On appeal from New Jersey State Division of Tax Appeals.
Halpern, Larner and King. The opinion of the court was delivered by Halpern, P.J.A.D. Larner, J.A.D. (dissenting).
This consolidated appeal presents the narrow but novel and important issue of whether the right-of-way easements held by respondents in Tewksbury Township, over and upon which they have constructed their power lines, are "lands" subject to taxation under the Public Utility Tax Act, N.J.S.A. 54:30A-49 et seq. (sometimes called the Gross Receipts Tax Act).
We are concerned only with the assessments by Tewksbury Township for the easements held by respondents for the years 1971 through 1974, inclusive.*fn1 The township had previously assessed JCP's easements as "lands," but Judge Lario of the New Jersey State Division of Tax Appeals set it aside. A similar attempt to assess Public Service's easements in West Amwell Township had previously been made by that township, but it was also set aside. No appeal was taken from those determinations.
The 1971 through 1974 assessments were affirmed by the Hunterdon County Tax Board. On appeal, summary judgment was entered by the Division in favor of respondents, setting aside and cancelling the assessments predicated on the prior decisions of Judge Lario. Relying on the doctrine of stare decisis , respondents now argue that Judge Lario's unappealed decisions bar appellant from maintaining the present appeals We disagree. Because the legal issue was the same in both appeals, we understand the Division's dismissal of the present appeals based on the stare decisis doctrine. See 2 Cooper, State Administrative Law , at 530-534 (1965); Butler Oak Tavern v. Alcohol Bev. Control Div. , 20 N.J. 373, 382 (1956). The doctrine of stare decisis , as applied administratively, is not binding on this court. See R. 2:2-3.
The business of public utilities is affected with a deep public interest. By statute they operate as controlled monopolies. They are governed by stringent regulations of the Public Utilities Commission which obligate them to charge fair, nondiscriminatory rates and to render satisfactory service to the public. They have the statutory power of eminent domain to acquire right-of-way easements in lands reasonably necessary for the transmission and distribution of electric power to the public. N.J.S.A. 48:3-17.6; N.J.S.A. 48:7-3.1. Municipal franchises are generally granted to them for the use of streets and highways within which to install their pole lines and other facilities. See N.J.S.A. 48:7-1 and 48:7-3.1.
This leads to the inescapable conclusion that public utilities are treated as a separate and distinct category by the Legislature, and that the right to tax their real and personal assets and their gross receipts, either at the State or local level, must be found in N.J.S.A. 54:30A-49 et seq. Thus, they pay excise and franchise taxes measured by their gross receipts for the privilege of exercising their franchises, as provided in N.J.S.A. 54:30A-54. A
designated portion of the taxes collected are then apportioned among the municipalities affected, in accordance with N.J.S.A. 54:30A-58 and N.J.S.A. 54:30A-60 and 61. This exclusive statutory scheme of taxing public utilities is clearly mandated by N.J.S.A. 54:30A-49 and N.J.S.A. 54:30A-51, which provide in relevant part:
54:30A-49. Purpose of Act; laws superseded.
The purpose of this act is to provide a complete scheme and method for the taxation of street railway, traction, sewerage, water, gas and electric light, heat and power corporations using or occupying the public streets, highways, roads or other public places, to exempt from taxation other than imposed by this act the franchises, stock, and certain property of such corporations and for the taxation of the property of such corporations not so exempted from taxation; * * *.
54:30A-51. Taxation of property, franchises, stock or gross receipts.
Street railway, traction, sewerage, water, gas and electric light, heat and power corporations using or occupying public streets, highways, roads or other public places, and their property and franchises, shall be subject to taxation only as in this act provided. Any such corporation shall not be subject to any other taxes upon its property, franchises, stock or gross receipts, and the shares of stock of any such corporation shall not be taxed in the hands of shareholders.
We are not here concerned with buildings or merchandise held for resale, as was the case in Public Service Elec. & Gas Co. v. Woodbridge Tp. , 73 N.J. 474, 480-481 (1977). Here the pivotal issue is whether respondents' easements are lands taxable under N.J.S.A. 54:30A-49, et seq.
Thus we must decide the critical issue of whether easements held by public utilities are "real estate" for the purposes of taxation as now defined in subsection (b) of N.J.S.A. 54:30A-50:
(b) "Real estate" means lands and buildings, but it does not include railways, tracks, ties, lines, wires, cables, poles, pipes, conduits, bridges, viaducts, dams and reservoirs (except that the lands upon which dams and reservoirs are situated are real estate) machinery, apparatus and equipment, notwithstanding any attachment thereof to lands or buildings.
This definition is in contrast to the broader and more inclusive general definition of real estate contained in N.J.S.A. 1:1-2 which provides:
Real estate; real property. The words "real estate" and "real property" include lands, tenements and hereditaments and all rights thereto and interests therein.
It is readily apparent that an ordinary easement comes within the purview of N.J.S.A. 1:1-2, but has been expressly excluded under N.J.S.A. 54:30A-50.
Under the General Tax Act (N.J.S.A. 54:4-1 et seq.) real property, unless expressly excluded, is assessed to the "owner" of record as of October 1 in each year. N.J.S.A. 54:4-23. An easement is an interest in land owned by another. 3 Powell on Real Property , § 405 (1977); Krause v. Taylor , 135 N.J. Super. 481 (App. Div. 1975); Oddo v. Saibin , 106 N.J. Eq. 453 (Ch. 1930). Respondents' easements are "in gross" because they are nonpossessory and personal to respondents who do not own lands appurtenant to them. P. & A. Const., Inc. v. Hackensack Water Co. , 115 N.J. Super. 550, 553 (Law Div. 1971). In fact, under the General Public Utilities Law (N.J.S.A. 48:1-1 to 48:23-7) the terms "right-of-way" and "easement" are defined thusly:
(b) "right of way" means the area devoted to passing over, on, through or under lands with utility plant facilities as part of a way for such purpose;
(c) "easement" or "easement rights" means privileges essential or appurtenant to the enjoyment of a right of ...