Switz v. Township of Middletown

Weintraub, J.

(concurring). For more than a century our statutes have provided for equal taxation of real and personal property at true value)\ The Constitution of 1844, as amended in 1875, provided that “Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value.” Art. IY, Sec. YII, par. 12. Our present Constitution provides in Article YIII, Section I, paragraph 1:

*600 “Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value; and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing district.”

Although this provision permits different legislative treatment of personal property from that accorded to real property and the use of percentage of true value as to real property, our statute still commands that real and personal property be treated alike and be assessed at true value. B. S. 54:4^1.

There has been a century of wholesale disregard of these mandates City of Passaic v. Passaic County Board of Taxation, 18 N. J. 371, 378 (1955). ]~Municipalities vied for a lower percentage of true value to gain advantage in the allocation of the cost of county or regional government and in the distribution of state aid for schools, under both of which programs the edge was in favor of the taxing district with a lower ratio. In addition to this inter-municipal maneuvering, discrimination as among taxpayers within the taxing district has been characteristic. Broadly speaking, different percentages of true value have been evolved as to farm land, vacant land, dwellings, and commercial and industrial properties, reflecting local appraisals of ability to pay or other local interests. In the certain areas, largely urban, commercial and industrial properties have absorbed a higher tax burden than other classes of real property. In some areas the reverse is true, tax advantage having been used to attract enterprises which but for this preferential treatment would have located elsewhere to obtain the benefit of other economic factorsTj

The treatment of personal property has been too variant to admit of categorical statement beyond the notorious fact that because of like considerations and the inherent difficulty of ascertaining its quantum and value, even the kind of uniformity found in the case of real property is absent in the assessment of personal property, both within that class and in relation to the treatment of real property.

*601 ^ These are hard facts and local economies have been geared to them. And property having been bought and sold for generations upon the basis of reality rather than constitutional and legislative prescription, it is manifest that if all property were assessed in harmony with law there would be a windfall to some and hardship to others.

There has been nothing secretive about these local practices, although the extent of the deviations from law were not revealed in mathematical terms until fairly recent events. These facts were so evident that legislation has been enacted upon the premise of their persistence. Thus, the Legislature provided for distribution of state aid for schools upon tables prepared by the Director of the Division of Taxation upon his own findings of the average ratio of taxation in the municipalities. Chapters 85 and 86 of the Laws of 1954; N. J. S. A. 18:10-29.30 et seq.; N. J. S. A. 54:1-35.1 et seq. And more recently the statutory form of the local assessor’s affidavit was amended so as to delete therefrom the statement that assessments were made on the basis of true value, an amendment which was enacted in response to assessors’ demands for relief from possible criminal charges in the light of the mounting attention to the problem.Ji Chapter 244 of the Laws of 1955, amending R. S. 54:4^36.

The other branches of government have been neither indifferent nor indolent. They inherited a problem they did not generate. “Por over a century, legislatures, governors and public commissions have recognized the breakdown of the general property tax and have tried all the remedies of their day — but none have succeeded.” Sixth Report of the Commission on State Tax Policy (1953), p. xvii. None among the humble will suppose his ukase would suffice. There is no easy solution for all the facets, but progress has nonetheless been made. l^The problem of intermunieipal competition has been fairly and substantially resolved. With respect to the distribution of (state aid, the use of the Director’s tables pursuant to the statute cited above has achieved essential equality. With respect to the distribution of the costs of county government, the Director’s tables have *602 furnished the county boards with a tool for equalization of aggregates, and it is said that 20 of the 21 counties have either accomplished such equalization or are about there. Progress has been made with^respect to the distribution of the costs of regional schools,.] See Township of Berkeley Heights in the County of Union v. Board of Education of the Union County Regional High School District No. 1, 23 N. J. 276 (1957); Maplewood Township in County of Essex v. Essex County Board of Taxation, 39 N. J. Super. 202 (App. Div. 1956).

