Wilentz v. Hendrickson , 135 N.J. Eq. 244 ( 1944 )

The basic question for decision is whether the remission of the accrued and unpaid interest, on the full principal amount of the delinquent property taxes upon private railroad companies operating in this state, as authorized by the interrelated statutes (P.L. 1941 ch. 290, as amended and supplemented byP.L. 1942 ch. 241), contravenes article I, paragraph 20, of our state constitution which provides:

"No donation of land or appropriation of money shall be made by the State or any municipal corporation to or for the use of any society, association or corporation whatever." (As added, Election September 7th, 1875, Proclamation, September 28th, 1875.)

A few prefatory words as to the parties are desirable. In form, this is a suit between two of our high state officials, the Attorney-General and the State Treasurer, each appearing in a representative capacity. The status of neither is questioned. The Attorney-General, "acting in behalf of the people of the state" filed an information challenging the constitutionality of the two statutes, supra, and the State Treasurer defends their constitutionality, with the aid of counsel, at the expense of the state, as "authorized and directed" by P.L. 1941 ch. 391 p.1012. In substance, the actual parties affected by this suit are the people of the state, on the one side, and the private railroad taxpayers, on the other. With this in mind we turn to the consideration and determination of the merits of this case as submitted.

Pursuant to the then applicable Railroad Tax Law (R.S.54:19-1, et seq., which has for its source P.L. 1888 ch. 208, as amended and supplemented), many private companies, owning and operating either a railroad system, or a railroad not a part of a system, in this state, were delinquent, on December 1st, 1940, in the payment of their taxes for the years of 1932 to 1940, inclusive. The delinquencies totaled a sum of at least $34,358,949.40 principal and, in addition thereto, a sum of at least $24,130,085.34 for the statutory rate of "interest" on the delinquent principal of "one per cent. for each month until paid." R.S. 54:27-4. The accuracy of the stated figures is not in issue. It depends — we are told — upon the determination of the contrary views of the parties as to whether payments on account of arrears shall first be credited to principal or to interest. By stipulation that question was reserved.

The sizable amount of these interest delinquencies, the steadfast adherence by these private railroad companies, with few exceptions, to their continuous withholding and contesting of the payment of their taxes when due to the state (Central RailroadCo. v. Thayer Martin, 114 N.J. Law 69, 73; 175 Atl. Rep. 637) quite naturally engendered great concern on the part of those of the public in interest. That concern found expression alike by former Governors of this state, representatives of the major political parties, by private and legislative committees and others.

Suffice it to observe here that this concern ultimately found legislative expression by the enactment of P.L. 1941 ch. 290 p.768. Generally stated, this statute provides for installment payments and acceptances thereof, over a fixed number of years, of the full principal amount of the delinquent taxes due and owing by the private railroad companies on December 1st, 1940, and remaining unpaid on the effective date of the statute (July 22d 1941), but without the payment of the delinquent "interest" of over $24,000,000. It is interesting at this point to mark the fact that for the first time our legislature, adopting a new nomenclature, denominated or characterized such delinquent interest as "interest penalties," and provided for their "remission." The legislature set down in the preamble to the statute the facts that motivated the challenged legislation. They are, in substance, that four railroad systems in the state are or have been recently in reorganization under the federal bankruptcy laws and that there was "doubt" as to the "ability of railroads to pay the delinquent taxes" and "at the same time to continue to furnish adequate and safe service;" that "immediate payment" of the accumulated tax delinquencies would "impair the capacity" of the delinquent railroads to furnish efficient transportation service to meet the demands of the "industrial development" of the state especially because of the present demands of production for national defense; and that the delinquencies "have tended" to create chaotic conditions in state and municipal finances, and that the state has an urgent interest in the immediate solution of the problem "in the maintenance" of "stable transportation facilities and public finances."

A brief statement of the more important developments in the progress of this case will help more clearly to lay bare the posed question requiring decision.

