author: Gordon H. Brown, J. S. C.

text:
    WILLIAM HOLSTER, SUBSTITUTED PLAINTIFF, v. THE BOARD OF TRUSTEES OF THE PASSAIC COUNTY COLLEGE, ROBERT S. ZIMMER, THE BOARD OF SCHOOL ESTIMATE OF THE PASSAIC COUNTY COLLEGE, THE BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF PASSAIC, RALPH A. DUNGAN, JOSEPH M. McCRANE, JR. AND GEORGE F. KUGLER, JR., DEFENDANTS, AND CITY OF PATERSON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-INTERVENOR.
    Superior Court of New Jersey Law Division
    Decided March 22, 1971.

      Mr. Arthur J. Sullivan, Jr. for plaintiff.

      Mr. Victor Librizzi, Jr., Deputy Attorney General, for defendants George F. Kugler, Jr., Joseph M. McCrane, Jr. and Ralph A. Dungan (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney).
   Gordon H. Brown, J. S. C.

By the amended complaint substituted plaintiff William Holster alleges that chapter 12 of the Laws of 1971, approved and effective on January 28, 1971, violates Art. VIII, § II, par. 3 of our 1947 State Constitution which provides in pertinent part:

The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State, which together with any previous debts or liabilities shall exceed at any time one per centum of the total amount appropriated by the general appropriation law for that fiscal year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. Begardless of any limitation relating to taxation in this Constitution, such law shall provide the ways and means, exclusive of loans, to pay the interest of such debt or liability as it falls due, and also to pay and discharge the principal thereof within thirty-five years from the time it is contracted; and the law shall not be repealed until such debt or liability and the interest thereon are fully paid and discharged. No such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon.

The original plaintiff here was the City of Clifton with a complaint in lieu of prerogative writs setting up five counts. The first four were disposed of in the course of a hearing held on the return date of Clifton’s order to show cause. It is the fifth count which raises the subject constitutional issue and only defendants Ralph A. Dungan, Joseph M. McCrane, Jr. and George F. Kugler, Jr. are involved in it. Legal argument on February 25, 1971 was precipitated by the State’s motion for summary judgment to sustain the statute, in which motion the City of Paterson, as intervenor, joined. The relief demanded by the order to show cause implies a reciprocal summary judgment motion to invalidate the act.

The legislative arrangement under attack enables the State to offer capital “support” for county college projects, in the context of N. J. S. A. 18A :64A-22, by authorizing the issuance of county bonds in predetermined amounts and by appropriating the money required to pay interest and principal thereon.

Plaintiff contends that by such participation in the county college program the State will undertake a “debt” or “liability,” with the result that chapter 12 contravenes the cited constitutional provision by which a public referendum is required. The State takes the stand that this financial aid is permissible without approval by the electorate because it is to be tendered in “annual appropriations,” thus making its action only voluntary. Put the other way around •— no compulsion pushes the State into the position of being an obligor to any degree because no “debt” or ‘liability” as to it has been created.

It is undisputed that if the effect of chapter 12 is to create a State “debt” or “liability,” the statute is unconstitutional.

Each side finds material for argument in the same body of decisional law. The following authorities govern the issue according to the briefs which have been submitted: Wilson, Atty.-Gen., v. State Water Sup. Co., 84 N. J. Eq. 150 (E. & A. 1915); New Jersey Turnpike Authority v. Parsons, 3 N. J. 235 (1949); Behnke v. New Jersey Highway Authority, 13 N. J. 14 (1953); McCutcheon v. State Building Authority, 13 N. J. 46 (1963); Passaic v. Consolidated Police, etc., Pension Fund Comm’n, 18 N. J. 137 (1955); State v. Lanza, 27 N. J. 516 (1958), and Clayton v. Kervick, 52 N. J. 138 (1968). The court has been unable to find additional New Jersey material in point. At this level, then, the rationale for decision is to be derived from these sources.

The aim which the constitutional debt limit was meant to promote must be kept in mind. It should serve as a standard for determining analytical relevance. According to the court in Wilson, supra:

* * * the object of the framers [Constitution of 1844] was to prohibit the issue of state bonds or similar obligations, failure to pay which might expose the state to the reproach of repudiation under which some of our sister states then suffered. [84 N. J. Eq. at 163]

But a somewhat different objective lias also been stated. In New Jersey Turnpike, supra, where it was held that the bonds in question were the debts of an entity independent of the State, there was reference to a theory that would free the bonds of constitutional control even if they were the direct obligations of the government:

This assertion is based on the Special Fund Rule, the theory of which is that the purpose of a debt limitation in a constitution is to protect the people of the state from the exercise of the taxing power to jiay obligations of the state, and therefore such a constitutional provision is not impinged upon by bonds that are payable solely from the revenues of the jiroject to be built with the proceeds of the bonds. [3 N. J. at 246]

The court went on to say that there was no need to consider the doctrine in the case at hand because the bonds were issued by the autonomous Authority. But in the Clayton opinion, supra, 52 N. J. at 149, it was noted that where bonds are payable solely from “a self-liquidating enterprise such as the Turnpike,” many jurisdictions have invoked the “special fund” doctrine in order to hold that such financing does not run counter to the purposes underlying the debt limitation clause.

The so-called special fund rule thus makes validity correlate with and turn upon the risk of taxation. What seems to be central in it is not simply whether there is a “debt” or “liability” but whether or not there is a source of payment independent of the State Treasury.

One finds a factor like that figuring throughout the decisions dealing with the debt limit problem. Indeed even in Behnke, supra, where the State had expressly guaranteed the Parkway bonds (to be paid from tolls) and had secured referendum validation in compliance with the Constitution, the court felt obliged to add to its approval the following gratuitous advice:

* * * we wou]xl suggest the danger to the State’s credit and solvency inherent in the unrestrained accumulation of state liability on the assumption that all such projects will be and remain self-supporting. [13 N. J. at 30]

In Wilson, defendant commission, a state agency, contracted to buy land for $1,000,000. The transaction was secured by a mortgage with bonds to be paid by what might be appropriated by the Legislature “from time to time.” It was the holding of the majority that this produced a constitutional type “debt” and that it was chargeable against the State. The dissent viewed the debt itself as being one not contemplated by the prohibition:

The plan avoids the evils which the constitutional provision was designed to meet, since the specific property acquired must be worth what is paid for it, or the owners would not sell on such favorable terms to the purchaser, and the public can at most lose no more than the specific property. The burden of taxation is not increased. [84 N. J. Eq. at 163]

In Clayton the court made this comment on the Wilson result:

Though its [the Commission’s] undertaking expressly stipulated that the bondholders would have recourse only to the mortgaged property, the majority found the bonds to be debts of the State within the meaning of the Constitution. [52 N. J. at 147]

It was on an issue as to the quantum of financial risk to which the State was exposed that the court found one ground for division in McCutcheon, supra. In that case there was under review a statute creating the defendant Authority to acquire office space for lease to the State. Funding bonds were to be paid out of rent receipts. On its part the State agreed to provide annual budget appropriations for current rents.

The majority saw the arrangement as really one for purchase of the properties by bonds to be financed with annual appropriations in the guise of rent amounts. According to the minority there was no more involved than the application of good prevailing business practices with an unobjectionable annual rental feature.

But in the course of exposition each side took a taxation risk factor into account. It was a significant element in the judgment of the majority:

Hei’e, unlike those that have gone before, the subject of the Authority’s domain is not a toll or self-sufficient facility; the Authority is obliged to lease its building facilities to the State or its departments, agencies, or instrumentalities, and the State Treasury is the sole source of its revenue, in the form of legislative appropriations utilized for the payment of an agreed “rental” in amount adequate to defray the Authority’s operating expenses and service and effect the ultimate retirement of the bonds. Thus, the Authority is xxon-revenue producing; it is an instx-umentality of the state whose function is wholly dependent upon state moneys raised by taxation. [13 N. J. at 62]

The countering attitude in dissent was that since leasing was the inherent nature of the legislative plan, the State’s obligation at most would be to pay for current yearly occupancy with funds from contemporaneous appropriations "without incurring any new state bonded indebtedness or imposing any new taxes * * Id. at 78.

It should be noted that the split in the court centered in the purchase-lease issue. On that level the 'two dissenting justices were only saying that a lease does not create an immediate liability in the aggregate amount of all of the future rents during the term. They did not quarrel with the principle in the prevailing opinion that there is constitutional invalidity where an

Authority is non-revenue producing; * * * an instrumentality of the state whose function is wholly dependent upon state moneys raised by taxation. [At 62]

Justice Hall in Clayton described the "general holding” of McCutcheon to be “sound law” and he articulated it as having declared the following proposition:

* * * the debt limitation provision is violated (assuming the amount involved is sufficient) where the revenue to pay for state governmental (or for that matter, educational) buildings furnished through an authority, and thus to satisfy that authority’s obligations, must and will come, in reality, only from state appropriations. [52 N. J. at 158]

Tax risk was certainly a dominant element in formulation of the Clayton decision. There the court was called upon to decide whether the bonds of the New Jersey Educational Facilities Authority would constitute “debts” or “liabilities” of the State. The trial judge had determined that they were neither. According to the opinion, “he stressed that, unlike the situation in McCutcheon, the facilities here were 'meant to pay their way’ from revenues obtained mainly from sources other than the State Legislature.” 52 N. J., at 144. In affirming, the Supreme Court itself stressed what might be called a tax risk factor. It felt that the Authority in question stood "on even firmer ground” than the Building Authority in McCutcheon because, as to the one before the court,

* * the annual rentals on its leases with the participating public and private educational institutions were intended to come mainly from sources unrelated to legislative appropriations. With that in mind, its operations may be compared favorably to the many self-liquidating projects which have been sustained in our State * * * and elsewhere. [52 N. J. at 154]

That consideration was underlined by Justice Hall in the part oí his separate opinion where he said:

I agree with the majority that the constitutional debt limitation provision * * is not violated by the act, because it is clear enough that no state appropriations or moneys will be required or can be compelled to be provided to enable the Authority to pay its obligations, [at 158]

By deductive reasoning one can derive a principle from these decisions to the following effect: if it is probable that a project, attributed to state auspices, will be financed without recourse to taxation, there is no debt limitation imposed by the Constitution. Such a rule of law seems to be implied in all the factual diversity and complexity and throughout the legal reasoning in Wilson (dissent), New Jersey Turnpike, McCutcheon (majority and dissent) and Clayton. And it serves the policy of tolerating social innovations, the need for which was pointed up by the court in Clayton:

* * * the Constitution “must be construed to the end that public progress and development will not be stifled and that public problems, with their ever increasing complexity, may be met and solved to the best interests of the public generally.” [52 N. J. at 153]

It leaves “some play * * * for the joints of the [constitutional] machine,” as advocated in what the McCutcheon dissenters called “the famous quotation” from Justice Holmes. 13 N. J. at 79.

