Opposition Brief — City of Bayonne v. Town of Seacaucus
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d-) Gupryma Court, UE
No. 93-693 FITLEY
JAN 28 1994
In The
Supreme Court of the nite States a
THE MEepYZ
>
October Term, 1993
CITY OF BAYONNE,
Petitioner,
vs.
TOWN OF SECAUCUS, HUDSON COUNTY BOARD OF
TAXATION, COUNTY OF HUDSON, BOROUGH OF EAST
NEWARK, TOWN OF GUTTENBERG, TOWN OF
HARRISON, CITY OF HOBOKEN, CITY OF JERSEY CITY,
TOWN OF KEARNY, TOWNSHIP OF NORTH BERGEN,
CITY OF UNION CITY, TOWNSHIP OF WEEHAWKEN and
TOWN OF WEST NEW YORK,
Respondents.
On Petition for Writ of Certiorari to the Supreme Court of
New Jersey
BRIEF IN OPPOSITION FOR
RESPONDENT TOWN OF SECAUCUS
FRANCES C. HOLLAND
Counsel of Record and
On the Brief
HOLLAND & HOLLAND
Attorneys for Respondent
Town of Secaucus
103 Barringer Court
West Orange, New Jersey 07052
(201) 325-0400
Le te (800) 3 APPEAL * (800) 5 APPEAL » (800) BRIEF 21
QUESTIONS PRESENTED
1. Under settled law, may a municipality rely upon the
Fourteenth Amendment to the United States Constitution in an
action against the State that created it?
2. Has the Petitioner demonstrated legally sufficient Supreme
Court review jurisdiction or has it improperly attempted to
“supplement” the record below so as to artificially create and
concoct the appearance of federal jurisdiction?
ii
TABLE OF CONTENTS
Page
Questions Pues oo c iis ccodavscrdaceetsies i
ee OU li
Tebbe CE CRMBGRE occa ccvcscccessevusenssnecenss ii
Stataenent SE MOSCA 6. cckhshan Feebbenases kebar ]
A. N.J.S.A.18A:54-11, The State Statute. ......... 3
B. TheSeete PaO: isc chsekciasaesecsss 6
Reasons for Demyimg Che WE oan c sc cccesses vecseus 12
OTT Ore 22
TABLE OF CITATIONS
Cases Cited:
Bergen Cty. Sewer Auth. v. Little Ferry, 7 N.J. Super. 213,
72A.2d 886 (N.J. Super. Ct. App. Div. 1950) ........ 12
Borough of Sayreville v. Middlesex County Bd. of Taxation,
133 N.J. Super. 46, 335 A.2d 75 (N.J. Super. Ct. App.
Div. 1975) ..ncccctadauuaeestassabeealanueunes 17
Camden v. Byrne, 82 N.J. 133, 411 A.2d 462 (N.J. 1980) ss
cc cccccacessshscscepens geese ni ais taws 12
iii
Contents
Page
Clifton v. Passaic County Bd. of Taxation, 28 N.J. 411,418
PED EE, TOG) vec nccsceswsccccscccccseccsens 17
Craig v. Boren, 429 U.S. 190, 97 S. Ct. 451, 50 L. Ed. 2d
397 (1976), rehearing denied, 429 U.S. 1124, 97 S. Ct.
1161, $1 L. Bd. 2AST4ACIGTT) 2... ccccccccccccces 21
Dandridge v. Williams, 397 U.S. 471, 90S. Ct. 1153, 25 L.
Ed. 2d 491, rehearing denied, 398 U.S. 914, 90 S. Ct.
1684, 26 L. Ed. 24 80(1970) ........-cececccceees 21
Fischer v. Twp. of Bedminster, 5 N.J. 534, 76 A.2d 673
POU, da dh oh dines dcenvcoseseecccesenes 18,19
Glassboro v. Byrne, 141 N.J. Super. 19, 357 A.2d 65 (N.J.
Super. Ct. App. Div. 1976), cert. denied, 71 N.J. 518,
SEG A.2AG6TEON.S. 1976) 0. cccccccvcccccccccccces 13
Graham v. Richardson, 403 U.S. 315,91 S. Ct. 1848, 29 L.
Ne ee 21
Henry v. Mississippi, 379 U.S. 443, 85 S. Ct. 564, 13 L. Ed.
NE is awash cbnwdvccasentsecesace id
Hoag v. State of N.J., 356 U.S. 464, 78 S. Ct. 829, 2 L. Ed.
2d 913, rehearing denied, 357 U.S. 933, 78 S. Ct. 1366,
NEUE Hicks cue donde ded on vcwdeetostoce 15
Kenney v. East Brunswick Tp., 172 N.J. Super. 45 (N.J.
Super. Ct. App. Div 1980) .........---eeeeeeeeeee 13
iv
Contents
Page
Martin v. Hunter’s Lesee, 1 Wheat. 304, 4 L. Ed. 97 (U.S.
SEED WA GusAN bien epueab beeen sageeyewenerea 14
McKenney v. Byrne, 82 N.J.304(N.J.1980) ........... 12
Middlesex County Bd. of Taxation v. Borough of Sayreville,
133 N.J. Super. 41, 335 A.2d 73 (N.J. Super. Ct. App.
OU PETE so Fkn ch acdenb uae sue bebrietaneneeNs 17
Mobile County v. Kimball, 102 U.S. 691, 26 L. Ed. 238
EE Abed DUR Oe each cekaa de cdedea eed eaee 12
Murphy v. Helena Rubenstein Co., 234 F. Supp. 893 (D.C.
N.J. 1964), appeal dismissed, 365 F.2d 533 (3rd Cir.
EOUPE swv.bvats 0 oudue eu ba venetes eter pies ae ee 21
Paramus v. Bergen County, 2 N.J. Tax 515 (N.J. Tax Ct.
SUES ca dads dee ucd see tie kenaereseenaee eae 12
Pelliconi v. Schuyler Packing Co., 140 N.J. Super. 190, 356
A.2d4(N.J. Super. Ct. App. Div. 1976) ............. 14
Reich v. City of Freeport, 388 F. Supp. 953 (D.C. Ill. 1974),
Od, S27 FARGES CHGS, ISTO) 4c cwciiccsiocies 15
Roseland v. Essex County Board of Taxation, 18 N.J. Misc.
613, 15 A.2d 765 (St. Bd. Tax App. 1940) ........... 16
Secaucus v. Hudson County, 255 N.J. Super. 665, 605 A.2d
1151 (N.J. Super. Ct. App. Div. 1992) .............. 3
|
PC iseniereeaiien. asiahi _ ae
Vv
Contents
Page
Secaucus v. Hudson Board of Taxation, 130 N.J. 393, 614
A.24616 (NJ. 1993) 2. cccccccscccccccccsccccces 20
State v. Brown, 41 N.J. 590, 198 A.2d 446 (N.J. 1964), cert.
denied, 377 U.S. 981, 84 S. Ct. 1888, 12 L. Ed. 2d 749
oP es ag ceed te Chak ebe ba eeee Ered nabangewne 21
State v. Garvin, 44.N.J. 268, 208 A.2d 402 (N.J. 1965) ... 21
Super Tire Engineering Co. v. McCorkle, 550 F.2d 903 (3rd
Cir. 1977), cert. denied, 98 S. Ct. 16, 434 U.S. 827, 54L.
Ed. 2d 86, rehearing denied, 98 S. Ct. 753, 434 US.
SOS BORE FRITS ssc ccccscctcge¢hdenshooees 15
Town of Secaucus v. Hudson County Board of Taxation, 133
N.J. 482, 614.A.2d616(N.J. 1992) .......-e eee eeenes 4,5,6
Town of Secaucus v. Hudson County Board of Taxation, 255
N.J. Super. 665, 605 A.2d 1151 (N.J. Super. Ct. App.
Sl Be bcd cv 0ecesscdccangecscunnedesenseue 9
Trenton v. New Jersey, 262 U.S. 182, 43 S. Ct. 534, 67 L.
DE DOT CUEED 5. nc Knicevnvcurqthanscnceneee tees 12
Vreeland v. Byrne, 72 N.J. 292, 370 A.2d 825 (N.J. 1977)
20
Williams v. Mayor and Council of Baltimore, 289 U.S. 36,
§3 S.Ct. 431, 77 L. Ed. 1015(1933) ........---0ee- 12
vi
Contents
Page
Statutes Cited:
tae EEE cov enscctcvadcakenessseeeeel 3
Pes SDE ons od e'ahakicdelietceetewesen 2,8, 19,20
iA REE sms Senn 16, 18
SEU BEE ih veersvusieap ere eee 13,14
SO BIE, ov eee srs ceeucdugelesaetoenee 1,15
IF 73 Bs AD GOES si versissccrsesnsseeeeaes 4
United States Constitution Cited:
FourteenthAmendment ................ i, 1,12, 14, 15,20, 21
Other Authorities Cited:
PEF. COMGE. CEST PO EY BPG eo vcpevcectacenw own 3,6, 8,10
PU.5. CORSE. (IETS, Vin PbS oboe bc ceccdeccseseds 19
Re 8! 68 DY, ) eee 8
N.J. Const. (1947) art. VIII, $1, 1(a) ................ 10
DORE ION FF vccncndendedaacecceenntianssnee 4
Hart & Wechsler, The Federal Courts and the Federal
System 470-526 (2d ed. 1973) ...........ce ce eeees 14
vii
Contents
Page
APPENDIX
Appendix A — Opinion — Secaucus v. Hudson County
Board of Taxation, et al., Docket No. L-094204-86PW
(N.J. Super. Ct. Law Div., June 29, 1990 ..........-. la
Appendix B — Order Granting Summary Judgment —
; Town of Secaucus v. Hudson County Board of Taxation,
et al., Docket No. L-094204-86 PW (N.J. Super. Ct.
Law Div., July 27,1990) ......-.--eeeeeeeceeeees 35a
Appendix C — Opinion — Town of Secaucus v. Hudson
County Board of Taxation and County of Hudson,
Docket No. A-4854-86T8 (N.J. Super. Ct., App. Div.,
May 18, 1988) ..........cccccccccccccccccccces 39a
ee es ee
2 Rtas edie are dla ithe
l
STATEMENT OF THE CASE
The petition for writ of certiorari filed by the City of Bayonne
with the United States Supreme Court seeks this Court’s exercise
of review jurisdiction and seeks to invoke the protection to the City
of Bayonne of the Fourteenth Amendment to the Constitution of
the United States by alleging purported denials to the municipality
of due process and equal protection rights resulting from the
August 4, 1993 New Jersey Supreme Court judgment in a state
case. Settled principles of law establish that a municipality cannot
invoke Fourteenth Amendment protection in an action against the
State that is its creator. Williams v. Mayor of Baltimore, 289 U.S.
36, 53 S. Ct. 431,77 L. Ed. 1015 (1933). The New Jersey Supreme
Court is the highest court of the judicial branch of the State
government. The City of Bayonne is a political subdivision of the
State of New Jersey located in the County of Hudson. Respondent,
Town of Secaucus, and the Petitioner, City of Bayonne, are two of
the twelve constituent municipalities of Hudson County. Ten of the
other respondents are Hudson County municipalities which are to
be financially recompensed for their past county tax
Overpayments, as is Secaucus, under the terms of the recent New
Jersey Supreme Court judgment; Bayonne is required to satisfy its
prior underpayments of past years’ county taxes.
The petitioner, Bayonne’s “Statement of Jurisdiction” states
inaccurately that this Court has jurisdiction, pursuant to 28 U.S.C.
§ 1257(a), to review these exclusively state issues of this case
within the judgment of the Supreme Court of New Jersey. Further,
the petitioner’s “Statement of the Case” and “Questions
Presented” misstate relevant facts, expanding and inaccurately
shading the facts of the state court record in an unsuccessful
attempt to generate a colorable “factual” predicate for federal
jurisdiction and grant of certiorari for review of the state court
judgment. Petitioner’s ostensible history dealing with “reliance”
by Bayonne was also not part of the state court record.
2
The New Jersey Supreme Court affirmed both the judgment of
the Appellate Division of the Superior Court of New Jersey and the
trial court judgment of the Superior Court, Law Division, finding
N.J. Stat. Ann. (“N.J.S.A.”) 18A:54-37 to be constitutionally
invalid under the New Jersey Constitution (1947) and finding
implementation by the Hudson County Board of Taxation
(“HCBT”) to be unauthorized by the state statute and
discriminatory to the “non-Bayonne” Hudson County
municipalities. The subject state statute codified as N.J.S.A.
18A:54-37 and now stricken by the New Jersey Supreme Court had
been enacted by the New Jersey State Legislature in 1973 to
provide the City of Bayonne with an exemption from county taxes
that fund the costs of the Hudson County Vocational School. Two
different county tax rates were created by HCBT in order to
implement the exemption, the lower rate for Bayonne exempting it
from the HCVS portion of county taxes and the higher rate for the
“non-Bayonne” municipalities including the HCVS portion of the
county budget. But, HCBT had also applied the higher tier county
tax rate created to implement county taxes including costs of
HCVS to the added and omitted assessment property rolls of the
“non-Bayonne” municipalities each year long after the HCVS had
been funded, producing the “non-Bayonne” municipalities’ excess
tax payments from the higher rate and causing their deposit into the
county surplus for use in the following year in application to
general county costs other than of HCVS. This HCBT
methodology thereby improperly exempted Bayonne from
payment of county taxes for other portions of the next year’s
general county budget, affording Bayonne an additional
exemption from county taxes not authorized by the state statute or
by other state law.
The only questions in the state proceedings were issues of
New Jersey state law involving challenges under the New Jersey
Constitution as special tax legislation and as violation of the tax
uniformity clause by the subject state statute, which exclusively
thsanczalde sales sell allcien | tated
3
exempted the petitioner-municipality from a part of county
taxation funding the HCVS portion of the general county budget,
and a related challenge also under State law to the improper
administrative calculation and implementation of county tax
apportionment by the HCBT, improperly exempting the petitioner-
municipality from payment of county taxes for aspects of the
county budget other than for HCVS, in a manner not authorized by
the subject statute.
