City of Clifton v. State Bd. of Tax Appeals

• Decision Date: 21 January 1941
• Docket Number: No. 294.,294.
• Parties: CITY OF CLIFTON v. STATE BOARD OF TAX APPEALS et al.
• Court: New Jersey Supreme Court

17 A.2d 476

CITY OF CLIFTON

v. STATE BOARD OF TAX APPEALS et al.

No. 294.

Supreme Court of New Jersey.

Jan. 21, 1941.

The City of Clifton assessed for taxation for the year 1938 personalty which was previously the property of the Cretona Print and Dye Works, but which was acquired by purchase by the Reconstruction Finance Corporation at a sale by a trustee in bankruptcy. On appeal the Passaic County Board of Taxation affirmed the assessment. The State Board of Tax Appeals reversed the judgment of the Passaic County Board of Taxation and ordered the assessment to be cancelled, and the City of Clifton brings certiorari.

Writ of certiorari dismissed.

Argued May term, 1940, before CASE, DONGES, and HEHER, JJ.

John G. Dluhy, of Clifton, for prosecutor.

Pitney, Hardin & Skinner, of Newark, for defendants.

DONGES, Justice.

Reconstruction Finance Corporation, on November 2nd, 1936, acquired by purchase at a sale by a trustee in bankruptcy certain personal property, consisting of machinery, equipment and tools, theretofore the property of Cretona Print and Dye Works, a corporation, which was located in the City of Clifton. The purchase was made to protect the interest Reconstruction Finance Corporation had in the property, arising out of a loan made by it to the Cretona corporation in the sum of $400,000, pursuant to the provisions of Section 5d of an act of Congress, known as Reconstruction Finance Corporation Act, 15 U.S.C.A. § 606b, on which loan the borrower had defaulted.

As of October 1, 1937, the prosecutor herein, City of Clifton, assessed said personal property for taxation for the year 1938, in the sum of $70,000. On appeal the Passaic County Board of Taxation affirmed the assessment. The State Board of Tax Appeals reversed the judgment of the County Board and ordered the assessment to be cancelled.

A single question is presented, namely, whether the property in question is the property of the United States and subject to exemption from taxation because of a lack of power in the states to tax property of the United States and its governmental agencies and because of the provision in the statute of this state (R.S. 54:4-3.3, N.J.S.A. 54:4-3.3) that "The property of the United States * * * shall be exempt from taxation * * *."

The Act of Congress, known as "Reconstruction Finance Corporation Act," approved January 22, 1932, 47 Stat. Ch. 8, pp. 5-12, 15 U.S.C.A. § 601 et seq., is entitled "An Act To provide emergency financing facilities for financial institutions, to aid in financing agriculture, commerce, and industry, and for other purposes." It provides in Section 10: "* * The corporation, including its franchise, its capital, reserves, and surplus, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any state, county, municipality, or local taxing authority; except that any real property of the corporation shall be subject to State, Territorial, County, municipal, or local taxation to the same extent according to its value as other real property is taxed."

When consideration is given to the purposes, organization, and operations of the corporation, it becomes apparent that it was designed to be and in fact is a governmental agency of the United States and that property held by it is property of the United States.

The Act of Congress provides: "Sec. 2 [§ 602]. The corporation shall have capital stock of $500,000,000, subscribed by the United States of America, payment for which shall be subject to call in whole or in part by the board of directors of the corporation." The sum mentioned was appropriated by the Congress for the purposes stated.

The Secretary of the Treasury has jurisdiction of the sale and issuance of the obligations of the corporation, which are guaranteed by the United States and are public debt transactions. It is authorized to act as a depository of public funds and to deposit its funds with the Treasurer of the United States. The Secretary of the Treasury and five directors appointed by the President with the consent of the Senate constitute its board of directors, whose salaries are paid by treasury checks; expenses are paid by Congressional appropriation; and, upon dissolution, any surplus is to be paid into the treasury of the United States.

By Section 5d, the corporation is authorized, inter alia, "to make loans to, any business enterprise when capital or credit, at prevailing rates for the character of loan applied for, is not otherwise available." Under this provision money was advanced to the Cretona corporation and thereout title to the property here involved was acquired by the defendant.

There can be no doubt that the defendant's creation and powers derive from the powers of the...