(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in
the interests of brevity, portions of any opinion may not have been summarized).
Argued September 17, 2001 -- Decided November 14, 2001
STEIN, J., writing for a unanimous Court.
In this appeal, the Court reviews a Chancery Division determination, affirmed as modified by the Appellate
Division, holding unconstitutional as applied to plaintiff BTD a provision of N.J.S.A. 22A:4-8 authorizing the
collection of a Sheriff's fee based on a settlement that occurred subsequent to the entry of a final judgment of
foreclosure and issuance of a Writ of Execution.
In December 1997, plaintiff BTD obtained a judgment in foreclosure in the amount of $3,830,913.23
against defendant 350 Warren. Thereafter, and pursuant to BTD's request, the Hudson County Sheriff scheduled a
foreclosure sale and placed the required notices of sale at the premises and in legal advertisements in local
newspapers. The stipulated actual cost of the direct services performed by the Sheriff's office in preparing for the
sale (exclusive of other indirect costs) amounted to $971.14.
Subsequent to the performance of these services by the Sheriff, BTD and 350 Warren reached a settlement
on the judgment. Thus, BTD requested that the Sheriff's office cancel the sale. Thereafter, pursuant to N.J.S.A.
22A:4-8 (entitled “Fees and mileage of sheriffs and other officers”) , the Sheriff sent BTD an invoice for
$30,408.64, representing the fee for services rendered in connection with the foreclosure proceeding. Under the
statute, in the case of a settlement without actual sale, the sheriff or other officer is authorized to receive one-half of
the amount of percentage allowed in the case of sale.
BTD refused to pay the Sheriff's fee and the Hudson County Sheriff instituted proceedings in the Chancery
Division through an Order to Show Cause to compel payment of the fees. The Sheriff's supporting papers related
the relevant facts supporting the demand for payment of the fee. BTD's opposing documents consisted of counsel's
brief and certification, alleging that the Sheriff's direct costs of $971.14 were facially disproportionate to the fee
assessed against BTD. No other proofs were offered by either party.
After a hearing, the Chancery Division dismissed the Sheriff's application, holding that N.J.S.A. 22A:4-8,
as applied to BTD, imposed a tax, and that the tax was unenforceable under Article 4 of the New Jersey
Constitution. The court reached that conclusion because the title of the statute in question did not disclose that the
statute imposed a tax. In explaining its conclusion that the fee at issue was equivalent to a tax, the court observed
that because the disproportion between the charge and the cost of the service was excessive, it was evident that the
charge imposed was intended primarily to raise revenue, and not to compensate the governmental entity for the cost
of providing the service.
A divided panel of the Appellate Division affirmed the Chancery Division's judgment, agreeing that the
fee imposed constituted a tax because the amount charged was disproportionate to the value of the services
rendered. However, the majority rejected the Chancery Division's view that the statute violated the single object
clause of the Constitution because the statute's title gives notice to the Legislature and to the public of the general
purpose of the act. Nevertheless, a majority of the panel held that the statute could not be enforced in the absence of
evidence that the Legislature intended to impose a tax on the users of the Sheriff's services. The dissenting member
of the panel disagreed that the statute could not be enforced, asserting that the majority had disregarded the
presumption of validity to which the statute was entitled.
The appeal was before the Court as of right, based on the dissent below.
HELD: The Appellate Division's affirmance of the Chancery Division's conclusion that the charge authorized by
the Sheriffs' fee statute, N.J.S.A. 22A:4-8, is intended primarily to raise revenue, and not to compensate the
governmental entity for the cost of providing the service, cannot be sustained on the existing record, the party
challenging the fee having offered no competent proof to overcome the presumption of its reasonableness.
1. There is a longstanding legislative authorization for and judicial recognition of the practice of compensating
sheriffs for their services in execution sales on the basis of the amount of the underlying obligation or settlement.