No federal questions were pressed, passed upon or in any way
involved in this state case. The New Jersey Supreme Court
decision in this case is based purely upon state grounds: (i) that the
challenged exemption statute was unconstitutional special
legislation pertaining to taxation, or exemption, barred by the
prohibition on special tax legislation found at article IV, § 7,1 9 of
the 1947 New Jersey Constitution; and (ii) that the HCBT’s
implementation of the stricken statute to county tax allocation was
discriminatory in its application to all the “non-Bayonne”
municipalities of Hudson County. The thirty-four page trial court
decision (Ral) and the Appellate Division opinion, reported as
Secaucus v. Hudson County, 255 N.J. Super. 665, 605 A.2d 1151
(N.J. Super. Ct. App. Div. 1992), also rest purely upon questions of
state law. No issues of federal law were pressed or proffered by the
City of Bayonne, or by any other party, either explicitly or
“implicitly” at any stage of the state proceedings.
A. N.J.S.A. 18A:54-11, The State Statute.
Since the 1930’s Bayonne maintained a vocational education
program, initially in a separate vocational high school, but by the
1960’s fully integrated within Bayonne’s comprehensive high
school. There was no “vocational education” student per se.
Students in Bayonne’s vocational program fully participated in
high school activities with other students, and attended many
classes with other non-vocational education students.
4
The subject state statute originally introduced in the New
Jersey State Senate by Senator Dugan in the 1972 Legislative
Session, as Senate Bill No: 74, when subsequently enacted,
provided as follows:
1. Notwithstanding any of the provisions of
chapter 54 of Title 18A of the New Jersey
Statutes in any county of the first class having a
population of not more than 700,000 according
to the 1970 Federal Census, each municipality
included within a school district [maintaining a
system of] which has maintained for a
minimum of 20 years a vocational education
program approved for the purposes of Federal
and State allotment of vocational funds by the
Commissioner of Education under the
regulation of the State Board of Education shall
be exempt from assessment, levy or collection
of taxes based on any apportionment of
amounts appropriated for the use of a county
vocational school district.
1973 N.J. Laws, c. 305, §1.
From the time of this statute’s enactment of all the State’s
municipalities only Bayonne qualified for exemption. The New
Jersey Supreme Court found that the original proposed legislation
before amendment in the Senate Education Committee “. . . would
have exempted virtually every municipality with a vocational
education program from contributing to the support of its county
vocational school.” Town of Secaucus v. Hudson County Board of
Taxation, 133 N.J. 482, at 487, 614.A.2d 616 (N_J. 1992) (Pa3).
The committee amendment narrowed the terms of the original
Bill from all municipalities with a “system of vocational
5
education” limiting its application to only those municipalities in a
county of the first class having a population of under 700,000, and
maintaining a program for a minimum of 20 years. The Senate
Education Committee Statement to the Bill left no doubt as to the
legislative intent:
This bill, as amended, would exempt the city of
Bayonne from any assessnent of taxes due to
the cost of supporting the county vocational
school in Hudson County.
The legislative history of the subject statute shows that as
originally proposed, the exemption would have applied to any
municipality within a school district maintaining a system of
vocational education approved for federal or state funding. Thus
the original general object was to provide relief for any (and all) of
those New Jersey municipalities operating their own vocational
education systems or programs, or included within districts
approved for aid purposes, from the hardship of simultaneous
support of a county vocational school. The trial court found that
virtually every municipality in the state receives some federal
funds from vocational education. (Ral3). The New Jersey
Supreme Court Opinion found that “{ajt least twenty
municipalities within the state maintained their own vocational-
education program ...,” Id. 133 N.J. 482, at 495 (Pal3). Upon
committee amendment substantially restricting its scope by
aggregate, multiple limitations, and subsequent enactment of the
special state statute, however, only Bayonne became exempt,
because of all the state’s municipalities, only Bayonne was located
in acounty of the first class having a population less than 700,000
(Hudson County) and had maintained a vocational educational
program approved for aid for the requisite 20 years. The restricted
state statute as thus enacted provided by its aggregate, multiple
limiting classifications that there be no apportionment of county
tax to Bayonne for amounts in the general county budget for the use
of the county vocational school district.
6
The New Jersey Supreme Court Opinion, after engaging in a
well-reasoned and detailed special legislation constitutional
analysis of the statute’s purpose and application of that purpose to
the specific facts of the case, concluded that the statute as it
actually operates does not represent a reasonable legislative
classification and, therefore, violates the prohibition on special
legislation of art. IV, § 7, { 9, of the New Jersey Constitution. /d.
133 N.J. 482, at 501 (Pa20).
B. The State Proceedings.
On October 17, 1986 Secaucus, a Hudson County
municipality, instituted an action in lieu of prerogative writs in the
Superior Court of New Jersey, Law Division: (i) against the
defendants, Hudson County Board of Taxation (“HCBT”) and
Hudson County, alleging overpayments of county taxes in past
years, seeking declaratory and prerogative writ relief requiring
exclusion of the higher two-tiered county tax rate apportioning
vocational school costs from the Secaucus rate of tax payment to
the county on account of added and omitted assessment property
lists after full funding each year for the County Vocational school
and (ii) against Hudson County for damages to the extent of
plaintiff’s past overpayments of county taxes, for the years 1981
through 1986, resulting from HCBT’s erroneous use of the two-
tiered rate applicable to the funding of the vocational school for
HCBT’s calculations of Secaucus’ county tax payments on
account of added and omitted assessments. Plaintiff sought
summary disposition in respect to the declaratory and prerogative
writ relief. Secaucus served notice upon Bayonne and all the other
Hudson County municipalities with copies of the Complaint, upon
filing with the Superior Court, Law Division. None of the Hudson
County municipalities intervened in the action, despite the notice
provided by Secaucus.
On March 5, 1987, the trial court determined that the
7
combined two tier rate created by HCBT for the “non-Bayonne”
municipalities, in order to exempt Bayonne from apportionment of
county taxes appropriated for the Hudson County Vocational
School (““HCVS”), when applied by the HCBT to added and
omitted assessment property rolls of the “non-Bayonne”
municipalities after funding had been raised for the county
vocational school resulted in undue discrimination to all Hudson
County municipalities other than Bayonne due to the methodology
whereby the funds were received by the County into surplus for
general county purposes. The remedy for this discrimination
adopted in 1987 by the trial court was the segregation by the
County in escrow of the “non-Bayonne” municipalities’
vocational school higher tier county tax rate component from
added and omitted taxes to be used for county vocational school
costs in the ensuing year. Secaucus’ claim against the County for
past damages was withdrawn and dismissed by the trial court
without prejudice; judgment was entered on April 16, 1987, but
stayed pending appeal. Cross-appeals on the issue of remedy were
then filed (Docket No. A-4854-86T8). During the appeal, it
became apparent to Secaucus that the subject state statute did not
pass muster under the New Jersey Constitution. The Appellate
Division, in an unpublished Opinion dated May 16, 1988, reversed
on the issue of remedy, and remanded the matter to the Law
Division for further proceedings on the remedy on the grounds that
all of the other Hudson County municipalities, although given
notice of the action and served by Secaucus with the October 16,
1986 Complaint, were not joined as parties, and because Secaucus
had raised substantial constitutional questions arising under the
New Jersey Constitution on appeal requiring the trial court’s initial
determination. See 1988 Appellate Division Slip Op. (Ra9 ) .
Pursuant to the Appellate Division’s 1988 remand and the
leave granted to Secaucus by the trial court to amend its Complaint,
Secaucus filed its Second Amended Complaint in Lieu of
Prerogative Writs contending the constitutional invalidity of
8
N.J.S.A. 18A:54-37, both by violation of the special tax legislation
prohibition of art. IV, § 7,4 9 and of the tax uniformity requirement
of art. VIII, § 1, { 1 of the New Jersey Constitution (1947), in
addition to the matters set forth in the earlier Complaint. The
Second Amended Complaint named Bayonne and all of the other
“non-Bayonne” Hudson County municipalities as parties
defendant.
On June 29, 1990, the trial court issued a 34-page written
opinion finding that N.J.S.A. 18A:54-37 violated both the special
legislation prohibition and the uniformity requirement of the New
Jersey Constitution (1947), and finding the higher tier tax rate as
applied by HCBT to the added and omitted tax rolls of the “non-
Bayonne” municipalities to be improper and discriminatory and
beyond the scope of the statute. (Ral-24). The August 9, 1990 trial
court judgment granted partial relief only for the period from 1986
to May 1988 from HCBT’s improper implementation of the statute
which resulted in overpayments of county taxes by the “non-
Bayonne” municipalities on their added and omitted assessments,
mandating credits on subsequent county taxes to be provided to the
“non-Bayonne” municipalities in compensation for prior
overpayments of county taxes and debits to Bayonne in restitution
for prior underpayments of county taxes resulting from the
implementation by HCBT.
Full relief from the application of the unconstitutional statute
was granted by the 1990 trial court judgment: (i) by full
elimination of the two-tiered county tax rates commencing with
those 1988 and 1989 county tax rates determined subsequent to the
May 27, 1988 filing of Secaucus’ motion to amend the Complaint
alleging unconstitutionality, with adjustments of past
overpayments of county taxes by credits to the non-exempted,
“non-Bayonne” municipalities on subsequent county taxes and of
past underpayments by debits to Bayonne on subsequent county
taxes and also (ii) by HCBT’s required implementation in the 1990
9
Abstract of Ratables of a single county tax rate and thereafter (for
the subsequent general county budget cost apportionment) among
all Hudson County municipalities. Finally, the trial court required
all credits to the “non-Bayonne” municipalities and debits to
Bayonne on subsequent county taxes resulting from all aspects of
remedies granted by the trial court to be implemented by HCBT in
the 1990 Hudson County Abstract of Ratables. At the conclusion of
a full hearing on settlement of the order on August 9, 1990, the trial
court entered the Order a Smale its Opinion granting
summary judgment.
Bayonne filed a Notice of Appeal and moved for emergent
stay pending appeal, granted by the Appellate Division on August
20, 1990. Secaucus moved before the New Jersey Supreme Court
for dissolution, or partial dissolution of stay. On August 31, 1990,
the New Jersey Supreme Court vacated the stay for the part of the
judgment requiring HCBT in the 1990 County Tax Abstract to
apportion subsequent county taxes according to a single county
rate among al] municipalities, but pending appeal only continued
stay of HCBT’s implementation of credits and debits on county
taxes to the municipalities: (i) for prior years’ payment under the
two county rates pursuant to the stricken exemption statute from
May 27, 1988 through the 1989 tax year; and (2) for HCBT’s
improper and discriminatory application of the higher county tax
rate to the added and omitted assessments of the “non-Bayonne”
municipalities from 1986 to May 27, 1988 beyond the scope of the
statute. HCBT filed a notice of appeal and Hudson County filed a
cross- appeal, but on January 17, 1991, the Appellate Division
entered an Order withdrawing the County’s cross-appeal with
prejudice.
On April 21, 1992, the Appellate Division filed its Opinion
affirming the trial court. Town of Secaucus v. Hudson County
Board of Taxation, 255 N.J. Super. 665, 605 A.2d 1151 (N.J. Super.
Ct. App. Div. 1992) (Pa43). The Appellate Division’s final
10
judgment held that the stricken statute violated the tax uniformity
clause of the 1947 New Jersey Constitution and that the violation
arose from the absence of uniformity in the distribution of the
county tax burden due to the application of two county tax rates.
The Appellate Division Opinion reasoned that:
[t]he overriding consideration in this
appeal is that because of the constitutional
mandate that there be a uniform county tax rate
the Legislature may not excuse a municipality
from paying county taxes that fund a county
facility even though the facility is not used by
its citizens - just as the legislature may not
excuse an individual taxpayer from paying
local taxes to fund a public school district even
though the public school is not used by the
taxpayer’s children.
(Pa48).
The Appellate Division did not reach the question of the Law
Division’s ruling that the statute constituted special legislation. In
May 1992, HCBT and Bayonne filed petitions for certification and
notices of appeal as of right with the New Jersey Supreme Court.
The Supreme Court of New Jersey granted certification, 130 N.J.
393, 396, 614A.2d 616(N.J. 1992) (Pa40). On August 4, 1993, the
Supreme Court of New Jersey found the subject statute to be
unconstitutional as special legislation prohibited by art. IV, §7,] 9
of the New Jersey Constitution (1947). Having found the statute to
be unconstitutional as special tax legislation, the Supreme Court of
New Jersey found it unnecessary to reach the issue of whether the
statute also violated the tax uniformity clause of art. VIII, § 1,
{ l(a). The Supreme Court of New Jersey also affirmed the
Appellate Division judgment and 1990 Law Division judgment as
follows:
11
Accordingly, we affirm the judgment of the
Appellate Division that HCBT should debit
Bayonne and credit the remaining Hudson
County municipalities the appropriate added
and omitted assessments for the period from
1986 to May 27, 1988, and for the 1989 tax
year. To ease the burden on Bayonne, we
modify the Appellate Division decision to
direct HCBT to calculate the appropriate debits
and credits and implement them on a pro-rated
basis over a reasonable period of time. We
further affirm the elimination of the two-tiered
Hudson County tax rate that was ordered in
1990.
(Pa29).
Subsequently, on August 13, 1993, HCBT took official action
establishing a four-year period commencing in 1993 for
implementation of the credit and debit remedies within subsequent
county tax apportionments required pursuant to the New Jersey
Supreme Court Opinion. On September 22, 1993, the New Jersey
Supreme Court denied Bayonne’s application for stay pending the
filing of Bayonne’s petition to the United States Supreme Court for
writ of certiorari. On October 7, 1993, the Honorable David H.
Souter, Associate Justice of the United States Supreme Court,
denied Bayonne’s petition for stay.