£jt is the far knottier problem of equalization as among individual taxpayers as to which a solution has yet to be evolved. And it is that problem which the present case brings before us.]

I.

Plaintiff alleged that her land and dwelling were assessed for 1955 at $31,000; that the Director’s tables reveal the average ratio of assessed to true value in the township to be 15.45%; and that on that basis the true value of her property must have been deemed by the assessor to be $200,647, whereas “The true value of plaintiff’s properties in fact is substantially less than the value so computed.” How much less she does not say.

Plaintiff did not make out a case of intentional, invidious discrimination against her. Snowden v. Hughes, 321 U. S. 1, 8 , 64 S. Ct. 397 , 88 L. Ed. 497 (1944). She alleged that the Sixth Report made by the Commission on State Tax Policy showed that in the tax years preceding 1953 residential real property in the township was assessed at 14% of true value and commercial and industrial real property at 18% of its true value. She charged further that on September 28, 1955 the Director of the Division of Taxation found the average ratio of assessed value to true value of real property in the township to be 15.45%. An affidavit on the motion reveals the Director’s finding was based on the following data gleaned from 862 sales between July 1, 1954 and June 30, 1955:

*603

Average

Sample Ratio Range Glass Ratio

Vacant land .......... 124 6.04% to 80% 25.46%

Residential ....... 728 ■ 3.08 " 80 14.40

Farm.......... 5 10.43 " 35.16 22.89

Other ......... 5 10.10 " 30.97 12.67

862 Weighted Average . . . .15.45%

The assessor in his affidavit averred “The said assessment which I placed upon plaintiffs property was made according to my best judgment as to the value of plaintiffs property in relation to the property in the area and according to the same standard of value used for other properties in the Township.”

It was conceded before us that the assessor did not attempt to use full true value, but there is no proof or concession that he singled out plaintiff for disproportionate treatment. Insofar as we might be willing to conclude from the evidence that the assessor differentiated consciously between different classes of property, it would have to be said that residential property fared quite well, the average class ratio being considerably below that found as to vacant land and farm land and slightly above the category denominated as “other.” The table of equalized valuations for 1955 shows that on the basis of true value the total valuation of “other” properties was $6,850,829 out of a grand total of $81,010,001.

With respect to “discrimination,” the record as it stands would support at most a finding that plaintiff, to an extent -not revealed, fared more poorly than some other property owners and perhaps did better than others, and not because of any invidious design as to her, but essentially because the assessment rolls got out of hand. This situation is not peculiar to Middletown township, but rather is typical, as the Director’s tables show, of the situation in other munici■palities. The reason is free of intentional wrong. Assessors have not kept and at the moment we may well assume they could not keep their rolls current with economic movements. The assessor, whose office perhaps is legislatively geared to an era which has passed and who in many cases is but a part *604 time official, finds to be monumental the duty to keep all property at any uniform valuation. There is no connection between that problem and the statutory mandate to use true value. The same discrepancies would exist whether the assessor sought to abide by full true value or any percentage of it, although the use of full true value would tend to magnify and thus to reveal more sharply the inequities which have unwittingly developed.

All agree that the Director’s Jabíes do not furnish ready aid to bring all properties up to either true value or any uniform percentage of true value. For example, the Director’s finding of an average class ratio of 14.40% as to residential property is based upon sales which reflect valuations ranging from 3.08% to 80%. Hence if one should multiply the individual residential assessments as they now stand by the factor obtained by dividing 14.40 into 100, the result would not be equalization but rather the aggravation of existing discrepancies. Nothing short of complete revaluation of all parcels and some technique to keep them current will resolve the kind of “discrimination” which plaintiff’s case reveals.

In this connection the application for a mandamus boils down to a prayer that the court order the assessor to do a more efficient job, wholly apart from any showing of a purpose on his part to do a poor one. And the inequity which plaintiff claims she experiences will be resolved, not by a command to think in terms of full value or any set percentage of it, but rather by a command to be more efficient, and indeed to make a complete revaluation, parcel by parcel.