(pp. 8-9)
2. A regulatory fee schedule has a presumption of reasonableness and ordinarily will be upheld unless competent
proof is offered to overcome the presumption. (pp. 9-11)
3. The litigant asserting that a charge imposed ostensibly for regulatory purposes is in reality a tax must bear the
burden of proving that allegation. (pp. 11-12)
4. The presumption of validity of a fee enactment can be overcome by proof that its primary purpose was to raise
revenue. (pp. 12-14)
5. Regulatory ordinances are presumptively valid and will be sustained absent proof that the fees imposed
unreasonably exceed the cost of regulation. (pp. 14-18)
6. The Court's conclusion in Resolution Trust Corp. v. Lanzaro, 104 N.J. 294 (1995), that the exaction there in
question was essentially equivalent to a tax, did not purport to evaluate the overall application of the Sheriff's fee
statute on a statewide basis in the context of a full record, but rather reflected the Court's judgment that the extreme
disproportionality between the fee and the value of the sheriff's services was facially inconsistent with Congress'
determination that the RTC's conservationist efforts should not be burdened by such exactions. (pp. 18-21)
7. Because no proofs were offered by either party concerning the statewide operation of the Sheriffs' fee statute, or
of the direct and indirect costs borne by sheriffs in discharging their statutory responsibilities, the Appellate
Division's affirmance of the Chancery Division's conclusion (that the charge authorized by N.J.S.A. 22A:4-8 is
intended primarily to raise revenue, and not to compensate the governmental entity for the cost of providing the
service) cannot be sustained. (pp. 21-23)
8. The longstanding history of the Sheriffs' authorization to collect fees for services in connection with foreclosure
sales persuasively suggests that the Legislature would intend that the fees continue to be so collected, whether it was
denominated a fee or a tax - the Legislature being authorized to impose either. The Court can discern no basis on
which the statute's invalidation should be sustained, even assuming that an adequate record established that the
charge imposed was essentially equivalent to a tax. (pp. 23-24)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Chancery
Division for further proceedings consistent with the Court's opinion.
CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO, LaVECCHIA, and ZAZZALI
join in JUSTICE STEIN's opinion.
SUPREME COURT OF NEW JERSEY
A-
62 September Term 2000
BTD-1
996 NPC 1 L.L.C., a
Delaware Limited Liability
Company,
Plaintiff-Respondent,
v.
350 WARREN L.P., a New Jersey
Limited Partnership,
Defendant.
HUDSON COUNTY SHERIFF,
Appellant.
Argued September 17, 2001 -- Decided November 14, 2001
On certification to the Superior Court,
Appellate Division, whose opinion is
reported at
333 N.J. Super 476 (2000).
Frederick P. Niemann, Assistant Monmouth
County Counsel, argued the cause for
appellant (William W. Northgrave, Hudson
County Counsel, attorney; Mr. Niemann and
Robin Moses, Assistant County Counsel, on
the briefs).
Matthew V. DelDuca argued the cause for
respondent (Dechert Price & Rhoads,
attorneys; Mr. DelDuca and Stacey O.
Steinmetz, on the briefs).
Stephen E. Trimboli argued the case for
amicus curiae Sheriff's Association of New
Jersey (Courter, Kobert, Laufer & Cohen,
attorneys; Mr. Trimboli and Michael A.
Shadiack, on the brief).
Donald J. Einhorn submitted letters in lieu
of brief on behalf of amicus curiae
Hunterdon County Sheriff (Gaetano M. De
Sapio, attorney).
Fredrick P. Niemann, Assistant Monmouth
County Counsel, submitted a letter in lieu
of brief on behalf of amicus curiae Monmouth
County Sheriff (Malcolm V. Carton, Monmouth
County Counsel, attorney).
Ronald Kevitz, Morris County Counsel,
submitted letter briefs on behalf of amicus
curiae Morris County Sheriff.
Thomas C. Miller, Somerset County Counsel,
submitted a letter brief on behalf of amicus
curiae Somerset County Sheriff.
Carol I. Cohen, Union County Counsel,
submitted a letter in lieu of brief on
behalf of amicus curiae Union County
Sheriff.
The opinion of the Court was delivered by
STEIN, J.
This appeal requires our review of a Chancery Division
determination, affirmed as modified by the Appellate Division,
BTD-1
996 NPC 1, L.L.C. v. 350 Warren, L.P.,
333 N.J. Super. 476
(2000), holding unconstitutional as applied to plaintiff a
provision of N.J.S.A. 22A:4-8 authorizing the collection of a
Sheriff's fee based on a settlement that occurred subsequent to
the entry of a final judgment of foreclosure and issuance of a
Writ of Execution. The Chancery Division determined that the fee
in question was essentially equivalent to a tax. The Appellate
Division agreed, a divided panel of that court also concluding
that the levy was unenforceable in the absence of legislative
intent to impose a tax on the users of Sheriffs' services. Id.
at 484.