As to the aspect of remedy imposed as a result of the
Constitutional invalidity of the statute, even upon completion of
HCBT remedial implementation four years after 1993, of the New
Jersey Supreme Court’s judgment, including the satisfaction of
remedial “single rate” county tax repayments from Bayonne (for
underpayments in the period from May 1988) by debits, Bayonne
will still retain the financial benefit from all past HCVS
12
exemptions from county taxes under the stricken state statute for
the period from enactment in 1973 to 1988, a 15-year period, under
the terms of the now-stricken exemption statute. Bayonne had also
gained a delay of two years by state court stays pending appeal
before making any of the county tax repayments initially ordered
by the Court in 1990, plus a four-year pro-rated period of debit
apportionment of the county tax repayments recently granted by
HCBT, pursuant to the New Jersey Supreme Court judgment.
REASONS FOR DENYING THE WRIT
In urging the Court to grant certiorari, the petitioner
municipality asserts privileges and immunities under the
Fourteenth Amendment to the United States Constitution against
the highest court of the judiciary branch of the State that created it,
despite the complete absence of any legal authority in support of
this position. Indeed, to the contrary result, it is accepted under
settled principles of law, that a municipality cannot invoke the
protection of the Fourteenth Amendment to the United States
Constitution in an action against the State that is its creator.
Williams v. Mayor of Baltimore, 289 U.S. 36, 53 S. Ct. 431, 77 L.
Ed. 1015, (1933), Paramus v. Bergen County, 2 N.J. Tax 515 (N.J.
Tax Ct. 1981). Counties are similarly barred from invoking the
protection of the federal Constitution or the state Constitution
against the State, Clark v. Degnan, 83 N.J.393,416A.2d816(N.J.
1980); Camden v. Byrne, 82 N.J. 133, 157, 411 A.2d 462 (N.J.
1980), Bergen Cty. Sewer Auth. v. Little Ferry, 7 N.J. Super. 213,
222-223, 72 A.2d 886 (N.J. Super. Ct. App. Div. 1950).
The courts have also consistently found on a related issue that
both municipalities and counties having been created by the State
are subject to its control. Williams v. Mayor and Council of
Baltimore, 289 U.S. 36, 53 S. Ct. 431, 77 L. Ed. 1015 (1933);
Trenton v. New Jersey, 262 U.S. 182, 43 S. Ct. 534, 67 L. Ed. 937
(1923); Mobile County v. Kimball, 102 U.S. 691, 26 L. Ed. 238
(1881); McKenney v. Byrne, 82 N.J. 304 (N.J. 1980).
ey
13
Municipalities do possess the right to attack a statute as being
in violation of the New Jersey Constitution, the theory being that
an unconstitutional enactment is invalid and also that as to statutes
requiring public fund expenditure, the municipality is a fiduciary
and trustee of the public interest in expenditure of public funds.
Kenney v. East Brunswick Tp., 172 N.J. Super. 45, 49-50 (N.J.
Super. Ct. App. Div. 1980). This was the basis of Secaucus’ claims
in the State case as presented in its Amended Complaint. It is
absolutely clear, however, that municipalities do not possess
Fourteenth Amendment rights arising under the federal
Constitution.
Neither can the municipality assert the federal constitutional
rights of its taxpayers and citizens, where none have intervened in
the state case. Nor could the municipality have maintained such an
action under the New Jersey Constitution. As the court held in
Glassboro v. Byrne, 141 N.J. Super. 19, 23, 357 A.2d. 65 (N.J.
Super. Ct. App. Div. 1976), cert. denied, 71 N.J. 518, 366A.2d 674
(N.J. 1976), equal protection considerations are not available or
pertinent to municipal corporations.
The petitioner’s jurisdictional statement inaccurately
contends, without providing any specificity in support of its
statement, that jurisdiction of this Court to review the state court
judgment lies in 28 U.S.C. $1257. This contention is not supported
either in the petition, or in the record of the state court action,
which devolved entirely upon issues of state law. No federal
questions were presented below by any party, nor did any federal
questions pertain to the case. Attempting to buttress its ill-founded
contentions, petitioner inaccurately claims (at Pb 8) that in
defending the state case it argued “implicitly, that if the Act was
stricken, the rights safeguarded to the residents of Bayonne. . .
would be impermissibly infringed. . . .” (emphasis added).
The gravamen of Bayonne’s Petition is that its very active
14
participation in five years of New Jersey state court proceedings,
commencing in 1988 in the trial court and concluding in 1993 with
the New Jersey Supreme Court Judgment, allowed it insufficient
process — notice and opportunity to be heard — to provide an
adequate basis upon which the New Jersey courts could in fairness
premise a determination that due to HCBT’s improper
administration (and also due to the unconstitutional exemption
statute) Bayonne had improperly underpaid past county taxes,
resulting in county tax overpayments by the other municipalities of
the County. In an argument never raised in the state court action in
the petition, Bayonne now also urges belatedly to this Court that
the municipality possessed a “reliance” interest in the stricken
county tax exemption granted by the state statute, somehow
worthy of federal constitutional protection under the Fourteenth
Amendment, or analogous to a “vested right”, but unrecognized or
unprotected by the New Jersey Supreme Court. Bayonne also
alleges incorrectly that the well-reasoned analysis and fully
supported determinations of state law affirmed within the New
Jersey Supreme Court Judgment were arbitrary in their application
to the municipality.
The existence of a federal question is an absolute requirement
for United States Supreme Court exercise of appellate jurisdiction
reviewing the decision of a state court. 28 U.S.C.A. § 1257.
Pelliconi v. Schuyler Packing Co., 140 N.J. Super. 190, 356A.2d 4
(N.J. Super. Ct. App. Div. 1976). See, e.g., Henry v. Mississippi,
379 U.S. 443, 85 S. Ct.564, 13 L. Ed. 2d 408 (1965); Martin v.
Hunter’s Lesee; 1 Wheat. 304, 4 L. Ed. 97 (U.S. 1816); 28
U.S.C.A. § 1257; Hart & Wechsler, The Federal Courts and the
Federal System (2d ed. 1973) at 470-526. Thus, under our federal
governmental system, the federal courts have no jurisdiction to
review a state court judgment except when a federal question has
been presented. Only in such a case presenting a federal question
may the final decree or judgment of the highest state court in which
a ruling might be had may there be review on certiorari in the
15
Supreme Court of the United States. Reich v. City of Freeport, 388
F. Supp. 953, (D.C. Ill. 1974), aff'd, 527 F.2d 666 (7th Cir. 1975).
The Supreme Court of the United States possesses no inherent
corrective power of review over state courts as it holds to supervise
and review proceedings in federal courts. Hoag v. State of N.J., 356
U.S. 464, 78S. Ct. 829, 2L. Ed. 913, rehearing denied, 357 U.S.
933, 78S. Ct. 1366, 2 L. Ed. 2d 1375.
Even in those cases where there are errors in federal law
application in state court judgments, the United States Supreme
Court will not review if the state court judgment rests on
independent and adequate state grounds. 28 U.S.C.A. § 1257(a).
Super Tire Engineering Co. v. McCorkle, 550 F.2d, 903, (3rd Cir.
1977), cert. denied, 98 S. Ct. 16, 434 U.S. 827, 54 L. Ed. 2d 86,
rehearing denied, 98 S. Ct. 753,434 U.S. 1025, 54L. Ed. 24773.
There are clearly no questions of federal law in this case. In the
state court action, Bayonne did not assert any argument arising
from the United States Constitution. The state court action was
determined exclusively by state law. [Yet, Bayonne, a New Jersey
municipality, has now filed a petition for writ of certiorari which
claims that the New Jersey Supreme Court has denied Bayonne’s
alleged rights of equal protection and of substantive due process
pursuant to the Fourteenth Ame: Jment of the United States
Constitution. ]
In the petitioners’ question 1 of “Questions Presented” in its
Jurisdictional Statement, the petitioner juxtaposes various factual
inaccuracies to convince this Court by these inaccuracies that
HCBT and Hudson County were “sham defendants” (Pb12), that it
had been treated unfairly and had been denied prop-r legal process
by the New Jersey Supreme Court. Petitioner inaccurately claims
that the plaintiffs’ Prerogative Writ procedure seeking mandamus
against HCBT and Hudson County was a “sham” designed to
maximize Bayonne’s potex‘:al liability. The procedural history
and facts of the state «“~s¢ reveal that this is absolutely untrue.
16
Further, the only basis upon which Bayonne was found financially
responsible in 1990 by the trial court was because it had previously,
significantly underpaid its proper proportionate share of county
taxes and these repayments of county tax by Bayonne are the basis
of the trial court judgment providing restitutionary credits to
Secaucus and the other “non-Bayonne” Hudson County
municipalities for their resultant past overpayments of
proportionate shares of county taxes. Thus, pursuant to N.J.S.A.
54:4-49 providing for obligatorreadjustment by debits and credits
for underpayment or overpayment of tax, Bayonne was obliged by
the Courts to satisfy its prior underpayments of county tax. As
found by the New Jersey Courts in Roseland v. Essex County Board
of Taxation, 18 N.J. Misc. 613, 15 A.2d 765 (St. Bd. Tax App.
1940), this statutory provision, N.J.S.A. 54:4-49, does not impose
any limitations period for the correction of apportionments of
county and state taxes to the municipalities.
Bayonne’s first faulty contention is that the New Jersey
Supreme Court denied the City’s alleged substantive (and
procedural) due process rights. Ignoring the clear mandate of
N.J.S.A. 54:4-49, Bayonne also inaccurately claims that the State
Court judgment requiring the municipality to make restitutionary
payments of county taxes to satisfy its prior county tax
underpayments arising from the improper county tax benefit it
gained through HCBT’s improper methodology of apportioning
added and omitted assessment county taxes and also its county tax
underpayments from the post-1988 exemption _ statute
applications, to provide recompense to the “non-Bayonne”
Hudson municipalities for their resulting overpayments of county
taxes, imposes improper “retroactive” “damages”. Bayonne also
claims without basis that through its reliance on the statutory
exemption and upon HCBT’s improper administrative method
granting Bayonne the extra exemption on county tax outside the
statutory scope, the municipality has purportedly acquired some
further unspecified (property) rights permitting it to retain the
17
improper benefits from prior underpayments of county taxes and
entitling it to continue ongoing to receive county tax exemption
relief from the HCVS portion of county taxes pursuant to the terms
of the now-invalidated exemption statute.
When the 1988 Appellate Division Opinion reversed and
remanded for further proceedings by the trial court, and upon
remand Bayonne was a party defendant. Thus Bayonne
participated fully in all state court proceedings in which its
interests were determined by the state courts.
In New Jersey, orders to accomplish proper apportionment
and equality of taxation between constituent municipalities of the
same county are enforceable by mandamus. Middlesex County Bd.
of Taxation v. Borough of Sayreville, 133 N.J. Super. 41, 335 A.2d
73 (N.J. Super. Ct. App. Div. 1975). This is true when the order is
directed to the county board of taxation, upon whom the primary
duty for securing a fair allocation among the constituent
municipalities of the common county tax burden under the state’s
statutory scheme for local taxation of real property. Borough of
Sayreville v. Middlesex County Bd. of Taxation, 133 N.J. Super. 46,
335 A.2d 75 (N.J. Super. Ct. App. Div. 1975). State law requires
that “the fiscal burden of county government shall be apportioned
equally and impartially among the several municipalities.” Clifton
v. Passaic County Bd. of Taxation, 28 N.J. 411, 418 A.2d 1 (N_J.
1958).
The mandamus remedy was sought by Secaucus in the
original state case, in conjunction with a judgment on certiorari to
review and invalidate improper governmental acts, in order to
compel the public officials of the county tax board and the county
to properly apportion, collect and apply county taxes in conformity
with the law. The focus of the initial action in lieu of prerogative
writs by Secaucus was to rectify and correct improper imposition,
calculation and collection of county taxes by HCBT on added and
18
omitted assessments and improper applications by the County of
the excess public funds resulting in Secaucus’ overpayments of
county tax. Subsequent to the 1988 remand by the Appellate
Division, Bayonne participated in all court proceedings as a
defendant in the case before any of the issues of remedy in the case
were determined by the trial court and thereafter Bayonne
participated as an appellant through two levels of state appellate
review including in the state’s highest court.
Despite the fact that this state case presents no statute of
limitations defense or question applicable, Petitioner’s Brief
nonetheless argues that the “relation back” concept, limiting
amendment of pleadings in a statutorily time-barred action, should
be applied by this Court to a state certiorari and mandamus action
reviewing validity of governmental acts and compelling
compliance of public officers of state entities with statutory
obligations barring unfair allocation of county taxes and improper
application of public funds. Invalid governmental acts beyond the
scope of legal authority do not become validated merely by the
passage of time. As stated infra, in New Jersey when
apportionment of county and state taxes has been incorrectly
accomplished, N.J.S.A. 54:4-49 requires the corrective
reallocation of county and state taxes to the municipalities.
“Relation back” and similar limitation of action defenses and
concepts cited by petitioner can only arise in cases from express
legislative intent inherent to public purpose in enactment of
applicable statutes of limitation. A statute of limitation is a
legislative mandate by statute effectively limiting both the
jurisdiction of the court to adjudicate certain claims or causes of
action and also thereby limiting the rights of litigants to maintain
litigation of particular causes of action in support of these claims.
In the case of Fischer v. Twp. of Bedminster, 5 N.J. 534, 76 A.2d
673 (N.J. 1950), the New Jersey Supreme Court held that a
legislative statute of limitations attempting to limit jurisdiction of
19
the New Jersey Court in actions in lieu of prerogative writs was
unconstitutional and expressly barred by art. VI, § 5, 1 4, of the
New Jersey Constitution (1947), which provides as follows:
Prerogative writs are superseded and, in lieu
thereof, review, hearing and relief shall be
afforded in the Superior Court, on terms and in
the manner provided by rules of the Supreme
Court, as of right, except in criminal causes
where such review shall be discretionary.
(Emphasis added).
The court in Fischer found that this New Jersey constitutional
provision intended that actions in lieu of prerogative writs in the
State be regulated solely by New Jersey Supreme Court rule
without any legislative interference. Fischer, Id. 5 N.J. at 539.
Petitioner freely admits in its petition at (Pb13) that there is no
statute of limitations question in this case, but, nonetheless, argues
irrelevantly that limitation of action principles unrelated to
prerogative writ relief and without any existing state limitations
statute nonetheless should have been applied by the State court and
now should be applied by this Court.
