Court Opinion

ID: 8902618
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:20:17.268578+00
Date Added: 2024-06-11T17:07:58.057887
License: Public Domain

Waesche; President.
(Dissenting.) The City of Newark is the owner in fee-simple, free and clear of all liens and encumbrances, of eight and fifty-eight hundredths (8.58) acres of industrial land located in the city. On August 13th, 1941, the city leased this industrial acreage, which was then vacant and unimproved land, for a term of fifty (50) years to the C-0 Two Eire Equipment Company, a private manufacturing corporation of the State of Delaware. In consideration for the said letting, the C-0 Two Eire Equipment Company agreed to pay the city a fixed yearly rent of five thousand dollars ($5,000) for the term of the lease. And said corporation further agreed, as part consideration for the lease, to erect and build on the demised land, at its own cost and expense, a factory building containing at least 65,000 square feet. By the terms of the lease, any building or buildings erected by the said corporation on the land described in the lease became the property of the city and a part of the land and premises demised by the lease.
Pursuant to the said lease, and prior to November 10th, 1942, the C-0 Two Eire Equipment Company erected on the land described in the lease a factory building or buildings.
The land described in the aforesaid lease and the buildings erected thereon by the aforesaid corporation are the properties involved in this appeal.
The 1943 tax duplicate of the City of Newark shows that the 1943 assessed value of both the land and the buildings is $292,900, being $42,900 for the land, and $250,000 for the buildings. However, both the-land and the buildings appear on the said tax duplicate as exempt from taxation. This appeal is to have this property, land and buildings, made subject to taxation at its true value.
The lease gives the C-0 Two Eire Equipment Company an option to purchase the demised premises at any time during the term of the lease at the price of $10,000 per acre, or $85,800. As stated above, the assessed value of the land and buildings for the year 1943 is $292,900. It is therefore apparent that the purchase price of $10,000 per acre is intended to represent only the value of the land. The purchase price agreed upon in the lease could not include the value *351of any buildings because when the lease was made and the purchase price was fixed no buildings had as yet been erected.
Furthermore, the C-0 Two Fire Equipment' Company carries on its corporate books the buildings it erected on the land described in the lease as fixed assets of the corporation. It valued those buildings as of October 1st, 1942, at $411,934.48.
The lease provides that if the property described in the lease is taken by condemnation or eminent domain the city will receive only the awrnrd for the value of the land, and the C-0 Two Fire Equipment Company will receive the award for the value of the buildings. The lease also provides that the city itself will not, during the term of the lease, condemn and take any part of the leased premises. Since the city “warrants and represents that it is the owner in fee-simple of the land,” the only premises the parties could have contemplated that the city would condemn would be the buildings.
The tax rate for the City of Newark for the year 1943 was $5.31 per $100 of valuation. As pointed out above, the 1943 assessed value of the buildings wras $250,000, and their book value, as of October 1st, 1942, was $417,934.48. The 1943 assessed value of the land was $42,900, and its agreed upon purchase price was $85,800. Therefore, if the property were subject to taxation, the taxes for the year 1943 on the assessed value of the land and buildings would have been $15,552.99, but, if the true value of the property for the year 1943 was $503,734, then the 1943 taxes should have been $26,748.28. Therefore, by leasing the property from the city at $5,000 a year, the corporation saves in taxes from $10,000 to $20,000 a year. Certainly this advantage is a flagrant violation of the principle of equality in matters of taxation. Equal right to the use of land requires equal taxation.
It is apparent that the corporation was to enjoy many of the aspects of ownership without the obligation of paying taxes. It seems that it was the intention of the city and the corporation that the buildings were to belong to the city only when they were to be taxed, but for all other purposes they were to belong to the corporation. The question is whether such an attempt to evade the payment of taxes is legal. I do not think so, and apparently the parties to the *352lease do not think so, because the lease provides that if any taxes are assessed against the land or buildings or any interest therein the city will pay them.
The property involved in this appeal is occupied by a private corporation and used exclusively by it in a strictly private business enterprise. By the very terms of the lease the possession of the property is given to the C-0 Two Eire Equipment Company with the right to use the demised premises in connection with its private business including “the handling, treating, manufacturing, remanufacturing, fabricating, storing, warehousing, and selling of goods, wares and merchandise of all kinds whatsoever as will not as such business is conducted by the Tenant give off deleterious or offensive odors, or constitute a public nuisance.”
The statute, R. S. 54:4—3.3; N. J. S. A. 54:4—3.3, exempts from taxation property owned by a taxing district only when “used for public purposes.” In the case of Essex County Park Commission v. State Board of Tax Appeals, 129 N. J. L. 336; 29 Atl. Rep. (2d) 739, 740, our Supreme Court said that, under the above statute, the test which determines the taxability of property owned by a taxing district is “the use to which the property is put.” The property of a taxing district is taxable, the court held, “unless devoted to that public use which the statute recognizes as a basis for exemption. * * * classification fox exemption based on use is consistent, meritorious as a matter of fair and just distinction and, in our judgment, valid.” By limiting the exemption from taxation of property owned by a taxing district to that which is “used for public purposes,” the statute contains a clear expression of legislative purpose to tax city owned property which is occupied by a private corporation and used exclusively by it for private business purposes. Jersey City v. Blum, 101 N. J. L. 93, 96; 127 Atl. Rep. 214.
Eor the above reasons, I do not think the property is exempt from taxation. The question of the true value of the property did not come up for consideration.