On appeal from the Division of Tax Appeals.
Allcorn, Kole and Pressler. The opinion of the court was delivered by Pressler, J.A.D. Allcorn, P.J.A.D. (dissenting).
The Township of Springfield appeals from a summary judgment entered by the former Division of Tax Appeals*fn1 dismissing its appeal from the judgment of the Union County Board of Taxation in respect of the 1977 assessment of the property in question by which it had increased the 1976 assessment thereof.
The first of the issues raised by this appeal is the applicability of the so-called Freeze Act, N.J.S.A. 54:3-26, to the judgment of the county board respecting the 1976 assessment of the property. The parties agree that if the Freeze Act applies, the assessment as stated in the 1976 county board judgment would not be subject to increase for the ensuing two years unless there was a subsequent change in the value of the property and, concomitantly, that if the Freeze Act does not apply, the assessor is not so constrained in respect of the 1977 assessment. Thus, the second issue raised by this appeal is the township's alternative contention that even if the Freeze Act does apply, a change in value sufficient to justify reassessment had occurred following the assessment date on which the 1976 county board judgment was based. The basis of the Division's action, here appealed from, was its conclusion that as a matter of law the Freeze Act did apply and that further there was no change in value.
The property in question is located in a split-use zone, that is, the front 233 feet are in a commercial zone and the rear 200 feet are in a residential zone. It was purchased by respondent taxpayers Irwin Weinberg and Yale Manoff at the end of 1973, the same year in which the township had completed its general revaluation for implementation in 1974. The property at the
time of the purchase was used for residential purposes, the improvements consisting of a two-family house and garage, and the revaluation assessment fixed its total value at $49,700, of which $22,700 was assigned to land and the balance of $27,000 to buildings.
The taxpayers had acquired the property with the intention of using it for commercial purposes. Their plan apparently was to clear the site and construct an office building thereon, and to this end they had arranged for the residential tenants to quit the premises. During the next two years they were, however, unable to commence physical implementation of their development plan because of their difficulty in securing the various municipal approvals, including variances, which they needed in order to go forward with their proposed commercial use. In the meantime, the residential building, not yet razed but unoccupied for a substantial period of time, had seriously deteriorated, had been vandalized and was finally gutted. These events apparently occurred prior to October 1, 1975, the valuation date for the 1976 assessment. N.J.S.A. 54:4-23. Accordingly, upon the assessor's refusal to grant assessment relief, the taxpayers appealed to the county board from the 1976 assessment, which had remained unchanged since the 1973 revaluation.
With respect to the 1976 appeal, the petition filed by the taxpayers with the county board recited the separate assessments of land, buildings, and the total thereof, and asserted that the fair building value was zero. They did not challenge the land assessment, repeating the $22,700 actual assessment figure as the assessment of the land which they considered just. Their request for relief, therefore, was a claim for reduction of the total assessment to eliminate the entire portion thereof attributed to buildings. The county board concluded that the improvements had substantially depreciated in value but were not completely without value, and consequently it reduced the building assessment from its original $27,000 to $7,000. Its formal certificate of judgment recited the original separate assessments of land and buildings, noted a remittance granted on the buildings
in the amount of $20,000, and by not referring to a remitted land value, affirmed, by implication, the original assessment thereof. It is nevertheless clear that the question of land value was never addressed by the parties, no proofs relating thereto were adduced, and it cannot in any sense be regarded as having been actually litigated.
The township did not appeal from the county board judgment respecting the 1976 assessment. It did, however, revise the assessment for 1977, and despite the absence of any intervening physical change of the property, increased the land assessment to $43,500 and reduced the building assessment to $2,000. It was the township's position that if the premises were no longer being used for residential purposes, they were then appropriately assessable at the higher land value applicable to commercial uses. The taxpayers again appealed to the county board, claiming that the Freeze Act prohibited the township from raising the land assessment. The township cross-appealed to the county board, asserting that despite the prohibition of the Freeze Act, there was nevertheless a change of value within its intendment justifying the increase. The county board dismissed the township's appeal and, on the taxpayers' appeal, reduced the land assessment to the amount stated in its judgment of the prior year. The township then appealed to the Division, which, on the taxpayers' summary judgment motion as aforesaid, sustained the taxpayers' claim to Freeze Act protection and agreed that no assessable change in value had occurred. We are satisfied that the Division of Tax Appeals did not err in either of these conclusions and, accordingly, we affirm.
N.J.S.A. 54:3-26, the Freeze Act, provides in pertinent part that
Where no request for review is taken to the tax court to review the action or determination of the county board involving real property the judgment of the county board shall be conclusive and binding upon the municipal assessor and the taxing district for the assessment year, and for the 2 assessment years succeeding the assessment year, covered by the judgment, except as to changes in value of the property occurring after the assessment date. Where such changes are alleged the petition of appeal shall specifically set forth the nature of the
changes relied upon as the basis for such appeal. However, the conclusive and binding effect of such judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation of all real property within the district has been put into effect.*fn2
This provision reiterates the import of N.J.S.A. 54:2-43, providing a similar two-year freeze in respect of judgments of the Tax Court, formerly the Division of Tax Appeals.
The legal question, then, is whether the Freeze Act applies to the county board's judgment as a whole or only to that component thereof which was actually litigated. The township urges that although the Freeze Act clearly applies to the building assessment component of the 1976 county board judgment, it cannot apply to the land assessment component thereof since that component was never disputed and no proofs as to land value were ever before the county board. We disagree. For the reasons herein stated we are satisfied, as a matter of public policy and statutory construction, that a judgment of the county board complete and regular on its face is entitled to Freeze Act protection in all respects where one component, even if not both, of the total assessment is determined by the county board upon an adjudication on the merits.
The Freeze Act is not an expression of a res adjudicata principle of preclusion of subsequent litigation and does not, therefore, state a policy of repose in that sense. See Samuel Hird & Sons, Inc. v. Garfield , 87 N.J. Super. 65, 75 (App.Div.1965). Rather, its purpose is to protect taxpayers from the harassment and, indeed, the retaliatory motivation of a municipal assessment practice which would permit arbitrary annual assessment increases requiring ...