On certification to the Superior Court, Appellate Division.
For reversal and reinstatement -- Justices Mountain, Sullivan, Pashman, Clifford, Schreiber and Handler. For affirmance -- None. The opinion of the court was delivered by Mountain, J.
The single issue in this case is whether very large construction cranes, mounted and movable on railroad-type tracks, are to be taxed as realty or as personalty.
The City of Bayonne imposed a tax upon three such cranes owned by Port Jersey Corporation and used by Global Terminal and Container Services, Inc. The tax was assessed under N.J.S.A. 54:4-1 upon the theory that the cranes were real property and taxable as such by the local taxing district. The Hudson County Board of Taxation disagreed, holding that the cranes were personal property. This result was affirmed by the State Division of Tax Appeals. The Appellate Division reversed, agreeing with the taxing district that the cranes were real property. We granted the taxpayers' petition for certification. 75 N.J. 533 (1977).
There is no issue here as to value since counsel stipulated at the hearing in the Division of Tax Appeals that each of
the three cranes was worth $1,000,000. The assessments before us are in respect of the years 1972 and 1973.
The property subject to tax was carefully described in the opinion of the Appellate Division as follows:
The cranes are used in the operation of loading and unloading of ships designed to carry freight in containers. The berthing space for the container ships is 1,800 feet in length and provides accommodations for two or three ships. It is serviced by a 1,800-foot pier which was specially designed and constructed to accommodate the three cranes in question. The deck of the pier consists of 6-inch concrete on piling. Each crane weighs approximately 1,000,000 pounds, and special piles capped with a 10-inch continuous strip of concrete were constructed as the base for the crane rails built into the pier. The rails, similar to those used on a railroad, weigh 175 pounds per foot.
The cranes are huge. Each is approximately 50 feet wide and stands approximately 170 feet above the rail. The lower side of the boom on each crane is approximately 90 feet above the rail, but when it is necessary to accommodate the berthing of a container ship, the boom may be raised to a height of 245 feet above the rail. Each crane is operated by electrical power, and to accommodate this need, an electrical bus bar system has been erected parallel to the length of the pier and immediately joining the rail side of the pier. This system consists of a series of steel columns, fastened to concrete footings. Each is approximately 16 feet high and spaced at intervals of 20 feet. The columns are connected at the top by a supporting steel structure which is cantilevered laterally in the direction of the water for a distance of approximately 4 feet, from which are suspended 4 electrical bus bars running the length of the pier which in turn deliver the electrical power through contact shoes which are directly connected to the cranes.
The bus bar system, an integral part of the cranes, derives its power from two special transformers which are located approximately 150 feet away from the rail side of the pier. Each transformer weighs approximately 14,000 to 15,000 pounds and is embedded on a concrete base about 4 feet high. The transformers are specifically designed to service the cranes. In order to supply power to the transformers and the cranes, an electrical substation is utilized. Forty percent of the substation's output is required to supply the necessary energy to operate the cranes. An additional two-story building set back approximately 75 feet from the rail side of the pier was erected to control the operation of the cranes. These additional facilities were erected specifically to service the cranes at a cost of approximately $815,000.
To this description we add only that the cranes are readily movable. An expert, called by the taxpayers, indicated he had participated in movements of similar equipment from New Jersey to New Orleans and from New Jersey to Houston. The cranes were simply rolled onto barges having similar rails and fastened to the barge.
In concluding that the cranes were real property, the Appellate Division relied heavily upon and quoted extensively from an earlier opinion of that court, National Lead Co. v. Bor. of Sayreville, 132 N.J. Super. 30 (App. Div. 1975). National Lead is very similar to this case. The problem, common to that case and to this, was well stated in the court's opinion in the earlier litigation:
N.J.S.A. 54:4-1 et seq. provides generally for the taxation by local tax districts of all property real and personal within their boundaries not otherwise exempted or expressly excluded from the operation of the chapter. Provisions for the assessment of real property are contained in N.J.S.A. 54:4-23 et seq. Prior to 1966 all tangible personal property other than household property and personal effects was also assessed and taxed by the local unit. N.J.S.A. 54:4-9 and 91. Since all taxable property, real or personal, was then taxed at the general rate of the district, the category in which machinery and equipment should be placed did not matter.
In 1966 the State preempted the taxation of business personal property by the enactment of N.J.S.A. 54:11A-1. As a result, the assessor in each taxing district now has to determine in appropriate cases what is includible as taxable real property, particularly in the case of fixtures which, in certain circumstances, might by annexation be assimilated into the realty. 1 Thompson, Real Property (1964), § 55, at 170 et seq. [132 N.J. Super. at 35]
The Business Personal Property Tax Act, N.J.S.A. 54:11A-1 et seq., mentioned in the foregoing quotation, generally imposes a tax at the State level upon all personal property used in business, such property being no longer subject to tax at the local level. It contains the following pertinent definition:
For the purposes of this act, unless the context ...