Mar. Petroleum Corp.. v. Jersey City

• Decision Date: 10 January 1949
• Docket Number: No. A-158.,A-158.
• Citation: 63 A.2d 262
• Parties: MARITIME PETROLEUM CORPORATION v. JERSEY CITY et al.
• Court: New Jersey Supreme Court

63 A.2d 262

MARITIME PETROLEUM CORPORATION

v.JERSEY CITY et al.

No. A-158.

Supreme Court of New Jersey.

Jan. 10, 1949.

COPYRIGHT MATERIAL OMITTED.

Appeal from former Supreme Court.

Certiorari by Maritime Petroleum Corporation, a corporation of the State of New York against the City of Jersey City, and State of New Jersey, Division of Tax Appeals, Department of Taxation and Finance, to review a judgment of the New Jersey Division of Tax Appeals, Department of Taxation and Finance, 50 A.2d 387, 25 N.J.Misc. 81, reversing the action of the Hudson County Board of Taxation canceling an assessment against the prosecutor in the sum of $175,000 for the year 1943, upon fuel oil and kerosene owned by prosecutor and located in tanks owned by Tankport Terminals, Inc., situate within taxing district of Jersey City, and reinstating validity of the assessment at the reduced sum of $85,404.24. Writ discharged, 137 N.J.L. 412, 60 A.2d 267, and the Maritime Petroleum Corporation appeals.

Judgment reversed and cause remanded with directions to vacate the assessment.

John Milton, Milton, McNulty & Augelli, John Milton, Jr., and Lawrence Whipple, all of Jersey City, for appellant.

John J. Meehan and Charles A. Rooney, both of Jersey City, for respondents.

HEHER, Justice.

The question here is whether fuel oil and kerosene of appellant in storage on October 1, 1942 in tanks at Caven Point, in Jersey City, owned and maintained by Tankport Terminals, Inc., for the sale of a warehouse storage service, were subject to an ad valorem tax by the local taxing district.

Appellant, a New York corporation with offices in the City of New York, was then a distributor of petroleum products to wholesalers in New York, New Jersey and Connecticut. In accordance with practice, the subject oil and kerosene were purchased by it from the Standard Oil Company and Shell Oil Company to supply the needs of certain of its customers for a twelve-month period, in keeping with contractual obligations, and shipped by tanker from the ‘American Gulf’ area and the West Indies and pumped into the storage tanks, there to await shipment by barge, truck and trailer as the need arose. Such deposits of oil remained in storage on an average of eighteen days.

It seems to be conceded that Tankport Terminals, Inc., was then engaged in the public warehousing business; it was incorporated in New Jersey to carry on the business of ‘storage and warehousing,’ and it offered that service for hire to the public generally. Its contract with appellant provided for ‘the use of a designated storage tank with designated capacity and for the warehousing service covering the handling of the oil to be stored by the customer in and out of that storage and in and out of the terminal.’ Appellant had no employees at the warehouse.

The old Supreme Court considered this to be the determining factor ( 137 N.J.L. 412, 60 A.2d 269): ‘If, on the other hand, the oil, after having been pumped into the tanks' of the warehouse ‘came to rest within the State and was merely held there for the convenience of buyers either within or without the State, then there was no bona fide storage of the same’ within the meaning of R.S. 54:4-3.20, N.J.S.A. It distinguished Crown Can Co. v. Division of Tax Appeals, Sup.1947, 135 N.J.L. 517, 52 A.2d 838, and Dearborn Chemical Co. v. Division of Tax Appeals, Sup.1947, 135 N.J.L. 580, 53 A.2d 639, as cases not involving property ‘already sold to buyers' and the use of ‘the device of storing the same in warehouses * * * solely for the purpose of effecting delivery by the seller to the buyer in a practical manner.’ It was thought significant that ‘the entire mass of oil was not segregated for the accounts of such customers, but actually remained, to a large extent, in the storage tanks, subject to delivery to customers upon’ appellant's direction. But we deem the distinction to be illusory. It is not to be found in the statute.