Conceiving the statute thus enacted (P.L. 1941 ch. 290) to be unconstitutional, Mr. David Wilentz, the then Attorney-General, acting on behalf of the people of the state, filed an information in our Court of Chancery, on September 3d 1941, alleging, among other grounds, that the statute was unconstitutional in that it contravened article I, paragraph 20, of our state constitution. He prayed that the statute be declared invalid and that the State Treasurer, his agents and servants, be restrained from carrying out or executing any and all of its provisions. The right to the relief sought was disputed by the then State Treasurer and thereafter by his successors.

On May 21st, 1942, Vice-Chancellor Jayne granted a rule to show cause with ad interim restraint in accordance with the prayers for relief.

On the very same day (May 21st, 1942) the legislature amended and supplemented P.L. 1941 ch. 290, by P.L. 1942 ch. 241. A reading of the latter statute clearly indicates that it is the handiwork of capable counsel, drafted and directed to the single end of further buttressing the objectives sought to be attained by P.L. 1941 ch. 290, in light of the attack made upon its constitutionality. It amends the title of the act to include the remission of the unpaid interest (continued to be called penalties), it emphasizes the waiver of the right to contest the legality of any assessment on railroad property for the years therein stated, it re-states the objectives of the act in some twelve paragraphs under section 15 thereof. These paragraphs are in the nature an historical resume of the circumstances — some of which have already been noted — leading up to the passage of the challenged statute, and conclude with the statement that the delinquent tax problem "can best be disposed of" and the "unpaid" balance "can best and most quickly be collected" in the manner provided by the statute and that "upon the acceptance and compliance with such terms and conditions by any railroad taxpayer the state will have receivedfull, fair and adequate consideration and the best interests of the state will have been served and furthered." (Italics supplied.)

After due consideration of the merits of the order to show cause with the ad interim restraint granted, based upon the affidavits and exhibits attached thereto, argument and briefs of the respective parties, Vice-Chancellor Jayne answered the posed question in the affirmative. His answer was based upon the findings, in substance, that the delinquent interest was not, in the circumstances exhibited, a penalty but rather was it compensation which together with the unpaid principal taxes should, as it did, "merge and constitute" the "debt" owing by each railroad company to the state, that the remission of that debt, i.e., the delinquent interest, was not supported by either a legal, equitable or moral consideration and hence the remission thereof was an indirect appropriation of public funds to a private corporation prohibited by article I, paragraph 20, of our state constitution. In reaching that result, Vice-Chancellor Jayne concedes that the holding in the case ofIn re Voorhees, 123 N.J. Eq. 142; 196 Atl. Rep. 365; affirmed by our Supreme Court, 121 N.J. Law 594; 3 Atl. Rep. 2d891; affirmed by this court, 124 N.J. Law 35; 10 Atl. Rep. 2d 650, was "exceedingly influential." See his comprehensive opinion in which is set down the facts, a detailed analysis of the statutes, the respective contentions, and the controlling law upon which he based his result. Wilentz v.Hendrickson, 133 N.J. Eq. 447; 33 Atl. Rep. 2d 366.

Accordingly, the Vice-Chancellor advised an order (July 27th, 1943) which was entered decreeing that P.L. 1941 ch. 290 andP.L. 1942 ch. 241 were invalid, and restraining and enjoining the State Treasurer, his successors, agents and servants, until final hearing of the case, from carrying out or executing any and all provisions of the statutes. An appeal was taken from the preliminary injunction, but it was not prosecuted because (so we are told) the appeal from the final decree "disposes of all issues involved."

On final hearing the parties submitted the cause to the Vice-Chancellor on a stipulation which, among other things, provided that:

"1. The several affidavits and exhibits attached thereto which were filed by the informant and by the defendant in support of their respective positions on the argument of the order to show cause why the temporary restraint should not be continued, shall be offered and received in evidence on final hearing with the same force and effect as though the several affiants had testified in person exactly as in said affidavits."

Vice-Chancellor Jayne adhered to the views which he had already expressed as his final opinion. He advised a final decree which was entered on September 28th, 1943, in and by which it is finally decreed that P.L. 1941 ch. 290 and P.L. 1942 ch. 241 are in contravention of article I, paragraph 20, of our state constitution, that they are null and void, and that all actions thereunder be restrained.

The State Treasurer appeals.