Petitioner in its second “Question Presented”, in support of its
jurisdictional statement, attempts to create a purported issue from
other New Jersey statutes permitting optional county service
programs, such as county library services or county health
services, where municipalities may choose as an alternative to
provide their own local services. In the state court action, Bayonne
claimed those other optional statutory programs demonstrated the
generality of N.J.S.A. 18A:54-37.
The New Jersey Supreme Court in finding the statute N.J.S.A.
18A:54-37 unconstitutional special legislation, because it
20
unreasonably limited the scope of application to municipalities
operating local vocational programs by the aggregate limiting
classifications of longevity of local program, total county
population and county population density, noted that this statute
was readily distinguishable from statutes (of general application)
permitting optional county services programs, as an alternative to
local provision of service. The Court citing in support of its
decision in Vreeland v. Byrne, 72 N.J. 292 at 301, 370 A.2d 825
(N.J. 1977), concluded on this point by emphasizing that in each
case the test of generality is whether the statute “rests upon a
reasonable or rational basis relevant to the purpose and object” of
the enactment. Secaucus v. Hudson County Board of Taxation, 130
N.J. 393, 502, 614A.2d 616 (N.J. 1993) (Pa22).
In its Jurisdictional Statement, the petitioner municipality
alleges that the New Jersey Supreme Court judgment distinguishes
these other statutory schemes.
In its second “Question Presented” “Jurisdictional
Statement”, petitioner Bayonne alleges to this Court that the New
Jersey Supreme Court judgment distinguishing these other New
Jersey “opt-out” statutory schemes, while striking down as a
special act the exemption pursuant to N.J.S.A. 18A:54-37 has
denied its citizens equal protection under the law.
Not only does the petitioner misstate the predicate facts and
legal conclusions within this question presented, but as previously
discussed, infra, the decision of the state court in this case
devolved purely on issues of state law thereby presenting no
federal question, but the petitioner as previously discussed, infra,
lacks standing to raise the Fourteenth Amendment claims to this
Court on behalf of its citizens.
By virtue of the similarity of analysis under New Jersey state
law for evaluating general legislation and under federal equal
. = ‘
21
protection analysis to evaluate whether equal protection under the
law has been afforded by the State as whether there is a reasonable
basis on the classification or distinction in treatment, the New
Jersey Supreme Court has already found the classification in the
stricken statute to be arbitrary. So even if assuming arguendo: (i)
that the Fourteenth Amendment were to be applied to
municipalities in actions against the State; (ii) that the municipality
were to have standing to raise the federal constitutional rights of its
citizens; and (iii) that the state court action were to have been
determined on other than state law, the multiple classifications by
the stricken statute still were clearly not rationally related to its
purpose. That after all was the substance of the New Jersey
Supreme Court judgment. When applicable, the Fourteenth
Amendment does not bar or invalidate all classifications if a
legislative enactment does not regulate a semi-suspect or suspect
class, the Fourteenth Amendment only prohibits invidious
discrimination, against persons and classes of persons without
rational basis as violations of equal protection and due process.
Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2d
491, rehearing denied, 398 U.S. 914, 90 S. Ct. 1684, 26 L. Ed. 2d
80 (1970); Graham v. Richardson, 403 U.S. 315,91 S.Ct. 1848, 29
L. Ed. 2d 534 (1974); Craig v. Boren, 429 U.S. 190, 97S. Ct. 451,
50 L. Ed. 2d 397 (1976), rehearing denied, 429 U.S. 1124, 97S. Ct.
1161, 51 L. Ed. 24574 (1977).
The due process clause of the Fourteenth Amendment cannot
be invoked merely because the fairness of a legal conclusion is
contested. State v. Brown, 41 N.J. 590 198 A.2d 446, (N.J. 1964),
cert. denied ,377 U.S. 981, 84S. Ct. 1888, 12 L. Ed. 2d 749; State v.
Garvin, 44 N.J. 268, 208 A.2d 402, (N.J. 1965). The due process
protections required by the Fourteenth Amendment comport with
basic notions of fair treatment, substantial justice, and a
determination of the controversy premised on the merits. Murphy
v. Helena Rubenstein Co., 234 F. Supp. 893, (D.C. N.J. 1964),
appeal dismissed, 355 F.2d 533 (3rd Cir. 1964). Irrespective of
22
current claims under the federal Constitution, the record of the
state case confirms absolutely that the petitioner was afforded
fundamental fairness by the New Jersey courts.
CONCLUSION
For the foregoing reasons, the petition for writ of certiorari
should be denied.
Respectfully submitted,
FRANCES C. HOLLAND
HOLLAND & HOLLAND
Attorneys for Respondent
Town of Secaucus
DATED: January 28, 1994
la
APPENDIX A — OPINION — SECAUCUS V. HUDSON
COUNTY BOARD OF TAXATION, ET AL., DOCKET NO.
L-094204-86PW (N.J. SUPER. CT. LAW DIV.,
JUNE 29, 1990)
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF
THE COMMITTEE ON OPINIONS
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION: HUDSON COUNTY
DOCKET NO. L-094204-86PW
SECAUCUS,
Plaintiff,
v.
HUDSON COUNTY BOARD OF TAXATION, COUNTY OF
HUDSON, CITY OF BAYONNE, BOROUGH OF EAST
NEWARK, TOWN OF GUTTENBERG, TOWN OF HARRISON,
CITY OF HOBOKEN, CITY OF JERSEY CITY, TOWN OF
KEARNY, TOWNSHIP OF NORTH BERGEN, CITY OF
UNION CITY, TOWNSHIP OF WEEHAWKEN, and TOWN OF
WEST NEW YORK,
Defendants.
Decided June 29, 1990
Frances C. Holland (Holland & Holland, attorneys) and Bernard
Schenkler (Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime,
attorneys) for plaintiff.
2a
Appendix A
Harry Haushalter, for defendant Hudson County Board of Taxation
(Robert Del Tufo, Attorney General of New Jersey, attorney).
Kathleen M. Grant for defendant Hudson County (Robert E. Barry,
Hudson County Counsel, attorney).
Robert F. Sloan for defendant Bayonne.
Libero D. Marotta for defendant East Newark.
Richard A. Bowe for defendant Guttenberg.
Eugene P. O’Connell for defendant Hoboken.
Mary Ann Murphy for defendant Jersey City
(Joseph Healey, Corporation Counsel).
Norman A. Doyle, Jr. for defendant Kearny (Doyle & Brady,
attorneys).
Herbert Klitzner for defendant No. Bergen.
Joseph S. Sherman for defendant Union City (Acheson, Pelio &
Scarinci, attorneys).
Le Roy D. Safro for defendant Weehawken.
Joseph A. Apicella for defendant, West New York.
HOPKINS, J.T.C., temporarily assigned.
This case brings for constitutional review L. 1973, c. 305, § 1,
codified as WN.J.S.A. 18A:54-37, which allows certain
municipalities having their own vocational education programs to
3a
Appendix A
be exempted from paying their proportionate share of county taxes
allocable to county vocational schools. Specifically before this
court is a challenge by plaintiff, Secaucus, alleging that the
provision is unconstitutional legislation in violation of both Art.
VII, § 1, par. l(a), the uniformity provision, and Art. IV, § 7, par. 9,
the special legislation prohibition, of the New Jersey Constitution
(1947).
The statute in question, N.J.S.A. 18A:54-37, reads as follows:
Notwithstanding any of the provisions of
chapter 54 of Title 18A of the New Jersey
Statutes, in any county of the first class having
a population of not more than 700,000
according to the latest federal decennial
census, each municipality included within a
school district which has maintained for a
minimum of 20 years a vocational education
program approved for the purposes of federal
or State allotment of vocational funds by the
Commissioner of Education under the
regulation of the State Board of Education shall
be exempt from assessment, levy or collection
of taxes based on any apportionment of
amounts appropriated for the use of a county
vocational school district.
As currently enacted, Bayonne is the sole municipality within
the State eligible for exemption.
This matter was originally instituted by Secaucus challenging
only the methodology utilized by defendant, Hudson County
Board of Taxation (HCBT), to levy the county tax on
4a
Appendix A
municipalities for added and omitted county tax revenues. Upon
remand from the Appellate Division, the complaint was amended
to allege the constitutional issues.
HCBT is the governmental agency responsible for
apportioning the costs of county government, including the costs
for the county vocational school, among the twelve municipalities
in Hudson County. Initially, the County Board of School Estimates
fixes an amount to be appropriated for county vocational school
use for the ensuing year, exclusive of the amount to be received
from the State. N.J.S.A. 18A:54-29 and -32. Once this amount has
been certified under N.J.S.A. 18A:54-29.1, the Board of Chosen
Freeholders:
[S)hall, upon receipt of the certificate,
appropriate, in the same manner as other
appropriations are made by it, the amount so
certified, and the amount shall be assessed,
levied, and collected in the same manner as
moneys appropriated for other purposes in the
county are assessed, levied, and collected,
unless such amount is to be raised as otherwise
hereinafter provided in this chapter. [N.J.S.A.
18A:54-29.2.] [emphasis added]
To comply with both N.J.S.A. 18A:54-29.2 and N.J.S.A.
18A:54-37, HCBT developed a system whereby a two-tiered
county rate was computed and applied to the various
municipalities within Hudson County.' A county taxation rate is
1. The twelve Hudson County municipalities which are parties to this
proceeding are: Bayonne, East Newark, Guttenberg, Harrison, Hoboken, Jersey City,
Kearny, North Bergen, Secaucus, Weehawken, West New York, and Union City.
Harrison has defaulted.
Sa
Appendix A
normally determined once the budgetary needs of the county are
tallied. The rate is determined per $100 of assessable property to
meet those budgetary figures. Since assessment practices vary
among the municipalities, the county tax burden of a municipality
is based upon its equalized true, value to the aggregate equalized
true value of all the municipalities within the county.
The two-tiered county rate formulated was utilized to
compute each municipality’s proportionate share of the certified
budgetary requirements for Hudson County, with the lower tier,
which did not include the Hudson County Vocational School
(HCVS) costs, applying to Bayonne. Thus, the two-tiered system
enabled Bayonne to enjoy a lower county tax rate due to the
statutory exemption. The proportionate amounts that the other
eleven municipalities contributed to fund the county school
absorbed Bayonne’s exemption.
On February 15 of each year, municipalities must also pay to
the county a share of the revenues derived pursuant to N.J.S.A.
54:4-63.1, et seq., (added assessments of real estate), N.J.S.A.
54:4-63.12, et seq., and N.J.S.A. 54:4-63.31, et seq., (omitted
assessments of real estate). These provisions prevent new
properties constructed after the October 1 assessment date, or
properties which were not included in the regular assessment list of
October 1 for the tax year, from escaping taxation until the
following year. Under N.J.S.A. 54:4-63.10,-63.22, and -63.38, the
added or omitted property assessment list is multiplied by the
county rate to calculate the sums due the county for added and
omitted taxes.
The same two-tiered approach used for the regular assessment
list was used when multiplying the added and omitted lists by the
county rate. Bayonne’s multiplier was the lower tier, reflecting its
6a
Appendix A
exemption from funding the county vocational school, while the
other municipalities paid the higher tier. None of these added or
omitted tax revenues were segregated or allocated to funding the
county vocational school, even though the two-tiered rate system
was still being employed.
Suit was filed in Superior Court by Secaucus against the
HCBT and the County of Hudson, alleging overpayment of county
taxes in past years. On an Order to Show Cause before this court, it
was held that the county rate applicable to added and omitted
assessments in Secaucus included a portion applicable to the
HCVS in Bayonne, and that such portions of the added and omitted
taxes were to be placed in escrow to fund the vocational school in
the next applicable budgetary year, rather than to be used for
general county purposes. This procedure permitted the
municipalities subject to the higher-tiered rate to recoup their
excess payments in the following year’s HCVS budget request.
Both plaintiff and defendants appealed that order. While
acknowledging the discriminatory nature of the tax system used by
defendants, the Appellate Division remanded the matter for failure
to join the other affected Hudson County municipalities. It
specifically declined to pass upon the validity of the trial court’s
remedy. By amended complaint, plaintiff challenged the
constitutionality of the total statutory exemption enjoyed by
Bayonne.
Kearny, East Newark, Union City, Weehawken and West New
York join with Secaucus in its present motion for summary
judgment. Bayonne and HCBT cross-move for summary
judgment. No material issues of fact being present, this matter is
suitable for summary judgment. Judson v. Peoples Bank & Trust
Co. of Westfield, 17 N.J. 67 (1954).
et en
ei ebnlb
Ta
Appendix A
The legislative history of the disputed statute shows that
Senate Bill 74, originally introduced for the 1972 Legislative
Session, provided:
1. Notwithstanding any of the provisions
of chapter 54 of Title 18A of the New Jersey
Statutes, each municipality included within a
school district maintaining a system of
vocational education approved for the
purposes of Federal or State allotment of
vocational funds by the Commissioner of
Education under the regulations of the State
Board of Education shall be exempt from
assessment, levy or collection of taxes based
on any apportionment of amounts appropriated
for the use of a county vocational school
district.
2. This act shall take effect immediately.
The Senate Committee amendments to Senate Bill 74 (1972)
limited the scope of the statute by adding, after the word “Statutes”
in the second line, “in any county of the first class having a
population of not more than 700,000 according to the 1970 Federal
Census.”
In lines 3 and 4, the phrase “maintaining a system of” was
omitted, and the following phrase added, “which has maintained
for a minimum of 20 years a.” Also added to line 3 was the word
“program” inserted after “education.”
Thus, as enacted December 14, 1973, the changes were as
follows:
8a
Appendix A
1. Notwithstanding any of the provisions
of chapter 54 of Title 18A of the New Jersey
Statutes, in any county of the first class having
a population of not more than 700,000
according to the 1970 Federal Census, each
municipality included within a school district
which has maintained for a minimum of 20
years a vocational education program
approved for the purposes of Federal or State
allotment of vocational funds by the
Commissioner of Education under the
regulation of the State Board of Education shall
be exempt from assessment, levy or collection
of taxes based on any apportionment of
amounts appropriated for the use of a county
vocational school district.
