Duke Power Co. v. State Bd. Of Tax Appeals

• Decision Date: 10 February 1943
• Docket Number: No. 219.,219.
• Citation: 30 A.2d 416,129 N.J.L. 449
• Parties: DUKE POWER CO. v. STATE BOARD OF TAX APPEALS et al.
• Court: New Jersey Supreme Court

129 N.J.L. 449

30 A.2d 416

DUKE POWER CO.

v.STATE BOARD OF TAX APPEALS et al.

No. 219.

Supreme Court of New Jersey.

Feb. 10, 1943.

Proceeding by the Duke Power Company for a writ of certiorari to review a judgment of the State Board of Tax Appeals, fixing an assessment against prosecutor's intangibles in Hillsborough Township, Somerset County, on appeal from a determination of the Somerset County Board of Taxation fixing an assessment of such property.

Assessment set aside, and judgment reversed.

Syllabus by the Court.

1. A corporation chartered by this State but not doing business here is not subject to taxation upon intangibles in another State where taxes have been assessed upon them and have been paid within the time fixed by law. N.J.S.A. 54:4-3.2.

2. A county board of taxation must act judicially when there is a complaint that specified property has been omitted from the assessment lists.

3. Due notice of the complaint must be given to the owner of the property claimed to be omitted.

4. There must be due examination of the complaint and due consideration of the claims of the owner and a hearing before judgment may be entered.

October term, 1942, before BODINE, HEHER, and PERSKIE, JJ.

Pitney, Hardin & Ward and Shelton Pitney, all of Newark, for prosecutor.

W. Eddy Heath, of Somerville, Frederick C. Vonhof, Edward R. McGlynn, and Joseph Weintraub, all of Newark, for defendants.

BODINE, Justice.

This writ brings before us for review a judgment of the State Board of Tax Appeals dated June 2, 1942, fixing an assessment against the prosecutor's intangibles in Hillsborough Township, Somerset County of $11,604,815.44, for the tax year 1939. The case was before the State Board on an appeal from a determination of the Somerset County Board of Taxation fixing an assessment of $8,143,159, and an amended assessment of $21,953,125. These assessments had been made on November 18, 1940, and November 22d, 1940, respectively, under circumstances to be hereafter related.

The jurisdiction of the County Board is challenged as it may well be, even though an appeal was taken to the State Board. Further, if the County Board lacked jurisdiction on the merits so did the State Board. Oradell v. State Board of Tax Appeals, 125 N.J.L. 37, 13 A.2d 479.

The State Board's judgment contained a finding that on the tax date, October 1, 1938, the prosecutor possessed the following intangible personal property of the values stated:

                +------------------------------------------+
                ¦Cash in banks               ¦$6,364,430.58¦
                +----------------------------+-------------¦
                ¦Cash on hand                ¦11,962.35    ¦
                +----------------------------+-------------¦
                ¦Notes, accounts and interest¦             ¦
                +----------------------------+-------------¦
                ¦receivable                  ¦5,005,460.21 ¦
                +----------------------------+-------------¦
                ¦Stocks in foreign companies ¦5,834,705.08 ¦
                +----------------------------+-------------¦
                ¦Bonds of other companies    ¦83,079.00    ¦
                +----------------------------+-------------¦
                ¦Bonds of North Carolina and ¦             ¦
                +----------------------------+-------------¦
                ¦of municipalities therein   ¦151,845.65   ¦
                +------------------------------------------+
                

The prosecutor is a New Jersey corporation and on the tax day in 1938 had its chief office in Hillsborough Township, Somerset County. Its charter prohibits any activities in this state. Its only property in this state are the transfer and stock books which must be kept here. All of the intangible property was secured and used in the course of business in the states mentioned. The transmission lines and plant are operated from a main office in Charlotte, North Carolina, and all its property is taxed under the Machinery Act of that state-a tax upon intangibles. The real and personal property situate in each state was also taxed. The intangibles were, of course, subject to taxation in this state if they do not fall within the exemption provided under N.J.S.A. 54:4-3.2. Newark Fire Ins. Co. v. State Board of Tax Appeals, 118 N.J.L. 525, 193 A. 912; New Jersey Insurance Co. v. State Board of Tax Appeals, 119 N.J.L. 245, 195 A. 719.

