Central R. Co. of NJ v. Jersey City

Background

Jersey City imposed taxes on land lying between the middle of New York Bay and the New Jersey low-water line that belonged to the plaintiff in error. The land was covered by a boundary agreement between New Jersey and New York, approved by both States and by Congress in 1834. The compact set the boundary at the bay’s middle, gave New York certain 'exclusive jurisdiction' over waters, and reserved to New Jersey exclusive property rights in the land under water plus limited rights over wharves, docks, and fisheries. The taxpayer argued that New York’s jurisdictional language left the land outside New Jersey’s power to tax and that taxing it would violate the Fourteenth Amendment.

Reasoning

The Court framed the question as whether the compact left sovereign control and taxation power with New Jersey. Reading the agreement, the Court treated the boundary line as the line of sovereignty and viewed New Jersey’s reserved 'exclusive right of property' as reflecting state sovereignty, not merely private ownership. It held that New York’s limited 'exclusive jurisdiction' was meant to protect navigation and commercial regulation, not to strip New Jersey of sovereign power to tax. The Court relied on long practice: New Jersey kept land records, levied similar taxes for years, and New York did not assert taxing authority. State courts had reached the same conclusion, and the Supreme Court affirmed their judgment.

Real world impact

The ruling confirms that New Jersey may tax submerged tidal lands on its side of the bay. Owners of such waterfront land and local governments can expect New Jersey taxation and regulation to govern shore improvements, wharves, docks, and fisheries as outlined in the compact. The decision upholds the state courts’ longstanding practice and settles the dispute in favor of New Jersey’s sovereign authority.