2. This act shall take effect immediately.
As originally proposed, the bill sought to exempt from
taxation amounts appropriated for the use of a county vocational
school in any municipality which maintained a State or federally
funded vocational school system. The amendment narrowed the
original bill from all municipalities maintaining a “system of
vocational education” by limiting its application to only those
municipalities in a county of the first class having a population of
not more than 700,000 which had maintained the program for a
minimum of 20 years.
The statute was originally enacted as L. 1973, c. 305, § 1 and
was amended by L. 1981, c. 462, § 20 by substituting “latest
federal decennial census” for “1970 federal census.”
a‘ —_-~- ae
9a
Appendix A
According to the 1970 and 1980 censuses, Hudson County fell
within the requirements of N.J.S.A. 18A:54-37 as a county of the
first class having a population under 700,000.
In 1970, Hudson County had a population of 607,839. N.J.S.A.
40A:6-1 then defined a county of the first class to be a “count[y]
having a population of more than 600,000.” Essex County and
Bergen County, with populations of 932,526 and 897,148,
respectively, were also counties of the first class, but were
excluded from consideration under N.J.S.A. 18A:54-37 because
their populations exceeded 700,000.
The 1980 census, however, showed a reduction in Hudson
County’s population to 556,972, jeopardizing its status as a county
of the first class. The Legislature, by L. 1981 c. 462, § 44 amended
N.J.S.A. 40A:6-1 to redefine a county of the first class as one
“having a population of more than 550,000 and a population
density of more than 3,000 persons per square mile.” The provision
for population density was a new criterion.
The following schedule shows the county population statistics
as derived from the 1970 and 1980 census reports.
i. - —
Counti :
1970 1980 Density per sq. mile
Atlantic 175,043 194,119 341.8
Bergen 897,148 845,385 3,567.0
Burlington 323,132 362,542 448.7
Camden 456,291 471,650 2,115.0
Cape May 59,554 82,266 312.8
Cumberland 121,374 132,866 266.8
Essex 932,526 851,116 6,701.7
10a
Appendix A
Gloucester 172,681 199,917 611.4
Hudson 607,839 356,972 12.108.)
Hunterdon 69,718 87,361 204.6
Mercer 304,116 307,863 1,356.2
Middlesex 583,813 595,893 1,885.7
Monmouth 461,849 503,173 1,066.0
Morris 383,454 407,630 865.5
Ocean 208,470 346,038 539.8
Passaic 460,782 447,585 2,393.5
Salem 60,346 64,676 191.3
Somerset 198,372 203,129 666.0
Sussex 77,528 116,119 221.2
Union 543,116 504,094 4,894.1
Warren 73,960 84,429 235.2
Under the reclassification, Hudson County retained its status
as a county of the first class by virtue of its density of 12,108.1
persons per square mile. Bergen County also continued as a county
of the first class with a population of 845,385 and a density of
3567.0, as did Essex County, which had a population of 851,116
with a density of 6701.7. However, Middlesex County, while
surpassing Hudson County in population in the 1980 census with
595,893, had only a density of 1885.7, and did not qualify as a
county of the first class.
Again, only Hudson County, with a population under 700,000,
qualified under N.J.S.A. 18A:54-37, and only Bayonne, in Hudson
County, had maintained a vocational education program approved
for allotment of state or federal vocational funds for the requisite
20 years. Thus, Bayonne was the only municipality in the State
which was exempt from county taxes used to support a county
vocational school. Kearny, in Hudson County, would have
qualified, except that its vocational school program had not been in
effect for the reguisite 20 years.
lla
Appendix A
As noted, favored treatment required that a municipality have
maintained, for a minimum of 20 years:
a vocational education program approved for
the purposes of Federal or State allotment of
vocational funds by the Commissioner of
Education under the regulation of the State
Board of Education. . . . [emphasis added]
Federal funding of vocational education began as early as
1917 under the Smith-Hughes Act. See Legislative History of Pub.
L. No. 94-482, S. Rep. No. 882, 94th Cong., 2d Sess. 42, reprinted
in 1976 U.S. Code Cong. & Ad. News, 4713, 4753-54.
In 1917 Congress enacted one of the
earliest Federal grant programs, the Smith-
Hughes Act. This legislation represented a
milestone in the development of Federal aid to
the States for education, incorporating
provisions for the allocation of funds, State
plans, development of State policymaking
boards for the administration of education
programs, matching requirements, and annual
accountability reports to Congress. These are
many of the same provisions carried through,
in various forms, in present Federal education
laws. The Smith-Hughes Act authorized $7
million for vocational education in agriculture,
trades and industry, and home economics, and
the training of teachers for these programs.
New Jersey enacted legislation as early as 1917 to accept
federal funds. N.J.S.A. 18A:59-4. These funds are provided under
Ore ere ee ee
12a
Appendix A
the Vocational Education Act of 1963, (Pub. L. 88-210, 77 Stat.
403), the 1976 amendments, and currently under the Carl D.
Perkins Vocational Education Act, (Pub. L. 98-524, 98 Stat. 2435),
20 U.S.C.A. § 2301, et seq. These funds are accepted and
distributed in accordance with N.J.S.A. 18A:59-4 & -5.
The requirement for apportionment or allotment of federal
funds is derived from the federal legislation itself. Thus, pursuant
to 20 U.S.C.§ 2302, Congress is required to appropriate the funds
necessary for vocational education, and a formula is established
for allotment of funds among the states. The procedure is described
in School Committee v. Mass. Dept. of Educ., 753 F. 2d 169, 171
(Ist Cir. 1985), involving the substantially similar 1976 Act:
The Act establishes a system of federal
grant support for state and local vocational
education programs, including post-secondary
school programs. In order to receive grant
money, a state must submit a three-year and
five-year vocational education plan to the
United States Department of Education
detailing, among other things, what purposes
the money is to serve and how it is to be
allocated. If the state plan is approved by the
United States Department of Education, the
state receives federal funds. Local entities must
apply to the Massachusetts Department of
Education, for specific grants from the federal
funds.
N.J.S.A. 18A:59-5 provides that the State Board of Education is the
agency responsible for administration and supervision of the plan:
13a
Appendix A
The state board is hereby designated as the
state board for the purposes of said act of
congress, and shall cooperate, as in the act
provided, with the federal board for vocational
education in the administration of the
provisions thereof. The state board shall do all
that is or may be required to secure for the state
of New Jersey the benefits of appropriations
under the act of congress for all purposes
4 specified therein.
y re Peat a we
nt ne ene Le Ee Se a7 ares ern
F Further, Legislative History of Pub. L. No. 94-482, S. Rep. No.
A 882, 94th Cong., 2d Sess. 61, reprinted in 1976 U.S. Code Cong. &
Ad. News, provides:
The concept of the State board of
vocational education as the sole State agency
: mandated by Federal law for the administration
of vocational education programs has been a
part of our nation’s tradition since 1917. [at
4773]
The State Plan for Vocational Education FY 1989-1990 (June
1988) (State Plan) prepared by the Division of Vocational
Education, provides that the Commissioner is the agent for the
Board.
20 U.S.C.A. § 2322 mandates the establishment of a State
council on vocational education. N.J.A.C. 6:41-2 created such a
council. Further, 20 U.S.C.A. § 2323 requires federal approval of a
State Plan. N.J.A.C. 6:43-1.1 provides that all vocational education
in New Jersey shall comply with the State Plan.
14a
Appendix A
(a) Any vocational and technical educational
program of less than college grade shall be
conducted within the framework of a State Plan
for Vocational and Technical Education
approved by the State Board of Education and
accepted by the United States Office of
Education.
20 U.S.C.A. § 2325 provides for local applications for funding
as follows:
(a) Requirements; determination by State
board
Except as provided in subsection (c) of this
section, any eligible recipient desiring to
receive assistance under this chapter shall,
according to requirements established by the
State board, submit to the State board an
application, covering the same period as the
State plan, for the use of such assistance. The
State board shall determine requirements for
local applications (and amendments thereto),
except that each such application shall—
(1) set forth the vocational education
programs, services, and activities proposed to
be funded. . . . (emphasis added]
According to the 1985-86 Annual Report of the State
Commissioner of Education, New Jersey received a total of
$10,005,935 in federal funding. Newark alone received $923,139
of federal vocational funds. 1985-1986 Comm’r Educ. Rep. 35. A
15a
Appendix A
computer list of federal funding by school district and by course,
for 1987 and for 1988, produced by the Department of Education,
shows that virtually every municipality receives at least some
federal funds. 1988 computer list of Requested/Approved Funding
by County produced by Bureau of Vocational Management
Services, Department of Education.
In 1988, Bayonne qualified and was approved for federal
funding for 13 courses, including marketing, auto body and data
processing. Bayonne received over $300,000 in federal funds in
1988.
Jersey City was approved to receive in excess of $700,000 in
federal funding for about 55 courses, including marketing, home
economics, child care, cosmetology, carpentry, electronics and
graphic arts. Kearny was approved to receive federal funds of
approximately $50,000 for five courses in 1988. Even plaintiff,
Secaucus, was approved to receive $19,000 in federal and state
funds for two courses.
Newark, in Essex County, was approved to receive over $1.0
million in federal funds for approximately 60 courses in 1988. In
Bergen County, New Milford was approved to receive some
$4,000 in federal funds for two courses. Englewood received over
$12,000 for three courses. Hackensack was approved to receive
over $30,000 for four courses. Lyndhurst was approved to receive
$45,000 for 13 courses. Elizabeth, in Union County, was approved
to receive almost $400,000 in federal funds for 35 courses.
Thus, the Commissioner of Education (the designated
representative under the State Plan) approves programs for
allotment of federal funds, under regulation of the State Board of
Education, i.e., the State Plan promulgated by the Board.
16a
Appendix A
It can be said that virtually every municipality in New Jersey
maintains:
a vocational education program approved
for the purposes of federal ... allotment of
vocational funds by the Commissioner of
Education under the regulation of the State
Board of Education. .. .
State categorical aid for vocational education is paid to
designated “Local Area Vocational School Districts” (LAVSD).
N.J.A.C. 6:46-2.1. To qualify for the LAVSD designation and
funding, such districts must operate at least two programs in
defined occupational areas such as agriculture, health, home
economics, marketing or technical education; provide secondary
education programs in trade; and comply with other administrative
requirements. N.J.A.C. 6:46-2.3. A “program” is defined in
N.J.A.C. 6:46-1 as “the planned sequence of courses, services or
activities designed to meet a vocational objective.” This definition
was promulgated in 1982, after the 1973 enactment of N.J.S.A.
18A:54-37.
The LAVSD designation was established in 1982. See Sen.
Educ. Comm. Statement A No. 1660, L. 1980, c. 102 to N.J.S.A.
18A:7A-1, et seq. The formerly designated Area Vocational
Technical Schools had evolved from the 1963 Vocational Act. That
act allocated funding, 50% from the federal government, 25% from
the State and 25% from the district. Federal funds ran out in the
mid-1970’s, and funding for vocational education was effectively
supplanted through chapter 212 of the Public School Education
Act of 1975, N.J.S.A. 18A:7A-1, et seq.
Bayonne receives state categorical aid funding for vocational
mF
17a
Appendix A
education on account of its vocational education in its high school.
Bayonne’s school district is a designated LAVSD. The school
district of Kearny, in Hudson County, is also a designated LAVSD,
as are school districts in 16 other municipalities in the State.
The following shows the State funding for approved LAVSD’s
for 1985-1986:
Bayonne (Hudson) $698,601
Black Horse Pike Regional (Camden) 483,131
Camden City (Camden) 841,502
Deptford Township (Gloucester) 264,643
Elizabeth (Union) 564,507
Hunterdon Central (Hunterdon) 335,258
Kearny (Hudson) 290,693
Linden (Union) 349,770
Lower Camden County Regional (Camden) 492,452
Matawan-Aberdeen (Monmouth) 361,022
Millville (Cumberland) 301,008
Morris Hills Regional (Morris) 412,700
North Hunterdon (Hunterdon) 476,362
Red Bank Regional (Monmouth) 160,350
Trenton (Mercer) 656,472
Union County Regional (Union) 249,434
Union Township (Union) 368,524
Willingboro (Burlington) 527,936
New Jersey also has other county vocational schools. N.J.S.A.
18A:54-11, et seg. According to the State Department of
Education, as of September 1, 1988, there were 20 county
vocational schools in existence. They are funded by the State, by
virtue of N.J.S.A. 18A:7A-24, and also receive federal funds. To
the extent they are not otherwise funded by State or federal
18a
Appendix A
revenues, county vocational schools are funded by each county,
which funding needs are “assessed, levied and collected in the
same manner as moneys appropriated for other purposes in the
County.” N.J.S.A. 18A:54-29.2.
Most of the county vocational school districts, including
Hudson County, also contain designated LAVSD’s. Both Bayonne
and HCVS are LAVSD’s and receive State categorical vocational
aid funding in addition to federal funds.
The HCVS commenced operations in its own facility in the
1974-1975 school year, although its Board of Education was first
constituted in 1965. Its records for 1972 show a resolution
directing negotiations for the acquisition of a school building. A
budget estimate for approximately $2.0 million was prepared in
early 1973. It was at that time that the subject statute was enacted.
Since at least the early 1930’s, Bayonne has maintained a
vocational education program. Initially, its vocational program
was operated through a separate vocational high school. By the
1960’s, the vocational program had become fully integrated with
Bayonne’s comprehensive high school. There is no “vocational
education” student, per se. In Bayonne’s vocational program, long
considered a model, vocational education students fully
participate in school activities with other students and attend many
classes with non-vocational education students.
There is no prohibition against Bayonne students or residents
from attending HCVS.
On February 15 of each year, in addition to the regular
installments of county taxes, a municipality must pay to the county
an amount determined by multiplying the total of added or omitted
19a
Appendix A
assessments “by the county . . . rate.” N.J.S.A. 54:4-63.10, 63.22,
63.38. The added and omitted assessment statutes, discussed
supra, all provide that each municipality must pay a portion of its
added and omitted assessment taxes to the county. These amounts
were paid at the two-tiered rate.