Chapter 12, now in controversy, provides a potential of $40,000,000 “to satisfy the State’s share of capital projects for county colleges pursuant to N. J. S. 18A :64A-22” whenever existing state funds are insufficient. Section 1. The board of higher education is empowered to determine the need for the “additional State support” as to a particular project. TJpon certification of the same to the State Treasurer the latter is to determine the remaining amount of bonds “entitled to the benefits of this act” and then to decide whether additional support is “necessary or advisable.” If he so determines then he certifies to the affected hoard of chosen freeholders “the amount of bonds which shall be entitled to the benefits of this act.” Section 2.

At any time within one year after the certification, the freeholders are “authorized” to issue bonds up to that amount providing there is compliance with the interest rate “specified” by the State Treasurer and with the maturity schedule for repayment he has “approved.” Section 3.

Within ten days after issuance of the bonds, the county is to certify “the exact amounts payable on account of interest and principal” and “the dates upon which such amounts are payable by the county.” Thereafter

* * * The amounts so certified by the county treasurer to the State Treasurer shall be appropriated and paid to the county on or before the dates of each payment by the county on such bonds or notes in an amount with respect to each such date equal to the amount payable on such date and shall be used by the county only for such payment. [Section 6]

There is thus no doubt that the full $40,000,000 ■— all of the “State’s share” of “support” — will originate in appropriations by the Legislature out of general taxation.

The principle distilled from the cited cases is that no constitutional debt limitation is operative where a project attributed to state auspices will probably be financed without recourse to taxation. Inasmuch as the plan set up by chapter 12 must be funded with tax money, there is nothing to be found in what those courts said to validate it.

Indeed New Jersey Turnpike and Behnke are inapt as precedents of any kind because in the former there was no appropriation by the State and in the latter the constitutional conditions were fulfilled. As for McCutcheon, the spirit of the majority opinion is hostile because the court there condemned “the State’s promise to supply * * * sufficient money to liquidate the bonds, available only through the medium of annual appropriations.” 13 N. J. at 57. And in Clayton the court disagreed with the McCutcheon analysis, saying that the bonds were not payable from general taxation (52 N. J. at 149) — thus implying that if such were the case it would be bad — and saying, further, that the arrangement under review in the Clayton case was unobjectionable because the money for paying the bonds would “come mainly from sources unrelated to legislative appropriations.” 52 N. J. at 154.

The scheme of chapter 12 of the Laws of 1971 joins the State to the payment of bonds from annual appropriations. With the exception of Wilson, which is adverse, no decisional law cited in the Attorney General’s briefs deals with such a situation. It appears to be unprecedented in this jurisdiction. Justification for the device is seen, however, in the language of the statute which makes the county the obligor of the bonds and which specifically disclaims any obligation incumbent on the State:

Bonds or notes issued under the provisions of this act shall not be deemed to constitute a debt or liability of the State or a pledge of the faith and credit of the State but are dependent for repayment upon appropriations provided by law from time to time. [Section 8]

With the State thus made immune by the design of the statute and the express disclaimer, it is argued, “state aid, payable out of annual appropriations, is a voluntary and uncompellable gratuity which does not constitute a debt of the State.” The brief cites Wilson, supra; Passaic v. Consolidated Police, etc., Pension Fund Comm’n, supra, 18 N. J. 137 (1955), and State v. Lanza, supra, 27 N. J. 516 (1958), in support.

It is necessary first to reject the contention that the disclaimer puts the statute, as is said, “outside the ambit of the constitutional provisions in question.” Not so. Transactions are not legally classified and sorted out according to contemporaneous labels. The over-all and inherent nature of what is happening must govern. The State’s role ought to be viewed in terms of its full relationship to the establishment and operation of county colleges as outlined by N. J. S. A. 18A:64A-1, et seq., as to which chapter 12 of the Laws of 1971 is a supplement.

At the very inception of a proposal to establish a county college, the State enters the picture. A petition by the board of chosen freeholders initiates the college project but the next threshold step must be taken by the State Board of Higher Education. It acts by first referring the petition to the Chancellor for his “independent study,” to include the question “whether the county * * * could, with the state aid provided for in this chapter, financially support such college.” N. J. S. A. 18A :64A-2.

Next, the Board is to study the Chancellor’s report so that it can itself determine, among other things, “whether the county * * * [has] the financial capacity to support such college.”

The Board of Higher Education is required to find that establishment and maintenance are “financially feasible” before the enterprise can proceed on the county level. N. J. S. A. 18A:64A-2, supra. The “state aid” so referred to is obtained through the administrative mechanism of N. J. S. A. 18A:64A-22 whereby the college can receive “state support” for up to one half of the cost of capital projects and additional money measured by a formula, for operational expense.

In light of these provisions of the basic enabling act, to which chapter 12 is but an appendage, and the resulting potential for radical fiscal action at the county level in reliance thereon, there is considerable attenuation of the State’s power to act unilaterally in turning a “gratuity” on or off. An issue develops which relates not so much to any obligation on the part of the State as it does to the reasonableness of a county expectation that the State will finance half of its capital commitment.

Looking at the enabling act from the county point of view, it must be noted that chapter 64A of Title 18A dwells persistently upon the subject of financial feasibility. The Chancellor and then the Board of Higher Education must each independently find that the county has the financial capacity to support the institution. N. J. S. A. 18A :64A-2. But it is made clear in this part of the statute that capacity should be measured after taking into account “the state aid provided for in this chapter.” Id.

In this matter the Legislature has, in effect, invited a county which cannot afford to pay hack all the bonds to issue them anyway if it has the resources to amortize half.

The concept of “gratuity” does not fit into such a statutory setting. This is especially so when both chapter 64A of Title 18A and Chapter 12 of the Laws of 1971 introduce the opposite connotation with the terms “State’s share,” “State support” and “state aid” as well as the strong idea of assurance conveyed by the phrase “bonds or notes entitled to the benefits of this act,” as it appears in the challenged statute.

Justice Swayze, in the dissenting opinion in Wilson, developed the “voluntary appropriation” point upon which the State relies in the case at hand:

The provision for the payment into a sinking fund of any moneys which shall be appropriated by any Legislature toward the principal, leaves it entirely optional with each successive legislature whether to appropriate or not, and in no way contravenes or modifies the express provision that the mortgage and bonds shall not create or constitute any indebtedness or liability of the state. Whatever a legislature may thus appropriate hereafter is a voluntary appropriation for a legitimate public purpose. [84 N. J. Eq. at 1621

In Lanza, supra, the court had occasion to uphold direct State payments as being “voluntary.” They were authorized by the challenged Bound Valley Act, empowering the State Commissioner of Conversation and Economic Development to acquire land for a future water supply system, to pay municipalities money equal to the taxes lost by resulting condemnations, and to pay counties and municipalities the cost of relocating roads.

Although the money was to come from annual appropriations, no “debt” or “liability” was created according to the court. The payments had no direct relation to the purchase of property but were instead being made on a secondary level to reimbxu’se local economic losses. It is noteworthy that the court, in approving these outlays, “presumably from available moneys in the Treasury” (27 N. J., at 525), pointed out that they would be “eventually reimbursed from the proceeds of the sale of water thereby to be supplied.” (At 524). Thus, the tax risk factor seems to have been weighed again.

But the court in Lanza made its decision turn on voluntariness: “There is no bargain or professed contractual, conventional or legal undertaking to recompense the given loss of tax revenue.” (at 525). McCutcheon and Behnke were differentiated as presenting “radically different transactions involving 'moral and ethical compulsions/ such as might be deemed to arise out of the undertaking itself.” (at 526).

Again, in Passaic, supra, a statute requiring the State to make annual payments from appropriations to a pension fund was held not to violate the constitutional debt limitation.

In Lanza and Passaic it could be said, in the language of Justice Swayze, that the respective statute “leaves it entirely optional with each successive Legislature whether to appropriate or not.” Wilson, 84 N. J. Eq. at 162.

Such a recurring option is not made available to successive Legislatures in the framework of chapter 12 of the Laws of 1971. They will, instead, be locked into a fiscal structure built by those who enacted the subject statute. It has been designed to implement a sense of commitment declared at the very start of the text to be one “to satisfy the State’s share of capital projects for county colleges” through payments of “State support” for repayment of county bonds. Accordingly, the intention is to apply such payments to projects where, by the State’s predetermination, there is “necessity” and to have the amount and time of payments coincide with a “maturity schedule” for the outstanding bonds. And the necessary sums, by direction, “shall be appropriated.” Section 6; emphasis added.