New Jersey was among the very first of the states of the Union to recognize the right of our courts, with proper regard and respect for the action of the co-ordinate branches of our government, to strike down legislation that contravenes the constitution, the fundamental law of our state. That right was first exercised in 1780 by our Supreme Court in the case ofHolmes v. Walton, 4 Historical Review 456; Wambaugh Cases onConstitutional Law, Book 1, p. 21. It was next exercised in 1802 in the case of State v. Parkhurst, published in the appendix to 9 N.J. Law 427, 443, et seq. (See footnote at p. 434 as to its affirmance by the Court of Errors and Appeals.) In the Supreme Court of the United States, it was first recognized in the case of Marbury v. Madison, 1 Cranch *137; 2 L.Ed. 60. And that right has ever since been exercised by all of our state and federal courts when properly invoked.

Proper regard and respect for the legislative branch requires, among other things, that courts should not act as censor of the reasonableness or wisdom of legislative enactments (Douglass v.Chosen Freeholders of Essex County, 38 N.J. Law 214, 216); that no statute shall be declared void if its "unconstitutionality is in anywise doubtful" (Attorney-General v. McGuinness,78 N.J. Law 346, 371, et seq.; 75 Atl. Rep. 455), or if there be "permissible doubt" as to the existence of the constitutional limitation invoked against the validity thereof,Attorney-General v. McGuinness, supra; State Board of MilkControl v. Newark Milk Co., 118 N.J. Eq. 504;179 Atl. Rep. 116; and that courts resort to the permissible rule of practical contemporaneous construction, to which we give great but not necessarily conclusive weight to sustain the constitutionality of a statute, but only if doubt exists as to the proper construction of a statute or of the construction or application of the constitutional provision invoked. Cf. State v. Wrightson,56 N.J. Law 126, 213; 28 Atl. Rep. 56; 22 L.R.A. 548 (words used are if the "language be obscure or doubtful"); CommonwealthRoofing Co. v. Riccio, 81 N.J. Eq. 486, and cases collated (atp. 489); 87 Atl. Rep. 114 (words used are whenever there is a "debatable question").

Thus in the exercise of our undisputed right, historically imbedded in our jurisprudence to declare a statute unconstitutional, and with proper regard for the self imposed limitations looking toward favoring the constitutionality of legislation, and deeply sensible of the respect and regard which we entertain for our co-ordinate branches of our government, we find that we entertain no doubt as to the unconstitutionality of the challenged statutes.

We, as judges, must not be "blind to see" and "shut our minds to truths" that "all others can see and understand." (Per Chief-Justice Taft in the Child Labor Case, 259 U.S. 20;66 L.Ed. 817, 819, and per Mr. Justice Cardozo, while judge of the Court of Appeals of New York, in the case of McGovern v.City of New York, 234 N.Y. 377; 138 N.E. Rep. 26, 32.)

The precise and unanswerable truths are that by the legislative authorization for the remission, cancellation and abatement of the delinquent interest, the legislature intended that the state should forgive or remit to the private railroad companies over $24,000,000 of the peoples' money, and this — as was admitted on the argument at the bar of this court — without proof that this debt was not collectible. No words, no rules of construction, can alter these truths; they are crystal clear.

In the case of Lohen v. Thompson, 88 N.J. Law 40;95 Atl. Rep. 447, the late Mr. Justice Swayze stated the rule as follows (at p. 42): "* * * the constitutionality of an act of the legislature is not to be determined by a consideration of verbal or rhetorical niceties; the act must be judged on a broader basis, and according to its effect as a whole."