The parties have stipulated that no part of the funds paid to
Hudson County on account of added and omitted assessments are
segregated for or paid for the use of the county vocational school.
All of the county taxes attributable to the added.and omitted taxes
became part of general funds used to fund Hudson County general
expenditures. By reason of the two-tiered county rate, Bayonne
taxpayers were exempted from paying the same portion of the
taxes resulting from the added or omitted assessments, even
though all such funds were used for general county government
purposes.
The constitutional provisions restricting legislative
enactments exempting local real property from taxation are
expressed in N.J. Const. (1947) Art. VIII, § 1, par. l(a) and par. 2,
which read as follows:
1. (a) Property shal] 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, except as otherwise
permitted herein, and such 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.
> «= & &
20a
Appendix A
2. Exemption from taxation may be granted
only by general laws. Until otherwise provided
by law all exemptions from taxation validly
granted and now in existence shall be
continued. Exemptions from taxation may be
altered or repealed, except those exempting
real and personal property used exclusively for
religious, educational, charitable or cemetery
purposes, as defined by law, and owned by any
corporation or association organized and
conducted exclusively for one or more of such
purposes and not operating for profit.
The leading case on the construction to be given to the above
constitutional provisions is N.J. State League of Municipalities v.
Kimmelman, 105 N.J. 422 (1987). That case involved the
constitutionality of a statute which prohibited newly constructed
single-family dwellings from being added to real property
assessment lists until a certificate of occupancy had been issued
and the dwelling had actually been occupied. The court reviewed
the history of the constitutional paragraphs to show the intent of the
framers before concluding that the statute violated both the
uniformity. provisions of Par. l(a) and the requirement that
exemptions be granted only by general laws, as contained in Par. 2.
In so doing, the court recognized the constitutional limitations
on taxation, as well as the cases construing those limitations prior
to the 1947 Constitutional Convention. Such background was
necessary to fully implement the constitutional requirement that
all real property shall be assessed according to the same standard of
value and taxed at the general tax rate of the taxing district.
It was pointed out that for almost 75 years, the New Jersey
2+ no at eee? Ca
2la
Appendix A
Legislature and the courts, in the development of tax policy, were
guided by the provisions of the 1844 New Jersey Constitution, Art.
IV, § 7, par. 12, which read as follows: “Property shall be assessed
for taxes under general laws, and by uniform rules, according to its
true value.”
In its review, the court relied heavily upon a monograph by
Aaron K. Neeld, contained in 2 Proceedings of the State of New
Jersey Constitutional Convention of 1947, 1685 (S. Goldman & H.
Crystal, ed. 1951), for the history of that tax policy. It was pointed
out that all taxes are state taxes, even though levied for county and
municipal purposes, and that such power, an essential attribute of
sovereignty, is unlimited in scope except as may be restrained by
constitutional inhibition or irrepealable legislative contract. Under
the 1844 Constitution, class taxation was valid, as long as there
was compliance with the classification rule that all reasonably
within the class were included, that uniformity prevail throughout
the whole class, and that the property be taxed at true value.
However, it was regularly held that classification must be of
property according to its characteristics, or the use to which it is put
and not according to the status of the owner or the mere incidence
of location of the property. Relying upon Neeld’s Proceedings,
supra, the court further stated that the 1844 Constitution tax clause
did not require that all property shall be assessed for taxes. Rather,
the Legislature could classify properties for purposes of exemption
from taxation, subject always, of course, to strict observance of the
classification rule. Elimination of a single member of the natural
class would invalidate the statute. See League, supra, at 428-429.
In support of those principles, the court also pointed out that
an attempted special exemption of $500 for firemen had been
voided on the ground that instead of classifying property for the
purpose of exemption, either by characteristics or by its uses, the
22a
Appendix A
legislation classified the owners of the property according to
characteristics possessed by them, regardless of the characteristics
possessed by the property and of the uses to which it was put.
Tippett v. McGrath, aff’d 71 N.J.L. 338 (E. & A. 1904). Further, an
attempt to exempt new improvements of real property for a period
of five years had also been voided on the basis of improper
classification. Koch v. Essex County Board of Taxation, 97 N.J.L.
61 (Sup. Ct. 1922), and Braunstein v. Jersey City, 98 N.J.L. 478 (E.
& A. 1923). Continuing, the court pointed out that subsequently, an
exemption by classification had been held valid for purposes of
industrial encouragement. Schwartz v. Essex County Bd. of
Taxation, 129 N.J.L. 129, 133 (Sup. Ct. 1942), aff’d 130 N.J.L. 177
(E. & A. 1943), and Burlington Distilling Co. v. State Board of
Assessors, 86 N.J.L. 92 (Sup. Ct. 1914), aff'd 87 N.J.L. 315 (E. &
A. 1915). This latter construction formed the basis for the
preferential tax treatment of railroads when the Railroad Tax Law
was revised to dedicate the proceeds of second class railroad taxes
to municipalities, but the rate of property taxation was fixed at only
3% per $100 value, notwithstanding the fact that the figure was
well below the average tax rate for the State. See Jersey City v.
Kelly, 134 N.J.L. 239 (E. & A. 1946), modifying Jersey City v. State
Board of Tax Appeals, 133 N.J.L. 202 (Sup. Ct. 1945). Such
favorable treatment was judicially approved on the basis that it was
a permissible means to “ease and make more flexible the burden of
taxation of railroad property.” State v. State Board of Tax Appeals,
134N.J.L. 34, 41 (1946), aff’do.b., 135 N.J.L. 482 (E. & A. 1947)
The favored treatment of railroads was the subject of much
discussion at the 1947 Constitutional Convention. The State
League of Municipalities there took the position that the judicial
approval of the railroad legislation was the first such approval
since the adoption of the tax clause in the Constitution of 1875, and
that the courts now construed that clause to permit the Legislature
23a
Appendix A
not only to segregate real property for valuation purposes, but also
to deliberately assess it at a lower rate than that paid by other
property.
It was against this background that the present uniformity and
exemption clauses were promulgated. Again, as shown in the
League case, the political compromise that evolved was that there
would be a deletion of the true value requirement from the tax
clause. However, the Constitution would require that as to the
taxation of real property, then and now the lifeblood of local
government, discriminatory burdens would be forever barred.
League at 433. After considering all of the above, the League court
held that it was required to reconcile the restraint on the power of
the Legislature, as imposed by the uniformity and general
exemption clauses, with the power to grant exemptions. It
achieved this reconciliation by recognizing that when the
delegates dealt with the exemption power, “they considered it as
being exercised in the historical mold of the public purpose — then
seen primarily as educational, charitable and religious purposes.”
League at 435.
The court then stated:
[G]iven that the single galvanizing event
that brought about the agreement on a tax
article was a compromise that gave greater
flexibility to the executive and legislative
branches in taxing all types of property other
than real estate, with the apparent purpose of
providing that real property dedicated to
municipal tax purposes should never be taxed
at an unequal burden, we cannot conclude that
the delegates intended that the Legislature
2Aa
Appendix A
could achieve, by the exemption clause, what
could not be done under the constitutional
restraints imposed upon it. For no matter
whether viewed as a classification or as an
exemption, it is clear that the purpose of the
challenged provision is to aid an ailing
industry. [at 436]
The court went on to point out that prior judicial decisions
were consistent in upholding the constitutional provision against
preferential property tax treatment. See Switz v. Kingsley, 37 N.J.
566 (1962), holding unconstitutional preferential property
treatment for qualifying farmlands by assessing such property at its
value for agriculture, rather than at its fair market value.
Subsequently, the Constitution was amended to permit such
favored treatment.
The League court, based upon the history of the uniformity
clause, found that it was enacted for the purpose of providing that
real property dedicated to municipal tax purposes should never be
taxed at an unequal burden and that the exemption clause could not
be used to undermine that proscription.
The subject statute specifically excludes Bayonne property
owners from that portion of Hudson County property taxation used
to support the HCVS. By statute, except as to the subject
exemption, all local property must be taxed, at its equalized value,
to support county government, including county vocational
schools. N.J.S.A. 18A:54-29.2, N.J.S.A. 54:4-41 and -47. The
subject statute authorizes a disparate treatment in the taxation of
other Hudson County municipalities for the benefit of Bayonne’s
property owners. This favorable status is based on the “mere
incidence of location.” League at 429. See N.J. Turnpike Authority
eres :
25a
Appendix A
v. Washington Tp., 16 N.J. 38 (1954), requiring that an exemption
can only be justified on the basis of the use of the property. The
uniformity clause prohibits favored treatment in the taxation of
real property, regardless of a legislatively determined justification.
Under those circumstances, N.J.S.A. 18A:54-37 is in conflict with
the uniformity clause and is invalid.
Plaintiff also attacks the subject statute as special legislation
creating an unnatural and arbitrary classification specifically for
Bayonne and excluding similarly situated municipalities which,
except for their failure to meet the county population provisions
and failure to have maintained a vocational education program for
20 years, would have been eligible for the tax exemption.
The uniformity clause requires property to be assessed by
general legislation and Art. IV, § 7, par. 9 (6) specifically prohibits
any special legislation relating to taxation or exemption therefrom.
Special legislation is described in 73 Am.Jur. 2d Statutes § 6
(1964), as follows:
Ordinarily, a statute is regarded as a
“special law” if it does not have a uniform
operation. Within the meaning of this rule, a
statute does not have a uniform operation if it
does not relate to persons, entities, or things as
a class, but to particular persons, entities or
things of a class. A classification renders a
statute special where it is made to depend, not
upon any natural, real, or substantial
distinction, but rather upon purely artificial,
arbitrary, illusory, or fictitious conditions, so as
to make the classification unreasonable and
unjust. Sometimes, it is said that a law is
26a
Appendix A
special where its classification is not based
upon some reasonable and _ substantial
difference in kind, situation, or circumstance
bearing a proper relation to the purpose of the
statute, but embraces less than the entire class
of persons to whose condition such legislation
would be necessary or appropriate, having
regard to the purpose for which the legislation
was designed. [emphasis added]
Plaintiff does recognize that it has the burden to demonstrate
clearly that the statute violates the constitutional provisions and
that there is a presumption of constitutionality. Mahwah Tp. v.
Bergen County Bd. of Taxation, 98 N.J. 268, 282 (1985), cert. den.
471 U.S. 1136, 105 S. Ct. 2677, 86 L.Ed.2d 696 (1985), which is the
latest Supreme Court opinion discussing special legislation in the
context of taxation, is particularly instructive in the principles to be
utilized in reviewing a statute for that deficiency. At issue there
was N.J.S.A. 54:4-5, L. 1922, c. 130, which provided a rebate of a
portion of a municipality’s share of county taxes if the municipality
was located in a first class county with a population in excess of
800,000, and had within its borders 200 acres or more of land used
and occupied by a state or county institution. The act’s purpose, as
originally enacted, was stated by the Legislature as follows:
This bill is proposed to correct an injustice
to the Township of Cedar Grove wherein the
Overbrook Hospital is situated. The township
is compelled to furnish tuition to the children of
various Officials and attendants employed
there, and is also compelled to record the vital
Statistics and to furnish protection to the
inhabitants of said hospital, without receiving
Appendix A
a dollar in return. (Statement 3, accompanying
P.L. 1918 p. 8471) [Mahwah at 275]
In holding the statute, as originally enacted, to be
constitutional, the court emphasized certain principles. First, a
statute is presumed to be constitutional and will not be declared
void unless the statute is clearly repugnant to the Constitution.
Further, citing from Jn re Loch Arbour, 25 N.J. 258, 265 (1957), the
court stated that “[a]dded force is given to these basic concepts by
the further policy of our law not to invalidate a statute which has
been in force without a substantial challenge for many years,
unless its unconstitutionality is obvious.” Jd. at 282.
The second principle is that the burden is on the party
challenging the constitutionality of the statute to demonstrate
clearly that it violates a constitutional provision. Mahwah at 283.
The last principle, one that is of longstanding validity, is that in
deciding whether an act is special or general legislation, the
determining factor is what is excluded, not what is included.
It then adopted the three-pronged test set forth in Vreeland v.
Byrne, 72 N.J. 292 (1977). This test includes consideration of the
purpose and object of the legislation, examination of the factual
situation under review in order to determine whether any one thing
is excluded that should be included, and lastly, determination of
whether the resulting classification can be said to rest upon any
rational or reasonable basis relevant to the purpose and object of
the act.
Applying the above principles to the subject statute, its history
shows that as first proposed, it was applicable to any municipality
included within a school district maintaining a system of
vocational education approved for the purposes of federal or state
28a
Appendix A
allotments of vocational funds by the State. However, as finally
enacted, it was restricted to municipalities in those first class
counties having a population of not more than 700,000 according
to the 1970 federal census, which municipalities had maintained,
for a minimum of 20 years, a vocational education program
approved to receive federal or state vocational funds. Only Hudson
County gualified as a county of the first class with a population less
than 700,000, and only Bayonne qualified as having a vocational
program in existence for the minimum 20 years. The Senate
Education Committee Statement to Senate Bill 74 (1972) left no
doubt as to the legislative intent:
This bill, as amended, would exempt the
city of Bayonne from any assessment of taxes
due to the cost of supporting the county
vocational school in Hudson County.
The statute was amended in 1981 to substitute “latest Federal
decennial census” for “1970 Federal census.”
At the same time, by L. 1981, c. 462, § 44, N.J.S.A. 40A.6-1,
the definition of a first class county was revised from a county
having a “population of more than 600,000” to a county having a
“population of more than 550,000 and a density of more than 3,000
persons per square mile.” This change in the definition of a first
class county must be reviewed in the context of the 1980 census
showing that Hudson County’s population had decreased from
607,839 in 1970 to 556,972 in 1980. As such, without the amended
definition, Hudson County would have lost its status as a first class
county as of 1980. Further, in reducing the required population
number, the Legislature also added the population density per
square mile standard for which Hudson also qualified. Although
Middlesex County had a larger total population, it could not meet
the density requirement.