Approval of a plan like that cannot be found in the Lanza opinion, where the court held that the State’s financial participation was “subsidiary” and “secondary” to “the basic object of the legislation.” 27 N. J. at 524. The rigid bond funding scheme specified by chapter 12 presents exactly what the dissenters in McCulcheon felt to be absent there as a touchstone connecting the State with a “debt” or “liability.” In upholding the State Building Authority Act the justices in dissent observed that “Nowhere on the face of the act does the State itself assume any burden * * 13 N. J. at 73.

Chapter 12 bespeaks a “burden” of the State throughout its provisions. It is an undertaking to assist necessitous counties. The term “State support” appears five times in the first three sections of the act. Even Section 8, with its so-called “disclaimer,” is not discordant with the theme. All it tells the world is that the State is not an obligor on the bonds. But there is nothing in the declaration which is at all inconsistent with the intention, clearly expressed before, to furnish bond-funding “benefits” to qualifying counties.

This court concludes, first, therefore, that by the expressed intent of chapter 12 of the Laws of 1971, a county has the right to expect the State to furnish half of the money necessary to pay principal and interest on bonds for capital projects after the State Treasurer’s certification. That is the plain promise of the statutory plan, and the “disclaimer” in section 8 thereof says nothing to the contrary. All it really does is to warn that bondholders cannot look to the State. Thus, the State cannot validly contend, as it has in its briefs in this case, that “Any indebtedness created under this Act is that of the county” and that “Its [the county’s] tax revenues are pledged to repay the obligation,” if by those words a lack of commitment to the county is meant.

Secondly, the State cannot deny to a county continuation of approved “support” after initial reliance upon it. When a board of chosen freeholders has acted to issue bonds on the strength of a certification, the funding necessary for the state share “shall be appropriated” according to section 6 of the statute. (Emphasis added).

Thus it is utterly unrealistic to make reference to “appropriations provided by law from time to time,” as is done in the act’s “disclaimer.” There is nothing optional or voluntary or gratuitous about the State’s financial participation. By chapter 12 it offers a maximum of $40,000,000 and directs payment out of appropriations. The annual amounts to be raised in that fashion will depend not on legislative will each year but upon the extent to which the standing offer of the enacting Legislature will be accepted.

Finally, since the State’s position in the elaborate and rigid arrangement set up by chapter 12 cannot be termed voluntary, it must be viewed as being obligatory. The Legislature has fastened a legal responsibility upon the State, making it bound to render certain financial support to county colleges each year. By the definition provided in Behnke (13 N. J. at 28) a Viability” has been assumed because there is “legal responsibility” in that the State is “ Vound or obliged in law and justice’ to do something.”

The debt limitation provision of the Constitution has been violated. for the reason that the money necessary to satisfy the State’s support of county colleges will come only from state appropriations. Therefore, chapter 12 of the Laws of 1971 is ineffective and void — it is unconstitutional because it has not been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State, as required by Art. VIII, § II, par. 3 of the 1947 State Constitution.

Summary judgment is granted to substituted plaintiff William Holster. The State’s motion for summary judgment is denied.


source: Caselaw Access Project

author: Beetel, J. C. C.

license: Public Domain

text:
    JAMES A. RICHARDS, PLAINTIFF, v. CAROL J. BARONE, TOWN CLERK OF THE TOWNSHIP OF CLINTON, MILDRED C. LARASON, CLERK OF HUNTERDON COUNTY, ALL MEMBERS OF THE CHARTER COMMISSION, DEFENDANTS, BERNARD P. RABB, GEORGE O. ELLIS, AND RUTH WOOD, DEFENDANTS-INTERVENORS.
    Superior Court of New Jersey Law Division.
    Decided March 25, 1971.

      Mr. Donald W. Morrow for plaintiff James A. Richards (Mr. James W. Miller, on the brief).

      Mr. Roger Cain for defendants Carol J. Barone and Charter Study Commission (Messrs. Felter and Cain, attorneys).

      Mr. Francis E. Pisani, II for defendants-intervenors (Mr. Oscar W. Rittenhouse, attorney).
   Beetel, J. C. C.

(temporarily assigned). This is an action brought under N. J. S. A. 19:29 — 1 (i) to set aside a general election on the- ground that the public question and the names of several candidates were not published in accordance with the general election laws and certain provisions of the Faulkner Act. N. J. S. A. 40:69A-1 et seq. Rabb, Ellis and Wood were granted leave to intervene as parties defendant on December 4, 1970 by consent of the parties. Defendant Larason has informed the court, through her attorney, that she takes no position in the outcome of the matter and consequently has not appeared during the litigation, in person or through counsel, and has not participated in oral or written argument of the matter.

The case is now before the court on two motions, one by plaintiff’s show cause order why the passage of the public question and election of candidates to the charter commission should not be declared invalid, null and void; the other motion being by defendants-intervenors for a judgment of dismissal based on the pleadings, in the form of a motion to dismiss the complaint. Both motions were argued simultaneously and are treated herein as cross-motions for summary judgment.

The factual basis for the present action is not in dispute. On August 6, 1970 the governing body of Clinton Township passed an ordinance authorizing the following public question:

Shall a charter commission be elected to study the charter of the Township of Clinton and to consider a new charter or improvements in the present charter and to make recommendations thereon?

to be placed on the ballot of the general election to be held on November 3, 1970. This was done in accordance with N. J. S. A. 40:69A-1. The ordinance was published by title only in the Hunterdon County Democrat on August 13, 1970. That notice did not mention when the charter study election would appear on the ballot, merely stating that

1. An election shall be held on the following question; [question stated]
2. The election shall be held on the above question in accordance with the applicable provisions of Title 40, Chapter 69A of the Revised Statutes.

Notice of the general election was published two weeks prior to the closing of the election rolls on September 24, 1970, and on October 22, and again on October 29, 1970. Each publication was in the Hunterdon County Democrat. None of the published notices mentions the fact that the charter study question would be placed on the ballot for determination at the November election. It is this failure to include specific notice of the date on which the public question election would be held which plaintiff contends vitiates the election.

Plaintiff’s ex parte applications to this court and to the assignment judge of the vicinage seeking to have the charter study question removed from the ballot being unsuccessful, an election was held on November 3, 1970, resulting in an affirmative response to the charter study question by a vote of 864 to 472. At the election 74% of the registered voters of the township cast their votes, although not all of them voted on the charter study question. At the same time a charter commission consisting of five members wes elected, as required by N. J. S. A. 40:69A-2. This action ensued.

There is no question that there has been a failure by the election officials here involved to comply with the mandatory provisions of N. J. S. A. 19:12-7(11) (b), since the fact that a public question was to be presented is not mentioned. The key issue upon which the validity of the presentation of the question must stand or fall is whether the failure to advertise or publish notice of the public question so vitally influenced the election proceedings as to have repressed or contravened a full and free expression of the popular will of the voters of the Township of Clinton. Sharrock v. Borough of Keansburg, 15 N. J. Super. 11 (App. Div. 1951).

The cases cited by plaintiff in support of his thesis are somewhat inapposite; Hodges v. Van Fleet, 55 N. J. 528 (1970), not bearing on election procedure at all; Michaelson v. Wall Tp., 92 N. J. L. 72 (Sup. Ct. 1918), dealing with special and not general elections, and Reed v. Independence Tp., 92 N. J. L. 102 (Sup. Ct. 1918), relying on the Michaelson case. The questions raised by plaintiff are not to be taken lightly, however, since we are involved here with one of the basic aspects of a democratic society — the right of the voting citizen to be informed of the matters with regard to which he is asked to make a decision. If failure to notify the electorate is found to have resulted in an uninformed vote, then the election should be set aside and a new election, properly advertised, should be ordered.

There being no cases specifically on point with respect to the subject matter of public questions under the Faulkner Act, it would appear that one must look for guidance to the State’s election laws (N. J. S. A. 19:1-1 et seq.) and the cases arising thereunder.

N. J. S. A. 19:29 — 1 sets forth nine specific grounds upon which voters of this State or any of its political subdivisions may contest an election. If the doctrine of ex-pressio unius est exclusio alterius were deemed to apply to to this provision of the statute, plaintiff’s allegations would be deemed to come within the terms of N. J. S. A. 19:29-1 (a), “malconduet * * * on the part of the members of the district board,” in that they failed to be sure that the public question was included in the published notices. However, since the wording of the statute is that an election “may be contested,” not “must be contested,” it is not necessary to stretch the language of the statute and it would appear this case is properly before the court.

In Sharrock v. Keansburg, 15 N. J. Super. 11 (App. Div. 1951), where the county clerk failed to cause to be printed on the ballot, immediately below the printed questions, an explanatory statement of the technical language appearing in the statute, the election was upheld. There, as here the precise situation involved was not covered by the existing statutes, and the court said:

* *’ * But where * ® * there is no legislative declaration, the courts will consider the nature of the irregularity, the significance of its influence and consequential derivations in order to determine whether the digression or deviation from the prescribed statutory requisitions had in reasonable probability so imposing and so vital an influence on the election proceedings as to have repressed or contravened a full and free expression of the popular will, and thus deduce the legislative intent reasonably to be implied, [at 17]

The court went on to state, in language particularly appropriate to the situation at hand, that

* * * The appropriate terms and conditions of the statute [regarding preparation of official ballots] constitute the mandate which the public officer is not privileged to disobey. If his neglect or wilful disregard has served to frustrate or thwart the full and free expression of the will of the voters * * *, his disobedience will vitiate the ballots and nullify the affected election return * * * But if it is evident thfit notwithstanding the dereliction of duty of the officer there was a fair election and an honest return and no violation of such matters as the recognised inherent and inviolable rights of the voters, the court in the public interest will have frequently ignored the harmless irregularity, [at 18; emphasis supplied, citations omitted J

See also Wene v. Meyner, 13 N. J. 185 (1953)

It would thus appear that our courts no longer adhere strictly to the holding of Reed v. Independence Tp., supra, that where “procedure is statutory * * * [it] must be strictly construed in the interest of the public.” 92 N. J. L. at 103.

