Central RR Co. v. NeeldCentral RR Co. v. Neeld
JACOBS, J.
These are five consolidated appeals from interlocutory orders of the Law Division denying the defendants’ motions to dismiss the complaints filed by the plaintiff railroad companies. Leave to appeal was granted by the Appellate Division (R.R. 2:2-3(a)) and we certified on our own motion (R.R. 1:10-1(a)).
Prior to December 10, 1956 the defendant Aaron K. Neeld, Director, Division of Taxation in the Department of the Treasury, made his preliminary determinations of the true value of various Class I and Class II properties of the plaintiff railroads, including properties located in the defendant municipalities. See
On March 15, 1957 the Director certified his 1957 assessments against the railroads’ Class II properties in the defendant municipalities and filed findings and conclusions in which he recognized the Supreme Court‘s ruling that he was empowered and required to make his final assessments of Class II railroad property “at the common level of assessment prevailing in the respective taxing districts,” but found that at no time during the hearings before him had any proof been adduced to show such common level of assessment. He pointed out that the Supreme Court had held that the average assessment ratio as shown on the Director‘s Table of Equalized Valuations (
We reject the appellants’ contention that the dismissal order of March 13, 1957 is res judicata and in itself precludes the railroads’ present actions. The doctrine of res judicata is well designed to preclude the relitigation of issues which have been fairly and finally determined, but it ordinarily does not come into play where the parties have not had an adjudication on the ultimate merits. See Meier Credit Co. v. Yeo, 129 N.J.L. 82, 86 (E. & A. 1942); Longo v. Reilly, 35 N.J. Super. 405, 410 (App. Div. 1955). Cf. McCarthy v. State, 1 Utah 2d 205, 265 P.2d 387, 49 A.L.R.2d 1031 (1953); 30 Am. Jur. Judgments, §§ 208, 209 (1940). The dismissal order of March 13 did not determine any of the ultimate merits of the present tax controversy. The earlier complaints presented somewhat different issues and were dismissed because the trial court considered that in view of the March 11 pronouncement of the Supreme Court in Delaware, Lackawanna and Western R.R. Co. v. Neeld, supra, there was then no just occasion for the declaratory and injunctive relief being sought by the railroads from the Law Division. The municipalities’ motions for dismissal had included a ground based on the doctrine of exhaustion of administrative remedies, but there is nothing in the record to suggest that the dismissals were in anywise rested on that ground. Although we are satisfied that res judicata principles have no real pertinence, the appellants may of course urge here, as they did below, that the present complaints should be dismissed because the railroads failed to exhaust the administrative appeal which is admittedly available to them under
The doctrine that a litigant must first exhaust his administrative remedies before he seeks judicial review is widely recognized and has been the subject of extended discussion. See Davis, Administrative Law 614 (1951); Parker, Administrative Law 117 (1952); Berger, “Exhaustion of Administrative Remedies,” 48 Yale L.J. 981 (1939); Stason, “Timing of Judicial Redress from Erroneous Administrative Action,” 25 Minn. L. Rev. 560 (1941); Comment, “Exhaustion of Administrative Remedies,” 39 Cornell L.Q. 273 (1954). Cf. Ward v. Keenan, 3 N.J. 298, 302 (1949); Nolan v. Fitzpatrick, 9 N.J. 477, 484 (1952); Waldor v. Untermann, 10 N.J. Super. 188, 190 (App. Div. 1950). In the federal sphere the doctrine has been said to date back to the advent of the Interstate Commerce Commission in 1887 (Ward v. Keenan, supra, 3 N.J., at 302) and Dundee Mortgage Trust Invest. Co. v. Charlton, 32 F. 192 (C.C.D. Ore. 1887) and Altschul v. Gittings, 86 F. 200 (C.C.D. Ore. 1898), have been cited as its earliest manifestations. See Berger, supra, 48 Yale L.J., at 981, n. 1. There the federal courts declined to grant relief to taxpayers who complained about excessive and discriminatory tax assessments without having taken the administrative appeals available to them. Similar tax assessment cases of equal or even greater vintage may readily be found in our own state reports. See Appelget v. Pownell, 49 N.J.L. 169 (Sup. Ct. 1886); State, Hall v. Snedeker, 42 N.J.L. 76 (Sup. Ct. 1880); State, Young v. Parker, 34 N.J.L. 49 (Sup. Ct. 1869); State v. Powers, 24 N.J.L. 406 (Sup. Ct. 1854); The State v. Danser, 23 N.J.L. 552 (Sup. Ct. 1852).