=
Sie ill SEAT "eis el: tah cio ili ste
29a
Appendix A
Bayonne continued to be the only school district qualifying
under the subject statute, and only Bayonne taxpayers enjoyed the
exemption from contributing to county vocational schools.
It is recognized that if the classification is otherwise valid, it is
not rendered invalid by the fact that it applies to only one city in the
state. A statute is not unconstitutional special legislation merely
because it addresses the needs of a particular municipality or
serves a particular legislative purpose. Mahwah at 285.
Accordingly, the legislators’ motivation in adopting the subject
statute in order to ameliorate the perceived hardship of Bayonne in
1971, and their efforts to continue that relief in the amendments in
1981, may not be fully determinative of the constitutionality of the
statute inasmuch as other school districts could come within its
scope. However, the history here shows that such was not the case
and the restrictions, particularly having such programs in existence
for at least 20 years, would make it unlikely that any school district
would qualify until some time in the future. Indeed, the record
reflects that except for the 20 year restriction, Kearny would
qualify, since it is located in Hudson County but had its program in
effect for only 6 years in 1986. That feature, together with the
general recognition of the need to encourage vocational education
programs, requires a finding that the statute was specifically
drafted not only to include Bayonne, but, in such restrictive terms,
as to make it highly unlikely that any other equally impacted
school district could qualify within any reasonable period of time.
The final prong of the Vreeland test is whether the act rests
upon a rational basis justifying the classification.
Classification by population, however, must be analyzed with
the following “bottom line” as noted in Jn re Loch Arbour, supra,
citing Paul v. Gloucester County, 50 N.J.L. 585, 592 (E. & A.
1888):
30a
Appendix A
The extreme limit of our inquiry in this
direction is, Does population bear any
reasonable relation to the subject to which the
legislature has applied it: is it germain [sic] to
the law?
In Mahwah, as well as in Newark Superior Officers Ass’n., et
al., v. Newark, et al., 98 N.J. 212 (1984), the court held that a statute
based upon a population classification was not invalid, per se. It
there pointed out that cities with larger populations had specific
problems which could very well be addressed without giving the
same remedy or relief to lesser populated cities. The same would
apply to populations between various numbers where those
numbers would represent a population criterion reasonably
associated with the restricted application of the legislation.
As noted in Mahwah, the case of Owens v. Fury, 55 N.J.L. 1
(Sup. Ct. 1892), upheld a statute transferring the greater part of the
appointive powers of common councils to the mayor in cities with
populations between 50,000 and 100,000. Emphasizing the
distinction between the greater public concern for such offices in
cities of more than 50,000, the court found the classification to
have a rational basis. However, in Raymond v. Teaneck, 14 N.J.
Misc. 487, 490 (Sup. Ct. 1936), aff’d 118 N.J.L. 109 (E. & A.
1937), the court considered legislation that fixed the tenure of tax
assessors and limited it to cities of a population no less than
135,000 and no more than 200,000. The court there stated:
[W]e cannot discover any sound reason
why one body of assessors or one type of
assessor should be continued in office in a
given locality of the state and another
performing the same service and holding the
eer en es
Pe ee ee Ce eee eee
Fe Se on a
3la
Appendix A
same office should be excluded. If continuance
in office because of experience, security in
office and freedom from political influence be
desirable in a population up to one hundred and
thirty-five thousand, it is difficult to
understand why it should not be desirable in a
population of from one hundred and thirty-five
thousand to two hundred thousand or over
three hundred thousand, and if desirable
respecting assessors generally, why not equally
desirable when the assessment is by
commissioners of assessment in the excluded
municipalities. .. .
Also, population was held not to be a reasonable classification in
Koons v. Atlantic City, 134 N.J.L. 329 (Sup. Ct. 1946), aff’d o.b.
135 N.J.L. 204 (E. & A. 1947). In that case, a retail sales tax was
authorized for any city with a population in excess of 50,000 and
bordering on the Atlantic Ocean. The legislative purpose was to
assist Atlantic City in recovering from recent hurricane damages.
The court, however, found that other shore municipalities had also
been damaged by the hurricane, and were improperly and
artificially excluded by the statute.
The above principles are equally applicable here. The
maintenance of a vocational education program by a municipal
school system, which also contributes to a county vocational
school, if a hardship, is a widespread one which is not restricted by
a population criterion. Bayonne, or any other municipality that
could possibly meet the statutory requirements, represent only a
fraction of the municipalities with the same common problem.
There are some 20 county vocational schools in the State and
numerous school districts with qualified vocational education
32a
Appendix A
programs. The perceived evidence of double contribution cannot
be measured, in its impact. by population restrictions. The
classification by population, including population density per
square mile, effectively excludes the many municipalities with the
same perceived hardship. As such, N.J.S.A. 18A:54-17 also
violates the constitutional proscription against special legislation.
It is concluded that the subject statute fails constitutional
muster both under the uniformity clause and as special legislation.
The issue originally presented to the court was whether the
statute should have been construed to require the HCBT to
compute another county tax rate for the added and omitted
assessment taxes paid by the non-Bayonne municipalities, in order
to permit these municipalities to retain those second-tier amounts.
Secaucus requests this remedy. The county, in turn, wishes to
continue the procedure, presently in existence, whereby the money
is paid to the county, and the county uses the funds for general
purposes.
This court, at the first hearing, found tuat the methodology
through which the county kept such funds for general county
purposes resulted in a discriminatory treatment of the non-
Bayonne municipalities in that such additional payments by them
for general county purposes discriminated in favor of Bayonne
taxpayers. That holding was based upon the principles enunciated
in Clifton v. Passaic County Board of Taxation, 28 N.J. 411 (1958),
and the well-established principle that there is only one county tax
rate, even though, as in this case, it was a two-tiered rate. The
county collection of funds received from the second-tier rate as
applied to added and omitted assessments and their use for general
purposes evidence discrimination in favor of Bayonne.
33a
Appendix A
In statutory construction, it is important that the legislative
policy be kept in mind. Clay v. East Orange, 177 N.J. Super. 79, 84
(Law Div. 1980), aff’d 181 N.J. Super. 40 (App. Div. 1981), aff’d
91 N.J. 429 (1982). That case relied upon New Capitol Bar & Grill
Corp. v. Div. of Employment Security, 25 N.J. 155 (1957), where
the court stated:
It is frequently difficult for a draftsman of
legislation to anticipate all situations and to
measure his words against them. Hence cases
inevitably arise in which a literal application of
the language used would lead to results
incompatible with the legislative design. It is
the proper function, indeed the obligation of
the judiciary to give effect to the obvious
purpose of the Legislature, and to that end
“words used may be expanded or limited
according to the manifest reason and obvious
purpose of the law. The spirit of the legislative
direction prevails over the literal sense of the
terms.” Alexander v. New Jersey Power &
Light Co., 21 N.J. 373, 378 (1956); Wright v.
Vogt, 7 N.J. 1, 6 (1951); Glick v. Trustees of
Free Public Library, 2 N.J. 579, 584 (1949).
Additionally, the statute before us is remedial
and should be liberally construed to
accomplish the social aim of the Legislature.
Campbell Soup Co. v. Board of Review,
Division of Employment Security, 13 N.J. 431
(1953) [at 160]
The above principles were also used in Robson v. Rodriquez, 26
N.J. 517, 528 (1958) and Clifton v. Passaic Tax Bd., supra.
34a
Appendix A
Applying those principles, it is obvious that the legislation
was directed to relieve Bayonne-type municipalities from
contributing to county vocational schools. It was never intended
that Bayonne obtain the extra benefit of also receiving favorable
treatment in the payment of Hudson County’s general operating
costs. This is the basis of Secaucus’ complaint. However, as there
is only one annual tax rate, appropriate construction, in
furtherance of the legislative policy, would be to make certain that
the second-tier payments from added and omitted assessments are
utilized to confine Bayonne’s favored treatment in contributing to
the HCVS budget. In order to avoid discriminatory treatment in
favor of Bayonne, to maintain the validlty of one county tax rate,
and to ensure that taxes paid as HCVS costs are used for such
purpose, the statute should be expanded to provide that such extra
payments be used to reduce the HCVS budget impost for the
following year. By earmarking such funds for that purpose, the
following year’s HCVS budget, as funded by the non-Bayonne
municipalities, will be reduced and the discriminatory practice
corrected.
Relief will be granted to the plaintiff and similarly situated
Hudson County municipalities by application of the excess two-
tiered payments to the HCVS budget commencing with the year
subsequent to the filing of the original complaint in 1986. Full
relief from the unconstitutional statute will commence with the
elimination of the two-tiered county rate commencing with the
county rates determined subsequent to May 27, 1988, the filing
date of the motion to amend the complaint to allege the
unconstitutionality of N.J.S.A. 18A:54-37. See Alfred Vail Mutual
Assoc. v. Halpin, 107 N.J. Super. 517, 533-534 (App. Div. 1969),
aff’d 58 N.J. 40 (1971).
Plaintiff will submit a proposed form of judgment pursuant to
the five-day rule in accordance with the above.
.
35a
APPENDIX B — ORDER GRANTING SUMMARY
JUDGMENT — TOWN OF SECAUCUS V. HUDSON
COUNTY BOARD OF TAXATION, ET AL., DOCKET NO.
L-094204-86 PW (N.J. SUPER. CT. LAW. DIV.,
JULY 27, 1990)
HOLLAND & HOLLAND, P.C.
400 Plaza Drive
Secaucus, New Jersey 07094
(201)-864-1300
Co-Counsel to Plaintiff
RAVIN, SARASOHN, COOK,
BAUMGARTEN, FISCH & BAIME
103 Eisenhower Parkway
Roseland, New Jersey 07068
(201)-229-9600
Co-Counsel to Plaintiff
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION: HUDSON COUNTY
Docket No. L-094204-86 PW
CIVILACTION
TOWN OF SECAUCUS,
Plaintiff,
-VS-
HUDSON COUNTY BOARD OF TAXATION, COUNTY OF
HUDSON, CITY OF BAYONNE, BOROUGH OF EAST
36a
Appendix B
NEWARK, TOWN OF GUTTENBERG, TOWN OF HARRISON,
CITY OF HOBOKEN, CITY OF JERSEY CITY, TOWN OF
KEARNY, TOWN OF NORTH BERGEN, CITY OF UNION
CITY, TOWN OF WEEHAWKEN, and TOWN OF WEST NEW
YORK,
Defendants.
ORDER GRANTING SUMMARY JUDGMENT
THIS MATTER having been presented to the Court by
Holland & Holland, P.C., (Frances C. Holland, Esq. appearing) and
Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime, (Bernard
Schenkler, Esq. appearing), co-counsel to Plaintiff, Town of
Secaucus, in the presence of Robert Del Tufo, Attorney General
(Harry Haushalter, Deputy Attorney General appearing); Kathleen
M. Grant, Esq., Assistant Hudson County Counsel; Robert F.
Sloan, Esq., attorney for defendant Bayonne; Libero D. Marotta,
Esq. attorney for defendant East Newark; Richard A. Bowe, Esq.,
attorney for defendant Guttenberg; Eugene O’Connell, Esq.,
attorney for defendant Hoboken; Mary Ann Murphy, Esq., attorney
for defendant Jersey City; Norman A. Doyle, Esq., attorney for
defendant Kearny; Herbert Klitzner, Esq., attorney for defendant
North Bergen; Joseph S. Sherman, Esq., attorney for defendant
Union City; Le Roy D. Safro, Esq., attorney for defendant
Weehawken; and Joseph A. Apicella, Esq., attorney for defendant
West New York; on a motion for summary judgment, and the Court
having considered the moving and opposing papers and argument
of counsel and for the reasons set forth in a written opinion dated
June 29, 1990, and good cause being shown;
IT IS on this 9th day of August 1990;
37a
Appendix B
ORDERED, that summary judgment be and hereby is granted
in favor of Plaintiff as follows:
1. N.J.S.A. 18A:54-37 be and hereby is declared
unconstitutional and invalid under the uniformity clause of the
Constitutional, Art. VIII Sec. 1 and under the constitutional
proscription against special legislation, Art. IV., Sec. 7, Par. 9(6).
2. The methodology utilized by the defendant Hudson
County Board of Taxation pursuant to N.J.S.A. 18:54-37 to collect
the second-tier county tax from the non-Bayonne municipalities
for added and omitted assessments and to retain and use the
additional funds for general county purposes be and hereby is
invalidated as discriminatory in favor of defendant Bayonne and
said invalidation applies to applications of excess two-tiered
payment to the general county budget commencing with the tax
year 1986; and
3. The Hudson County Board of Taxation shall calculate the
amount collected from the eleven Hudson County municipalities
other than Bayonne on account of added and omitted assessments
between 1986 and May 27, 1988, and calculate the reduced amount
which should have been due and payable from the eleven Hudson
County municipalities, other than Bayonne, had the added and
omitted assessment tax proceeds been segregated and applied to
reduction of the subsequent tax year’s County Vocational School
Budget. the Hudson County Board of Taxation shall further
calculate any reallocation of the apportionment of the Hudson
County Budget among all twelve municipalities including
Bayonne. Any debits and credits shall be set forth in the 1990
Hudson County Abstract of Ratables to be adopted by the Hudson
County Board of Taxation; and
38a
Appendix B
4. The Hudson County Board of Taxation shall calculate as a
debit of Bayonne its proportionate share of the cost of the budget of
the Hudson County Vocational School from and after May 27,
1988 and the resultant credits to the remaining eleven Hudson
County municipalities for over-payments on for the budg-2t of the
Hudson County Vocational School from or after May 27, 1988.
Any such debits and credits shall be set forth in the 1990 Hudson
County Abstract of Ratables to be adopted by the Hudson County
Board of Taxation; and
5. For the tax year 1990 and thereafter, the two-tiered system
implemented by the Hudson County Board of Taxation under
N.J.S.A. 18:54-37 is abolished and the cost of funding the Hudson
County Vocational School shall be included in the general county
budget. Hudson County taxes shall be apportioned among the
twelve municipalities in the 1990 Hudson County Abstract of
Ratables by the Hudson County Board of Taxation according to a
single county rate and in every tax year thereafter is to be so
apportioned in the Hudson County Abstract of Ratables.
s/ John J. Hopkins
Hon. John J. Hopkins, J.T.C. t/a
39a
APPENDIX C—OPINION - TOWN OF SECAUCUS V.