With regard to the first criterion, the “nature of the irregularity” has already been set forth, namely the admitted failure to publish notice of the proposed public question as required by N. J. S. A. 19 :12 — 7 (II) (a) and (b). The publication of the August 6, 1970 ordinance by title only clearly does not meet the standard set up by the statute.

This admitted omission could have been such as to vitiate the election were it not for several other factors which fortunately do appear in the record. Affidavits of David Riley, Virginia Hurford and Katharine Apgar, election judges of the Township of Clinton, immediately prior to the election in question, indicate that sample ballots for the 1970 general election were mailed to the residents of their respective districts on October 27, 1970. Plaintiff alleges that he received a sample ballot on October 29, 1970, and so it would be fair to assume that most of the residents of the township would have received their sample ballots at approximately the same date, almost a week prior to the election.

In Lindabury v. Clinton Tp., 93 N. J. L. 37 (Sup. Ct. 1918), concerning an election to determine whether the sale of intoxicating liquors as a beverage should be permitted in the township, said election being held pursuant to the Local Option Act, L. 1918, c. 2 (the elections! contested in Reed v. Independence Tp. and Michaelson v. Wall Tp., supra, arose under the same act), the court held that since the county clerk was required to furnish sample ballots to be mailed to each registered voter, failure to advertise the public question was not fatal.

While mere mailing of the sample ballots alone may not be sufficient to vitiate the failure to advertise the' charter study question, still other circumstances combined with that factor to overcome the defect. This court can take judicial notice that the issue of changing the form of the governing body of the Township of Clinton has been before the voters of the township for well over a year, more or less continuously. The case of Hodges v. Van Fleet, 55 N. J. 528 (1970), dealing with another facet of this issue, was before this court last winter. Hunterdon County has only one major newspaper, which is read regularly by most citizens of the county. The publicity given to the issue of a charter study commission by this newspaper are so generally known and of common notoriety within the area of Hunterdon County, that it cannot reasonably be the subject of dispute. Although not mentioned specifically by the parties, this is general knowledge. See Evidence Rule 9(2).

The great amount of publicity, together with the sample ballots, tends to negate the proposition that the electorate went into the voting booths on election day and were confronted with a public question which was “sprung” on them, as it were. There obviously was a great deal of interest in the outcome of the election; 74.4% of the registered voters voted. Of the 1508 voters who did go to the polls, 1338 voted on the charter study question, approximately 65% of all the registered voters in the township.

The fact that the charter study commission was approved by nearly a 2-1 vote of those who actually voted on the question is a further indication that there has indeed been a full and free expression of the popular will. If the vote were significantly closer, it is possible that the procedural omission would have had the effect of imposing so vital an influence on the election that the election would have boon vitiated.

However, in the face of so many factors indicating that the will of the people has been made known, this court has no alternative but to uphold the approval of the charter study question and the election of the charter study commission members, resulting from the election of November 3, 1970.

In accordance with the provisions of N. J. S. A. 19 :29-14, costs are assessed against plaintiff.

APPENDIX “A”

TOWNSHIP OP CLINTON NOTICE OP GENERAL ELECTION

Notice is hereby given that the District Boards of Election and Registry in and for the TOWNSHIP OP CLINTON, County of Hunterdon, State of New Jersey, will meet at the Municipal Building, Annandale, on TUESDAY, NOVEMBER 3, 1970 and conduct the General Election between the hours of 7 a.m. and 8 jp.m. (Eastern Standard Time) for the purpose of electing the following:

1 Member of U. S. Senate ■ — • 4 year term.

1 Member of U. S. House of Representatives ■ — ■ 2 year term.

Sheriff — 4 year term.

1 Member of the Board of Chosen Freeholders for 3 year term.

At said General Election the following municipal officers to be elected are:

One Member of the Township Committee for 3 years.

The Boundaries of Clinton Township Elections Districts are. as follows:

District No. 1: Lands North of Route 78 and West of Petticoat Lane and Mt. Grove Road. Voting held in Municipal Building, Annandale, N. J.

District No. 2: Lands East of Petticoat Lane and Mt. Grove Road and North of Interstate Route 78 to the Borough of Lebanon boundary line; South of Old Mountain Road including lands up to Round Valley Reservoir State Lands, voting held at Municipal Building, Annandale, N. J.

District No. 3: Lands South of Route 78 to Lebanon Borough Line and west of State Lands of Round Valley Reservoir. Voting held at Municipal Building, Annandale, N. J.

Inquiries as to the locations of polling places in the township may be made at the municipal building, 735-5328, from 9 a.m. to 4 P.M.

(Pr.’s. Fee $25.00) 23.2

CAROL J. BARONE Township Clerk

       See Appendix A, consisting of the published notice of October 29, 1970. This notice is substantially identical to the other published notices.

      “* * # m such notice it shall be necessary to include only the municipal officers to be nominated or elected and the public questions to be voted upon in the municipality in lohich such newspaper

        or newspapers are published; 'and except, that in all municipalities in which no newspaper is published, such notice required to be published in a newspaper or newspapers circulating in such municipality, shall include only the municipal officers to be nominated or elected and the public questions to be voted upon in such municipality in which such newspaper or newspapers circulate.” (Emphasis supplied)

      “ (a) Malconduet, fraud or corruption on the part of the members of any district board, or of any members of the board of county canvassers, sufficient to challenge the result;
      (b) When the incumbent was not eligible to the office at the time of the election;
      (c) When the incumbent had been duly convicted before such election of any crime which would render him incompetent to exercise the right of suffrage, and the incumbent had not been pardoned at the time of the election;
      (d) When the incumbent had given or offered to any elector or any member of any district board, clerk or canvasser, any bribe or reward, in money, property or thing of value for the purpose of procuring his election;
      (e) When illegal votes have been received, or legal votes rejected at the polls sufficient to change the result;
      (f) For any error by any board of canvassers in counting the votes or declaring the result of the election, if such error would change the result;
      (g) For any other cause which shows that another was the person legally elected;
      (h) The p'aying, promise to pay or expenditure of any money or other thing of value or incurring of any liability in excess of the amount permitted by this title for any purpose or in any manner not authorized by this title;
      (i) When a petition for nomination is not filed in good faith or the affidavit annexed thereto is false or defective.”


author: Pee Curiam.

text:
    IN THE MATTER OF THE APPEAL OF THE CITY OF CLIFTON, PETITIONER-APPELLANT, v. PASSAIC COUNTY BOARD OF TAXATION, ET AL., RESPONDENTS-RESPONDENTS. IN THE MATTER OF THE APPEAL OF THE BOROUGH OF RIDGEFIELD, ET AL., PETITIONER-APPELLANTS, v. BERGEN COUNTY BOARD OF TAXATION, ET AL., RESPONDENTS-RESPONDENTS. BOROUGH OF RIDGEFIELD, ET AL., APPELLANTS, v. JOHN A. KERVICK, TREASURER OF THE STATE OF NEW JERSEY, ET AL., RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued January 11, 1971
    Decided March 15, 1971.

      Before Judges Goldmann, Leonakd and Mountain.

      Mr. Frank A. Carlet, First Legal Assistant, argued the cause for appellant, City of Clifton. (Mr. Arthur J. Sullivan, Jr., City Counsel, attorney; Mr. Carlet of counsel).

      Mr. John A. Bchepisi argued the cause for appellants, Borough of Ridgefield, et als. (Messrs. Breslin and Monaghan, attorneys; Mr. Schepisi, of counsel).

      Mr. Carmen A. Ferrante filed a statement in lieu of brief on behalf of appellant Borough of Bloomingdale.

      Mr. Richard M. Conley, Deputy Attorney General, argued the cause for respondents, John A. Kervick, Treasurer of the State of New Jersey, et als. (Mr. George F. Xugler, Jr., Attorney General of New Jersey, attorney; Mr. Conley, on the brief; Mr. Elias Abels on, Assistant Attorney General, of counsel).

      Mr. James V. Segreto filed a statement in lieu of brief on behalf of respondent Borough of Haledon.

      Mr. Douglas C. Borchard, Jr., Assistant Borough Attorney, filed a statement in lieu of brief on behalf of respondent Borough of Hawthorne. (Evans, Hand, Allah ough and Amoresano, attorneys; Mr. Borchard, of counsel).

      Mr. Joseph D. Donato filed a statement in lieu of brief on behalf of respondent Township of Little Palls.

      Mr. Edward F. Weiss filed a statement in lieu of brief on behalf of respondent Borough of North Haledon. (Weiss and DeLuccia, attorneys).

      Mr. August C. Michaelis filed a statement in lieu of brief on behalf of respondent City of Passaic.

      Mr. J oseph A. LaCava filed a statement in lieu of brief on behalf of respondent City of Paterson. (Mr. Joseph L. Conn, attorney).

      Mr. Pat Di Ianni filed, a statement in lieu of brief on behalf of respondent Borough of Pompton Lakes.

      Mr. Amos C. Saunders filed a statement in lieu of brief on behalf of respondent Borough of Totowa.