We conclude that the record before us clearly is inadequate
to support the Chancery Division's conclusion that the charge
authorized by the statute “'is intended primarily to raise
revenue, and not to compensate the governmental entity for the
cost of providing the service.'” Id. at 479. Moreover, absent
any procedural challenge to the enactment of N.J.S.A. 22A:4-8,
see N.J. Const. art. IV, § 6, ¶ 1 (requiring that revenue bills
originate in the General Assembly), we disagree with the holding
of the majority below that the statute, if determined to be a
tax, is unenforceable absent a legislative intent to impose a
tax. Accordingly, we reverse the judgment below.
I
The facts are essentially undisputed. In May 1997,
plaintiff BTD 1996, NPC 1, L.L.C. (BTD) filed a complaint in
foreclosure against 350 Warren L.P. (350 Warren). In December
1997, the court entered a judgment in foreclosure in the amount
of $3,830,913.23, and issued a Writ of Execution. In response to
BTD's request, the Hudson County Sheriff scheduled a foreclosure
sale and required BTD to pay a $1000 deposit to be applied
against the Sheriff's expenses. The Sheriff scheduled the sale
for July 9, 1998, placing the required notices of sale at the
premises and in legal advertisements in local newspapers. The
parties stipulated that the actual cost of the direct services
performed by the Sheriff's office in preparing for the sale _
exclusive of indirect costs for personnel, equipment, supplies,
office space and other expenses essential to the operation of the
Sheriff's office _ amounted to $974.14.
Prior to the sale, BTD requested that the Sheriff's office
cancel the sale, informing them that the underlying dispute had
been resolved by 350 Warren's payment of $2,400,000. Pursuant to
N.J.S.A. 22A:4-8, the Sheriff sent BTD an invoice for $30,408.64,
representing the fee for services rendered in connection with the
foreclosure proceeding. That statute, entitled “Fees and mileage
of sheriffs and other officers,” provides in pertinent part:
When a sale is made by virtue of an
execution the sheriff shall be entitled to
charge the following fees: On all sums not
exceeding $5,000.00, 4%; on all sums
exceeding $5,000.00 on such excess, 2½%; the
minimum fee to be charged for a sale by
virtue of an execution, $20.00.
. . .
When the execution is settled without
actual sale and such settlement is made
manifest to the officer, the officer shall
receive ½ of the amount of percentage allowed
herein in case of sale.
through an Order to Show Cause to compel payment. The Sheriff's supporting papers essentially related the relevant facts supporting the demand for payment of the fee. The papers in opposition, consisting of a brief and certification by an attorney associated with BTD's counsel, alleged that the Sheriff's direct costs of $971.14 were facially disproportionate to the fee assessed against BTD. No other proofs were proffered by either party. After the initial hearing on the Sheriff's application, the Chancery Division ordered that notice of the proceeding be provided to the Attorney General, see R. 4:24-4, and also permitted Warren, Somerset, Hunterdon, Morris and Monmouth counties, as well as the Sheriff's Association of New Jersey, to participate as amici curiae. The Attorney General declined to participate.
On the next hearing date, the Chancery Division dismissed the Sheriff's application, holding that N.J.S.A. 22A:4-8, as applied to BTD, imposed a tax, and that the tax was unenforceable pursuant to art. 4, § 7, ¶ 4 of the New Jersey Constitution, which provides that “every law shall embrace but one object and that shall be expressed in the title.” The court reasoned that N.J.S.A. 22A:4-8 violated that constitutional mandate because its title _ “Fees and mileage of sheriffs and other officers” _ does not disclose that the statute imposed a tax. Explaining its conclusion that the fee at issue was essentially equivalent to a tax, the court observed
that N.J.S.A. 22A:4-8 is unconstitutional as applied to the plaintiff in this case, where the disproportion between the charge and the cost of the service is excessive, the charge imposed is intended primarily to raise revenue, and not to compensate the governmental entity for the cost of providing the service. Resolution Trust v. Lanzaro [ 140 N.J. 244 (1995)]. As a result, the charge is essentially the equivalent of a tax, measured by the sale price of the foreclosed property. [I]t is apparent in this case that the charge is grossly disproportionate to the cost of the services rendered under any measure, and it is premised solely on the statutory authorization appearing in 22A:4-8, which permits the Sheriff to receive one-half of the amount of the percentage allowed in the event a sale is made.
