74 N.J.L. 761 | N.J. | 1907
The opinion of the court was delivered by
In the year 1903, and again in the year 1904, the tax commissioners of Jersey City imposed a property tax upon the right or franchise of the street railway company to operate its railroad in the streets. Upon writs of certiorari prosecuted by the company the Supreme Court set aside these taxes upon the ground that the franchise was taxable under the so-called “Vóorhees act” (Pamph. L. 1900, p. 502), and was therefore exempt from taxation under the General Tax law of 1903 by the term's of paragraph 8 of section 3 of that law. These judgments of the Supreme Court are now under review.
The two eases1 ('one' involving'-tlie' tax for 1903, 'the other the tax for 1904) were argued together. Counsel on both sides have assumed that the Tax act of 1903 applies in both cases, but by its sixty-sixth section (Pamph. L. 1903, p. 433) this act was made to take effect December 20th, 1903,. and its provisions were extended' to the taxes assessed. in .that year only with respect to proceedings had on and after that date. The accompanying express repealer' of former acts' concerning taxes was likewise made to take effect December 20th, 1903. Pamph. L. 1903, pp. 436, 446. Since the tax of 1903 that is now in question was assessed and levied prior to. December 20th in that year, its validity must depend upon the law as it stood before the revision of 1903, .This .refers us to^he supplement of April 11th, 1866, to the General Tax law of 1846. Pamph. L. 1866, p. 1078; Gen. Stat., p. 3292, pl. 62.
•. The language of section 2 of this enactment is: . “That all real and personal estate within this state,- whether owned by
In the year 1894 the Supreme Oourt had to deal with the validity of a tax levied by the city of Paterson upon the corporate franchise of a-water company that had pipes in the street. Passaic Water Co. v. Paterson, 27 Vroom 471. In support of the tax the act of 1866 was relied upon. In delivering the opinion 'of the court, Mr. Justice Dixon, after quoting the language of section 2 of that act, proceeded to say: “The form of expression adopted in this- enactment ■suggests, I think, that- it was designed to reach only those species of property which are usually owned both by individuals and by corporations, and that other species, such as offices, which are owned by individuals almost exclusively, and franchises, which are owned by corporations almost exclusively, were not within the purview of the law.55 He found this view strengthened by the language of sections 3 and 4> and he gave a similar construction to section 105 of the General Corporation act of 1875 (Rev. 1877, p. 196; Rev. Sup. 1866, p. 170), which provided that the real and personal estate of. every corporation should be taxed the same' as the real and personal estate of an individual.
Since this decision it has not, so far as we recall, been at any time contended that either the mere franchise of corporate existence or the so-called “local franchises55 of corporations
The tax of 1903 that is now in question is therefore not to be justified by the Tax law of 1866. - •
The validity of the tax of 1904 depends upon the proper construction of the General Tax act of 1903 already referred lo. Pamph. L. 1903, p. 394. By its second section it is enacted that “all property, real and personal, within the jurisdiction of this state, not expressly exempted by this act, or excluded from its operation, shall be subject to taxation at its true value under this act,” &e. Section 3 declares: “The following property shall be exempt from taxation under this act, namely,” and here follow eight numbered paragraphs, the last of which, as printed in the pamphlet laws (Pamph. L. 1903, p. 396), reads as follows: “(8) All officers and franchises, and all property used for railroad and canal purposes, the taxation of which is provided for by any other law of this state.” As pointed out by Mr. Justice Swayze, in delivering the opinion of the Supreme Court, the word “officers” is a misprint' for “offices,” as appears by an inspection of the original act.
The Supreme Cou'rt held that the last clause- 'of the paragraph just quoted qualifies “offices and franchises” as well as “property used for railroad and canal purposes,” and that franchises are exempted only where'their taxation is provided for by some other law. The Voorhees.act was pointed out as the “other law” efficient for this purpose. This act (Pamph.
We agree with the Supreme Court that this tax on gross receipts is not a property tax, but a license fee imposed as a condition upon which the enjoyment of special privileges in the streets is made to depend.
And for this very reason, if we agreed with the Supreme Court in its construction of paragraph 8 of section 2 of the General Tax law of 1903, we should have difficulty in deeming'the taxation imposed by the Voorhees act upon franchises as being the kind of taxation that would work an exemption from taxation under the act of 1903, for the taxation that is imposed by the latter act upon the subjects that are within its operation is property taxation, based upon the value of the property. The exemption provided by section 3 is an exemption of property from taxation under this act, and the clause of paragraph 8 of that section — “the taxation'of which is provided for by anjr other law of this state" — seems, by ihe ordinary rules of construction, to refer to other taxation of the same hind, viz., the taxation of property as properly, and according to its true value as required by the constitution.