The doctrine has been freely applied in New Jersey not only in tax assessment cases where administrative appeals have been available from earliest times (see Laws of New Jersey 1703-1820, at p. 308) but in many other situations where adequate administrative appeals were provided by the Legislature. In Jefferson v. Board of Education, 64 N.J.L. 59 (Sup. Ct. 1899), the relator sought a writ of mandamus to compel action by the Board of Education of Atlantic City to admit his son to the Indiana Avenue school. The court denied the relator‘s application on the ground that he was obliged to exhaust the administrative appeals provided in the school law of the State before seeking judicial relief. In the course of its opinion the court pointed out that the legislative branch had wisely provided a chain of administrative tribunals which was empowered to deal with school controversies and that the judicial branch should, in the exercise of its discretion, generally stay its hand pending completion of the statutory steps on review. Many later cases under the school law have taken the same approach. See Draper v. Comm‘rs. of Public Instruction, 66 N.J.L. 54 (Sup. Ct. 1901); Stockton v. Board of Education, 72 N.J.L. 80 (Sup. Ct. 1905); Montclair v. Baxter, 76 N.J.L. 68 (Sup. Ct. 1908); Ridgway v. Upper Freehold Bd. Education, 88 N.J.L. 530 (Sup. Ct. 1916).
In Lutz v. Kaltenbach, 101 N.J.L. 316 (Sup. Ct. 1925), the relators sought a writ of mandamus to compel the issuance of a permit by a building inspector; the court denied relief, pointing out that the relators should first “exhaust their remedy” by taking their appeal to the board of adjustment established under the zoning law. In Matthews v. Asbury Park, 113 N.J.L. 205 (Sup. Ct. 1934), the court denied an application for writ of certiorari to review the issuance of a liquor license; in the course of its opinion the former Supreme Court expressed the view that the “appellate provisions” of the Alcoholic Beverage Control Act should have been exhausted before judicial relief was sought. In Jamouneau v. Newark, 132 N.J.L. 117 (Sup. Ct. 1944), the court dismissed a writ of certiorari which had been allowed to review the 1944 municipal budget for Newark; the budget had been approved by the Commissioner of Local Government but no application had been made to the State Board to review the Commissioner‘s approval. The court took the position that the case before it was one where all of the statutory appeals “must be pursued before recourse to the courts” and quoted approvingly from Florenzie v. East Orange, 88 N.J.L. 438 (Sup. Ct. 1916), where the court declined to review the validity of an assessment for benefits because the applicant for the writ of certiorari had failed to exhaust his available statutory appeal.
The doctrine of exhaustion of administrative remedies was applied in the foregoing cases as a rule of orderly procedure which embodied due and deferential regard for the legislative wisdom and policy in providing expert administrative review tribunals to deal with the specialized fields entrusted to them. It was not viewed as an absolute or jurisdictional rule and, when the interests of justice so required, was departed from by the immediate judicial granting of prerogative writ relief. See Lane v. Bigelow, 135 N.J.L. 195, 200 (E. & A. 1947); Redcay v. State Board of Education, 128 N.J.L. 281, 284 (Sup. Ct. 1942); Conaway v. Atlantic City, 107 N.J.L. 404, 408 (Sup. Ct. 1931). Cf. Davis, “Administrative Remedies Often Need Not Be Exhausted,” 19 F.R.D. 437, 487 (1957). When the prerogative writs were superseded in 1948 they were replaced by the procedure embodied in R.R. 4:88 which expressly retained the exhaustion-of-remedies doctrine; thus R.R. 4:88-14 has at all times provided that “except where it is manifest that the interests of justice require otherwise, proceedings under Rule 4:88 shall not be maintainable, so long as there is available judicial review to a county court or inferior tribunal or administrative review to an administrative agency or tribunal, which has not been exhausted.” In the instant matter the proceedings by the railroads in the Law Division were admittedly instituted under R.R. 4:88 without prior exhaustion of the available administrative appeal to the Division of Tax Appeals; R.R. 4:88-14 must consequently be applied to dismiss their actions unless there is a manifest showing that the interests of justice require otherwise. No such showing appears and, indeed, all the pertinent considerations seem to us to point to the contrary. See Delaware, Lackawanna and Western R.R. Co. v. Neeld, supra, 23 N.J., at 575; Delaware, L. & W.R. Co. v. City of Hoboken, 10 N.J. 418, 424 (1952).