A divided panel of the Appellate Division affirmed the Chancery Division's judgment. The entire court agreed that the fee imposed constituted a tax because the amount charged was disproportionate to the value of the services rendered. The majority rejected the trial court's view that the single object clause of the constitution rendered the statute unenforceable, observing that “'[t]he constitutional provision is complied with when the title gives notice to the Legislature and the public of the general purpose of the act.'” 333 N.J. Super. at 483 (quoting General Public Loan Corp. v. Director of Div. of Taxation, 13 N.J. 393, 403 (1953)). Nevertheless, the court held that the statute could not be enforced in the absence of evidence that the Legislature intended to impose a tax on the users of Sheriffs' services. The court stated that “we cannot enforce a tax where the Legislature did not intend to impose one.” Id. at 484 (citing Kingsley v. Hawthorne Fabrics, Inc., 41 N.J. 521, 529-30 (1964) and Fedders Fin. Corp. v. Director, Div. of Taxation, 96 N.J. 376, 386 (1984)). The dissenting member disagreed that the statute could not be enforced, asserting that the majority had disregarded the presumption of validity to which the statute was entitled. Id. at 491-92 (Steinberg, J., dissenting).
II
A
Although the Appellate Division opinion, id. at 482-83 n.4, refers to a predecessor statute to N.J.S.A. 22A:4-8 enacted in 1948, L. 1948, c. 273, our research suggests that the statutory roots of N.J.S.A. 22A:4-8 go back at least as far as 1799. In Sinnickson v. Gale, 16 N.J.L. 21 (Sup. Ct. 1837), the Supreme Court of Judicature determined that the sheriffs' fee statute then in effect contemplated that the fee would be assessed on the basis of the amount generated for the party executing on the property, and not on amounts realized in excess of that which was required to satisfy the execution. Id. at 22. In its opinion the court noted that an earlier version of the statute, enacted in 1799, allowed the Sheriff “'for serving every execution, if for one hundred Dollars or less, one dollar; and if above that sum, two cents on every dollar, to be computed on the debt, or damages, paid, or secured to the plaintiff.'” Id. at 21. An 1823 amendment reduced the fee to two percent on sales up to $1,000 and one percent on the excess; but in cases of settlement without actual sale the Sheriff was allowed fee of one percent up to $1000 and one-half of one percent on any excess.
In Sturges v. Lackawanna and Western Railroad, 27 N.J.L. 424 (Sup. Ct. 1959), the Sheriffs of Hunterdon and Warren Counties had executed on defendants' property to facilitate plaintiff's effort to collect a judgment for $388,912.88. Plaintiff subsequently withdrew the executions, and the Sheriffs severally sought to collect, based on the amount of the judgment, “one-half of the amount of percentage allowed in cases of sale” as authorized by the statute then in effect. Id. at 426. The court determined that although the Sheriffs were entitled to compensation, the fee should be calculated on the basis of the value of the goods levied on, rather than on the amount of the underlying judgment. Id. at 426-27.
In the context of the issue before us, Sinnickson and Sturges demonstrate the longstanding legislative authorization and judicial recognition of the practice of compensating sheriffs for their services in execution sales on the basis of the amount of the underlying obligation or settlement.
B
Because this appeal requires us to determine whether plaintiff's facial challenge to the validity of N.J.S.A. 22A:4-8 should be sustained, we deem it necessary and appropriate to reiterate the basic legal principles that inform our inquiry. This Court in Bellington v. East Windsor Township, 17 N.J. 558, 564-65 (1955), explained the essential distinction between regulatory statutes and statutes designed primarily to raise revenue:
There is a basic distinction between a local legislative act primarily regulative of a business, trade, profession, or calling in the exercise of the police power to serve the common need and the use of the delegated power to tax the pursuit for revenue. In the first case the license fee is ordinarily the means of defraying the expense fairly attributable to the regulative process, while the broader sovereign power to tax for revenue to serve a public purpose of a general nature is confined by constitutional limitations, the terms of the grant itself, and the rule of reason and good discretion.
