Case Name: TOWNSHIP OF TEWKSBURY, RESPONDENT-APPELLANT, v. JERSEY CENTRAL POWER & LIGHT COMPANY AND PUBLIC SERVICE ELECTRIC & GAS COMPANY, PETITIONERS-RE SPONDENTS
Court: New Jersey Superior Court, Appellate Division
Jurisdiction: New Jersey
Decision Date: 1978-04-21
Citations: 159 N.J. Super. 44
Docket Number: 
Parties: TOWNSHIP OF TEWKSBURY, RESPONDENT-APPELLANT, v. JERSEY CENTRAL POWER & LIGHT COMPANY AND PUBLIC SERVICE ELECTRIC & GAS COMPANY, PETITIONERS-RESPONDENTS.
Judges: 
Reporter: New Jersey Superior Court Reports
Volume: 159
Pages: 44–60

Head Matter:
TOWNSHIP OF TEWKSBURY, RESPONDENT-APPELLANT, v. JERSEY CENTRAL POWER & LIGHT COMPANY AND PUBLIC SERVICE ELECTRIC & GAS COMPANY, PETITIONERS-RESPONDENTS.
Superior Court of New Jersey Appellate Division
Argued February 16, 1978
Decided April 21, 1978.
Before Judges Halpern, Earner and King.
Mr. Sheldon A. Weiss argued the cause for appellant.
Mr. Howard T. Rosen argued the cause for respondent Public Service Electric & Gas Company (Messrs. Rosen, Gel-man and Weiss, attorneys; Mr. Rosen and Mr. Sidney D. Weiss, of counsel; Mr. William J. BalcersTci on the brief).
Mr. Robert O. Brolcaw argued the cause for respondent Jersey Central Power & Light Company.

Opinion:
The opinion of the court was delivered by
Halpern, P. J. A. D.
This consolidated appeal presents the narrow but novel and important issue of whether the right-of-way easements held by respondents in Tewksbury Township, over and upon which they have constructed their power lines, are "lands" subject to taxation under the Public Utility Tax Act, N. J. S. A. 54:30A—49 et seq. (sometimes called the Gross Receipts Tax Act).
We are concerned only with the assessments by Tewksbury Township fpr the easements held by respondents for the years 1971 through 1974, inclusive. The township had previously assessed JCP's easements as "lands," but Judge Lario of the New Jersey State Division of Tax Appeals set it aside. A similar attempt to assess Public Service's easements in West Amwell Township had previously been made by that township, but it was also set aside. No appeal was taken from those determinations.
The 1971 through 1974 assessments were affirmed by the Hunterdon County Tax Board. On appeal, summary judgment was entered by the Division in favor of respondents, setting aside and cancelling the assessments predicated on the prior decisions of Judge Lario. Belying on the doctrine of stare decisis, respondents now argue that Judge Lario's unappealed decisions bar appellant from maintaining the present appeals We disagree. Because the legal issue was the same in both appeals, we understand the Division's dismissal of the present appeals based on the stare decisis doctrine. See 2 Cooper, State Administrative Law, at 530-534 (1965); Butler Oak Tavern v. Alcohol Bev. Control Div., 20 N. J. 373, 382 (1956). The doctrine of stare decisis, as applied administratively, is not binding on this court. See R. 2:2-3.
The business of public utilities is affected with a deep public interest. By statute they operate as controlled monopolies. They are governed by stringent regulations of the Public Utilities Commission which obligate them to charge fair, nondiscriminatory rates and to render satisfactory service to the public. They have the statutory power of eminent domain to acquire right-of-way easements in lands reasonably necessary for the transmission and distribution of electric power to the public. N. J. S. A. 48:3-17.6; N. J. S. A. 48:7-3.1. Municipal franchises are generally granted to them for the use of streets and highways within which to install thrir pole lines and other facilities. See N. J. S. A. 48:7-1 and 48:7-3.1.
