N.J. Realty Title Ins. Co. v. Div. Of Tax Appeals

• Decision Date: 23 July 1948
• Docket Number: No. 271.,271.
• Parties: NEW JERSEY REALTY TITLE INS. CO. v. DIVISION OF TAX APPEALS et al.
• Court: New Jersey Supreme Court

137 N.J.L. 444

60 A.2d 265

NEW JERSEY REALTY TITLE INS. CO.

v.DIVISION OF TAX APPEALS et al.

No. 271.

Supreme Court of New Jersey.

July 23, 1948.

Certiorari proceeding by New Jersey Realty Title Insurance Company to review a judgment of the Division of Tax Appeals in the Department of Taxation & Finance of the State of New Jersey sustaining a tax assessment by the City of Newark.

Judgment reversed and cause remanded for further proceedings not inconsistent with opinion.

May term, 1948, before BODINE and HEHER, JJ.

Charles B. Niebling, of Newark, for prosecutor.

Thomas L. Parsonnet, of Newark (Vincent J. Casale, of Newark, of counsel), for defendant City of Newark.

HEHER, Justice.

The question for decision is the validity of an assessment for taxation on intangible personal property of prosecutor, a stock insurance company, levied for the year 1945 by the City of Newark under R.S. 54:4-22, as amended by ch. 245 of the pamphlet laws of 1938, N.J.S.A. 54:4-22.

The levy was in the sum of $75,700, or 15% of the sum of the company's paid-up capital and surplus in excess of liabilities and certain reserves for taxes, unearned premiums, losses, and so on. The capital and surplus upon which the assessment was made included on the assessing date bonds issued by the United States in the total sum of $451,682.25; and it is contended that section 54:4-22, cited supra, is ‘in contravention of the Constitution and laws of the United States,’ in that the proviso incorporated by the amendment of 1938, cited supra, fixing a minimum assessment at the rate of 15% of the paid-up capital and surplus in excess of liabilities, served to impose a direct tax upon the bonds issued by the Federal government included in the capital and surplus account.

Stocks, bonds, Treasury notes, and other obligations of the United States are ‘exempt from taxation by or under State or municipal or local authority.’ 31 U.S.C.A. § 742: R.S. 54:4-3, N.J.S.A. Vide Howard Savings Institution v. Newark, 63 N.J.L. 547, 44 A. 654. The exemption does not now extend to interest upon obligations, or dividends, earnings, or other income upon shares, certificates, stock, or other evidences of ownership, or gain from the sale or other disposition of such obligations and evidences of ownership issued on or after March 28, 1942, by the United States or any agency or instrumentality thereof. Ch. 147 of the Public Laws of 1947, 61 Stat. 180, 31 U.S.C.A. § 742a.

The tax imposed by section 54:4-22, as amended, is not an excise, but an ad valorem tax on personal property. It is comprehended under this heading in the Revised Statutes. The tax is levied ‘upon the full amount or value’ of the company's property (exclusive of real estate and tangible personal property, which are to be separately assessed and taxed where located, all shares of stock owned by the company, and nontaxable and exempt property), less ‘all debts and liabilities certain and definite as to obligation and amount,’ and all reserves for taxes and a fixed proportion of the reserves for ‘unearned premiums, losses and other liabilities;’ provided the assessment against the ‘intangible personal property’ shall ‘in no event be less than fifteen per centum of the sum of the paid-up capital and the surplus in excess of the total of all liabilities of such company,’ as stated in the company's annual statement for the preceding calendar year filed with the State...