A mere claim of inefficiency is hardly one which invites a judgment of mandamus. For relief from injustice flowing from inefficiency, plaintiff should be remitted to another remedy. The point of this extended discussion of the nature of plaintiff’s true grievance is to clear this case of any notion that we are dealing here, on a complaint in lieu of the prerogative writ, with discrimination in fact resulting from willful disobedience of duty. Rather, the only complaint which is properly before us is that the assessor intentionally disobeyed a statutory command to think in terms of full true value.

*605 I believe plaintiff may urge that complaint as a taxpayer and citizen even if she in fact is the beneficiary of the assessor’s violation. 35 Am. Jur., Mandamus, § 320, p. 73. But a clear comprehension that plaintiff is seeking to vindicate that public right helps to indicate the course we should take.

II.

It is urged the problem calls solely for an administrative solution, and hence we should decline to entertain the matter. I cannot concur in that view. It is appropriate and indeed the duty of the judiciary to lend its hand in the vindication of a public right. But although the right of plaintiff to be heard is constitutionally assured, Art. VI, Sec. V, par. 4, yet the right to relief depends upon the application of principles which control the granting of a mandamus. As is fully developed in the opinion of Mr. Justice Heher, mandamus will not issue where public harm or confusion may result.

The problem of equalization among taxpayers is far more complex than the problem of equalization of aggregates as among taxing districts. Let us view the setting in which we are asked to order peremptorily the assessment of all classes of real property at true value.

New Jersey is predominantly a property tax state. About 70% of all revenues, state and local, are derived from ad valorem taxation, and an even greater percent of all local revenues emanate from that source.

As stated above, discrimination among classes of property has been widespread, and properties have been bought and jsold for generations on the basis of tax treatment in fact, jj" What will be the impact of sudden uniform treatment of all classes of property? We cannot answer this question even as to Middletown Township on the basis of what little is disclosed in the record before us. It may be that the consequences of uniform treatment within the township itself may be taken in stride. But we must look beyond the township, because, as set forth below, the entire county is concerned and moreover since the precedent we establish here will apply *606 as well throughout the State, and we may assume that interests concerned await our opinion and will be energized into action by what we say here, we cannot omit to think in terms of statewide implications.

“New Jersey taxes on residences are almost double the national average.” Sixth Report of the Commission on State Tax Policy (1953), p. xxiv. We know, for example, and hence cannot ignore it, that thousands of new homes have been purchased on a basis which to the buyer is the practical equivalent of a rental proposition in which the annual tax bill is a potent factor. What will happen to these purchasers and the owners of homes generally if the extra burden now borne by commercial and industrial real property is shifted to residential ? In those areas in which industries were lured by gentlemanly understandings of tax preference, will they leave or stay, and if they leave, what will be the impact upon local economies built upon them?

Some utilities are taxed upon the application of the average rate of taxation upon their gross receipts in lieu of ad valorem taxation of certain properties. The average rate of taxation passed the $7.50 per hundred mark and by recent legislation a ceiling was placed at that figure and a floor at $5. Chapter 268 of the Laws of 1955 and Chapter 15 of the Laws of 1956; N. J. S. A. 54:31-50. The total yield to local governments from this source in 1956 was $28,325,764. It has been estimated that if all property were assessed at full true value, the average íate of taxation would fall far below $5. What would happen to the municipalities concerned if they suddenly lost one-third of that revenue?

The statute commands that personal property be assessed at full true value, and as pointed out below, we are not free to ignore that command if we should decide to act. What will happen to commercial and industrial enterprises which doubtless in many instances have a local understanding and even without it pay on a basis far below true value? What of the resident, if his household effects should be assessed at full true value and thus be required to share equally the excess burden now placed elsewhere?