That is a sound rule of judicial review to determine the constitutionality of a statute. For it aims to ascertain the true intent of the legislature. That is the rule we here employ. When so employed, neither the use for the first time, of the words "unpaid interest penalties" instead of the words "interest" or "delinquent interest," nor the failure to use words directly stating an "appropriation of money," can support the claim made that the legislature made no appropriation of money in the challenged statutes within the meaning of the constitutional limitation of article I, paragraph 20. For whether the delinquent interest be denominated a "financial obligation" which is in fact "nullified" (In re Voorhees, supra), or whether it be denominated as a "pecuniary burden" which is in fact "released" (Jersey City v. North Jersey Street Railway Co.,78 N.J. Law 72; 73 Atl. Rep. 609), or whether it be denominated by its true, statutory name, a tax debt, which is in fact remitted, canceled and abated, there is no difference in principle and none in fact.Jersey City v. North Jersey Street Railway Co., supra (at p.74). What the legislature may not constitutionally do directly it may not do indirectly. In re Voorhees, supra. For the end result is the same in each instance. The people's treasury becomes depleted to the extent involved just as effectively as if such a sum were actually paid out. Therein lies the congenital infirmity in the challenged statutes and that is their clear and unquestionable evil. With equal clearness and freedom from doubt there exists the constitutional limitation (article I, paragraph 20), as it has existed since 1875, to remedy, to strike down the recurring evils which gave it birth and are here present. There is no basis for any "permissible doubt" as to its meaning and application. In re Voorhees, supra.

Since we are free from any doubt as to the meaning and effect of the challenged statutes, and as to the existence, meaning and effect of the constitutional limitation, there is no occasion, under the applicable rule of law, to resort to the rule of practical construction. Moreover, the statutes cited as having been sustained before and after the adoption of article I, paragraph 20, supra, are clearly distinguishable. None presents the issue here involved. It should suffice to observe that those statutes, without detailing their provisions, are so clearly different in principle, so factually at variance with the circumstances which existed and motivated the enactment of the presently challenged but unambiguous statutes, that they utterly fail to support the applicability or analogy attributed to them. Obviously if the validity of those statutes were to be accepted as indicative of the meaning and application of the constitutional limitation (article I, paragraph 20) in the case at hand, then it would be within the power of the legislature, in the circumstances exhibited, to forgive part of the principal tax as well as the statutory interest thereon, a component part of the principal tax. There is no such power. In re Voorhees,supra. That is not seriously questioned, if not outrightly admitted.

In light of our freedom from doubt in the premises, and in light of our approval of the construction given to article I, paragraph 20, in the Voorhees Case, the rule of practical contemporaneous construction is without application.

Thus if the state has a vested right in and to the tax debt (delinquent interest), then unless the remission, cancellation and abatement of that right is supported by a "legal, equitable or moral consideration" (In re Voorhees, supra), the challenged statutes clearly contravene, in spirit and in fact, the constitutional limitation (article I, paragraph 20) invoked.

Does the state have a vested interest in and to the accrued, unpaid and delinquent interest? The learned Vice-Chancellor answered this question in the affirmative. We are entirely satisfied that the proofs and authorities upon which he relied fully support his answer.

We adopt his reasoning on this phase of the question before us and pause only to note that the cases of Town of Belvidere v.Warren Railroad Co. (Supreme Court, 1869 or 1870),34 N.J. Law 193; affirmed in substance but dismissed on a procedural ground, 35 N.J. Law 584; Dixon v. Jersey City (SupremeCourt, 1873), 37 N.J. Law 39; Pennsylvania, c., Terminal Co. v. Gummere (Supreme Court, 1915), 87 N.J. Law 353;95 Atl. Rep. 134, and Burlington County v. Martin, 129 N.J. Law 92;28 Atl. Rep. 2d 116, are not in conflict with that reasoning or with the result reached. For in the first place the decision in both the Belvidere and Dixon Cases antedated the enactment of the constitutional provision here under discussion, which provision was not mentioned or in issue in thePennsylvania Terminal Co. Case. And in the Burlington CountyCase our affirmance was made to rest on the sole ground that the discretionary writ of mandamus will ordinarily not be awarded, when such an award will create disorder or confusion.

In the second place all of these cases involve the construction of a statute concerning the commission of a crime, or the construction of a statute otherwise essentially penal. (Cf. R.S.1:1-15 as to the effect of offenses, c., incurred under repealed acts.) No such statute is here involved.

A reading of the Belvidere Case makes clear (at p. 199) that it was decided on the holding in the cases of Commonwealth v. Duane, 1 Binn. 601 (1804); Yeaton v. United States, 5Cranch 281*; 3 L.Ed. 101 (1809), and Norris v. Crocker, 14How. 429; 14 L.Ed. 210 (1851).

