72 N.J.L. 127 | N.J. | 1905
The opinion of the court was delivered by
The prosecutor claims exemption from the franchise tax imposed by the state upon the ground that at least fifty, per cent, of its capital stock is invested in manufacturing carried on within the state. The question is one
This summary of the facts show that the only asset of the prosecutor is the contract of January 6th, 1903. It owns no designs, patterns or machinery. The manufacture at Harrison is carried on with tire designs and patterns formerly and still belonging to the copartnership, and the whole scheme is evidently a mere arrangement for a division of profits by means of dividends upon the capital stock of the prosecutor instead of a division as the agreement originally provided between the Buffalo copartners on the one side, and the Marine company on the other.
The agreement of April 21st, 1903, which was preliminary to the organization of this corporation, recognizes that this was the object of the organization of the corporation; it recites that the provisions of the agreement of January 6th shall remain and be carried out “except as modified by this agreement with said Marine company, to take in place of its half interest of the profits of the business, as provided by said agreement of January 6th, 1903, one-half of the said capital stock of the new company and the dividends that may be declared thereon.”
The case differs, therefore, from the case of Phonograph Company v. Board of Assessors, 25 Vroom 430, which was relied upon by the prosecutor. That case was decided upon the ground that the prosecutor controlled the manufacture of the phonographs, and tire Edison company was but the instrument by which they were made. The value of the plant in that case was in the patent right, which was controlled by the prosecutor, and without which the manufacture could not lawfully be carried on. The court therefore held that the plant of the Edison company became pro hac vice the plant of the prosecutor.
In the later cases of Edison Phonograph Co., 28 Vroom 520, and the Storage Battery Co. v. Board of Assessors, 31 Id. 66; affirmed in 32 Id. 289, it was held that the prosecutors had failed to sustain the burden of establishing their exemption.
We think tire prosecutors in tire present case have likewise failed to establish an exemption. The tax must therefore be affirmed, with costs.