      Mr. J ohn M. Running filed a statement in lieu of brief on behalf of respondent Borough of Ringwood.

      Mr. Richard P. Marcus filed a statement in lieu of brief on behalf of respondent Borough of Wanaque.

      Mr. Robert S. Moraff, Assistant Township Counsel, filed a statement in lieu of brief on behalf of respondent, Township of Wayne. {Mr. Joseph Be Luccia, attorney; Mr. Moraff, of counsel).

      Mr. Louis Wallisch, Jr. filed a statement in lieu of brief on behalf of respondent Township of West Milford. {Messrs. Wallisch & Wallisch, attorneys; Mr. Louis Wallisch, Jr., of counsel).

      Mr. J. Mortimer Rubenstein filed a statement in lieu of brief on behalf of respondent Borough of West Paterson.
   Pee Curiam.

In these consolidated actions appellants chal-

lenge the constitutionality of N. J. S. A. 54 :llD-7, originally enacted as part of L. 1966, c. 135, one of a related group of six acts (L. 1966, c. 133 to 138 inclusive), reforming and revising the business tax laws of New Jersey. It was thereafter amended by L. 1967, c. 50 and L. 1968, c. 104.

We affirm substantially for the reasons expressed by Judge Simpson in his opinion reported in 108 N. J. Super. 284 (Law Div. 1970).

The several related statutes passed in 1966, as presently amended, mark the culmination of a long legislative endeavor to achieve an effective and fair method for the taxation of personal property used in business. Much of the earlier history of this effort has been recounted in prior decisions. These include Passaic v. Passaic Co. Bd. of Taxation, 31 N. J. 413 (1960); Switz v. Kingsley, 37 N. J. 566 (1962); Thomas v. Kingsley, 85 N. J. Super. 357 (Law Div. 1964), aff'd 43 N. J. 524 (1965) and Zito v. Kingsley, 92 N. J. Super. 37, 44 (App. Div. 1966).

In brief, the 1966 legislation deprived municipalities of the power to tax tangible personal property used in business while at the same time imposing now and increased state taxes on business and business assets. It further provided for the distribution of revenues received from this source among municipalities In replacement of the revenues [formerly] derived by such municipalities from the local taxation of personal property used in business.” N. J. S. A. 54:11D — 1.

The particular statute which is here challenged, N. J. S. A. 54:11D-7, has nothing to do with the assessment or collection of taxes. It is concerned simply with providing a formula whereby a county board of taxation may arrive at a figure approximating a capitalization of the replacement revenue received by a particular municipality and then employ that figure, together with the equalized assessed value of real estate, in determining “total valuation” for purposes of apportioning the cost of county government and regional and consolidated school district requirements pursuant to N. J. S. A. 54:4-49 to 51.

As is well known, certain county and regional and consolidated school district needs are met from local taxes. N. J. S. A. 54:4-39 to 41. The procedure designed to accomplish this purpose is supervised by county boards of taxation, which first equalize the assessed values of all real property among the respective taxing districts, N. J. S. A. 54:3-17 to 19; 54:4-47. Then, pursuant to N. J. S. A 54:11D — 7, “the assumed assessed value of the property represented by the money received by each taxing district” is determined and then equalized in the same manner that real estate assessments are equalized. Finally, based upon these equalized assessments, the burden is apportioned among the several districts, N. J. S. A. 54:4-49 to 51.

Initially appellants invoke Article VIII, § I, par. 1 of the New Jersey Constitution of 1947 which reads,

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

As noted above the only statute attacked in this action is N. J. 8. A. 54 :llD-7 and it has nothing to do with assessing taxes. Hence this constitutional provision is inapplicable. Furthermore, with the exception of the first sentence, the provision is concerned only with the taxation of real property, which is not touched upon in the legislation we are considering.

Appellants further argue that the application of the statutory formula results in their paying a disproportionately large share of county taxes and assert that a constitutional right is thus violated. This argument seems to rest upon a fundamental misapprehension of the nature of the revenues involved.

The replacement revenues received by each municipality are not funds that have been raised locally and that can be said to represent the tax yield from local ratables. They are, for instance, not like real estate taxes. As to the latter the individual assessments must be equalized before apportionment in order that there may be a fair allocation of the county tax burden among the various taxing districts within the county. The replacement revenues, on the other hand, are funds that have been raised by the State and that belong to the State. It is true, of course, that the 1966 legislation, especially L. 1966, c. 135, does allocate these revenues to local taxing districts. It must be borne in mind that the manner in which the revenues are allocated among and distributed to the municipalities is not challenged in this suit and hence needs no particular discussion.

It should further be noted that, as mentioned above, replacement revenues are derived from several sources. These are the following: Unincorporated Business Tax Act, N. J. S. A. 54:11B-1 et seq.; Business Personal Property Tax Act, N. J. S. A. 54:11A — 1 et seq.; Retail Gross Reecipts Tax Act, N. J. S. A. 54:110-1 el seq., and funds yielded by an increase in the franchise tax imposed by the Corporation Business Tax Act (1945), N. J. S. A. 54:10A-1 el seq. These taxes are all collected by the State on a state-wide basis. After collection they are disbursed throughout the State among the various taxing districts.

While the record seems not to disclose the gross amounts received by the State from each source, an estimate is to be found in the legislative history of the enactments. At a public hearing before the Joint Taxation Committees of the Senate and of the Assembly it was estimated that about $91,000,000 would be raised from the four taxes as follows:

Unincorporated business tax $26,000,000
Retail gross receipts tax 4,000,000
Business personal property tax 30.000. 000
Corporation franchise tax 31.000. 000
$91,000,000

It must be apparent that these revenues, as to the source of their payment, bear no relationship to the revenues formerly raised by local taxing districts by the assessment of local personal property used in business. We point this out because appellants seem to base one or more of their arguments upon the supposed relationship between the two. As we have quoted above, the 1966 legislation, as now amended, was intended to afford a substitute source of municipal revenue but it does not follow that the municipalities’ rights with respect to the old and new tax monies are the same or in any way related.

In fact we see no reason why, had the Legislature chosen to do so, it could not have directed that the State effect the division of tax revenues as between municipality and county and simply remit the shares to each. It could have also allotted the entire $91,000,000 to county needs. This might have resulted in local financial chaos but it would not have offended the Constitution.

Appellants argue that application of the formula discriminates against them and in favor of other taxing districts in violation of their Fourteenth Amendment rights. The record is devoid of proofs adequate to support such a conclusion nor are we referred to any authorities that so hold. We have set forth above some of the reasons why we disagree. Judge Simpson’s opinion enumerates others. There has been a failure to meet the very heavy burden imposed upon one who seeks to overcome the strong presumption of constitutionality that.attends a legislative enactment.

Affirmed.


author: Sullivan, P. J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. GEORGE VADER, JR., DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued March 15, 1971
    Decided March 29, 1971.

      Before Judges Sullivan, Collesteb and Labeeoque.

      Mr. Michael B. Justin, Assistant Deputy Public Defender, argued the cause for appellant {Mr. Stanley G. Van Ness, Public Defender, attorney).

      Mr. Barnett E. IJofman, Assistant Prosecutor, argued the cause for respondent {Mr. Clinton E. Cronin, Acting Prosecutor of Middlesex County, attorney).
   The opinion of the court was delivered by

Sullivan, P. J. A. D.

In this murder-arson case the State, pursuant to leave, granted, appeals from a pretrial decision of the trial court excluding all evidence relating to a January 6, 1970 inspection of fire-damaged premises by Detective Knelle and Dr. David Von Ludwig, including photographs taken at the time.

The case arises out of a fire which occurred on January 2, 1970 in a dwelling house occupied by defendant and his family in Highland Park, New Jersey. As a result of the fire and smoke damage, the house was rendered uninhabitable. Doors and windows were broken and all utilities were cut off. Defendant’s child Susan, who was in the house at the time of the fire, was overcome by smoke and died the next day.

The authorities were suspicious of the fire and, on January 3, 1970, obtained a warrant to search the house which was executed the same day. An inspection of the property was made, photographs taken and certain items confiscated. A return was made of the warrant on January 5, 1970. Also on January 5, 1970 the prosecutor’s office communicated with Dr. David Yon Ludwig of New York, an outstanding expert in the field of arson. Dr. Yon Ludwig visited the Highland Park property on January 6, 1970 in the company of Detective Knelle, made an inspection of the house and took photographs. Defendant was subsequently indicted for murder and arson.

Prior to trial defendant moved to suppress all evidence relating to the inspection made on January 6, 1970. The motion was originally denied by the trial court. Thereafter, the court reconsidered its ruling when its attention was called to State v. Parsons, 83 N. J. Super. 430 (App. Div. 1964). Based on Parsons the court changed its ruling and held that the January 6 inspection was an illegal search. The court held that the January 3 search warrant could not support the January 6 “search” since the warrant had been executed on January 3 and there may not be more than one search under a warrant.

We conclude that the police investigation as to the cause of this fire did not constitute a search within the meaning and scope of the Fourth Amendment, and that a search warrant was not needed. The basic purpose of the Fourth Amendment is the protection of an individual’s privacy and the security of his home. Here, the premises had been rendered uninhabitable by a fire. All utilities had been disconnected. Ho one was occupying the house, the doors and windows of which were broken. The fire was of suspicious origin and had resulted in the death of a child. Under these circumstances, the prompt, on-the-seene investigation of the fire by the authorities did not infringe on defendant’s right of privacy or the security of his home and was not a Fourth Amendment search requiring a search warrant. See Stone v. Commonwealth, 418 S. W. 2d 646, 647, 654 (Ky. Ct. App. 1967), cert. den. Stone v. Kentucky, 390 U. S. 1010, 88 S. Ct. 1259, 20 L. Ed. 2d 161 (1968). State v. Parsons, 83 N. J. Super. 430 (App. Div. 1964), involved an admitted Fourth Amendment situation and is not to the contrary. In Parsons we merely held there could be but one search under a search warrant.