The construction of the paragraph in question — -“all offices
The following are the principal reasons that have led ns to this view: ■ . •
The frame of the paragraph shows a rhetorical pause after the word “franchises,” indicating that “offices and franchises” were dealt with as one group of objects and “property used for railroad and canal purposes” as another group, to the latter of which alone the qualifying clause was intended to pertain. The word “which” is reasonably to be referred to the last antecedent. If the qualifying clause had been intended to apply to all the antecedents in the paragraph the frame of the sentence would more properly have been “all offices, all franchises and all property used for railroad and canal purposes, the taxation of which,” &c.
The act of 1903 is manifestly a revision act. Without at, all intimating that the legislature may not properly include, in an act intended primarily as a revision, such changes and modifications in the law as to it seems proper, there is, we think, a reasonable presumption that minor changes of verbiage and rearrangement of paragraphs and sections, as found in such a revision, are not necessarily intended to work any radical change in the law. By the decision of the Supreme Court in the case already alluded to (Passaic Water Co. v. Paterson, 27 Vroom 471) it had been declared that neither offices nor franchises were taxable under the act of 1866. Ho act had as yet been passed (so far as we are aware) for the taxation of .offices. If therefore the construction adopted by the Supreme Court be correct, offices are taxable under the act of 1903; a somewhat radical departure from previous legislative policy.
.It is, we think, clear that the decision in 27 Vroom was in the mind of the. framer of the act of 1903. By mentioning offices and franchises as exempt from taxation under this act
It is easy to find a reason in general policy for leaving offices untaxed by the act of 1903. Any tax imposed upon a public office (and the term “offices” in the act can hardly be deemed to refer to other than public offices) would amount in effect to a reduction of the salary or other compensation allowed by law to the official. The compensation of existing offices (having been fixed before the law had made provision for any tax upon such offices) was presumably established as the net compensation for the respective officials.
As to franchises, these were already subject (not without exception, but in many if not in the majority of important instances) to a governmental exaction; railroad and canal franchises being taxed as property under the act of 1884 as amended in 1888, and many other corporation franchises being subject to license fees either under the Voorhees act (Pamph. L. 1900, p. 502) or under the act of February 19th, 1901. Pamph. L., p. 31. Under the act last mentioned, corporations of this state, other than those which are subject to the payment of a state franchise tax assessed upon the basis of gross receipts, were required to pay an annual license fee or franchise tax upon the basis of the amount of their capital stock issued and outstanding, with a proviso that this should not apply to railway, canal or banking corporations, or to savings banks, cemeteries or religious corporations, or purely, charitable or purely edxrcational associations not conducted for profit, or manufacturing or mining corporations at least fifty per centum of whose capital stock issued and outstanding is invested in mining or manufacturing carried on within this state; and with respect to manufacturing or mining companies carrying on business in this state and having less .than fifty per centum of their capital invested in such busi
• Again; it is reasonable to suppose that if it had been intended to subject offices and franchises to taxation under the act of 1903, some rules would have been prescribed for arriving at their valuation. Certainly the placing of a proper valuation upon either of them is not a simple matter. IIow is an office to be valued? Some offices are without pecuniary emolument. In some instances the 'compensation is in the form of fees, the aggregate amount of which is variable and subject to contingencies. Some offices yield a return greater
With respect to franchises, they are subject to regulation in the public interest, as by requirements for a more adequate and costly service to the public, or by limiting the charges to be made to the public for the service rendered, and the practical value of a franchise is dependent largely upon the presence or absence of such regulations, and upon their stringency when present.
And if offices and franchises were to be taxed as property, in what taxing district should they be taxed? Both offices and franchises are classed by Blackstone with real estate (although not, perhaps, defined as such), being described as tenements (2 Bl. Com. 17), and also as incorporeal hereditaments. Id., 21, 36, 37. Is an office to be taxed where the incumbent resides or where the duties of the office are to be performed? Is a franchise to be taxed at the place where it is exercised, and if exercised in more than one place, then where is it to be taxed ?
Of course, it is not intended to intimate that the above queries are insoluble, but only to say that some attempt would probably have been made to solve them if the legislature had intended to bring property of this class within the purview of the act of 1903, and to tax it as property.
We therefore hold that, so far as the scheme of taxation established by the act of 1903 is concerned, offices and franchises are exempted therefrom, whether taxed under any other law ox not, the act being in this respect like the act of 1866 as construed in Passaic Water Co. v. Paterson, 27 Vroom 471.
The result is to affirm the judgment of the Supreme Court as to the taxes for both the years 1903 and 1904.
For reversal — None.