This leads to the inescapable conclusion that public utilities are treated as a separate and distinct category by the Legislature, and that the right to tax their real and personal assets and their gross receipts, either at the State or local level, must be found in N. J. S. A. 54:30A-49 el seq. Thus, they pay excise and franchise taxes measured by their gross receipts for the privilege of exercising their franchises, as provided in N. J. S. A. 54:30A-54. A designated portion of the taxes collected are then apportioned among the municipalities affected, in. accordance with N. J. S. A. 54:30A-58 and N. J. S. A. .54:30A-60.. and 61. This exclusive statutory scheme of taxing .public utilities is clearly mandated' by N. J. S. A. 54:30A-49 and N. J. S. A. 54:30A-51, which provide in relevant part:
54:30A-49. Purpose of Act; laws superseded.
The purpose of this act is to provide a complete scheme and method for the taxation of street railway, traction, sewerage, water, gas and electric light, heat and power corporations using or occupying the public streets, highways, roads or other public places, to exempt from taxation other than imposed by this act the franchises, stock, and certain property of such corporations and for the taxation of the property of such corporations not so exempted from taxation; * # *
54:30A-51. Taxation of property, franchises, stock or gross receipts.
Street railway, traction, sewerage, water, gas and electric light, heat and power corporations using or occupying public streets, highways, roads or other public places, and their property and franchises, shall be subject to taxation only as in this act provided. Any such corporation shall not be subject to any other taxes upon its property, franchises, stock or gross receipts, and the shares of stock of any such corporation shall not be taxed in the hands of shareholders.
We are not here concerned with buildings or merchandise held for resale, as was the Case in Public Service Elec. & Gas Co. v. Woodbridge Tp., 73 N. J. 474, 480-481 (1977). Here the pivotal issue is Avhether respondents* easements are lands taxable under N. J. S. A. 54:30A—49, et seq.
Thus we must decide the critical issue of whether easements held by public utilities are "real estate** for the purposes of taxation as now defined in subsection (b) of N. J. S. A. 54:30A—50:
(b) "Real estate" means lands and buildings, but it does not include railways, tracks, ties, lines, wires, cables, poles, pipes, conduits, bridges, viaducts, dams and reservoirs (except that the lands upon which dams and reservoirs are situated are real estate) machinery, apparatus and equipment, notwithstanding any attachment thereof to lands or buildings.
This definition is in contrast to the broader and more inclusive general definition of real estate contained in N. J. S. A. 1:1-2 which provides:
Real estate; real property. The words "real estate" and "real property" include lands, tenements and hereditaments and all rights thereto and interests therein.
It is readily apparent that an ordinary easement comes within the purview of N. J. S. A. 1:1—2, but has been expressly excluded under N. J. S. A. 54:30A-50.
Under the General Tax Act (N. J. S. A. 54:4-1 el seq.) real property, unless expressly excluded, is assessed to the "owner" of record as of October 1 in each year. N. J. S. A. 54:4-23. An easement is an interest in land owned by another. 3 Powell on Real Property, §405 (1977); Krause v. Taylor, 135 N. J. Super. 481 (App. Div. 1975); Oddo v. Saibin, 106 N. J. Eq. 453 (Ch. 1930). Bespondents' easements are "in gross" because they are nonpossessory and personal to respondents who do not own lands appurtenant to them. P. & A. Const., Inc. v. Hackensack Water Co., 115 N. J. Super. 550, 553 (Law Div. 1971). In fact, under the General Public Utilities Law ,(N. J. S. A. 48:1-1 to 48:23-7) the terms "right-of-way" and "easement" are defined thusly:
(b) "right of way" means the area devoted to passing over, on, through or under lands with utility plant facilities as part of a way for such purpose;
(e) "easement" or "easement rights" means privileges essential or appurtenant to the enjoyment of a right of way; . [N. J. S. A. 48:3-17.2]
As indicated, it is the legislative intent which must control in determining the taxability of public utilities is expressed in N. J. S. A. 54:30A—49 to 54:30A-67. Public Service Elec. & Gas Co. v. Woodbridge Tp., supra, 73 N. J. at 478; 71 Am. Jur. 2d, State and Local Taxation, §438 at 740-741. The sense of the law must be gathered from the nature of the subject matter, the contextual setting and the objectives sought to be accomplished. Considering these statutes as a whole, with reference to the system of which it is a part, and giving the words used their ordinary and common sense meaning as we are required to do, we are satisfied that respondents' easements are not "real estate" subject to the assessments herein levied. Eather, they are nothing more than necessary adjuncts to the franchise under which respondents operate and, therefore, taxable only in the manner and extent provided for in N. J. S. A. 54:30A-49 et seq. However respondents' easements may be categorized for purposes other than taxation, the State has reserved to itself the right to tax such public utility easements and, thereafter, apportion the proceeds collected. See Newark v. State Bd. of Taxation, 67 N. J. L. 246 (E. & A. 1902).