The proceeding originated in a letter to the Township Committee suggesting that personal property of a large corporation was not being taxed for the year 1939. The charge was made July 10, 1939. The writer was employed on a percentage basis to bring in the taxes. Thereafter, the Township Collector made complaint to the Somerset County Board of Taxation of the omission from the assessment of intangible personal property as follows: ‘Cash, $5,602,986.00; Accounts, Notes and Interest Receivable, $5,268,663; Municipal Bonds $246,308.00, Stocks, Bonds and other investments, $6,480,313; Deferred Charges, $75,607.00.’ From the complaint on prosecutor's motion all items save ‘cash’ were struck. This action finds support in Newark v. Essex County Board of Taxation, 127 N.J.L. 527, 23 A.2d 805. The provisions of N.J.S.A. 54:4-15 do not apply to cash in this state, if there was any, since it is exempt under N.J.S.A. 54:4-3.23. MacPherson v. State Board, 127 N.J.L. 599, 23 A.2d 582.

On November 13, 1940, the county board heard the case on the ‘cash’ items. However, on November 18, 1940, by resolution at an ex parte hearing, it fixed an assessment on the basis of estimates of the value of intangibles made by certain persons who made affidavits. On November 22, 1940, the following resolution was passed: ‘Be it resolved that there be entered upon the tax lists and duplicates for Hillsborough Township for the taxing year 1939 a toal assessment of $21,953,125.00 (Twenty-one Million, nine hundred fifty-three thousand, one hundred twenty-five dollars), thus amending an assessment determined by this Board on November 18th, 1940, against Duke Power Company, a New Jersey corporation covering omitted ‘cash’ only, which total amount represents the true value of intangible personal property wholly omitted by the local assessor for Hillsborough Township, Somerset County, New Jersey, on the assessing date, October 1st, 1938.' By no such method could it make ‘cash’ out of things not such.

The prosecutor had no notice of the hearing. It contends that both notice of the complaint and of the hearing thereon were necessary under N.J.S.A. 54:3-20. A mere notice was sent advising it of the amended assessment couched in the following language: ‘You are hereby notified of the entry of an amended assessment of $21,953,125.00 against Duke Power Company, a New Jersey corporation covering intangible taxable assets of said corporation for the taxing year of 1939, in Hillsborough Township, Somerset County, New Jersey. A true copy of the resolution fixing the aforesaid assessment is herewith enclosed.’ This resolution is to be found above. It specifies nothing but advises that there is a tremendous tax to be paid if valid. The subterfuge of the resolution to make intangibles ‘cash’ was dropped.

The prosecutor later received the following notice: ‘Please take notice that the next meeting of Somerset County Board of Taxation will be held at the Court House in Somerville, New Jersey, at 10 A. M. on Monday, December 2nd, 1940.’

In compliance therewith its counsel attended at the time specified and was told by the President of the Board: ‘We didn't ask you to be here. We simply notified you that we would have our regular meeting today and the reason for that was that if you desired to examine the records of the Board of that meeting (of Nov. 22, 1940) it was your privilege to do it.’

A claim for exemption then presented was not allowed in evidence but was filed in the Board's records.

N.J.S.A. 54:3-20 provides a method for the inclusion of property omitted by the assessor and another method for the inclusion of property omitted from the assessment. Let us glance first at the procedure when property is omitted from the assessment. ‘On the written complaint of the collector, or any taxpayer of the taxing district or of the governing body thereof, that property specified has been omitted in the assessment, the county board, on five days' notice in writing to the owner by the party complaining, and after due examination and hearing, may enter the omitted property on the duplicate by judgment rendered within ten days after the hearing. * * * Such proceedings may be brought within one year from the date when taxes on real property become a lien.’ The italics supplied.

There was no compliance whatever with the provisions of the law as we have seen. The notice was, in part, defective and there was no notice of the hearing when the question of the value of intangibles was determined, and no proceeding in a judicial manner as required by law. Duke Power Co. v. Essex County Board of Taxation, 122 N.J.L. 589, 7 A.2d 409, affirmed 124 N.J.L. 41, 11 A.2d 21; followed in Porto Rican, etc. v. Essex County Board of Taxation, 122 N.J.L. 595, 7 A.2d 410, affirmed 124 N.J.L. 134, 11 A.2d 22; Sun Oil Co. v. Essex County Board of Taxation, 122 N.J.L. 594, 7 A.2d 410, affirmed 124 N.J.L. 133, 11 A.2d 32.

The defendants contend that their proceedings were proper because it was under the first part of N.J.S.A. 54:3-20, which reads as follows: ‘The county board of taxation shall, by resolution, cause to be entered upon the tax duplicate a proper assessment against any property omitted by the assessor. The board shall then give immediate notice of such entry and of the time and place of its next meeting to the owner of the property affected, and furnish a copy of the entry to the clerk or collector of the taxing district, who shall enter it on his tax list.’

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