Merchants' Ins. Co. v. City of Newark

• Decision Date: 12 January 1892
• Citation: 23 A. 305,54 N.J.L. 138
• Parties: MERCHANTS' INS. CO. v. CITY OF NEWARK. AMERICAN INS. CO. v. SAME. FIREMEN'S. INS. CO. v. SAME. NEWARK FIRE INS. CO. v. SAME.
• Court: New Jersey Supreme Court

23 A. 305

54 N.J.L. 138

MERCHANTS' INS. CO.

v. CITY OF NEWARK.

AMERICAN INS. CO.

v. SAME.

FIREMEN'S. INS. CO.

v. SAME.

NEWARK FIRE INS. CO.

v. SAME.

Supreme Court of New Jersey.

Jan. 12, 1892.

(Syllabus by the Court.)

The facts fully appear in the following statement by Magie, J.:

The above-entitled writ of certiorari has brought up an assessment of taxes by the tax officers of the city of Newark against the Merchants' Insurance Company. Three other writs have brought up like assessments against the American Insurance Company, the Firemen's Insurance Company, and the Newark Fire Insurance Company. As the same questions were presented in all the cases, they were argued together, upon' facts agreed upon by the attorneys of the respective prosecutors and of the city.

Argued at June term, 1891, before Scudder and Magie, JJ.

F. Adams and Mr. Colie. for prosecutors.

Mr. Coult, for the city of Newark.

MAGIE, J., (after stating the facts as above.) The regularity of the respective assessments before us is questioned by some of the reasons filed, but on the argument those reasons were abandoned, and counsel confined themselves to the question of the validity of the taxes complained of. All the prosecutors are corporations of this state having a capital stock, and engaged in the business of insuring property against fire. Counsel for the city concedes that prosecutors are to be taxed by the rule contained in the tax act of April 11, 1866, i. e., upon the amount of their capital stock paid in and their accumulated surplus, after deducting the value of their real estate as prescribed in the act. Revision, p. 1156, § 15; Id. p. 1159, § 23. Insurance corporations are expressly excepted from the operation of section 105 of the corporation act, (Revision, 196,) as amended by the supplement of March 7, 1878, (Supp. Revision, 170.) which imposes a tax on the real and personal estate of certain corporations as if they were individuals. The last-named act withdrew from the operation of the act of 1866 a class of corporations, and subjected them to taxation in a different mode. The act of 1866 had been declared to be in harmony with the constitutional requirement that "property shall be assessed for taxes under general laws and by uniform rules, according to its true value." Bank v. City of Newark, 39 N.J. Law, 380,40 N. J. Law, 558. The act of 1878 has also been declared to be valid legislation within that constitutional requirement. Iron Co. v. Yard, 42 N. J. Law, 357. It must result that the act of 1866 remains valid in this respect, in its operation upon corporations not within the act of 1878. Counsel for the city also concedes that, in estimating the paid-in capital stock and the accumulated surplus of corporations for taxation under the act of 1866, deduction is to be made, not only for their real estate, but also for so much of the stock and surplus as is invested in property exempt bylaw from taxation. Such was the construction given to provisions of the tax act of 1862, (P. L. 1862, p. 349,) which were identical with those of the act of 1866 now under consideration. Bank v. Assessor, 30 N. J. Law, 13; Easton v. Metz, 32 N. J. Law, 199.

These concessions leave nothing for consideration but the claim of prosecutors that, in determining the amount of stock and surplus for taxation, the city authorities refused to deduct the value of certain securities in which the same were invested, and which, they claim, were non-taxable. One of the securities in question is a Long Branch graded school bond, issued under authority of an act approved March 22, 1875, (P. L. 1875, p. 309,) which expressly enacts that bonds so issued shall be "exempt from taxation." The act took effect immediately, and so became law before the constitutional amendments were operative, which was September 28, 1875,(P. L. 1876, p. 433.) The bond is dated April 1, 1875, is payable to bearer, and declares on its face that it is exempt from taxation. In the absence of proof to the contrary, it must be presumed to have been issued on its date. Had the state issued its own obligations under an act exempting them from taxation, a contract would have arisen which the state could not impair by any subsequent act. Bank v. Assessor, 30 N. J. Law, 13. An act authorizing a municipality, an agent for local government, to issue its bonds, and declaring bonds so issued to be exempt from taxation, has similar force. Doubtless such an act would not constitute a contract between the state and the municipality, and the authority to issue such bonds might at any time be withdrawn. But if, before withdrawal of authority, the municipality has issued the bonds exempt from taxation, thereupon a contract arose with every successive holder which could not be impaired even by a constitutional amendment. Railroad Co. v. McFarlan, 31 N. J. Eq. 706. This bond, therefore, carried with it an exemption from taxation, and its value ought to have been deducted from the amount assessed upon its owner.

Other securities claimed to be non-taxable are certain bonds issued by the township of East Orange. By an act passed in 1872, that municipality was authorized to issue bonds exempt from taxation. The bonds in question, however, were all issued by the township after the constitutional amendment had gone into operation. That amendment, by its own force, abrogated and annulled all local and special laws exempting property from taxation, unless they constituted irrepealable...