*607 Class II railroad property is assessed at • the state level for local use and in 1956 the yield was $14,363,933. The railroads claim the state assessor uses full true -value while the municipalities which receive the proceeds tax the several classes of real property at varying rates, all below 100 percent. If this be a fact, what would happen to the residents of those municipalities if a portion of the differential were shifted to them by increasing their assessments to full true value?

There are other cognate problems. In theory, if all property were assessed at full true value, the individual tax bill in terms of dollars should remain the same. But men seasoned in public life assert that fact will not match theory, saying the reduction of the tax rate will encourage demands for greater expenditure which are now resisted by a forbidding tax rate. The borrowing capacity of local government is hinged to its total ratables. To lift them to full true value would, it is claimed, lead to pressures to borrow more. And if legislatively some standard other than full true value is prescribed for that purpose, what would be the impact upon the bonds or borrowing capacity of 'those municipalities whose total ratables are based on a percentage above the one selected? What technique will solve that dilemma ? _

I have posed a number of questions and answered none. The long and short of it is that we know enough to be wary^ but not enough to know the answers. And the reason is evident. The record before us, and indeed the judicial process itself, are inadequate to ascertain the facts with respect to problems of such breadth. If we could resolve them by the stroke of a pen, I would gladly join. But for all I know we might be bulling through a china shop.

It is the obligation of the judiciary to refrain from peremptory action which may raise havoc with the public welfare. None of us is happy about the spectacle of a constitution or a statute ignored. But there is no appropriate whipping boy, neither the five million citizens of our State nor the assessors who fell heir to this extraordinary problem. *608 Although ultimately we must act, yet it is equally our duty to give our citizens a decent opportunity to seek an orderly solution of the manifold problems through their elected representatives or by constitutional amendment if they should conclude one to be necessary and desirable.

A proper handling of the problems will require initially an extensive fact-finding inquiry with respect to the matters suggested above and perhaps others of which I am ignorant, and thereupon the difficult task of conceiving solutions equitable to all in the light of conflicting interests. If a constitutional amendment should be thought to be necessary, there must be an opportunity to propose and vote upon it and then to legislate in the light of the decision at the polls. A complete revaluation of all property in the State will require outside expert assistance, and the opinion has been expressed that if all qualified appraisers in .the country could be recruited, a number of years would be needed for completion of the work. It seems to me that in the light of ail of these considerations, a minimum period of three years is needed, and hence that any order to assess at full value should not be operative for at least that period. I am not unmindful that in the interim some taxpayers will be paying more than they should pay according to. the constitutional or statutory mandate. I will not stress the other side, that many of them bought at figures deflated by tax treatment in fact and that obedience to the statute means a matching inequity to others who also bought on the same basis. The larger consideration which to me is controlling is the welfare of the entire public which might be seriously invaded by peremptory action at this time.

III.

Two other matters remain for consideration: (a) the cross-claim against the county board and (b) whether an order should include a direction to assess personal property at true value.

*609 A.

The initial question is whether the taxpayers of Middle-town Township have an interest in the assessment practices in the other 50 municipalities of the county.

The individual tax bill reflects (1) the cost of municipal government and (2) the cost of county government (for present purposes I will omit any reference to school districts). Overall, the cost of county government represents about 20% of the total tax bills, being more or less than that percentage with respect to a given municipality depending upon the amount of municipal services and the cost thereof.