The first case involved a Pennsylvania statute under which defendant was convicted for libel and pending appeal a statute was passed prohibiting such a prosecution. The second case involved an Act of Congress prohibiting intercourse with certain ports. Pending appeal from the sentence of condemnation of the schooner involved, the act expired by reason of its own limitation. And the third case involved a suit for a penalty under an Act of Congress concerning fugitives from justice and persons escaping from the services of their master. The applicable section of the act was repealed pending suit. Those cases held, as was pointed out in Town of Belvidere v.Warren Railroad Co., supra (at p. 199), that the "repeal of a penal statute puts an end to all prosecution under it. Sedg. onStat. Const. Law 129," and that the "repeal of a law imposing a penalty, although after conviction, arrests the judgment."

The philosophy for the rule underlying the holding in these cases and urged upon us in the instant case, finds perfect expression in the case of Commonwealth v. Duane, supra, where the court held (at p. 609), "In nothing is the common law, which we have inherited from our ancestors, more conspicuous than its mild and merciful intendments towards those who are the objects of punishment." The effect of this rule is that it "takes away punishment" whether it arises under a statute concerning crime or a statute otherwise essentially penal. It operates, in the opinion of Mr. Justice Van Syckel in the Dixon Case, supra (at p. 42), "like a full pardon which releases the punishment and extinguishes the guilt."

The rationale of a holding as to a statute concerning a crime, or to a statute otherwise essentially penal cannot be applied to the applicable tax statute (R.S. 54:19-1, et seq.), or to the issue here involved. Surely that statute is not a statute concerning crime! Nor is it a penal statute. Cf. Huntington v.Attrill, 146 U.S. 657, 669; 36 L.Ed. 1123, 1126; New York v.Coe Manufacturing Co., 112 N.J. Law 536, 538; 172 Atl. Rep. 196;cer. den., 293 U.S. 576; 79 L.Ed. 764; Erie Elevator Co. v.Jersey City, 83 N.J. Eq. 71, 75; 90 Atl. Rep. 8; affirmed,84 N.J. Eq. 176; 92 Atl. Rep. 599; Beasley v. Gottlieb,131 N.J. Law 117; 35 Atl. Rep. 2d 49. Nor is a delinquent taxpayer a criminal wrongdoer. Interest is neither denominated as a penalty in the statute nor is it here a penalty in fact. Appellant lays hold of the expression in the Belvidere Case (atp. 198) that interest is a "pain denounced for delinquency." Denouncement however strong is not the determinative. The true determinatives are whether under all the circumstances exhibited in each case presented, considered and determined, the interest exacted is reasonable or arbitrary; whether it is compensation for the use of the money due to the state and for the costs necessarily incurred in the enforcement of its payment (Meilink v. Unemployment Reserves Commission, 314 U.S. 564, 567;86 L.Ed. 458, 461), or whether it is merely a penal exaction. True it is that in a sense the payment of interest is not without some "pain" but it is equally true that it is rather a common "pain" suffered by all delinquents. This does not, however, establish that it is not interest and is a penalty. Nor does the fact that the rate of interest imposed may lessen the temptation to defer payment as an economic advantage (it had no such effect here) establish that it is not interest. The statute fixes the quality of the interest charge; and we are not at liberty to make an essential distinction not found in the legislative expression. The interest, as it accrues, merges in what the statute itself denominates a "debt" due the state. The accrued interest is annexed to the "debt" so as to constitute it an integrated part of the whole. The whole thus is the "debt due from the company to the state * * * for which an action at law or suit in equity may be maintained, and shall be a preferred debt in case of insolvency." R.S. 54:27-4. There is neither proof that the interest, the component, the integrated part of the tax debt is unreasonable or arbitrary nor, as already observed, that it was not collectible.

We are satisfied therefore, that in the circumstances exhibited and the law applicable thereto, that the interest was compensatory and not penal, and that the state had a vested right in and to that interest, and that this interest, together with the principal taxes, constituted the tax debt due from each of the private railroad companies to the state.

Is the remission, cancellation and abatement of the tax debt (delinquent interest) supported by a legal, equitable or moral consideration? The learned Vice-Chancellor answered that question in the negative. Here, too, we are entirely satisfied that the proofs and authorities upon which he relied support his answer.