The order suppressing evidence is reversed.


author: Lane, J. A. D.

text:
    ROYAL STORE FIXTURE CO., A CORPORATION, PLAINTIFF-RESPONDENT, v. NEW JERSEY BUTTER COMPANY, A CORPORATION, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 23, 1971
    Decided March 31, 1971.

      Before Judges Kilkenny, Halpern and Lane.

      Mr. George G. Tartar aTgued the cause for appellant.

      Mr. Neil F. Deighan, Jr., argued the cause for respondent (Messrs. Eisselman, Devine, Deighan & Montano, Attorneys; Mr. Deighan, on the brief).
   The opinion of the court was delivered by

Lane, J. A. D.

Defendant appeals from a final judgment in the amount of $7,436.92 together with costs. The matter was submitted to the trial court upon a stipulation of facts and briefs. The trial court found that defendant had converted goods of plaintiff and fixed the value at the amount remaining due on an installment sale contract covering the goods at the time of conversion.

Defendant obtained a judgment against one Laskey, individually and trading as Silver Slicer, in Delaware County, Pennsylvania, in the amount of $5,663.70. Execution was issued to the sheriff of the County of Delaware. Pursuant to a levy by the sheriff, a sale of property in Laskey’s store was held. The property was bought in by the defendant for one dollar and thereafter removed by the defendant from Pennsylvania to New Jersey.

Plaintiff had sold the property to Laskey in Pennsylvania under an installment sale contract duly filed in Pennsylvania and held a security interest in the property. At the time of defendant’s judgment against Laskey, Laskey was in default under the terms of the installment sale contract. The unpaid balance due on the installment sale contract was $7,436.92. The value of the property levied upon and sold was more than $7,436.92.

On February 6, 1967 plaintiff’s Philadelphia counsel wrote to defendant’s Delaware County counsel advising that plaintiff was entitled to either the balance due on the installment contract or the goods that had been sold. This letter was answered February 14, 1967 by a mere statement that the goods were “in possession of New Jersey Butter Company, located at 1482 South Ninth Street, Camden, N. J.” By letter dated March 7, 1967 defendant’s Delaware County counsel advised plaintiff’s Philadelphia counsel that defendant stood “ready, willing and able to return the equipment * *

On appeal defendant argues: (1) a debtor’s rights in collateral can be involuntarily transferred; (2) there must have been a demand for the return of the property before defendant can be guilty of conversion because the taking was lawful; and (3) defendant was an improper party.

We consider first whether the law of New Jersey, the forum state, or the law of Pennsylvania, the state in which the security agreement was entered into and where the goods were located, should be applied. The New Jersey conflicts rule is applicable. In re Damato, 86 N. J. Super. 107, 116 (App. Div. 1965). Under our conflicts rule the law of the state which has the most significant relationship with the occurrence or transactions of the parties will control as to the substantive matters. Maffatone v. Woodson, 99 N. J. Super. 559 (App. Div. 1968), certif. den. 51 N. J. 577 (1968). Since the security agreement was made in Pennsylvania and the property was located in Pennsylvania at that time and also at the time of the levy, the law of Pennsylvania is applicable. Daily v. Somberg, 28 N. J. 372 (1958); Cooper v. Philadelphia Worsted Co., 68 N. J. Eq. 622 (E. & A. 1904); Van Dyke v. Bolves, 107 N. J. Super. 338 (App. Div. 1969). However, the question of whether the defendant is the proper party is a matter of procedure to be determined by our law. Marshall v. Geo. M. Brewster & Son, Inc., 37 N. J. 176 (1962).

The financing statement from Laskey to plaintiff (a Pennsylvania installment sale contract) included all of the necessary requisites required by 12A P. S. § 9-402. The requirements for filing (12A P. S. § 9-401) were complied with. Plaintiff was the holder of a perfected security interest in the property involved. Since there had been proper filing before the levy and sale, defendant was charged with notice of plaintiff’s interest in the property.

Under the Uniform Commercial Code, which has been adopted in Pennsylvania, a debtor’s rights in collateral may be transferred. 12A P. S. § 9-311. A transfer of the debtor’s rights, however, can in no way affect the secured party’s rights in the collateral unless authorized in the security agreement. 12A P. S. § 9-306(2).

Under the terms of the agreement between Laskey and plaintiff, plaintiff had become entitled to possession of the property before the levy by reason of Laskey’s default. 12A P. S. § 9-501(1). At the time of the levy plaintiff had tire right to immediate possession of the property. Such right is a prerequisite to an action for conversion. United States v. Sommerville, 324 F. 2d 712 (3 Cir. 1963), cert. den. 376 U. S. 909, 84 S. Ct. 663, 11 L. Ed. 2d 608 (1964); 18 Am. Jur. 2d, Conversion, § 54, p. 191.

To establish a cause of action for conversion, plaintiff not only must prove that it was entitled to possession of the property but also an act of the defendant wilfully done constituting a deprivation to plaintiff of such right to possession, i. e., an act by defendant of dominion over the property. Norriton East Rlty. Corp. v. Central-Penn Nat. Bank, 435 Pa. 57, 254 A. 2d 637 (Sup. Ct. 1969); Stevenson v. Economy Bank of Ambridge, 413 Pa. 442, 197 A. 2d 721 (Sup. Ct. 1964).

Defendant, relying upon Seaboard Consumer Discount Co. v. Landau’s, 167 Pa. Super. 180, 74 A. 2d 737 (Super. Ct. 1950), argues that since the execution, levy and judicial sale were made in good faith, there was no act of conversion as a result of the levy. The trial court found that by removing the property from Pennsylvania to New Jersey defendant had exercised such dominion as to constitute a conversion. The parties have not cited to us any Pennsylvania case specifically on point. The New Jersey law, however, is clear that such act would constitute a conversion. Cf. Potash Stores Inc. v. Bay Development Corp., 118 N. J. L. 242 (Sup. Ct. 1937); Ayres v. Tinsman, 74 N. J. L. 295 (Sup. Ct. 1907). Under Evidence Rule 9(3), we apply the New Jersey rule.

Under the facts stipulated a conversion was committed by defendant, even assuming that the execution and levy were valid.

There was no necessity for the plaintiff to prove a demand for the return of the property and a refusal by the defendant since defendant’s dominion over the property by removing it from Pennsylvania to New Jersey was unlawful. Stevenson v. Economy Bank of Ambridge, supra.

Defendant was not incorporated until March 22, 1967, which was after the conversion; therefore, it claims that it is an improper party. This issue was not contained in the pretrial contentions of defendant nor was it listed in paragraph 7 of the pretrial order. Under these circumstances we hold that it has been waived. Cf. Terminal Enterprises, Inc. v. Jersey City, 54 N. J. 568, 578 (1969); Jardine Estates v. Koppel, 24 N. J. 536, 542 (1957); R. 4:25-1(b).

The judgment is affirmed.


text:
    DOVER TOWNSHIP HOMEOWNERS AND TENANTS ASSOCIATION, PLAINTIFF-RESPONDENT, v. TOWNSHIP OF DOVER, PLANNING BOARD OF THE TOWNSHIP OF DOVER, DEFENDANTS, AND HOVSONS, INC., DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 23, 1971
    Decided April 2, 1971.

      Before Judges Kilkenny, Halpern and Lane.

      Mr. Stewart M. Hutt argued the cause for appellant (Messrs. Hutt ds Berlcoiu, attorneys; Mr. Hutt, of counsel and on the brief; Mr. Jay M. Hollander, on the brief).

      Mr. Gaetano J. Alaimo argued the cause for respondent.
   The opinion of the court was delivered by

Lane, J. A. D.

Defendant Hovsons, Inc. appeals from a judgment setting aside “tentative and final approvals granted by the defendant Planning Board of the Township of Dover to Defendant Hovsons, Inc., in connection with its application for a P. U. D. project pursuant to the Planned Unit Development ordinance and statute, * * *,” and enjoining the Township of Dover, the Planning Board of the Township of Dover and Hovsons, Inc. “from further proceeding under the P. U. D. application of defendant Hovsons, Inc., or from doing, constructing or causing any building or activity on the site pursuant to said application.”

On February 25, 1969 the township adopted “An ordinance Allowing Planned Unit Developments In Certain Areas of the Township of Dover, County of Ocean, Enacted Pursuant to the Powers Granted In R. S. 40:55-54 et seq., Known As the ‘Municipal Planned Unit Development Act (1967)’ In and for the State of New Jersey.” The ordinance provided in section 5 that the planning board was the municipal authority to administer the powers under the ordinance.

Anticipating the adoption of the ordinance, Hovsons on February 13, 1969 submitted an application to the planning board for tentative approval of a Planned Unit Development consisting of 1,344 housing units and for final approval of the first section of the P. U. D. consisting of 32 units. Notice of a public hearing to be held by the planning board on March 3, 1969 was published in a local newspaper on February 20. In addition, notices were sent to the vast majority of people living within 200 feet of the property involved.