The Director found that the factual proofs before him were insufficient to establish any illegal discrimination within the principles expressed in Delaware, Lackawanna and Western R.R. Co. v. Neeld, supra. Accordingly, he assessed the Class II properties at true value and his assessment, subject to upsettal on review, is entitled to the presumption of correctness. See Delaware, L. & W.R.R. Co. v. City of Hoboken, 16 N.J. Super. 543, 549 (App. Div. 1951), reversed on other grounds, 10 N.J. 418 (1952). The railroads may, of course, have his assessment reviewed on appeal to the Division of Tax Appeals, and such appeal has in fact been taken. The authority of the Division to correct the assessment if it is excessive or if there has been illegal discrimination is clear.
“And it is a corollary of the foregoing that the particular issue is peculiarly within the province of the administrative tribunals; and there is no occasion for judicial intervention before the exhaustion of the administrative remedies. They are wholly adequate, and the normal course in the circumstances. There is no discernible consideration of justice demanding that the administrative agencies be ousted of the jurisdiction for which they are specially fitted. The adjudicative function of the Division Director is established. The inquiry now concerns agency expertness and discretion, in the main. See Nolan v. Fitzpatrick, 9 N.J. 477 (1952); Ward v. Keenan, 3 N.J. 298 (1949); Swede v. City of Clifton, 22 N.J. 303 (1956).”
In their brief the railroads cite Baldwin Construction Co. v. Essex County Bd. of Taxation, 16 N.J. 329 (1954), as a “prime example” of taxpayers being permitted to obtain judicial relief from discriminatory assessments without exhausting their administrative remedies. There the lower courts had retained jurisdiction because they doubted or denied that the administrative tribunals had any jurisdiction to remedy the discriminatory assessments by reducing them to a common level of assessment below true value. See 28 N.J. Super. 110 (App. Div. 1953); 24 N.J. Super. 252 (Law Div. 1952). On appeal we determined the merits without passing upon the exhaustion-of-remedies doctrine or the extent of the jurisdiction of the administrative tribunals. Thereafter we held, in an opinion by Justice Burling (Gibraltar Corrugated Paper Co. v. North Bergen Tp., supra), that the Division of Tax Appeals has the statutory power and duty to remedy a discriminatory assessment by reducing it to the common level of assessment below true value. The stated justification for the lower courts’ retention of jurisdiction in Baldwin has thus been removed and its holding furnishes no current support for the railroads’ position here. Similarly, we find nothing in the railroads’ citation of Delaware, Lackawanna and Western R.R. Co. v. Neeld, supra, to aid their contention that the exhaustion-of-remedies doctrine should not be invoked; the pertinent language in that opinion, quoted earlier, points entirely the other way. There the Director had disavowed his legal power and obligation to correct an unconstitutionally discriminatory assessment by reducing it to the common level of assessment below true value; this court declared that he had such power and obligation and remanded the cause, significantly, not to the lower court but to the Director for further proceedings in conformity with the principles declared by the court. Here the Director has not disavowed his legal power and obligation but, recognizing the principles announced by the court, found the proofs of discrimination insufficient. Assuming, as the railroads stress (citing Orrok v. Parmigiani, 32 N.J. Super. 70, 74 (App. Div. 1954)), that their complaints in the Law Division are at this preliminary stage to be viewed sympathetically as asserting a proper claim of unconstitutional discrimination, they are still required to exhaust their pending appeal in the Division of Tax Appeals where testimony may be taken and their claim may justly be determined on the full record made there. If they obtain a decision in the Division which they consider favorable no further action on their part may be necessary; if, on the other hand, they consider themselves aggrieved by its decision they may then readily obtain judicial review on appeal to the Appellate Division in accordance with R.R. 4:88-8. See Werner Machine Co. v. Director of Division of Taxation, 17 N.J. 121 (1954); Fifth St. Pier Corp. v. City of Hoboken, 22 N.J. 326 (1956).