Proper regard and respect for legislative declarations set down in support of its enactments are not breached where the existence and resultant consequences of such declarations are judicially determined. For such a determination does not comprehend the policy or the wisdom of the legislation; it comprehends only the constitutional power of the legislature to enact the challenged legislation. The common and proper exercise of this judicial function is not open to debate. Reference to a few of the endless number of many illustrative cases should suffice. Cf. Norman v.Baltimore and Ohio Railroad Co., 294 U.S. 240; 79 L.Ed. 885 (gold cases); Nebbia v. New York, 291 U.S. 502; 78 L.Ed. 940 (business (milk) with a public interest); New Jersey SuburbanWater Co. v. Board of Public Utility Commissioners,123 N.J. Law 303; 8 Atl. Rep. 2d 350; cer. den., 309 U.S. 663;84 L.Ed. 1010; McGregor, Receiver, v. Board of Public UtilityCommissioners (utility rates); Home Fuel Oil Co. v. GlenRock, 118 N.J. Law 340, 345; 192 Atl. Rep. 516 (zoning); RegalOil Co. v. State, 123 N.J. Law 456; 10 Atl. Rep. 2d 495 (police power).

Appellant concedes that if a "fictitious consideration" were declared or "mentioned," the validity of the challenged acts could not be sustained if their purpose was to make an appropriation of public funds to private corporations. If that be so, and it clearly is so, the adequacy of the consideration is in the circumstances a proper subject for review by the court. In the case of McGovern v. City of New York (1933), supra, the contractors asserted the existence of a contract by which the City of New York, acting through the Public Service Commission and the Board of Estimate and Apportionment, undertook to pay them the costs incurred through the advance in the price of labor and material as a consequence of the war. The validity of that contract was challenged on the ground that it violated article 3, section 28, of the constitution of the State of New York prohibiting any city to grant extra compensation to any public officer, servant, agent or contractor. The asserted consideration was the surrender of a right, namely, the contractors paid the wages that were necessary to keep the work in motion, and avert the disruption and suspension of work as the result of a protracted strike. In the unanimous opinion of the Court of Appeals of New York, written by that scholarly jurist, the late Mr. Justice Cardozo, the asserted right was analyzed and found to be "illusory." Said the late justice, "Millions were promised by the city in return for an unreal surrender. Either there was no consideration at all, or the shred of value, if any, is so grossly disproportionate to the return that to uphold it as sufficient would be to nullify the constitution by subterfuge and fiction." That lays to rest all questions as to the judicial function in considering and determining the issue here present. The cases ofMorris and Essex Railroad Co. v. Newark, 76 N.J. Law 555;70 Atl. Rep. 194; Borough of Runnemede v. The New Jersey WaterCo., 123 N.J. Law 383; 8 Atl. Rep. 2d 576, are not to the contrary. While it is true that the court did say that neither an "adequate or only partial consideration" could be the subject of "inquiry here, i.e., in the first case, and that the "adequacy" of the consideration could not be determined "in the issue" in the second case, it clearly appears that the court, in both cases, considered the question of consideration and determined that there was "a valuable" consideration in each case.

Let us briefly analyze this asserted "substantial and valuable consideration" which the state is purported to receive for the remission, cancellation and abatement of this sum in excess of $24,000,000 in interest (tax debt) due from the railroad taxpayers. Chiefly, it is to receive a waiver from the railroad taxpayers of all their rights to contest the legality of the amount of any assessment on their property used for railroad purposes made prior to December 1st, 1941, pursuant to the applicable tax acts and to like assessments made for 1941, and it is also to receive written consents to the discontinuance and dismissals of any and all proceedings pending respecting any such assessments.

1931 to 1936. It would be interesting but altogether too long to detail the various unsuccessful appeals that the railroad taxpayers prosecuted in both our state and federal courts to set aside the assessments made on their properties. Compare for the common pattern of attack, Central Railroad Co. v. State Tax Department, 112 N.J. Law 5; 169 Atl. Rep. 489; cer.den., 293 U.S. 568; 79 L.Ed. 667; Central Railroad Co. v.Martin, 114 N.J. Law 69; 175 Atl. Rep. 637; Central RailroadCo. v. Martin, 115 Fed. Rep. 2d 968, decided November 27th, 1940, rehearing denied January 24th, 1941, cer. den. April 28th, 1941, 313 U.S. 568; 85 L.Ed. 1527. The results of that denial are obvious. The railroad taxpayer had nothing to waive as to these years, and the pattern of their attack was definitely made inefficacious. 1937 and 1938.