The assessment of the cost of a license and the ensuing governmental supervision and control is sustained by the correlative benefits to the public. A license tax for revenue represents an exercise of the general taxing power. Thus, one is differentiated from the other, although the license fee for regulation alone also has the connotation of a tax as a charge on the business or pursuit for the cost of supervision in the public interest. The powers are essentially different: one is to license and regulate under the police power; the other, to raise revenue under the general power to tax. But the two may be 'unitedly exercised.' And the assessment may still constitute a license fee proper rather than a tax for revenue even though the fee charged be in excess of the regulatory expenses and burdens. Where the primary object is police regulation, it does not necessarily matter that the incidental result is revenue above the actual cost of supervision and control of the business; that is not enough to render the return a tax for revenue rather than a license tax; e contra, where revenue is the principal objective of the tax, it is not sustainable under the police power alone.
[Citations omitted.]
Another fundamental principle that guides our disposition is
that a regulatory “fee schedule has a presumption of
reasonableness and will ordinarily be upheld unless competent
proof is offered to overcome the presumption.” Automatic
Merchandising Council v. Township of Edison,
102 N.J. 125, 130
(1986). Accord, Gilbert v. Town of Irvington,
20 N.J. 432, 435
(1956); Bellington, supra, 17 N.J. at 568-69.
Several cases illustrate clearly the requirement that the
litigant asserting that a charge imposed ostensibly for
regulatory purposes is in reality a tax must bear the burden of
proving that allegation. For example, in Weiner v. Borough of
Stratford,
15 N.J. 295 (1954), plaintiff challenged a municipal
ordinance imposing an annual license fee of from five to one
hundred dollars on all persons engaging in any business within
the Borough, the grant of the license to be determined by the
Borough Council on recommendation of the Planning Board.
Although the ordinance was invalidated because it contained no
standards governing the issuance of licenses, plaintiff also
contended that the fee constituted an invalid tax rather than a
regulatory enactment. In an opinion by the late Justice Brennan,
this Court rejected that contention because no proof had been
offered to demonstrate a disparity between the fees imposed and
the cost of regulation. The Court observed:
Plaintiff's contention is not without
merit. Certainly the ordinance is singularly
wanting in regulatory features. Apart from
the provision applicable specifically to new
businesses, the only provisions suggestive of
regulation are those which condition the
issuance of licenses upon compliance by the
licensee with safety laws and ordinances,
and, in the case of theatres and other places
of amusement, require the written
certification of such compliance from the
building inspector and the chief of the fire
department. The annual license fees range
from $5 to $100 (all but eight businesses pay
a $5 fee; an auction store pays the $100
fee), and the paucity of regulatory
provisions is strongly suggestive that these
fees are unreasonably in excess of the
regulatory costs and are in actuality imposed
solely to raise revenue.
However, the disparity is not so obvious
that we can reach a conclusion without
evidence of the relation of the fees to
regulatory costs, and there is no evidence
bearing upon that question in the record. In
the circumstances we are unable to determine
the question. Moreover, plaintiff does not
complain of the $100 licensee fee chargeable
for an auction store and is willing to pay
it.
[Id. at 298 (emphasis added).]
In contrast, Daniels v. Borough of Point Pleasant,
23 N.J. 357 (1957), illustrates that the presumption of validity of a fee
enactment can be overcome by proof that its primary purpose was
to raise revenue. At issue in Daniels was the validity of a 1956
amendment to the Borough's building code that significantly
increased the fees for building permits. Under the prior
ordinance, permit fees were four dollars for structures valued up
to $1000, and an additional two dollars for each additional $1000
in valuation or fraction thereof. The plaintiff adduced evidence
proving that in the year prior to enactment of the amended
ordinance, aggregate fees collected amounted to $8875, of which
one half was paid to the building inspector as compensation and
the balance retained by the Borough. No other persons were
employed to directly assist the building inspector, although he
did receive routine but minimal assistance from other Borough
employees.
The amended ordinance increased permit fees substantially.
Plaintiff, a residential home contractor, testified that he
primarily constructed small homes for military veterans financed
by federal loan programs, and that his average permit fee had
increased from $18 per home under the prior ordinance to $262 per
home under the revised ordinance. Evidence also was adduced that
the Mayor and two councilmen had stated that the purpose of the
amendment was to raise revenue to offset municipal expenses
caused by an expanded school population. Based on the evidence
adduced, the trial court invalidated the amendment. In
affirming, this Court observed:
Inherent in the power to regulate and control
is the power to charge license fees primarily
designed to defray the costs of such control.
They must not, of course, exceed the bounds
of reason considered in connection with the
service and the cost of the service
granted[.]
. . .
What the Borough of Point Pleasant is
attempting to do here is to defray the
general cost of government under the guise of
reimbursement for the special services
required by the regulation and control of new
buildings.
