On appeal from a final order of the Tax Court of New Jersey.
Bischoff, Milmed and Francis. The opinion of the court was delivered by Milmed, J.A.D.
This appeal brings up for review the jurisdiction of the Tax Court of New Jersey which was established by L. 1978, c. 33, N.J.S.A. 2A:3A-1 et seq.
The factual background of the matter may be briefly summarized. A revaluation of the assessed properties in the Township of North Bergen (township) became effective in the tax year 1974. The revaluation sparked numerous tax appeals, including those by plaintiffs, in that year and in succeeding tax years. As a result of judgments reducing assessments entered in many of those appeals in the Division of Tax Appeals, the Hudson County Board of Taxation and the Tax Court, the township ultimately expects to refund upwards of $6,000,000. Early in 1980 plaintiffs moved in the Tax Court for orders compelling the township to pay them refunds arising from the judgments reducing assessments on their properties, the aggregate sum being approximately $725,000. Plaintiffs subsequently withdrew their motions since there was no provision in the then
current (1979) township budget to allow for payment of the refunds. In lieu thereof, plaintiffs moved in the Tax Court: (1) to restrain the township and its governing body from adopting its preliminary or final 1980 budget pending further order of the Tax Court; and (2) to compel and direct the governing body to include in the 1980 budget specific line items permitting payment of the refunds.
After hearing, an order was entered in the Tax Court on February 8, 1980: (1) restraining the township governing body "from adopting the 1980 preliminary and/or final budget for the Township of North Bergen pending further order" of the court; (2) directing the governing body "to include as separate line items" in the budget "appropriations for the refunds and interest charges due upon each of the judgments" in the matter; (3) directing the township Commissioner of Revenue and Finance "to issue refund checks payable to the individual plaintiffs," with interest, and deliver the checks to plaintiffs' attorneys; and (4) directing that interest be paid "at the statutory rate commencing on the dates provided by statute with respect to refunds due upon judgments relating to the 1977, 1978 and 1979 tax years," and at the rate of 12% a year, commencing 30 days after the date of each judgment, with respect "to refunds due upon judgments relating to the tax years prior to 1977."
A little over a month later the township sought an order dissolving the restraints and permitting the governing body "to introduce and adopt a preliminary and final budget." The township attorney argued that: (1) even if a budget with the refund items included was adopted, the township would still not be able to comply with the court's order because the necessary funds would not become available until quarterly tax payments and municipal income from other sources came in; (2) the restraints should not have been issued since plaintiffs had made no showing of irreparable harm; (3) if the full amount of refunds due all taxpayers was to be included in the budget, the
governing body would then be violating the "CAP" law*fn1 since the resulting budget increase would be "more than 5%"; and (4) if the court's order "is allowed to stand," the governing body would be "placed in jeopardy" of violating either the court's directives or the applicable statutes. As a substitute for the restraints and directives contained in the Tax Court's order of February 8, counsel suggested that the township be permitted to proceed with the sale, pursuant to its recently adopted local bond ordinance, of $6,100,000 of its bonds, approval of the ordinance having been granted by the Local Finance Board.*fn2 An order, consented to by the parties, was signed on March 19, 1980 dissolving the restraint contained in the February 8 order; vacating the provisions of the February 8 order which directed the township to include in its preliminary and final budgets "appropriations for the refunds and interest due the plaintiffs"; directing the governing body to "proceed forthwith and with due diligence to complete the sale and issuance of the bonds . . . and to obtain the proceeds thereof"; and directing that "[p]romptly upon receipt of the proceeds of said bond issue, the [township] and its duly authorized officials shall pay to the plaintiffs . . . the amount of tax refunds due to each, together with such interest due thereon as hereinbefore provided for by this Court," the checks representing the refunds to be made payable to the attorneys for each respective plaintiff.
Some three months after entry of the March 19 "consent order" the Tax Court, on plaintiffs' application, directed the township, by its governing body, to show cause why the members thereof "should not be compelled to appear before [the] Court in order to determine the extent to which they are in compliance with the previous order of [the] Court dated March 19, 1980," and ordered that the township "show cause as to why
sanctions should not be imposed" if it is determined that the governing body "failed to comply with" that March 19 order. At a continued hearing of the motion on July 17, 1980 it was disclosed that the township was actually contemplating a bond issue package relating to three separate projects aggregating $18,000,000, the only component thereof which had up to that time been approved by the Local Finance Board being the $6,100,000 proposed issue to pay the tax refunds. After hearing argument the Tax Court judge concluded that authority for the Tax Court to grant relief in the case "is found in [ N.J.S.A. ] 2A:3A-4, specifically section 4 of the act creating [the] court . . . [which] provides in substance that the tax court in all causes within it's [ sic ] jurisdiction may grant legal and equitable relief so that all matters in controversy between the parties may be completely determined." He found that the governing body of the township had "not proceeded with the due diligence required by [the] court's order of March 19, 1980," and he set forth the relief to be granted plaintiffs which thereafter was, in essence, incorporated in an order dated July 23 and filed July 30, 1980, which provides:
The township appealed from this July 23 order and we stayed its enforcement pending disposition of the appeal.
The township contends, in essence, that: the Tax Court had no authority to hear and determine plaintiffs' post-judgment motions; the Tax Court lacks jurisdiction to entertain a proceeding in lieu of the prerogative writ of mandamus "to compel the municipal officers to exercise their discretion in preparation of a municipal budget," or "to restrain the introduction and passage" of a municipal budget; the Tax Court "abused its discretion by requiring budgetary appropriations"; plaintiffs are not entitled to injunctive relief since "they have failed to show immediate and irreparable damage"; plaintiffs failed to join an indispensable party, viz. , "the Director of the Division of Local Government"; the order under review "is in violation of N.J.S.A. 54:3-27.2"; and enforcement of the order is prohibited by the "separation of powers" provision of the State Constitution, N.J.Const. (1947) Art. III, par. 1.
The central issue before us is whether the Tax Court had jurisdiction to hear plaintiffs' post-judgment motions and grant the relief which it did in this case. We hold that it did not.
Following the filing of the township's notice of appeal, the Tax Court judge filed his "findings and conclusions" in the matter. In regard to the court's jurisdiction, he again pointed to subsection (a) of § 4 of the act which established the court, stating:
The broad basis for this Court's exercise of its powers in aid of post-judgment relief is N.J.S.A. 2A:3A-4 which provides, pertinently:
a. The tax court, in all causes within its jurisdiction, and subject to law, may grant legal and equitable relief so that all matters in controversy between the parties may be completely determined.
This provision must be read in the context of the manifest intention of the Legislature to invest the Tax Court with the same powers as the Trial ...