The railroad taxpayers' appeals for these years, substantially based upon the same inefficacious pattern of attack, were decided adversely to them on May 13th, 1941. State Board of Tax Appeals —Central Railroad Company of New Jersey v. Martin, 19 N.J. Mis.R. 427; 20 Atl. Rep. 2d 330. That determination was not contested. The time for contest (three months, R.S. 54:26-11) had expired when P.L. 1942 ch. 241 was enacted. As to the reasonableness of the time limitation, see Cook v. Allendale,79 N.J. Law 285, and cases there collated, 75 Atl. Rep. 769.

1939. The railroad taxpayers appealed to the State Board of Tax Appeals and the City of Jersey City filed a cross appeal. SeeState Board of Tax Appeals — Jersey City v. Martin, 20 N.J.Mis. R. 283; 26 Atl. Rep. 2d 733. The appeal of the railroad taxpayers was dismissed without opinion on June 2d 1942. There has been no contest as to that judgment.

1940-1941. The railroad taxpayers appealed to the State Board of Tax Appeals. No hearing has been held on these cases. The affidavit of the Attorney-General discloses that the fundamental methods of valuation used in making the valuations of the railroad taxpayers' properties for the years 1937 to 1941, inclusive, were substantially the same as those which had been used by the State Tax Commissioner and his predecessors for over forty years theretofore and particularly the methods which were used for the years 1931 to 1936 and which were sustained. As pointed out for respondent, the State Tax Commissioner made substantial reductions to the railroad taxpayers for the years 1939 to 1941 although these railroads have during that period enjoyed and are now "enjoying revenues and earnings to heights approaching previous all-time highs (and) which have since been outstripped." Using the 1933 assessments as stated in 114 N.J. Law 69, 70, the following is disclosed:

Name of System        1933 Valuation      1941 Valuation
    C.R.R. of N.J.         $102,351,077        $67,742,634
Lehigh Valley R.R.       45,694,813         36,495,060
D., L.  W.R.R.          85,386,862         56,298,424
Erie Railroad            50,136,198
39,719,523 N.Y. Central R.R.        30,010,862         22,613,734

In light of these facts, in light of the lack of any new issues involved, and in light of the fact that there is no proof that the debt is not collectible, it becomes altogether clear that the asserted rights of the railroad taxpayers are "illusory" rather than real. The consideration, if any, is "so grossly disproportionate" to the price (over $24,000,000) that to uphold it as a legal consideration between the parties here involved and in the circumstances exhibited would be to nullify article I, paragraph 20, of our state constitution "by subterfuge and fiction." No word or act of this court shall contribute to such a result.

Nor do we find anything in the proofs to support a moral or equitable consideration. There is nothing to indicate that the railroad taxpayers rendered any service past or present other than such services as each private railroad company was and had been rendering in operating pursuant to its franchise from the state. Such services invoke neither a moral nor an equitable consideration. Whether such operation is successful or unsuccessful, the taxes due to the state had not ceased and do not cease to be a "lien paramount to all other liens upon all the lands and tangible property and franchises" of each of these companies. R.S. 54:27-4. There is no proof that the market value of these assets is less than the taxes due thereon. There is proof that throughout the period from 1930 through 1941 every railroad taxpayer had "more than enough money available," after the payment of "railway operating expenses," fully and timely to pay its tax obligation. With few exceptions, they chose otherwise to apply this money. They ignored the priority of their tax obligation. They chose persistently and consistently to resist their payment year after year until the total tax debt (principal and interest) has reached the sum of about sixty million dollars, or more. They may not now capitalize upon a situation which they voluntarily created however painful it may now be. The legislature may not alleviate such pain with the people's money.

We have carefully considered all other points argued and find that they require no further discussion.

For the reasons here stated and for those stated by the learned Vice-Chancellor not inconsistent herewith, the decree is affirmed, without costs.