Mayor & Council of City of Hobo Ken v. Martin

• Decision Date: 06 March 1939
• Docket Number: Nos. 250-254.,s. 250-254.
• Citation: 4 A.2d 697,122 N.J.L. 264
• Parties: MAYOR AND COUNCIL OF CITY OF HOBO KEN v. MARTIN, State Tax Commissioner, et al.
• Court: New Jersey Supreme Court

4 A.2d 697

122 N.J.L. 264

MAYOR AND COUNCIL OF CITY OF HOBO KEN

v. MARTIN, State Tax Commissioner, et al.

Nos. 250-254.

Supreme Court of New Jersey.

March 6, 1939.

Certiorari proceedings by the Mayor and Council of the City of Hoboken against J. H. Thayer Martin, State Tax Commissioner, and others, to review apportionments made by the Commissioner of the proceeds of taxes imposed upon the gross receipts of the Public Service Electric & Gas Company, Public Service Coordinated Transport, and New Jersey Bell Telephone Company.

Certifications by the Commissioner affirmed, and writs dismissed.

Argued October term, 1938, before CASE, DONGES, and PORTER, JJ.

Edward P. Stout, of Jersey City, for prosecutor.

David T. Wilentz, Atty. Gen, Herbert J. Hannoch, of Newark, John Solan, of Trenton, and Morris Weinstein, of Newark, for respondent J. H. Thayer Martin, of Newark, State Tax Commissioner, and 126 municipalities.

CASE, Justice.

The five writs, with the proceedings thereon, are within one state of case and were argued and briefed together. They bring up the apportionments made by the State Tax Commissioner of the proceeds of taxes imposed upon the gross receipts of Public Service Electric and Gas Company, Public Service Coordinated Transport and New Jersey Bell Telephone Company under chapters 7 and 8 of the Pamphlet Laws of 1938, N.J.St.Annual 1938, 54:31-15.1 et seq.; 54:31-29 et seq, and go only to the constitutionality of those statutes. The magnitude of the statutory program and of the tasks thereby imposed is evidenced by the fact that in the Bell Telephone Company case the writ names 550 respondent municipalities, of which 126 appear by attorney in opposition to the contentions of the prosecutor and the remainder do not appear.

We find no reversible error. In general, our conclusions rest upon the reasons contained within the opinion filed contemporaneously herewith in City of Camden v. State Board of Tax Appeals, N. J.Sup, 4 A.2d 700.

It is said, however, with respect only to chapter 8, N.J.St.Annual 1938, 54:31-29 et seq., that the statute does not impose a tax upon either property or franchises, that it lays a tax upon gross receipts and that, therefore, the object of the act is not expressed in the title as required by article 4, section 7, par. 4 of the state constitution. The title of the statute is "An Act for the taxation of the property and franchises of street railway, traction, gas and electric light, heat and power corporations using or occupying public streets, highways, roads or other public places in this State, and to repeal sections 54:31-16 to 54:31-28 inclusive and sections 54:32-1 to 54:32-7 inclusive of the Revised Statutes".

A title designating a statute as taxing franchises has been held to sustain a provision, in the body of the act, imposing a license tax, in the shape of a tax upon gross receipts, as a condition precedent to the exercise of special privileges in the streets. North Jersey Street Railway Co. v. Jersey City, 73 N.J.L. 481, 63 A. 833, affirmed 74 N.J.L. 761, 67 A. 33. In the terms of the statute (section 6, N.J.St.Annual 1938, 54:31-34), the taxes are for the privilege of exercising the corporate franchises and using the public streets, highways, roads or other public places. A gross receipts tax so imposed, and with like appropriation of proceeds, has frequently been called a franchise tax by our courts. Atlantic City & Shore Railroad Company v. State Board, 88 N. J.L. 219, 221, 96 A. 568; Paterson & Passaic Gas & Electric Co. v. State Board of Assessors, 69 N.J.L. 116, 54 A. 246; Eatontown v. Monmouth County Electric Co., 78 N.J.L. 493, 74 A. 513; New York & N. J. Water Co. v. Hendrickson, 90 N. J.L. 537, 101 A. 168. Whatever the technical distinction between the terms "franchise" and "exercise of franchise", we consider that the use of the former in the title is not so inept as to be a constitutional fault.

The taxes are not property taxes, but the proceeds of them are distributed upon property valuation and because of them the tax on property is eliminated. Section 6 of the statute imposes the taxes. Subdivision (a) thereof, N.J.St.Annual 1938, 54:31-34(a), lays a flat five per centum tax on gross receipts, with a scale-down to two per centum where the gross receipts shall not exceed $50,000.00. That is a survival of the principle of the Voorhees Act (ch. 195, p. 502, P.L.1900), as amended by ch. 17, p. 42, P.L.1917, and of the street railroad property and franchise statute (ch. 290, p. 644, P.L.1906). In passing we note prosecutor's objection on constitutional grounds to the differential in rate favorable to utilities doing a smaller business; but the Court of Errors and Appeals considered and enforced that very provision in the 1917 statute. Bergen Aqueduct Co. v. State Board of Taxes, etc., 95 N.J.L. 486, 112 A. 881. The title of the Voorhees Act was "An Act for the taxation of all the property and franchises of persons, copartnerships, associations, or corporations using or occupying public streets," etc. That statute did not really impose a new property tax. What it did regarding property was to preserve property taxation and to direct that property be assessed and taxed "as now provided by law". The tax newly imposed was what the North Jersey Street Railway Company case, supra, 74 N.J.L. 761, 765, 67 A. 33, 34, said was a "fee imposed as a condition upon which the...