Jamouneau v. City of Newark

Conklin, Commissioner. Leslie H. Jamouneau, alleging that he is an aggrieved taxpayer of the City of Newark, filed a petition claiming that Block 5088, Lot 138, consisting of 8.58 acres, together with buildings erected thereon, is in the possession of the C-0 Two Dire Equipment Company and is used by it under a lease from the City of Newark, owner of the fee of the premises, under such circumstances as to render the said C-0 Two Dire Equipment Company legally liable to assessment as owner for the year 1943 of the said premises. [346] Under date of August 13th, 1941, the City of Newark entered into an agreement of lease with the C-0 Two Fire Equipment Company by which it leased unto them a plot of meadow land near State Highway 25 and Haynes Avenue in the City of Newark. This lease commenced October' 1st, 1941,. and was for a term of fifty years. (Eecorded in Book A-99 of Deeds, pages 328-33'i' in the register’s office of the County of Essex.) The annual rental is $5,000, and the city covenants to satisfy any taxes or assessments which may become-a lien upon the. said land or premises or be charged against the tenant by reason of its interest in said lands and premises or any building or improvements thereon. Should the city decide to sell the leased land, then the C-0 Two Fire Equipment Company has a prior option under the lease to purchase the property at the established price of $10,000 an acre, regardless of any other offer made. The city further agreed that this lease contain a renewal clause, that the city should open and pave a street, put in fill on the land, and assist in having-a railway spur installed. By its terms the C-0 Two Fire Equipment Company agreed to erect a factory building,, which became the property of the city and part of the demised premises. In case of condemnation through eminent domain,, the C-0 Two Fire Equipment Company would be entitled,, if that contingency occurred, to a part of the award made for the improvements. The lease further provided that the interest of the company is subject to mortgage. This matter was appealed to the Essex County Board of Taxation, which board held that it did not have jurisdiction of the matter in controversy. In the hearing before this Division a certified copy of the lease was offered as evidence- and received. There is no dispute that the land is assessed at $42,900 and the building at $250,000 but carried on tbe tax books of the City of Newark as exempt. The C-0 Two-Fire Equipment Company carried a book value on the building of $482,540.24. This action was brought by the taxpayer under the provisions of R. S. 54:3—21; N. J. S. A. 54:3—21, wherein feeling-that ho was discriminated against by the assessed valuation of other property in the county or taxing district he appealed347 to the Essex County Board by filing a petition of appeal with the County Board, which appeal was dismissed, and under the provisions of R. S. 54:2-39; N. J. S. A. 54:2—39, being dissatisfied with the judgment of the County Board, he appealed to this Division. ’ ' The authority of the City of Newark to enter into an agreement of lease is given under R. S. 40:176-11; N. J. S. A. 40:176-11, which provides: “Every city of the first class of this state may lease to any person or persons any land or building of the municipality not needed for public use for a fixed term not exceeding fifty '(50) years.” And if the authority of the City of Newark is not found under that section, then the city claims the authorization as given by R. S. 40:179-34; N. J. S. A. 40:179-34, which provides : “Any city fronting upon the navigable waters of this state is hereby authorized to establish docks, warehouses, ferries, terminals and shipping and industrial facilities in such city and upon adjoining lands under water, and to construct, • establish, equip, maintain and operate or to lease to lessees for a term of years, in whole or in part, such docks, warehouses, ferries, terminals and shipping and industrial facilities, including piers, bulkheads, slips, basins, industrial buildings, equipment, railroads and other structures and improvements (all the foregoing together with the lands and lands under water upon which the same may be located, being hereinafter collectively referred to as an 'industrial terminal’), and for that purpose to use any available lands owned by such city and to acquire such other lands and rights in lands, including lands now or formerly under water, as may he necessary for the purpose. Such city shall have power to acquire in fee simple all the lands, lands under water and all other property, easements, rights and appurtenances by purchase, condemnation or grant, and to enter into such contract or • conlraets with the board of commerce and navigation, or other board or department of this state and with other municipalities, persons, and corporations for the use of any lands, lands under water or rights therein and for the erection, construe [348] tion and equipment of such, industrial terminal and the appurtenances thereof as may be necessary to carry out the purposes of this act.” And the authority to enter into a lease for the properly is provided in R. S. 40:179-35; N. J. S. A. 40:179-35: “The governing body of any city where such industrial terminal may be established shall have the power to operate and maintain such terminal or to lease for a term not exceeding fifty years the whole or any part thereof, or the lands, lands under water and rights therein, upon which such terminal is proposed to be established under an agreement or agreements for the construction, erection, and equipment thereof by the lessee or lessees upon such terms and conditions as may be determined by such governing body. Every such agreement shall, provide that all interest upon bonds to be issued as hereinafter provided and the principal amount of all serial bonds as they severally mature during the term of any lease made as provided herein shall be paid by the lessee to the city at least fifteen days prior to the day on which said principal or interest may become due.” It is not within the province of this Division, a quasi-judicial body, to determine the constitutionality of any act of the legislature, for it has been held in the decisions of this Division in the case of City of Newark v. Mutual Benefit Life Insurance Co., 1934-1939 New Jersey Tax Reports, 440, President Weaver said: “As this board is a gwasi-judieial body, it has no power to pass upon constitutional questions of law, but must interpret the statutes as they are written.” And later in the Supreme Court case of Schwartz v. Essex County Board of. Taxation, 129 N. J. L. 129; 28 Atl. Rep. (2d) 482, 484, Mr. Justice Colie, speaking for the court said: “It is indisputable that the determination of the constitutionality of an act of the legislature rests with a judicial body; not with a qmsi-judicial body such as the State Board of Tax Appeals. The final responsibility to pass upon the constitutionality of a given piece of legislation rests in the courts and it is the duty of the various state agencies and administrative bodies to accept a legislative act as eonstitu [349] tional until such time as it has been declared to be unconstitutional by a qualified judicial body.” The Division of Tax Appeals of the Department of Taxation and Finance is not such a qualified judicial body as to pass upon the constitutionality of an act of the legislature. It was the argument and contention of the petitioner that even admitting the constitutionality of the act, the lease was fraudulent and was entered into for the purpose' of evading taxation by the C-0 Two Fire Equipment Company and that the lease was in reality a deed of conveyance. For this Division to make such a finding would be tantamount to declaring that this Division by its judgment has the power to order a reformation of the lease. This power we do not have, and should be the proper subject-matter of a writ of certiorari in the Supreme Court. Such is the remedy that was available to the petitioner and the authority for such a procedure is clearly set forth in the case of Shea v. Ellenstein et al., 118 N. J. L. 438; 193 Atl. Rep. 551. By its action the Essex County Board of Taxation dismissed the petition of appeal on the grounds that it did not have jurisdiction. This Division does not concur with said County Board for the reason that under R. S. 54:3-21; N. J. S. A. 54:3-21, any taxpayer feeling that he is discriminated against may- appeal to the County Board and under R. S. 54:2-39; N. J. S. A. 54:2-39 to this Division. If we found that the County Board in its dismissal for lack of jurisdiction had made a proper disposition of the case, then we would not have attempted to determine the matter before us on its merits. But the Division of Tax Appeals has the authority to determine if dismissal by the County Board for lack of jurisdiction was proper (see Borough of Oradell v. State Board of. Tax Appeals, 125 N. J. L. 37; 13 Atl. Rep. (2d) 479. From the proofs presently before us it appears that this property should be excluded from taxation, or under the provisions of R. S. 54:4—3.3; N. J. S. A. 54:4-3.3, exempted from taxation. Judgment has been entered in accordance with the foregoing conclusions.