Here, the difference between the cost to
the borough of regulating and controlling new
construction bears no reasonable relation to
the amount of revenue raised by the new
amendatory ordinance. The record indicates
that approximately the same services will now
be rendered as were rendered in the prior
years by the building inspector, and that the
fees raised by the new ordinance exceed by
more than 700% the cost of inspecting the
buildings and regulating the construction.
Admittedly, the purpose of the ordinance was
to raise revenue to defray the increased cost
of school and other government services. The
philosophy of this ordinance is that the tax
rate of the borough should remain the same
and the new people coming into the
municipality should bear the burden of the
increased costs of their presence. This is
so totally contrary to tax philosophy as to
require it to be stricken down.
[Id. at 361-62 (emphasis added).]
More recent decisions have reaffirmed the principle that
regulatory ordinances are presumptively valid and will be
sustained absent proof that the fees imposed unreasonably exceed
the cost of regulation. In Automatic Merchandising Council,
supra,
102 N.J. 125, the issue concerned the validity of an
Edison Township ordinance that imposed a forty-dollar annual
licensing fee for food-service vending machines. The trial court
found the fee unreasonable based on its determination that direct
and indirect costs, plus a permissible revenue allowance, did not
exceed fifteen dollars per machine, and ordered a partial refund
of the excess over that amount. The Appellate Division ordered a
refund of the entire fee. Automatic Merchandising Council v.
Township of Edison,
204 N.J. Super. 395, 405 (1985). We
reinstated the trial court's determination. In passing, we noted
that although we were not bound by the Township's election not to
contest before us the trial court's finding that the forty-dollar
fee was excessive, we were disinclined to address the issue
because the record was inadequate:
In its petition for certification,
Edison Township did not directly challenge
the trial court's determination that the
licensing fee unreasonably exceeded the costs
of regulation, but rather limited its
petition to the decision of the Appellate
Division in ordering a total refund.
Although we are not confined to arguments
presented in the petition for certification,
we decline to address the merits of the fee
because of the procedural posture of the
case. This case is a poor vehicle to test
whether the revenue collected falls within
the reasonable limits of excess over
regulatory costs. Because of various
discovery rulings made in the course of
pretrial, defendant-municipality was unable
to present all the proofs that it contends
would sustain the forty-dollar fee.
Food-handling machines obviously pose a
genuine concern for human health. Unless
temperatures are correctly maintained, food
may spoil and various bacteria may become
present in the food; unless the vending
machines are properly sealed, external
contaminants may enter the machine and the
product. It is difficult to quantify the
nature or number of inspections warranted to
assure continued public health. A good
measure of discretion will have to be
accorded a regulatory agency to develop a
suitable program. Because of its discovery
problem, this case seemed to proceed on the
theory that the municipality had to prove the
cost-basis of its fee schedule. Such is not
the law. A municipal fee schedule has a
presumption of reasonableness and will
ordinarily be upheld unless competent proof
is offered to overcome the presumption.
Such proof should ordinarily encompass the
variety of factors covered in our earlier
decisions.
[Automatic Merchandising Council,
supra, 102 N.J. at 129-30 (emphasis
added).]
To the same effect is our holding in Public Service Electric
and Gas Co. v. New Jersey Department of Environmental Protection,
101 N.J. 95 (1985), in which a group of electric utility
companies challenged the reasonableness of the permit fees for
the 1982-83 fiscal year imposed by the Department of
Environmental Protection (DEP) on discharges of heated effluent
into the State's waterways. The fees were imposed pursuant to
New Jersey's Water Pollution Control Act, N.J.S.A. 58:10A-1 to -
20, which directed the DEP Commissioner to “establish and charge
reasonable annual administrative fees, which fees shall be based
upon, and shall not exceed, the estimated cost of processing,
monitoring and administering the [New Jersey Pollutant Discharge
Elimination System] NJDES permits.” N.J.S.A. 58:10A-9. Pursuant
to the statute, the DEP annually estimated its overall regulatory
costs for the NJDES program and allocated those costs among the
three surface-water discharge categories: industrial, municipal,
and thermal. For the year at issue, the DEP allocated $652,728
to the thermal dischargers out of its annual regulatory cost of
approximately $2.5 million primarily on the basis that thirty
percent of the total number of permits issued were for thermal
dischargers. DEP asserted that its allocation of approximately
25 percent of its regulatory costs to thermal dischargers was
rationally related to the regulatory burden imposed by those
discharges. The electric utility companies, in a submission
outside the record but put before the court as an exhibit to
their appellate brief, attempted to demonstrate that the
aggregate fees imposed on thermal dischargers was vastly
disproportionate to DEP's actual work effort in regulating that
category of discharges.