At the public hearing the attorney representing the applicant requested that the witnesses testifying in support of the application be sworn. The chairman of the planning board, however, felt that swearing the witnesses was not necessary. Two witnesses testified in support of the application. At the conclusion of the hearing a motion was made to approve the preliminary plan subject “to road pattern and topo meeting the Township Engineer’s approval, problem regarding the intersection of Indian Hill Road caused by the high elevation of land at this point, some provision made for person coming south entering the site to be worked out with the County. Additional information regarding parking, entrance and exit, and the manner in which the model area will be used after project is completely sold.” The motion was unanimously adopted. There were no “findings of fact related to the specific proposal” nor were the reasons for the approval given; nor did the motion “set forth with particularity in what respects the plan would or would not be in the public interest * * as required by N. J. S. A. 40 :55-61(b). At the same meeting final approval was given for the model area subject to the same conditions. No transcript of the hearing was made as required by N. J. S. A. 40 :55 — 60(b).

The application that was submitted stated that the site to be covered by the development was made up of 22 parcels comprising approximately 400 acres. It stated:

The site is made up of approximately 22 in number of parcels as they are presently shown on the Dover Township Tax Map in Blocks 442, 443 and 414. Hovson’s Inc. owns in fee approximately 115 acres of this land, and with respect to the remaining acreage has entered into written contracts to purchase.

Hovsons obtained building permits for the model area on March 21, 1969 under which ten model homes have been constructed.

By letter dated May 8, 1969 the township attorney wrote to the township clerk sending a copy to Mr. Hovnanian, president of Hovsons, Inc. The letter stated that the attorney had made a review of two applications submitted to the planning board for approval of Planned Unit Developments, one of which was the application of Hovsons. He pointed out that a date had been set for the public hearing before the adoption of the ordinance and that there had been no written resolution granting approval “setting forth in detail findings arrived at after the public hearing; stipulations or conditions respecting such matters as time schedules, etc.”

On May 19, 1969 the planning board adopted a resolution reciting that on March 3, 1969 preliminary approval had been granted to Hovsons and “through inadvertence the said resolution did not set forth the required statutory finding of fact.” The resolution that was adopted was aptly described by the trial judge, “[it] seems to be nothing but conclusions which parrot the statutory language.”

Mr. Herbert Miller, a member of the planning board, participated in the March 3, 1969 meeting and voted in favor of the motion adopted at that meeting and also voted in favor of the May 19, 1969 resolution. He was employed by Lawyers Title Insurance Company in charge of its Toms River office. Lawyers Title Insurance Company did all the title work on the project for the defendant and, in fact, does all of the title work for Mr. Hovnanian and his various corporations.

The plaintiff association is a group of residents of Dover Township, some of whom live within 200 feet of the project. Its formation was triggered by the planning board’s approval of a Planned Unit Development of Cali Associates. The complaint in this action attacked not only the resolution approving the Hovsons’ development but also the resolution approving the Cali Associates’ development. Members of the plaintiff were aware of the construction going on at the Hovsons’ development no later than March 30, 1969. The complaint "was not filed until June 18, 1969.

By order dated September 2. 1969 an interlocutory injunction was issued. By order dated October 3, 1969 defendant’s motion to dismiss the complaint for lack of standing of plaintiff was denied. On or about the same date an order was entered denying defendant’s motion for summary judgment. Application for leave to appeal the latter two orders was denied by the Appellate Division.

The ordinance permitting the construction of Planned Unit Developments in the township was repealed before the hearing in the trial court on January 12, 1970. Judge Edward V. Martino in an oral opinion set aside the action of the planning board as void because of the conflict of interest of Mr. Herbert Miller, citing Hochberg v. Freehold, 40 N. J. Super. 276 (App. Div. 1956), certif. den. 22 N. J. 223 (1956).

Defendant argxres that plaintiff association, being neither the municipality enforcing its zoning ordinance, a taxpayer nor a citizen of the municipality, has no standing to bring the action. A taxpayer without showing special damage may challenge an action of a governing body affecting the overall integrity of the zoning plan of the municipality. Booth v. Board of Adjustment, Rockaway Tp., 50 N. J. 302 (1967). Where a challenge to an action by the governing body raises the question of gross illegality or abuse of public responsibilities, a plaintiff need not show special damage. Koch v. Seaside Heights, 40 N. J. Super. 86, 93 (App. Div. 1956), aff’d o. b. 22 N. J. 218 (1956). Any one of the members of plaintiff, all of whom are residents of the township, would have standing to maintain this action. Since the matter raised by the complaint alleges illegality on the part of the planning board affecting the integrity of the zoning ordinance of the township, we hold that plaintiff corporation has standing to sue in the interest of its members. Crescent Park Tenants Ass’n v. Realty Equities Corp. of New York, 58 N. J. 98 (1971); Oneida County Forest Preserve Council v. Whele, 309 N. Y. 152, 128 N. E. 2d 282 (Ct. App. 1955).

N. J. S. A. 40:55-1.4 states in part:

No member of the planning board shall be permitted to act on any matter in which he has, either directly or indirectly, any personal or financial interest.

Where a member of a planning board having an interest prohibited by this statute participates in planning board action, such action is invalid regardless of the amount of interest shown. Aldom v. Roseland, 42 N. J. Super. 495 (App. Div. 1956); Hochberg v. Freehold, 40 N. J. Super. 276, 283, supra.

As a member of the planning board, Miller was obliged to determine whether the Planned Unit Development of defendant was in the best interest of the township. ELe might, therefore, be required to make a decision which would be detrimental to the defendant. It is perfectly obvious that if he had a sufficient interest based upon his relationship with defendant, there would be a conflict. In his position as manager of the Toms River office of Lawyers Title Insurance Company, it was in the interest of Miller’s employer that the application for the Planned Unit Development be approved for the additional title work that would be required. The statement of the two interests indicates the conflict. Cf. Griggs v. Princeton Borough, 33 N. J. 207 (1960).

The interest of Miller tainted both actions of the planning board so that they are invalid because of his participation regardless of the lack of any allegation of fraud or bad faith.

We take this opportunity to comment upon the proceedings before the planning board. All too often municipal bodies act without respect, sometimes without regard, to requirements imposed by the Legislature and those imposed by the courts. What happened in this application is an example. It should have been perfectly obvious that Miller’s position was such that he should not have participated in any way on the application. In addition, the planning board chairman declined to swear the witnesses. N. J. S. A. 40:55-60 (a) is specific in providing that “All testimony by witnesses at any hearing shall be given under oath * *

No transcript of the hearing was made as required by N. J. S. A. 40:55-60(b). That provision provides that “A transcript of the hearing shall be caused to be made by the municipal authority * *

We have already referred to the failure of the planning board to comply with N. J. S. A. 40:55-61 as to the adoption of a resolution specifically setting forth factual findings and other matter.

There was also a failure to assure that N. J. S. A. 40:55-60(a), providing for notice, was complied with. The notice prescribed is to be in the manner provided for in N. J. S. A. 40 :55-34. That provision requires that a zoning ordinance before it is adopted be published. The notice that was given in this case was:

NOTICE
Notice is hereby given pursuant to R. S. 40:55-60, that a public hearing will be held before the Planning Board of the Township of Dover on March 3, 1969 at 8:00 p.m. at the Municipal office, 33 Washington Street, Toms River, New Jersey to consider the application for tentative approval by Hovson’s Inc. of a Planned Unit Development pursuant to an ordinance of Dover Township entitled “An Ordinance Allowing Planned Unit Developments in Certain Areas of the Township of Dover, County of Ocean, Enacted Pursuant to the Powers Granted in R. S. 40:55-54 et seq., known as the ‘Municipal Planned Unit Development Act, (1967)’ in and for the State of New Jersey.”
Any persons interested in said application and desiring to be heard may be present and shall be given an opportunity to be so heard.
MAURO, HAYEY & HOLDER, ESQS.
504 Main Street
Toms River, N. J. 08753
Agents for Hovson’s Inc.
(SUN-2-20-69)

ClearlyHhis publication did not constitute valid notice under the statute. It was in flagrant disregard of the legislative provision. The application in full should have been published so that the public would be informed of, among other things, exactly what zoning changes were being requested.

We need not decide whether these deficiencies standing alone would require setting aside the action of the planning board. We incline to the view that, taken together, they would because of the mandatory language of the statutes and because the approval of a P. U. D. application creates a zone for a specific area different from all other areas, thereby raising constitutional questions. See, Roselle v. Wright, 21 N. J. 400 (1956). On its face the plan to construct 1,344 additional housing units in this age of lack of sufficient housing for our citizens would appear to be in the public interest. Unfortunately, because of deficiencies that could have been easily avoided, the housing will not be constructed in defendant township unless the township reenacts the P. U. D. ordinance and a new application is approved.

Defendant urges that the suit is barred by R. R. 4:88-15(b) (3) (now R. 4:69-6(b) (3)) which provides that an action to review the determination of a planning board be brought within 45 days after the accrual of the right to review. N. J. 8. A. 40:55-64 states that tentative approval of a P. U. D. plan shall be deemed a final administrative decision subject to judicial review. We do not consider the deficient motion of March 3, 1969 an approval for purposes of review, particularly because the planning board itself recognized the deficiencies of the action in its May 19, 1969 resolution. The complaint was filed on June 18, 1969, as noted above, within 45 days of the adoption of the May 19, 1969 resolution and was therefore timely. Defendant’s argument that under N. J. S. A. 40:55-61 (a) tentative approval was deemed to have been granted 60 days after the March 3, 1969 hearing because the planning board failed to act is not consistent with the facts. The planning board did not fail to act; it acted, but its action was improper.

Finally, we note that the contentions of defendant that plaintiff is barred by laches, estoppel and the doctrine of relative hardship are inapplicable, the actions of the planning board being void. Cf. Summer Cottagers’ Ass’n of Cape May v. City of Cape May, 19 N. J. 493, 504 (1955).