Under R.S. 54:4-3.20, N.J.S.A., cited supra, ‘All personal property stored in a warehouse’ of one ‘engaged in the business of storing goods for hire’ was rendered immune from taxation. Compare Independent Warehouses, Inc. v. Scheele, Err. & App.1945, 134 N.J.L. 133, 45 A.2d 703. When reduced to possession, petroleum is a commodity which is the subject of property and of intrastate and interstate commerce. West v. Kansas Natural Gas Co., 1910, 221 U.S. 229, 31 S.Ct. 564, 565, 55 L.Ed. 716; State v. Indiana & Ohio Oil & Gas & Mining Co., 1889, 120 Ind. 575, 22 N.E. 778, 6 L.R.A. 579. The Uniform Warehouse Receipts Law of 1907 defines ‘warehouseman’ as ‘a person lawfully engaged in the business of storing goods for profit.’ R.S.57:1-1, N.J.S.A. ‘Goods' means ‘chattels or merchandise in storage, or which has been or is about to be stored.’ Ibid. We need not determine whether the definition comprehends all tangible personalty. Certainly, it includes the subject property, for petroleum products are articles of commerce-commodities bought or sold in trade, or market, or by merchants, and therefore merchandise. R.S. 54:4-3.20, N.J.S.A., applies to all warehouses, whether public or private. A common carrier storing goods at the instance of the consignor has been held to be a warehouseman under the duty of reasonable care. Armstrong Rubber Co. v. Erie R. Co., Sup.1927, 103 N.J.L. 579, 137 A. 596. And a garage keeper storing automobiles for hire is a warehouseman charged with the like duty. New Jersey Mfrs' Ass'n Fire Insurance Co. v. Galowitz, Err. & App.1929, 106 N.J.L. 493, 150 A. 408.

The Uniform Warehouse Receipts Act was primarily designed to achieve uniformity in the law relating to warehouse receipts and thereby to effect the secure and ready use of such receipts as instruments of title and credit. This is made manifest by the title of the original act of 1907. Pamph. L. p. 341. Vide Heffron v. Bank of America National Trust & Savings Ass'n, 9 Cir., 1940, 113 F.2d 239, 133 A.L.R. 203; Terminal Warehouse & Refrigerating Co. v. Cross Transportation Co., D.C.Mun.App.1943, 33 A.2d 617; Salt River Valley Water Users' Ass'n v. Peoria Ginning Co., 1924, 27 Ariz. 145, 231 P. 415; Mason v. Exporters & Traders Compress Co., Tex.Civ.App. 1936, 94 S.W.2d 758; Weil Bros. v. Keenan, 1938, 180 Miss. 697, 178 So. 90.

The cited statute permits the storage of ‘fungible goods,’ defined as ‘goods of which any unit is, from its nature or by mercantile custom, treated as the equivalent of any other unit.’ R.S. 57:1-1, N.J.S.A. A warehouseman is obliged to keep the stored goods so far separate from the goods of other depositors, and from the goods of the depositor himself for which a separate receipt has been issued, as to permit at all times the ‘identification and redelivery’ of the goods deposited; but if authorized by agreement or by custom, a warehouseman may mingle fungible goods with other goods of the same kind and grade, and in such case the various depositors of the mingled goods ‘shall own the entire mass in common, and each depositor shall be entitled to such portion thereof as the amount deposited by him bears to the whole’, and the warehouseman shall be severally liable to each depositor ‘for the care and redelivery of his share of such mass to the same extent and under the same circumstances as if the goods had been kept separate.’ R.S. 57:1-25 to 27, N.J.S.A.

Fungible commodities are such as belong to the same class and may be exchanged indifferently one for another, and so are not required to be delivered in specie to satisfy the warehouseman's obligation. Although not limited to such as are the subject of bulk storage, fungible things are customarily stored in bulk. Grain stored in grain elevators and warehouses is the classic example of fungible goods, but petroleum products are not less so, especially when the term is viewed in the light of the subject matter and the legislative purpose to provide for warehouse receipts having the attributes of negotiable instruments of credit. Under section 57:1-26, N.J.S.A., cited supra, the parties may by agreement authorize the commingling of goods and merchandise in storage, and thus give the subject matter the statutory characteristics of fungible goods, if the goods are capable of acquiring that quality. And mercantile custom may give rise to the like sanction. In the view of the statute, goods may be of one of three classes: inherently fungible, or capable of acquiring that quality by agreement, or quite incapable thereof. In cases within the first two...