Jersey City v. Mar. Petroleum Corp...

• Decision Date: 12 November 1946
• Parties: JERSEY CITY v. MARITIME PETROLEUM CORPORATION.
• Court: New Jersey Tax Court

50 A.2d 387

JERSEY CITY

v.MARITIME PETROLEUM CORPORATION.

New Jersey Department of Taxation and Finance, Division of Tax Appeals.

Nov. 12, 1946.

Proceeding in the matter of the appeal of the City of Jersey City from a judgment of the Hudson County Board of Taxation, cancelling a tax assessment levied for the year 1943 by the city against fuel oil and kerosene owned by the Maritime Petroleum Corporation, and the city's application for restoration of the assessment.

Judgment reversed, and assessment restored in part.

Syllabus by the Court.

Fuel brought into the State by tanker, unloaded and stored in tanks where it is mingled with the products of others and allowed to remain in storage for an indeterminate period for other than natural causes or lack of facilities for immediate transportation, is not in interstate commerce and is subject to local taxation.

Personal property stored in a warehouse not entitled to exemption under R.S. Sec. 54:4-3.20, N.J.S.A. Sec. 54:4-3.20, where no sworn claim therefor was filed with the taxing district, as required by R.S. Sec. 54:4-15, N.J.S.A. Sec. 54:4-15.

The statutory requirement (R.S. Sec. 54:4-11, N.J.S.A. Sec. 54:4-11), that assessment on personalty consisting of stock in trade and materials used in manufacturing, be made on the basis of the ‘average’ of such stock located in the taxing district, satisfied where month end inventories, taken from the books and records of the taxpayer used to arrive at average.

Charles A. Rooney, Arthur Mullen and Marcel E. Wagner, all of Jersey City, for petitioner.

Milton, McNulty & Augelli, and John Milton, Jr., all of Jersey City, for respondent.

KREAMER, Commissioner.

The City of Jersey City levied a personal property assessment in the amount of $175,000 against products known as No. 2 fuel oil and kerosene owned by Maritime Petroleum Corp., a corporation of the State of New York, taxpayer herein. These products were located in tanks owned by Tankport Terminals, Inc., situate within the taxing district of the City. An appeal was taken by the taxpayer to the Hudson County Board of Taxation, which Board set aside and cancelled the assessment. The City now appeals from the County Board judgment and seeks to have the assessment restored.

Maritime resists the appeal on two grounds: (1) that such fuel as is to be found on the premises of Tankport is there only temporarily stored, being intended for transportation and disposal by and to customers of Maritime, so that no taxable situs in Jersey City attaches thereto as being in interstate commerce and within the protection of the commerce clause of the Federal Constitution, Art. 1, § 8, cl. 3; and, (2) that the fuel admittedly owned by Maritime was stored in tanks of the Tankport Terminals, Inc., a corporation of New Jersey, engaged in the business of storage and warehousing petroleum products and by reason of such storage was thereby exempt from taxation under provisions of R.S. Sec. 54:4-3.20, N.J.S.A.: ‘all personal property stored in a warehouse of any person, copartnership, or corporation engaged in the business of storing goods for hire shall be exempt from taxation.’

Maritime Petroleum Corp. is in the business of buying and selling fuel oil and kerosene and its principal suppliers are the Standard Oil Company of New Jersey, and the Shell Oil Company. The location of the actual source of supply is referred to in the testimony as the ‘gulf’. During the months of June, July and August of any year, Maritime lines up its customers and enters into contracts for the furnishing of its fuel products to them. These contracts are actually entered into at a time when Maritime has as yet not received title to any oil from its suppliers. The amount of fuel contracted to be sold by Maritime is the factor governing the quantity purchased by it. The suppliers then ship the product by tanker from the gulf to the storage point at Tankport where the same is pumped into the tanks leased by Maritime and title to the fuel is then transferred to Maritime. The tankers in which the fuel is shipped are not owned by Maritime, nor does that company maintain any employees where the fuel is stored. The evidence discloses that the fuel remains in storage for an indeterminate period, where it is mingled with other fuel owned by other companies. The fuel is not processed while it remains at Tankport.

The ultimate destination of the fuel is completely dependent upon the customers of Maritime. If the particular customer has inland storage, the product moves by truck, or if the customer has water storage, it is removed by barge. But in both cases the product is taken in facilities and equipment either owned or hired by the customers of Maritime.

We are driven to the conclusion that the subject products, after being unloaded and mingled with the products of others, and remaining at Tankport for an indeterminate period, depending upon the will of the customers of Maritime, cannot be considered as being in interstate commerce. The case at bar comes squarely within the purview of a very recent pronouncement upon the subject by our Court of Errors and Appeals. We refer to Independent Warehouses v. Scheele, 134 N.J.L. 133, 45 A.2d 703, 707.

In that case the Erie Railroad, at the direction of its shippers, stored coal at storage warehouse facilities in New Jersey, maintained through a separate corporation wholly owned or controlled by Erie. The coal was mixed with the product of other companies and remained at the storage point known as ‘Coalberg’ for an indefinite period subject to the will of the owner, who would decide when and where it was to be shipped. It was urged in support of the argument that the coal in storage was in interstate commerce, that the warehouse facilities were employed solely to provide regular in-transit service to shippers for interstate shipment of coal. The court said:

‘Thus the continuity of the carriage in interstate commerce is broken when the carried commodity is unloaded and stored at Coalberg for an indefinite period, subject to the owner's disposal, and thereby the coal becomes intermingled with the general mass of property having a situs within...