For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor and Schettino. For reversal -- None.
Plaintiff sued the defendant municipality to recover taxes it paid on real property for the period April 1, 1965 through December 8, 1965. Alternatively, plaintiff sought recovery from the State. On motion, the trial court entered judgment for defendants. We certified plaintiff's appeal before argument in the Appellate Division.
The State, by the State Highway Commissioner, had instituted condemnation proceedings against plaintiff's property in connection with the construction of Route 280. The State took possession on April 1, 1965. On September 22, 1965, prior to any hearing before the condemnation commissioners, the parties entered into a written agreement for the sale of the property, by the terms of which plaintiff agreed to "pay all taxes to the date of delivery of deed." The deed was delivered on December 8, 1965.
The parties each held a different view with respect to the extent of the tax liability of the property. Plaintiff conceived that the property became exempt from local taxation as of April 1, the date the State took possession, and on that basis contended the taxes for the year 1965 abated pro rata as of that date. The State Highway Commissioner believed the State's exemption took effect upon the delivery of the deed and that the City was entitled to taxes apportioned as of
that date. Hence the contract of sale was drawn on that premise. The City claimed taxes for the entire calendar year on the thesis that the State's mid-year acquisition could not affect the taxable status of the property for that year.
The State insisting upon compliance with the contract, plaintiff paid the City under written protest, and the City gave a written receipt for payment through December 8, expressly reserving its claim for taxes for the remainder of the year.
As to its suit against the City, plaintiff's theory must be that (1) the City was unjustly enriched because it was not entitled to taxes for the period beginning April 1, the date on which the State took possession, and (2) plaintiff's payment was not voluntary because it had to close title before the end of the calendar year by reason of certain tax consequences under the federal income tax laws. We need not discuss the second proposition since we are satisfied the City was not unjustly enriched, and hence judgment was correctly entered in its favor.
As we have said, the City insisted it was entitled to be paid for the entire calendar year 1965. Its thesis was later upheld in a suit between the City and the State involving taxes on other real property. City of East Orange v. Palmer, 47 N.J. 307 (1966). Hence, to prevail plaintiff must maintain these propositions: (a) that prior to City of East Orange v. Palmer the law was as plaintiff contends (i.e., that taxes abated as of the transfer of possession) rather than as the State had believed it to be (i.e., that taxes abated as of the date of delivery of the deed); and (b) that the holding in City of East Orange v. Palmer should not be made retroactive to the tax year 1965.
No case expressly held, as to an acquisition by the State itself, that taxes on real property would abate pro rata as of the day the State took possession. In such circumstances, it is difficult, if not impossible, to say the State was
plainly wrong in its view that the delivery of the deed was the critical event. We know only that the City later prevailed upon an even more expansive view of its entitlement. And although we have this day held that City of East Orange v. Palmer will not be applied to acquisitions which antedated our decision in that case, Goldberg v. Traver, 52 N.J. 344, it hardly follows that a City was "unjustly enriched" when it received payment in accordance with what was ultimately found to be the correct principle, and upon which it might well have prevailed had plaintiff litigated the issue instead of making payment. On the contrary, the City received what in justice it should have received, and it is denied that result in other situations only because of considerations, discussed in Goldberg v. Traver, supra, which are irrelevant when payment was actually made. Indeed to permit recovery here would invite suits against municipalities in all the cases in which the State ...