In 1948 this court adopted its implementing rules which sought to avoid the problems of the prerogative writ practice and to provide simple and expeditious modes of judicial review from administrative action and inaction. The rules perpetuated none of the former procedural distinctions resting on the nature of the relief sought and their wholesome design was clear; they contemplated that every proceeding
Reversed, with direction that the complaints in the Law Division be dismissed in order that the appeals of the railroads now pending before the Division of Tax Appeals may proceed with reasonable promptitude.
HEHER, J. (concurring).
I concur in the judgment of reversal and in the reasoning as well. But I do not join in the disposition of the “final procedural point” relating to judicial review of “determinations by state administrative agencies or agents.” This is wholly unnecessary to the decision here, and therefore obiter dictum in the constitutional field of appellate jurisdiction and procedure that, in the interest of sound judicial administration, should await a cause in which the questions are directly involved and essential to the determination of the issues raised.
There are certain basic preconditions to the exercise of the appellate jurisdiction. The Appellate Division of the
The appeal is taken by the service and filing of a notice of appeal, as prescribed by R.R. 1:2-8, 4:88-8; and the appeal must be timely to invest the appellate tribunal with jurisdiction. State v. Janiec, 6 N.J. 608 (1951), cert. den. 341 U.S. 955, 71 S.Ct. 1007, 95 L.Ed. 1376 (1951). And see Reconstruction Finance Corporation v. Prudence Securities Advisory Group, 311 U.S. 579, 61 S.Ct. 331, 85 L.Ed. 364 (1941).
The common reciprocal jurisdiction thus given the Law and Chancery divisions of the Superior Court was primarily designed to secure a complete determination of “all matters in controversy between the parties * * *.” But this does not have reference to appeals, the exclusive province of the Appellate Division of the court; and so it would seem that R.R. 1:27D is not concerned with appeals. The concluding clause of the rule, “* * * and the action or cause shall then be proceeded upon as if it had been originally commenced in the proper court,” makes clear its intended scope and purpose. Certainly, no one would contend that a judgment of the Law Division or the Chancery Division of the Superior Court is transferable to the Appellate Division for review without the intervention of the appellate process.
There is no occasion now to review the considerations of policy underlying the conditions made a sine qua non to the exercise of the appellate function. I would suggest the prudence of reserving the question for fuller examination in a case in which the point in its various facets is directly raised and argued.
The extraordinary jurisdiction formerly exercised by the prerogative writs is now vested in the Superior Court, to be afforded “* * * as of right, except in criminal causes * * *“; and the relief sought by the railroads here is in the nature of mandamus to compel the Director to determine the issue of equality vel non by the employment of the assessment ratios contained in the 1956 Table of Equalized Valuations. See Delaware, Lackawanna and Western R.R. Co. v. Neeld, 23 N.J. 561 (1957).
R.R. 4:88-8 concerns only the “final decision or action” of a “state administrative agency“; and R.R. 4:88-14 provides that, save where required in the “interests of justice,” proceedings under Rule 4:88 “shall not be maintainable, so long as there is available judicial review to a county court or inferior tribunal or administrative review to an administrative agency or tribunal which has not been exhausted.”
HEHER, J., concurring in result.
For reversal — Chief Justice WEINTRAUB, and Justices HEHER, BURLING, JACOBS and PROCTOR — 5.
For affirmance — None.