It seems clear to me that all of the taxpayers of a county are entitled to equal treatment with respect to the distribution of the cost of county government. Distribution among municipalities on the basis of equalization of aggregates of their respective ratables accomplishes a proper allocation of that cost as among the municipalities, and if equalization of the assessments within the Township of Middletown were achieved, each taxpayer of the township would bear his proper share of the cost of county government as against other taxpayers of the township. But, so far as the tax for county purposes is concerned, each taxpayer is entitled to equality, not merely as against other taxpayers within his own municipality, but also as against all other taxpayers of the county. It is no answer to say that the taxpayer is paying no more than his just share. He is entitled to enforcement of the legislative scheme that all taxable property be taxed equally for the purposes of county government. Just as plaintiff’s right to such enforcement of the public duty within her township should be recognized whether she is bearing more or less than the share of the cost of local government which would be hers if the statute were complied with, so also there must be recognized the right of the owner of any property taxed for county purposes to seek enforcement of the statutory scheme for equality as among all amenable to taxation for corinty purposes. Driscoll v. Burlington-Bristol Bridge Co., 8 N. J. 433, 476 (1952); *610 Garrou v. Teaneck Tryon Co., 11 N. J. 294, 302 (1953); Koch v. Borough of Seaside Heights, 40 N. J. Super. 86, 93 (App. Div. 1956), affirmed 22 N. J. 218 (1956); Haines v. Burlington County Bridge Commission, 1 N. J. Super. 163, 171 (App. Div. 1949).

If the county tax were separately levied by the county itself, the right of each taxpayer to seek enforcement of the statutory scheme throughout the county would be apparent. If the county tax were thus directly distributed by county assessments ranging, let us say, from 3.08% to 80%, a taxpayer would not be denied the right to enforce the public duty merely because he happened to be paying the same number of tax dollars he would pay if uniformity had been achieved. If I am correct in this premise, then the right of a taxpayer of Middletown to relief as to the entire county with respect to the tax for county purposes should not be obscured and denied by the circumstance that the county tax is levied via municipalities and local assessors rather than directly by the county itself.

The defendants seem to be appropriate • parties to assert representatively the rights of the individual taxpayers of Middletown. Hence I believe they are entitled to maintain a cross-claim to obtain relief with respect to the other municipalities upon a showing like the one which suffices for relief against them. I agree, however, that the county board is not the appropriate defendant to the cross-claim. The defendants should be the several assessors, for they are primarily chargeable under the statute, and realistically the county board has neither the time nor funds to accomplish individual reappraisals of all property. There is no suggestion that the county board would not perform its function within its means and practical opportunity if the local assessors performed theirs.

B.

Plaintiff did not seek assessment of personal property at true value. The question is whether the court should grant relief solely as to real property. I think it should not if *611 personal property is assessed below full true value, and no one seriously doubts that generally it is so assessed and in some instances not at all. Sixth Report of the Commission on State Tax Policy (1953), p. 9.

The statute calls for like treatment of both real and personal property. It is of no moment that the Legislature may constitutionally differentiate between the two. The Legislature has not, and the provision for true value as to which enforcement is sought appears only in the statute. In short, if mandamus is granted to compel assessment at true value, it will be the statute, not the Constitution, which is being enforced.

I do not seek to compel plaintiff to urge a right she may prefer not to assert. On the contrary, my point is that she may not ask the court to ñnd and enforce a right different from the one she really has. Her right as a member of the public is to seek enforcement of the statutory plan and not some variation from it. She seeks a judgment which we know would establish and enforce a different policy, to wit, that real property shall bear a greater burden than personal property, for to assess all real property at full true value while personal property is assessed at a lower standard necessarily imposes a greater burden on real property than the Legislature has determined.

