,000 on land, $3,500 on improvements. The taxpayer then appealed to the Division which further reduced the assessment to $16,100, $12,600 on land and $3,500 on improvements. The township cross-appealed to the Division from the county board reduction, seeking the reinstatement of the assessment made by the local assessor. The present appeal is by the township, which seeks to set aside the decision of the Division and to reinstate the original assessment.
The township contends that the Division erred: (1) in basing the value of the real estate for assessment purposes upon the character of the title held by the taxpayer rather than the value of the land itself, and (2) by holding that the taxpayer was vested with "but little more than a license to use the land" for limited purposes, which so encumbered the fee that the land should not be assessed as it would be if the limitations on use did not exist. The position of the taxpayer is: (1) the assessment was not based on the title to the property but rather on its value as reduced by restrictions on the use thereof contained in the deed of conveyance, and (2) the taxpayer owns less than a fee simple in the land and therefore is not subject to real property taxes.
The facts are not in dispute. The parcel under appeal consists of a narrow strip of land located in a residential area which is referred to as Shark River Hills Estates, and lies between Shark River and Riverside Drive, which parallels the
river. The width of the strip varies between 40 feet and 60 feet, and it is about 1,400 feet long. It is used as a bathing area by residents of Shark River Hills Estates who are members of the Shark River Hills Beach Corporation, organized as a nonprofit corporation "for purposes necessary or incidental to the improvement of Shark River Hills Beach by its members." The improvements on the property consist of a small frame house, a 500-foot bulkhead, facilities for small boating, and a fence which borders upon Riverside Drive.
The taxpayer obtained title to the property from the township by a deed dated August 21, 1952, which contains the following paragraph:
"It is agreed and understood that this conveyance is made, executed and accepted upon the express condition that the grantee, its successors or assigns, and any lessee, shall not use or occupy the herein described lands and premises for any purpose other than a bathing area and shall not receive any profit for the use thereof, and shall not erect any structure or structures upon the said lands and premises without the written consent of the grantor, and shall not convey, mortgage or otherwise alienate the said lands and premises without the written consent of the said grantor, and in the event of a violation of any of the said conditions this deed shall become null and void and the grantee shall forfeit all right and title to the said lands and premises and all interest therein shall revert without prejudice to the grantor herein."
Subsequently the taxpayer acquired from the State of New Jersey, by purchases and leases, riparian rights in the waters of Shark River adjacent to the property. The instruments which evidence these transactions prohibit the taxpayer from appropriating the lands under water, placing solid fill thereon, or erecting any structure other than a pier or piers under which the tide may ebb and flow.
At the hearing in the Division each side called one expert witness. Frank B. Maring, a real estate broker and appraiser called by taxpayer, testified that he was familiar with property values in the "neighborhood" and had made an appraisal of the subject property. He said also that in appraising the
property he had taken into consideration "the substance in the deed as affecting the value of the property." Then:
"Q. Now, in your judgment, Mr. Maring, is there any value attached to this property in view of the reverter clauses in the deed? A. Well, I am going to have to answer that question by saying that if we pursue the definition of fair market value, the willing buyer and the willing seller concept, both being aware of all the facts, and neither being under compulsion to buy or sell, I would say that it has no value on that basis. But I must say that it does, it has to have some value, and I think it does have a value in use. I don't think it could be sold. Well, it ...