The judgment is affirmed.


author: Leonard, J. A. D.

text:
    FRED DEPKIN & SON, INC., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT, v. DIRECTOR, NEW JERSEY DIVISION OF TAXATION; NEW JERSEY MOTOR FUELS TAX BUREAU; AND ATTORNEY GENERAL OF NEW JERSEY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued March 8, 1971
    Decided April 8, 1971.

      Before Judges Golbmann, Leonard and Fritz.

      Mr. Balph W. Chandless argued the cause for appellant (Messrs. Chandless, Weller •& Kramer, attorneys).

      Mr. Bichard M. Conley, Deputy Attorney General, argued the cause for respondents (Mr. George F. Kugler, Jr., Attorney General, attorney; Mr. Stephen Shillman, Assistant Attorney General, of counsel).
   The opinion of the court was delivered by

Leonard, J. A. D.

Plaintiff appeals from a Law Division order granting defendants’ motion to dismiss its complaint and dissolving a temporary restraint which plaintiff had previously obtained.

The uncontroverted affidavits filed with the trial court by the field representatives of defendant Motor Fuels Tax Bureau (hereinafter Bureau), stated that on or about October 6, 1969 plaintiff’s tank truck delivered fuel to diesel fuel tanks at a retail diesel fuel outlet, B. O. W. Motors in Little Ferry, New Jersey. B. O. W. Motors had two 4000-gallon diesel fuel tanks which are connected to a diesel fuel pump. The pump is marked “diesel fuel” and •the price per gallon of fuel is indicated thereon to include federal and state motor fuel taxes. On or about November 17, 1969 at plaintiff’s office, plaintiff’s president showed the Bureau field representatives records of deliveries made by plaintiff to B. O. W. Motors consisting of approximately 18,128 gallons of fuel oil, during the period from August 15, 1969 through October 6, 1969. The records indicated the dates of delivery, invoice numbers, price per gallon, and total sales price for deliveries during that period. On the same occasion the president told these field representatives that plaintiff had made 'additional deliveries of fuel to B. O. W. Motors, but he refused to disclose records of those deliveries.

Defendant Bureau wrote to plaintiff’s attorney on January 7, 1970 stating that it deemed plaintiff liable for the motor fuels tax on fuel the company had sold because plaintiff had knowledge that the ultimate use of the fuel would be to propel motor vehicles on the highway. The Bureau demanded, pursuant to N. J. S. A. 54:50-2, that its representatives be permitted to enter plaintiff’s premises for the purpose of auditing its records to determine any such liability. On January 15, 1970 the Bureau again wrote to plaintiff’s attorney stating that if plaintiff did not make its records available for an audit by January 31, 1970, the Bureau, by authority of N. J. S. A. 54:49-5, would make an arbitrary assessment of the amount of tax due and proceed to take the steps necessary for collection.

Plaintiff instituted this action for declaratory judgment on February 2, 1970, alleging that it was not a taxpayer under the New Jersey Tax Upon Sale of Motor Fuels Act (hereinafter act), N. J. S. A. 54:39-1 et seq., and that the Bureau’s proposed action would deprive it of its property without due process of law, in violation of the federal and state constitutions. Plaintiff demanded judgment declaring its rights, declaring the imposition of 'any tax on it by the Bureau to- be unconstitutional, and enjoining the Bureau from making the proposed tax assessment.

On February 17, 1970 tlie Bureau sent a tax assessment notice to plaintiff explaining that part of the assessment was based on actual sales of fuel from August 15 through October 6, 1969, as determined in the prior partial audit of plaintiff’s records, and that the remainder of the assessment was projected for the period of January 1 through August 14, 1969.

On February 24, 1970 plaintiff obtained a temporary restraint against both defendants, the Bureau and the Director of the Division of Taxation, by alleging that it would suffer irreparable damage if defendants were able to proceed to docket and collect the tax assessment. The court ordered defendants to show cause why the restraint should not be continued pending final hearing.

Defendants answered the complaint and by way of defense asserted that plaintiff had not exhausted its administrative remedies and was therefore precluded from maintaining the action. They moved for an order dismissing the complaint or, in the alternative, directing plaintiff to seek a hearing of its case before the Division of Tax Appeals.

Plaintiff sent a timely Protest of Tax Asesssment to defendant Director on March 16, 1970, preserving its right to an administrative hearing.

Plaintiff’s order to show cause and defendants’ motion to dismiss were heard on March 26, 1970. The trial judge held that plaintiff’s action was premature because there was no imminent danger to it and it had not exhausted its administrative remedies. The temporary restraint was accordingly dissolved and the complaint dismissed. Plaintiff appeals from this judgment.

Plaintiff first contends that the act is unconstitutional upon its face and therefore it is not necessary that it exhaust its administrative remedies by requesting a hearing on the protest filed with the Commissioner, N. J. S. A. 54:49-18, or by appealing to the State Board of Appeals, N. J. S. A. 54:39-49.

The complaint filed herein did not raise the present specific constitutional argument. Rather, plaintiff sought to have the act declared unconstitutional only as it applied to itself individually. The present attack was raised for the first time when defendants moved to dismiss. Nevertheless, we consider it upon its merits.

Plaintiff bottoms its present contention of unconstitutionality upon the arguments that (1) the act lacks standards for determining who shall pay the tax and (2) N. J. S. A. 54:50-2, which gives the Commissioner the power to cause an examination or investigation to be made of the place of business, tangible personal property and books and records of any taxpayer, authorizes an illegal search in violation of the Fourth Amendment. This point and the arguments advanced in support thereof are without merit.

N. J. S. A. 54:39-64(b) defines who is subject to payment of the motor fuel tax. It provides:

Any person purchasing motor fuel on which there has been no charge made to him of the motor fuel tax thereon, if the same be thereafter used or sold for use in the operation of a motor vehicle upon the highways, shall be required to obtain a special license B from the director and shall be required to pay a tax, at the rate per gallon specified in section 54:89-27 of this Title, on the total number of gallons so used or sold for use. * * *

Likewise, motor fuel is defined by N. J. S. A. 54:39-2 as being any “liquid” sold for the purpose of “generating power for the propulsion of motor vehicles upon the public highway.”

Thus, the act clearly provides standards for determining who pays the tax. Further, these standards are sufficiently definite to insure that the Director does not exceed the allowable limits of delegation of legislative powers to his subordinates. Moreover, the existing administrative and judicial review of any determination made by the Director constitute a safeguard which is “probably of greater significance than further details in the statutory standard.” Burton v. Sills, 53 N. J. 86, 91 (1968), appeal dismissed 394 U. S. 812, 89 S. Ct. 1486, 22 L. Ed. 2d 748 (1969).

N. J. S. A. 54:50-2 does not violate the Fourth Amendment. Essentially, this section of the act authorizes the Director to check with taxpayers as to the basis of their returns. There could be no enforcement of the tax laws if the Director was not authorized to review the records from which the returns are prepared. The inquiry authorized thereunder is within the statutory authority of the Director, the demand is not too indefinite, and the information sought is reasonably relevant to the matters under inquiry. Thus, the statutory authorization is not unreasonable. Cf. United States v. Morton Salt Co., 338 U. S. 632, 70 S. Ct. 357, 94 L. Ed. 401 (1950); Federal Trade Com’n v. American Tobacco Co., 264 U. S. 298, 44 S. Ct. 336, 68 L. Ed. 696 (1923).

Boyd v. United Stales, 116 U. S. 616, 6 S. Ct. 534, 29 L. Ed 746 (1886), and Carroll v. United States, 267 U. S. 132, 45 S. Ct. 280, 69 L. Ed. 543 (1924), both relied upon by plaintiff in support of its contention that the statute authorizes an illegal search, are inapposite. The act authorizes an inspection of the records by the Bureau solely for the purpose of establishing a tax liability. The information secured is not used as the basis for a forfeiture or any criminal proceedings.

Plaintiff’s contention that the act is unconstitutional as applied to it can best be evaluated after a careful examination of the true nature of the tax and the many detailed facts concerning plaintiffs activities and knowledge in connection with the fuel it sold to B. O. W. Motors. Roadway Express, Inc. v. Kingsley, 37 N. J. 136, 139 (1962). Under the circumstances, the taking of the necessary evidence and the making of the necessary factual findings and legal determinations should be permitted to rest, in the first instance, with the administrative officials designated by the Legislature for that purpose. Ibid. See also Central R. R. Co. v. Neeld, 26 N. J. 172, 178-181 (1958), cert. den. 357 U. S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d 1371 (1958). Plaintiff, having filed a protest and “preserved its right to a hearing” pursuant to N. J. S. A. 54:49-18, should now request an immediate hearing by the Commissioner. If it feels aggrieved by his order or determination, it may then appeal to the State Board of Tax Appeals, in accordance with N. J. S. A. 54:39-49. Then, if it so desires, plaintiff may obtain judicial review by the Appellate Division. B. 2:2-3(a) (2). Consequently, we find that the interest of justice does not require us presently to make a determination of the issue of the act’s unconstitutionality as applied to plaintiff, before plaintiff exhausts the available administrative remedies. See Nolan v. Fitzpatrick, 9 N. J. 477 (1952); R. 4:69-5.

The case of Schwartz v. Essex County Board of Taxation, 129 N. J. L. 129 (Sup. Ct. 1942) does not support plaintiff’s contention that administrative remedies need not first be exhausted because of the specific constitutional question now raised. The court therein (at 132) approved the practice of by-passing an administrative hearing, only where the “single question presented” involved a determination of the constitutionality of a legislative act on its face. As we have previously noted, there are other factual as well as legal questions present. Further, in view of our conclusion that the act is constitutional on its face, that issue is no longer viable.

Judgment affirmed. We do not retain jurisdiction.