On appeal from final judgment entered in the Tax Court of New Jersey.
Matthews, Pressler and Petrella. The opinion of the court was delivered by Matthews, P.J.A.D.
This is an appeal from a decision of the Tax Court of New Jersey applying the Freeze Act (N.J.S.A. 54:2-43) to a judgment entered pursuant to a stipulation of settlement. 183 N.J. Super. 359.
Kentile Floors, Inc. (taxpayer) is the owner of lands and premises designated as Lot 10 in Block 255 on the Tax Map of the Borough of South Plainfield. For the tax years 1977, 1978 and 1979 the property was assessed by the borough at $10,597,800, allocated $1,475,000 to the land and $9,122,800 to the improvements. The taxpayer appealed from each assessment in the year it was made. Due to a backlog of cases, however, all three cases were pending in 1980. Consequently, the three appeals were consolidated for trial by court order.
On March 24, 1980, prior to the trial, the parties entered into a stipulation of settlement under which the property was assessed for each year at $8,850,000, allocated $1,475,000 to the land and $7,735,000 to the improvements. The settlement agreement represented that both parties were "satisfied that said settlement
and disposition adjusts the assessment of the property to the fair assessable value of the property as of the assessing date." On June 25, 1980 a "Judgment Pursuant to Settlement" was entered in accordance with this agreement by the Clerk of the Tax Court.
In 1980 the borough again assessed the taxpayer's property at $10,597,800, allocated $1,475,000 to the land and $9,122,800 to the improvements. Following an appeal by the taxpayer on October 29, 1980 the Middlesex County Board of Taxation entered a judgment reducing this assessment to $8,850,000, allocated $1,475,000 to the land and $7,375,000 to the improvements.*fn1
On November 25, 1980 the borough filed an appeal in the Tax Court alleging that the reduction in assessment granted by the county board was in error and did not reflect the true value of the property. In its answer the taxpayer asserted that the 1979 Tax Court judgment was a final judgment within the meaning of the Freeze Act, N.J.S.A. 54:2-43; as a result, the borough was estopped from levying an assessment higher than that reflected in the 1979 judgment. In the alternative, by way of counterclaim, the taxpayer maintained that the borough's 1980 assessment was in excess of the true value of its property.
The taxpayer moved for summary judgment and Judge Andrew granted the taxpayer's motion, ruling, among other things, that "a judgment based upon a stipulation of settlement constitutes a final judgment for the purposes of N.J.S.A. 54:2-43." We agree and affirm.
The borough contends that it was error for the Tax Court to apply the Freeze Act, N.J.S.A. 54:2-43, in this case because the 1979 judgment, to which the act was applied, was entered pursuant to a settlement agreement and thus was unsupported
by a factual hearing. Essentially, the borough maintains that the Freeze Act may only be applied to a judgment resulting from a full hearing on the merits issued by a court or board of competent jurisdiction. We disagree.
The relevant provision of the Freeze Act provides as follows:
Where a judgment final has been rendered by the tax court involving real property such judgment shall be conclusive and binding upon the municipal assessor and the taxing district, parties to such proceeding, for the assessment year and for the 2 assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. Where such changes are alleged, the complaint 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.
Preliminarily, we note that the statute speaks only of a final judgment rendered by the Tax Court and is silent with regard to how that judgment is entered. In support of its position that this statute applies only to judgments issued pursuant to a hearing, the borough relies on Riverview Gardens v. North Arlington, 9 N.J. 167 (1952); In re Strauss, 28 N.J. Super. 526 (App.Div.1953), and Hamilton Gardens, Inc. v. Hamilton Tp., 45 N.J. Super. 124 (App.Div.1957). Those cases, however, though equating final judgment with judgment on the merits, do not support the contention that the Freeze Act may not be applied to a judgment on the merits entered by consent.
In Hamilton Gardens the taxpayer appealed from assessments levied in 1952 and 1953 which were in excess of a 1951 judgment entered after a contested hearing before the Division of Tax Appeals.*fn2 On appeal from the 1952 and 1953 assessments the Division sustained the increase, finding that the 1951 judgment had not fixed the true value of the property and, therefore, that the Freeze Act did not apply. This court reversed:
The design of the act was to remedy "repeated yearly increases in the assessed value of property, not related to or justified by any changes increasing its market value, and resulting in harassment of the taxpayer, subjecting him to the trouble and expense of annual appeals to the county tax board." City of Newark v. Fisher, 8 N.J. 191, 199-200 (1951) (dealing with the corresponding statute, N.J.S.A. 54:3-26, pertaining to judgments of the county board). The language refers to a "final judgment" in the Division. This denotes a judgment on the merits of an appeal contesting an assessment and, as was pointed out in Riverview Gardens v. Borough of North Arlington, 9 N.J. 167, 173 (1952):
"An assessment that is either too high or too low may be 'frozen' * * * and remain so for the statutory period unless there were changes in the value of ...