N. Jersey St. Ry. Co. v. Mayor

• Decision Date: 11 June 1906
• Citation: 63 A. 833,73 N.J.L. 481
• Parties: NORTH JERSEY ST. RY. CO. v. MAYOR, ETC., OF JERSEY CITY et al.
• Court: New Jersey Supreme Court

63 A. 833

73 N.J.L. 481

NORTH JERSEY ST. RY. CO.

v. MAYOR, ETC., OF JERSEY CITY et al.

Supreme Court of New Jersey.

June 11, 1906.

(Syllabus by the Court.)

Certiorari by the North Jersey Street Railway Company against the mayor and aldermen of Jersey City and others, to review the action of respondents in levying certain taxes. Taxes set aside.

See 61 Atl. 95.

Argued February term, 1906, before GARRISON, GARRETSON, and SWAYZE, JJ.

Frank Bergen and William D. Edwards, for prosecutor. George L. Record and Robert Carey, for Jersey City.

SWAYZE, J. The question involved in these cases is the right of Jersey City to levy a property tax upon the right, privilege, license, or franchise of the prosecutors to lay and maintain street railway tracks and operate trolly cars thereon. The solution depends upon the construction of the tax act of 1903. P. L. 1903, p. 394. That act provides for the taxation of all property, real and personal, not expressly exempted by the act, or excluded from its operation. Included in the property exempted from taxation are "all officers and franchises, and all property used for railroad and canal purposes, the taxation of which is provided for by any other law of this state." The word "officers" is a misprint for "offices," as appears by an inspection of the original act. We think the last clause qualifies franchises as well as property used for railroad and canal purposes, and that the exemption is only of franchises the taxation of which is provided for by another law. It is settled in this state that franchises are property (State Board of Assessors v. Central R. R. Co., 48 N. J. Law, 146, 4 Atl. 578; Newark v. State Board of Taxation, 67 N. J. Law, 246, 51 Atl. 67), and the only just reason for exempting such property from the operation of the act is that it is subjected, in the opinion of the Legislature, to its fair share of the public burdens by other legislation. This result can only be secured by the construction we adopt.

The question, then, is whether the taxation of franchises is provided for by other legislation. The act relied upon by the prosecutors is the so-called "Voorhees Act" of 1900 (P. L. 1900, p. 502). That this act purports to tax the franchises of persons and corporations having the right to use or occupy the streets is not denied by the city. It is urged, however, that the act of 1900 is unconstitutional, and that if it is constitutional, the percentage of the gross receipts required to be assessed, is not a tax. The act of 1900 has been before the court in Paterson and Passaic Gas and Electric Co. v. State Board of Assessors, 69 N. J. Law, 116, 54 Atl. 246, affirmed 70 N. J. Law, 825, 59 Atl. 1118, and its constitutionality was essential to justify the result reached in that case, but the question now presented was not raised, and we have therefore examined it without regard to that decision. The objections to the constitutionality of the act are two: (1) That a tax upon gross receipts is not a tax according to true value as required by the Constitution, for the reason that the percentage of gross receipts must be levied though the exercise of the franchise may actually involve a loss and the franchise may be of no value; (2) that the act attempts to provide two different methods of taxation for the property of the corporation, one by local assessors according to its value, the other an arbitrary imposition by a state board. The first objection is fatal to the validity of the act if the franchise tax thereby imposed is a property tax. If it is not a property tax, the second objection is without force.

We think the tax on gross receipts is not a property tax, but a license tax imposed by the state as a condition precedent to the exercise of special privileges in the streets. We ought not, unless compelled, to adopt a construction which would make the act a clear violation of the constitutional requirement that property be assessed at its true value. That result of the city's contention is a potent argument for another construction. That the Legislature did not intend the tax on gross receipts to be a property tax is indicated by the distinction made between property and franchises throughout the act. The title begins, "An act for the taxation of all the property and franchises," etc. Section 1 begins, "All the property, real and personal, and franchises," etc. Section 2 provides for the valuation and assessment of the property. Section 4 (page 503) provides for the valuation and section 5 for the assessment of the franchise. Section 6 (page 504) provides for the distribution of the franchise tax in proportion to the value of the property as assessed by local assessors. Throughout a distinction is preserved between the property tax and the franchise tax. This distinction is emphasized by the provisions of section 7, which enacts that money paid to a taxing district pursuant to contract, shall be considered a payment on account of the franchise tax imposed by the act; and by the provisions of section 8 which enacts that the franchise taxes imposed by the act shall be in lieu of all other franchise taxes now assessed against persons or corporations subject to the provisions of this act. We think it clear that the franchise tax was not intended to be a property tax. That impositions of this character may be imposed by way of a license tax is well settled. Such a tax is imposed by this state upon the general franchise to be a corporation, and has been sustained by the courts. Standard Underground Cable Co. v. Attorney General, 46 N. J. Eq. 270, 19 Atl. 733, 19 Am. St. Rep. 394; Honduras Co. v. Board of Assessors, 54 N. J. Law, 278, 23 Atl. 668; Lumberville Bridge Co. v. Board of Assessors, 55 N. J. Law, 529, 26 Atl. 711, 25 L. R. A. 134; Marsden Co. v. Board of Assessors, 61 N. J. Law, 461, 39 Atl. 638. The principle...