We deem it vitally significant that in past years local assessors throughout the State, with rare exceptions that need not be detailed, excluded" public utility easements from their real estate assessment lists. In the few instances where they were assessed as real estate, the assessments were set aside and cancelled on appeal, or the amount involved was very small and was paid to avoid the expense of an appeal. This long-standing administrative practice, without change by the Legislature, is indicative of the legislative taxing scheme and intent, and is entitled to great weight in construing the taxing statutes involved. See Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 733, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (1975), reh. den. 423 U. S. 884, 96 S. Ct. 157, 46 L. Ed. 2d 114 (1975); Rudolph v. Potomac Electric Power Co., 58 App. D. C. 54, 24 F. 2d 882, 884 (D. C. Cir. 1928), cert. den. 278 U. S. 656, 492 S. Ct. 185, 73 L. Ed. 565 (1929); In re Application of Saddle River, 71 N. J. 14, 24 (1976); Matawan v. Monmouth Cty. Tax Bd., 51 N. J. 291, 300 (1968); Public Service Elec. & Gas Co. v. Woodbridge Tp., supra, 73 N. J. at 481-482.
If the Legislature wanted to assess and tax easements granted to public utilities, it would have been a very simple matter for it to have so provided. The Legislature's failure to do so, with full knowledge of how the local taxing authorities were dealing with the subject for many years, is supportive of the view expressed herein. The uncomplicated approach to taxing public utilities, as expressed in N. J. S. A. 54:30A-49 et seq., avoids the conflict which has long existed in the law as to what fixtures become real estate because of the manner of their annexation, and what interests in land are realty, by eliminating such interests from N. J. S. A. 54:30A—49 et seq. Public Service Elec. & Gas Co. v. Woodbridge Tp., supra; N. J. Power & Light Co. v. Denville Tp., 80 N. J. Super. 435 (App. Div. 1963).
Courts must refrain from usurping the function of the Legislature when its intent is clearly expressed. See Property Owners Ass'n of N. Bergen v. North Bergen Tp., 74 N. J. 327, 338 (1977). We understand and appreciate the desire of appellant, and all other municipalities, to find new ways to increase tax revenues. But the answer is not in ferreting out forbidden sources; rather, it is the Legislature's function, in its sound discretion after an empirical analysis, to increase the rate of tax payable by public utilities to municipalities under N. J. S. A. 54:30A-49 et seq. Any approach which permits individual municipalities to assess and tax the public utility easements here involved as lands would lack uniformity, simplicity of administration and would be violative of the Legislature's intent.
We are in essential accord with the reasons expressed by Judge Lario in his opinions of April 5, 1971 and, as supplemented herein, affirm the determinations below.
Respondent Public Service's easements are about 200 feet wide and 27,000 feet long, and occupy about 126 acres. Respondent Jersey Central Power & Light Company's (JCP) easements are about 150 feet wide and 30,000 feet long, and occupy about 100 acres. Generally speaking, the easements were specifically granted for right-of-way purposes and reserved to the owners-grantors the right to use their lands over which the easements were granted for any purpose that would not interfere with respondents' easements. In fact, the various owners utilize the rights-o'f-way for a great variety of purposes such as agriculture, boat dock's, driveways, swimming pools and other uses too numerous to mention.
For example, in tlie instant eases the owners were assessed for 20% of the assessed value, and respondents for 80% thereof. How Tewksbury Township arrived at the value of each owner's parcel and how it apportioned the percentage rates has been reserved by the Division. We can visualize the chaos that would result if the hundreds of municipalities involved used their own methods in valuing and assessing each separate public utility easement in the State.