This Court rejected the utilities' challenge to the
reasonableness of DEP's allocation of its NJPDES regulatory costs
to the thermal dischargers, noting that the utilities' challenge
“comes outside the record and does not permit the agency to
respond on the record,” id. at 107, and concluding that the
utilities had failed to sustain their burden of demonstrating the
unreasonableness of DEP's fee allocation. The Court observed:
Thus, we believe the Legislature desired
only to reaffirm its long-standing practice
under which regulatory licensing programs of
agencies are not taxing mechanisms but a
means of generating enough revenue to be
self-sustaining. In light of this statutory
policy, we cannot say that there is an
insufficient factual basis for the agency to
act, or that in applying the policies of its
enabling legislation to the record facts
before it the Department made a clear error
in judgment with respect to the allocation of
costs between the categories.
Hence, although we are left with a sense
of some unease about the basis for the
allocation among the categories, we cannot
say that an allocation that is roughly
related to the number of permits in each
category and does not generate
disproportionately-excessive costs against
the category members is invalid as a matter
of law.
[Id. at 109.]
C
As did the Chancery Division, the Appellate Division based
its determination that the Sheriff's fee at issue was a tax
rather than a regulatory fee, 333 N.J., Super. at 480-82, on this
Court's decision in Resolution Trust Corp. v. Lanzaro,
104 N.J. 294 (1995). That reliance, although understandable, was
misplaced. Two aspects of Resolution Trust distinguish the issue
there from the one presented on this appeal: first, the
disparity between the Sheriff's costs of $369.58 (in addition to
services engaging approximately ten hours of staff time), and the
statutory fee of $275,075, was enormous; second, and of even
greater significance, the fee in Resolution Trust was to be
exacted from Resolution Trust Corporation (RTC), a federal
governmental instrumentality established by Congress to act as
conservator or receiver of failed thrift institutions and,
expressly to enhance its ability to perform its statutory
mission, exempted by Congress from all “state, municipal, and
local taxation except taxes on real estate held by the
Corporation . . . .”
12 U.S.C.A.
§1441a(g). Id. at 251.
Implementing its statutory authority, RTC had adopted a policy
concerning payment of state and local taxes that provides in
part:
The Corporation is immune from taxes other
than ad valorem real property taxes. Taxes on
sales, transfers, or other dispositions of
Corporation property are generally in the nature
of excise taxes which are levied on the
transaction and not on the property (although the
calculation of the amount of tax may be based on
the property's sale price); the Corporation is
immune from such taxes.
[Statement of Policy Regarding the
Payment of State and Local Property
Taxes,
56 Fed.Reg. 23426, 23427 (1991).]
Concededly, in concluding that the fee sought to be imposed
on RTC by the Monmouth County Sheriff was “essentially equivalent
to a tax measured by the sale price of the foreclosed property,”
id. at 260, we did not require the RTC to sustain the ordinarily
applicable burden of proving the unreasonableness of the
regulatory exaction, Automatic Merchandising Council, supra, 102
N.J. at 1030. We emphasized, however, the primacy of federal law
in determining whether the charge to RTC as the successful bidder
at a foreclosure sale of property on which it held mortgages as
successor to a failed Savings and loan was in the nature of a tax
rather than a regulatory fee. Id. at 252-53. Critical to our
conclusion was the recognition that Congress apparently intended
that RTC, similarly to the Federal Deposit Insurance Corporation,
was not to be burdened by state and local taxation when it
acquired, as it did in the case then before us, assets previously
encumbered by mortgages to failed thrift institutions. Id. at
260. Accordingly, our conclusion in Resolution Trust, supra,
that the exaction in question was essentially equivalent to a tax
did not purport to evaluate the overall application of the
Sheriff's fee statute, N.J.S.A. 22A:40-8, on a statewide basis in
the context of a full record, but rather reflected our judgment
that, in the context of the extreme disproportionality between
the fee and the value of the sheriff's services, the charge at
issue there was facially inconsistent with Congress'
determination that RTC's conservationist efforts as receiver of
failed thrift institutions should not be burdened by such
exactions.
