193 A. 912 | N.J. | 1937
The question before us concerns the validity of the personal property assessment made by the city of Newark on October 1st, 1934, for the year 1935 against prosecutor. The assessment was made in accordance with our General Tax act. Pamph. L. 1918,p. 858, ¶ 307, as amended.
Prosecutor is a general fire insurance company organized under the laws of this state with its registered office at 31 Clinton street, in the city of Newark. For six years prior to the assessment its main and executive offices have been and now are at 150 William street, in the city of New York. Prosecutor's general business is conducted in New York, and *526 all the books of the company, except those required by law to be kept at its registered office in New Jersey, are located there. Although a small amount of cash and some few securities are kept in New Jersey so that business may be done here, the great majority of these items is either in the New York offices or in banks in that state. The business conducted at the Newark office is confined to local regional underwriting and the adjustment of claims arising therefrom. Reports on such business are sent to the main office in New York. The record also discloses that prosecutor pays no personal property tax in New York, and, for aught that appears, no such tax is exacted by that state.
The state board of tax appeals affirmed the assessment as made by the taxing authorities of Newark thereby assessing the intangible property owned by prosecutor. This court grantedcertiorari and prosecutor argues that the assessment as made should be reduced because (1) New Jersey has no jurisdiction to tax the intangibles; and (2) because it was error to include the item of unearned premium reserve as a taxable asset.
First: As to jurisdiction to tax prosecutor in this state. This question must, in light of the proofs, be considered upon the inescapable premise that prosecutor had its business situs as of October 1st, 1934, and still has it, in New York; that the securities, the personalty involved, have become an integral part of its business situs in New York; but that prosecutor pays no personal property tax to the State of New York.
It is fundamental that jurisdiction to tax depends primarily on the type of tax sought to be exacted and the property that is subject to the tax. Here the tax, under the act, is a personal property tax. The property subject to the tax constitutes securities which represent paid in capital stock and accumulated surplus of the company. Such securities are clearly intangibles. It is well settled that intangible personalty is taxable at the domicil of the owner. Kirtland v. Hotchkiss,
Nor de wo, by so deciding, run afoul of the strong modern sentiment against multiple taxation as manifested by the United States Supreme Court. See Farmers Loan and Trust Co. v.Minnesota, supra (at p. 212); First National Bank of Boston v. Maine, supra (at pp. 326, 334). For, as has been pointed out, prosecutor pays no personal property tax in New York. Thus under the circumstances here exhibited multiple taxation is impossible. Prosecutor may not invoke the dictum that "the rule of immunity from taxation by more than one state * * * is broader than the application thus far made of it." First National Bankof Boston v. Maine, supra (at p. 326).
Second: As to the item of unearned premium reserve. We are aware of the fact that sound accounting practice may require this item to be booked as a liability. Nor are we unmindful of the many things that may be said in favor of such a requirement. Modern statistical analyses available to companies in the position of prosecutor may and do compute *529
to a very accurate degree just what part of such reserve will be expended each year. But companies control the fund so set up. They invest them and earn a return upon them. Because of these factors our sister states have divided upon the answer to this problem. See 13 A.L.R. 189, et seq. Our Court of Errors and Appeals has taken the position that this item, at least for the purpose of taxation, should be considered an asset. City ofTrenton v. Standard Fire Insurance Co.,
The judgment of the state board of tax appeals is, therefore, affirmed, with costs.