} HUDSON COUNTY BOARD OF TAXATION AND COUNTY
OF HUDSON, DOCKET NO. A-4854-86T8 (N.J. SUPER.
CT.,APP. DIV., MAY 18,1988)
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF
THE COMMITTEE ON OPINIONS
ne ee ar ee ee
SUPERIOR COURT OF NEW JERSEY
APPELLATEDIVISION
A-4854-86T8
TOWN OF SECAUCUS,
Plaintiff-Appellant-
Cross-Respondent,
Vv.
HUDSON COUNTY BOARD OF TAXATION
AND COUNTY OF HUDSON
Defendant-Respondents-
Cross-Appellants.
Argued February 29, 1988 — Decided May 18,
1988
Before Judges O’ Brien, Havey and Stern.
On appeal from the Superior Court of New
Jersey, Law Division, Hudson County.
Bernard Schenkler argued the cause for
appellant-cross-respondent (Holland &
Holland, and Ravin, Sarasohn, Cook,
40a
Appendix C
Baumgarten, Fisch & Baime, attorneys; Lewis
M. Holland on the brief and Bernard Schenkler
on the reply brief).
Harry Haushalter, Deputy Attorney General,
argued the cause for respondents-cross-
appellants (W. Cary Edwards, Attorney
General of New Jersey, attorney for
respondent-cross-appellant, Hudson County
Board of Taxation; Michael R. Clancy, Deputy
Attorney General, of counsel; Mr. Haushalter
on the brief).
Respondent-cross-appellant Hudson County
relies on the brief submitted by the Attorney
General.
PER CURIAM:
This appeal and cross-appeal challenge a ruling by the Law
Division relating to how property tax revenue from added and
omitted assessments should be fixed and allocated. Defendants
Hudson County and the Hudson County Board of Taxation
(County Board) challenge the trial court’s ruling “that the carry-
over of [the general tax rate] to the added and omitted assessments
and the ability and the actual use of the total amount paid to the
County on that at [the general tax rate] creates an undue burden on
non-Bayonne municipalities.” All parties challenge the
consequent judgment entered which provides that “that portion of
added and omitted taxes received by Hudson County from the
Hudson County municipalities reflective of the Hudson County
Vocational School rate component shall be utilized solely for
funding the Hudson County Vocational School,” and that “[t]hat
4la
Appendix C
. . . portion of the added and omitted taxes collected by the county
and applied solely for funding the [school] shall be deducted from
the amount of monies needed to be raised through the local
property tax levy in that tax year for the [school].”
Plaintiff appeals from the remedy embodied in the judgment
and defendants cross-appeal. We reverse and remand for further
proceedings.
The dispute in this case flows from the fact that taxpayers of
Bayonne, which has its own vocational school, have been
exempted by statute from contributing to the funding of the
Hudson County Vocational School, which is funded from the
county budget. See N.J.S.A. 18A:54-37.
As aconsequence of the exemption, municipalities other than
Bayonne, including plaintiff Town of Secaucus, must contribute
for a county service not paid by Bayonne taxpayers, and the
general tax rate for the municipalities other than Bayonne is higher
than the general tax rate for Bayonne. —
I.
The Hudson County Board of Taxation created a two-tier rate
based on Bayonne’s exemption. With respect to regular
assessments, the municipalities other than Bayonne pay property
taxes based on a rate for their share of county taxes, and a separate
additional amount, calculated by using a separate rate, which
exclusively funds the county vocational school. Bayonne, by
reason of the statutory exemption, pays its taxes based on the
“county rate” without regard to the vocational school.
Consequently, its “county rate” is lower than the rate for the other
11 municipalities.
PMS
P r
r
42a
Appendix C
Plaintiff instituted this action by complaint in lieu of
prerogative writs in the Law Division seeking exclusion of the
County Vocational School costs from the rate used for added and
omitted assessments. Plaintiff challenged the county board’s
decision to employ a “county rate” for added and omitted
assessments consisting of the rate applicable to each municipality
including county taxes and the separately delineated rate for the
county vocational school budget utilized outside of Bayonne.
Plaintiff claimed that the system is unauthorized by statute and is
unfair to all of the municipalities in Hudson County except
Bayonne, because it required them to pay more than their fair share
to the county and because the added and omitted assessments do
not apply to defray the costs of the county vocational school. Thus,
it claimed that the added and omitted statutes should not include
the component representing the county vocational school.
The Law Division agreed that the present method unfairly
discriminated against non-Bayonne municipalities, but the judge
declined to construe the statutes in the manner urged by plaintiff.
Rather, he fashioned a remedy which in effect required the county
to escrow or set aside in a separate fund that portion of added and
omitted assessments revenue attributable to the rate fixed for the
vocational school budget.
No party is satisfied with this result. Plaintiff and defendants
argue that there is no statutory authority for what the judge did.
Plaintiff claims the judge should have adopted its suggested
remedy, namely interpreting the “county rate” as not including that
rate for the vocational school. Defendants urge that there was no
reason for the judge to change the existing system in the absence of
additional legislation on the subject. They contend that the present
system is contemplated by the existing legislation.
43a
Appendix C
I.
We initially reject defendants’ claim that the complaint is
untimely as filed more than 45 days after the county board notified
plaintiff of its obligations with respect to the added and omitted
assessment for 1987. While plaintiff sought credits for
overpayments from prior years against the 1987 assessment, it also
sought declaratory relief for future years, and the case involves
substantial and recurring issues of public importance and
constitutional law. See R. 4:69-6(c) (enlargement of time “where it
is manifest that the interest of justice so requires”). See also Reilly
v. Brice, 109 N.J. 555 (1988); Schack v. Trimble, 28 N.J. 40 (1958).
We also reject defendants’ further contention that review of a
decision by the county board of taxation must be filed in the Tax
Court. While the action in lieu of prerogative writs was properly
before the Law Division, the case was properly assigned to a judge
of the Tax Court temporarily assigned to the Law Division to hear
this case. See Alid., Inc. v. Town of North Bergen, 89 N.J. 388
(1981). Moreover, the judge noted that it was being consolidated,
with a case then pending in the Tax Court involving the same
parties and seeking the same relief.'
I.
On February 15 of each year a municipality must, in addition
to the regular installment of county taxes, pay to the county an
amount determined by multiplying the total of added or omitted
assessments “by the county . . . rate.” N.J.S.A. 54:4-63.10, 63.22,
1. The judge also noted that the matter was being consolidated with a matter
subsequently filed in the Tax Court seeking reduction of the 1987 rate and declaratory
relief. We note that, if not already accomplished, the judge can perfect the
consolidation on remand.
wee
a
44a
Appendix C
63.38. However, the statutes do not define the »hrase “county
rate.” Thus, the issue is whether to construe the phrase “county
rate” as applying merely to the rate for county expenditures
common to all municipalities and their taxpayers, as plaintiff
urges, or the rate for county expenditures including those related to
the county vocational school, as urged by defendants.
The obligation of the trial court is to interpret what the
legislature meant by the phrase “county rate” in these
circumstances. County of Bergen v. Borough of Paramus, 79 N.J.
302, 306 (1979). As the judge noted, it has long been held that the
overall goal of the Legislature is to apportion the cost of county
government among its constituent municipalities as equally and as
impartially as possible. Clifton v. Passaic County Board of
Taxation, 28 N.J.411, 418 (1958). Absolute equality is a practical
impossibility, but it is the duty of the county board to minimize as
far as possible the unfair distribution of county taxes among
constituent municipalities. City of Passaic v. Passaic County Bd. of
Taxation, 18 N.J. 371, 381 (1955). Clifton v. Passaic County Board
of Taxation, supra, applied that principle in ascertaining what
should be the proper “county rate” for purposes of added and
Omitted assessments where the issue related to the standard of
value. 28 N.J. at 420.
Thus, the “county rate” for Hudson County must be that rate
which most equitably distributes the burden of county government
among the constituent municipalities. The real issues in this case
relate to the determination of which rate produces the fairest result,
consistent with the overriding goal of the Legislature, and, if the
existing practice is not statutorily or constitutionally proper,
whether the court was authorized to create the remedy it imposed.
For the reasons hereinafter expressed, we remand for further
proceedingss.
4Sa
Appendix C
A.
In the case of the added and omitted assessments, there is
discrimination in the sense that the components that make up the
rate are not uniform among Hudson County municipalities. The
crucial difference flows from the stipulation that added and
omitted assessments are not used to fund the county vocational
school. Here, it was stipulated that none of the added or omitted
taxes are in fact used for the vocational school but are used for
general county purposes. Thus, as plaintiff argues, it “and the ten
(10) other municipalities in Hudson County are taxed for the added
and omitted assessments at the higher of the dual rates, while
Bayonne is taxed at the lower of the dual rates, yet none of the
proceeds of taxation for added and omitted assessments at the
higher rate is applied to the funding of the vocational school.”
Particularly in light of the agreement of counsel that the added
and omitted assessments are not used to fund the county school,
there appears to be justification for the judge’s conclusions that the
present system is discriminatory and unlawful. However, we
decline to decide the issue because the City of Bayonne as well as
the Hudson County municipalities are entitled to be heard, and it
should therefore be given the opportunity to address the threshold
claim. We thus remand because Bayonne and the other
municipalities, while given notice of the suit, were not joined as
parties. Moreover, plaintiff raises constitutional issues on this
appeal which should be addressed in the first instance by the trial
judge.
R. 4:28-1(a) provides, in pertinent part, that a person shall be
joined as a party “if (1) in his absence complete relief cannot be
accorded among those already parties, or (2) he claims an interest
in the subject of the action and is so situated that the disposition of
46a
Appendix C
the action in his absence may . . . (i) as a practical matter impair or
impede his ability to protect that interest.” According to Judge
Pressler, “indispensability is usually determined from the point of
view of the absent party and in consideration of whether or not his
rights and interests will be adversely affected.” Pressler, Current
N.J. Court Rules, Comment R. 4:28-1 (1988).
In the present case, both defendants alleged in their answers
that all of the municipalities in Hudson County were indispensable
parties to the action. Defendants pressed the point on the return of
the order to show cause. The judge disagreed. However, his ruling
directly affects all municipalities, and the parties in fact stipulated
that if there was any reduction in the rate used for calculating
added and omitted assessments, “one effect would be to increase
the amount of County taxes to be apportioned amongst all Hudson
County municipalities.”
The other municipalities, especially Bayonne, were therefore
indispensable parties in the sense that plaintiff’s proposed
solution, and at least to some degree, the remedy adopted by the
trial judge, adversely affected Bayonne and its taxpayers.
Furthermore, if plainitff is correct in its contention about the
remedy imposed, the other municipalities were adversely affected.
Moreover, there is an obvious practical advantage to joining
Bayonne and the other municipalities as parties. One would expect
that Bayonne in particular would strive to show precisely how any
change in the existing scheme would affect its taxpayers. It would
certainly bé helpful to have more information about the impact of
the judge’s solution or plaintiff’s proposed solution. With such
information a court would be in a better position to construe the
phrase “county rate” in a manner most consistent with the
overriding goal of the legislation, namely to insure “that the fiscal
burden of county government shall be apportioned equally and
\
7
d
$a cite
47a
Appendix C
impartially among the several municipalities.” Clifton v. Passaic
County Bd. of Taxation, supra, 28 N.J. at 418. The record discloses
that even the judge was unsure about the practical impact of his
decision, although he endeavored to apply that principle in
developing the remedy he created.
B.
In its reply brief, plaintiff contends that the system employed
by the county board is invalid and unconstitutional, because N.J.
Const. (1947), Art. VIII, §I, par. 1(a), provides that “[pJroperty
shall be assessed for taxation under general laws and by uniform
rules.” The subject was not raised in the complaint, nor before the
trial court, and was not addressed in plaintiff’s main brief filed
with this court; and it is improper to raise new arguments in a reply
brief before us. Brown v. Shaw, 174 N.J. Super. 32, 39 (App.
Div.1980). The new contentions reiate to both the claim for relief
and remedy, and should be addressed initially by the trial court.
As the matter must be remanded so that indispensable parties
may be joined, the constitutional issues should be presented
simultaneously, so that all interested parties may respond. On
remand, the trial judge should liberally permit amendment of the
pleadings to add the necessary parties, claims and defenses. The
trial judge should initially decide the constitutional issues raised,
unless he feels the matter can properly be resolved by statutory
construction which avoids a constitutional claim.
While the court may adhere to its initial determination as to
the impropriety of the present system, we emphasize that such a
holding does not necessarily require entry of the relief sought by
plaintiff or imposed by the court.
48a
Appendix C
It is argued before us that the court exceeded its authority by
ordering the county to segregate a portionof the money received by
way of added and omitted assessments for the use of the county
vocational school. Plaintiff cites Robinson v. Cahill, 70 N.J. 155
(1976), for the proposition that a trial court does have the authority
“to fashion an appropriate remedy for the violation of a statute.”
The relief ordered in Robinson was a last resort and followed prior
decisions in the same case in which the Supreme Court had urged
the legislature to take action to provide a remedy. See Robinson v.
Cahill, 62 N.J. 473 (1973); 63 N.J. 196 (1973). See also 70 N.J. 155
(1976); 70 N.J. 464, 465 (1976). We do not address the propriety of
the remedy fashioned here because of the need for further review
of the matter by trial judge after hearing from all indispensible
parties.”
In essence, we cc aclude that the existing scheme utilized by
the board should not have been addressed until all of the
municipalities in the county had been joined and it was clear how
any change ordered would affect the respective tax burdens of the
various municipalities. We therefore remand to permit the
development of a complete record and consideration of the
significant and important public issues in light of the factual
determinations and appropriate law. We do not retain jurisdiction.
2. Wedonot suggest that this remedy might not be appropriate after all parties
have had an opportunity to be heard.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.