III
On this record, we clearly are unable to sustain the
Appellate Division's affirmance of the Chancery Division's
conclusion that the charge authorized by N.J.S.A. 22A:4-8 “is
intended primarily to raise revenue, and not to compensate the
governmental entity for the cost of providing the service.” As
noted, no proofs were offered by either party concerning the
statewide operation of the Sheriffs' fee statute, or of the
direct and indirect costs borne by Sheriffs in discharging their
statutory responsibilities. BTD relied only on the allegation
that the Sheriff's direct costs of $971.14 were disproportionate
to the fee imposed. That proffer clearly is inadequate to
invalidate a fee statute of statewide application that, in
principle, has functioned with legislative authorization for in
excess of two hundred years.
We need not and do not address here the complex factual
issues that would be implicated by a challenge to the statute
supported by an adequate and comprehensive record. We take note,
however, of the Hudson County Sheriff's assertion that its fees
from all sources, including those realized from foreclosure sales
pursuant to N.J.S.A. 2A:4-8, constitute approximately only forty
percent of its total budget. We infer, but cannot be certain,
that the budget reflects both the direct and indirect costs of
operating the Sheriff's department. On that point, the Appellate
Division observed that “[w]e do not suggest that indirect costs
and expenses of running the Sheriff's office should not have been
included in evaluating proportionality.” BTD, supra, 333 N.J.
Super. at 479 n.1.
We acknowledge the concern expressed by the Sheriffs'
Association of New Jersey as amicus curiae that invalidation of
the Sheriff's fee statute would have significant fiscal
implications in all twenty-one counties. We also acknowledge the
assertion by the Hudson County Sheriff that the issue of
disproportionality cannot be assessed on the basis of isolated
transactions, and that in their experience fee revenues generated
from foreclosure sales in which the sale price is nominal or
modest often are insufficient to compensate the Sheriffs' Office
for its costs. Those concerns and contentions illustrate the
soundness and significance of this Court's admonition almost
fifty years ago in Weiner, supra, 15 N.J. at 298, that “the
disparity is not so obvious that we can reach a conclusion
without evidence of the relation of the fees to regulatory costs,
and there is no evidence bearing on that question in the record.”
(Emphasis added). Accordingly, because BTD has not offered
“competent proof . . . to overcome the presumption [of
reasonableness],” Automatic Merchandising Council, supra, 102
N.J. at 130, we are compelled to reverse the Appellate Division's
judgment invalidating the fee imposed by the Hudson County
Sheriff.
We add only these observations. We do not agree with the
Appellate Division's assertion that, assuming N.J.S.A. 22A:4-8
imposed a tax rather than a regulatory fee, it would be invalid
in the absence of a clear legislative intent to impose a tax on
those who benefit from the services of Sheriffs in implementing
foreclosure sales. BTD, supra, 333 N.J. Super. at 484-85. The
law is well settled in this State that “[t]he power of taxation
is a vital attribute of government and is vested in the State
Legislature. . . .” Solomon v. Jersey City,
12 N.J. 379, 383
(1953). The longstanding history of the Sheriffs' authorization
to collect fees for services in connection with foreclosure sales
persuasively suggests that the Legislature would intend that the
fees continue to be collected, whether it was denominated a fee
or a tax. Whatever its legal classification may be, the charge
is one that the Legislature is authorized to impose. No
procedural challenge to the enactment of N.J.S.A. 22A:4-8 having
been asserted, see N.J. Const. art. IV, § 6, ¶ 1 (requiring that
revenue bills originate in the General Assembly), we discern no
basis on which the statute's invalidation should be sustained,
even assuming that an adequate record established that the charge
imposed was essentially equivalent to a tax.
We reverse the judgment of the Appellate Division and remand
the matter to the Chancery Division for further proceedings
consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO,
LaVECCHIA, and ZAZZALI join in JUSTICE STEIN's opinion.
NO. A-62 SEPTEMBER TERM 2000
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
BTD-1
996 NPC 1 L.L.C., a
Delaware Limited Liability
Company,
Plaintiff-Respondent,
v.
350 WARREN L.P., a New Jersey
Limited Partnership,
Defendant.
_____________________________
HUDSON COUNTY SHERIFF,
Appellant.
DECIDED November 14, 2001
Chief Justice Poritz PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINION BY