If plaintiff complained only of the failure to assess residential property at true value and sought a judgment limited to such property, surely no court would grant it .in the face of the fact that other classes of real property are assessed on a lower basis, for it would be manifest that the judgment would transfer to residential property some of the burden which belongs with other real property. The situation here presented is fundamentally no different. A difference may be found if we consult our private preference, but the policy is not ours to establish. The problem we now have resulted from precisely such determinations of preferences by local authorities. In R. S. 54:4-1 the Legislature plainly stated its policy that “All property, real and personal * * * shall be subject to taxation * * * at its true value, and *612 shall be valued by the assessors of the respective taxing districts.” The assessor’s duty to assess all taxable property at true value is single and indivisible, and it is that duty and only that duty which a litigant, speaking for the public, may seek to enforce. If a plaintiff alleged and proved that an assessor discharged that duty with respect to all but a portion of the taxable property and sought mandamus to compel performance as to such portion, relief so limited would be proper. But far different is a complaint which, as here, seeks not to have all taxable property assessed at true value but rather to have only a portion of such taxable property so assessed, and thus asks the court to join in creating a discrimination which the statute forbids. It is inconceivable to me that a court must aid in such discrimination at the bidding of a litigant. "Mandamus is a writ designed to remedy a wrong, not to promote one.” 34 Am. Jur., Mandamus, § 34, p. 830. If the assessment of all taxable property at true value should be unpalatable (and doubtless it is), it would merely evidence the inappropriateness of mandamus as a remedy for these tax problems.

IV.

The township did not seek to review so much of the judgment as ordered it to appropriate funds necessary to accomplish a revaluation, but the question which that portion of the judgment involves is too important to pass without at least an expression that our action does not impliedly constitute a determination of it.

The duty to assess is placed upon the assessor. R. 8. 54:4-12, 23. It is his judgment which is required. I do not doubt his authority to accept such help as may be ofEered, but quite different is the question whether a court may compel him to seek outside assistance or order a municipality to provide it. The Legislature has authorized contracts and emergency borrowing for that purpose, Chapter 48 of the Laws of 1956, N. J. 8. A. 40:50-9 eb seq., but has not ordered the municipalities to act. Since the question has not been *613 raised, briefed or argued, and is not necessarily involved in the appeal, we should express no view upon it.

The defendant assessor and the assessors who may be added as defendants to the cross-claim and as to whom a basis for relief is established may properly be ordered to start and proceed diligently to revalue all property, because information thus gathered would seem necessary under any solution of the problem. But any time limitation for completion must take into account the need for proper revaluation. There is no point in compelling such haste that the end product will be characterized by new inequities.

Mention should be made of the objection that since appraisal involves judgment and discretion, it may not be judicially ordered. The difficulty is enlarged by suggesting that upon contempt proceedings liability might depend upon varying views in an area in which experts are prone to disagree. Although on mandamus the end result of an exercise of discretion may not be controlled, it is equally clear that a public official may be compelled to exercise that discretion. 34 Am. Jur., Mandamus, §§ 67-8, pp. 855-8; see Reid Development Corporation v. Township of Parsippany-Troy Hills, 10 N. J. 229 (1952); Gallena v. Scott, 11 N. J. 231 (1953). Where, as here, it is conceded that the assessor made no effort to assess at true value, he may be ordered to perform the statutory duty, that is, to undertake in good faith to assess at what he believes to be the true value of the property, without, of course, attempting to control the result he reaches in a bona fide appraisal. o

Accordingly I would reverse the judgment except as to the county board and remand the cause to the trial court with these directions:

1. To inquire as to whether personal property is assessed at true value, and if it appears that it is not, to permit plaintiff to amend to seek relief with respect to both real and personal property, and in default of such amendment to dismiss the complaint.

*614 2. To permit defendants to amend the cross-claim and to add the assessors of the other municipalities in the county (and the municipalities if defendants should see fit so to do).

3. Upon a finding that the assessors have not sought to assess at true value, to order them to proceed diligently and in good faith to revalue all taxable property, real and personal, at full true value.

4. To order the assessment of all such property at full true value simultaneously upon completion of the revaluations by all assessors in the county (if they are added as parties defendant on the cross-claim and a basis for relief is found), but in no event should such direction be effective prior to assessment for the year 1960.

5. To retain jurisdiction of the cause for such modification or further order as circumstances may justify.

:|i % % :Ji #

None of the divergent views within the court has mustered a majority. Three members of the court agree upon a result different from the one I prefer and yet not too distant from it. To the end that there may be majority action, I will concur in the result they reach in the opinion by Mr. Justice Heher.