Phillipsburg Horse Car R. Co. v. State Bd. of Assessors

• Decision Date: 19 December 1911
• Citation: 82 N.J.L. 49,81 A. 1121
• Parties: PHILLIPSBURG HORSE CAR R. CO. v. STATE BOARD OF ASSESSORS et al.
• Court: New Jersey Supreme Court

81 A. 1121

82 N.J.L. 49

PHILLIPSBURG HORSE CAR R. CO.

v. STATE BOARD OF ASSESSORS et al.

Supreme Court of New Jersey.

Dec. 19, 1911.

(Syllabus by the Court.)

Certiorari prosecuted by the Phillipsburg Horse Car Railroad Company to review an assessment of franchise taxes by the state board of assessors. Tax affirmed.

Argued November term, 1911, before GARRISON and TRENCHARD, JJ.

W. H. Walters, Gilbert Collins, and Henry J. Steele, for prosecutor.

Josiah Stryker and Edmund Wilson, Atty. Gen., for State Board of Assessors.

J. I. B. Reiley, for Town of Phillipsburg.

S. C. Smith, for Township of Pohatcong.

TRENCHARD, J. This writ of certiorari brings up for review the assessment of franchise taxes in the year 1910 on the prosecutor, the Phillipsburg Horse Car Railroad Company, under chapter 290 of the Laws of 1906. P. L. p. 644. The return shows that, pursuant to section 4 of that act, the prosecutor sent to the state board of assessors a statement showing (1) the gross receipts from its business in this state for the year ending December 31, 1909; (2) the entire mileage of prosecutor's railroad in this state; and (3) the mileage of such road upon the streets, highways, roads, lanes, or other public places in this state. It further shows that the tax in question was determined as required by section 5 of the act by calculating 4 per cent. upon such proportion of its gross receipts as the length of the line upon the streets, highways, roads, lanes, and other public places in this state bears to the length of the whole line. It appears that the prosecutor in its report to the state board attempted to apportion the receipts between intrastate and interstate traffic, and insisted that the franchise tax in question should be ascertained by taking 4 per centum of the receipts derived from intrastate traffic only. It further appears that the only road owned by the prosecutor is located in the township of Pohatcong and the town of Phillipsburg in this state; that the two divisions of the line meet at Union Square in Phillipsburg, near the Delaware bridge; that cars from both divisions cross the Delaware bridge on tracks owned by the bridge company and then proceed on tracks owned by the Easton Transit Company to Centre Square in Easton, in the state of Pennsylvania; that the distance from the easterly end of the Delaware bridge to Centre Square is forty-nine hundredths of a mile.

It also appears that the prosecutor owns no franchises of any kind in the state of Pennsylvania; that it operates the track located on the Delaware bridge under a lease, paying rent therefor; and that the tracks from the western end of the Delaware bridge to Centre Square are operated by the prosecutor under an agreement with the Easton Transit Company, under which the prosecutor pays an annual sum to the latter company. This agreement contains a clause requiring the prosecutor to honor transfers issued by the Easton Company, and an agreement by the Easton Company to accept over a portion of its line transfers issued by the prosecutor. These transfers in no way affect the gross receipts, as the transfers honored by each company are considered as offsetting those issued by it. It also appears that the prosecutor is a corporation of this state.

By stipulation it appears in effect that 70 per cent. of the cash fares received by the prosecutor were received for the carriage of passengers either from New Jersey to Pennsylvania or from Pennsylvania to New Jersey, and that 30 per cent. of such cash fares were received for the carriage of passengers wholly within the state of New Jersey.

The sole question raised by the reasons for reversal is whether prosecutor can be required to pay a franchise tax of 4 per cent. on such proportion of its gross receipts as the length its line on the streets, highways, etc., in this state bears to the length of its whole line, or whether, before such proportion is taken, the amount of gross receipts received from interstate traffic must first be deducted from the total of gross receipts. Sections 4 and 5 of the act of 1906 (P. L. pp. 645, 646), under which the tax was assessed, are as follows:

"Sec. 4. Every street railroad corporation subject to taxation under the provisions of this act, shall, on or before the first Tuesday in May in each year, return to the state board of assessors a statement showing the gross receipts from its business in this state for the year ending December 31st, next preceding, and any such corporation having part of its road in this state and part thereof in another state or states, or having part of its road on private property and part on any public street, highway, road, lane or other public place shall make a report showing the gross receipts on the whole line, together with a statement of the length of the whole line and the length of the line in this state upon any street, highway, road, lane or other public place, and the franchise tax of such corporation for the business done in this state shall be levied by the state board of assessors upon such proportion of its gross receipts as the length of the line in this state upon any street, highway, road, lane or other public place bears to the length of the whole line," etc.

"Sec. 5. An annual franchise tax upon the annual gross receipts of every street railroad corporation or upon such proportion of such gross receipts as the length of its line in this state upon any street, highway, road, lane or other public place, bears to the length of its whole line, shall be assessed by the state board of assessors as follows: For the year nineteen hundred and six, two and one-half per centum upon such gross receipts; for the year nineteen hundred and seven, three per centum; for the year nineteen hundred and eight, three and one-half per centum; for the year nineteen hundred and nine, four per centum; for the year nineteen hundred and ten, four and one-half per centum; for the year nineteen hundred and eleven, and annually thereafter, five per centum."

These sections plainly require the levying of the tax in the manner pursued by the state board. They require that the franchise tax shall be levied upon such proportion of the gross receipts as the length of the line in this state upon any street, highway, road, lane, or other public place bears to the length of the whole line.

But the prosecutor contends that the act of 1906, as applied to the prosecutor, is a regulation of interstate commerce in conflict with the exclusive powers of Congress under the Constitution of the United States. Of course, the determination of this question depends upon the character of the tax imposed, and upon what such tax is levied.

What, then, is the character of the tax in question, and upon what is it levied? This question must be considered in the light of the following matters:

(a) The act of 1906, as will be seen by its title, applies only to street railroad corporations using or occupying public streets, etc., in this state. It contains a complete scheme for taxing all the property and franchises of such corporations. Section 2 provides that all property of such companies, whether located upon a street or highway or not, shall be assessed and taxed at local rates as now provided by law. This section evidently applies only to tangible property. Sections 4 and 5 provide, as above stated, for an annual franchise tax upon the annual gross receipts or upon such proportion of such gross receipts as the length of line upon the streets, etc., in this state bears to the length of the whole line. This tax is called a franchise tax wherever referred to in the act. Section 8 provides that the franchise tax, and the tax on real and personal property shall be in lieu of all other taxes.

(b) Prior to the passage of the act of 1906, such street railroad corporations were taxed under chapter 195 of the Laws of 1900 (P. L. p. 502). That act, so far as street railroads were concerned, provided for substantially the same system of taxation as is provided for by the act of 1906, except that the earlier act took the entire gross receipts from the business of the street railroad company in the state of New Jersey, and contained no provision for apportionment as is contained in section 5 of the act of 1906. The act of 1900 also provided that the taxes imposed thereunder should be in lieu of all other taxes. Prior to the enactment of the act of 1900, street railroad corporations were taxed under the general provisions of section 4 of chapter 59 of the Laws of 1884 (P. L. p. 235), which provided "that all other corporations incorporated under the laws of this state, and not hereinbefore provided for, shall pay a yearly license fee or tax of one-tenth of one per cent. on the amount of the capital stock of such corporations." That was a tax upon the franchise of the corporation to exist as a corporation. Marsden Co. v. Assessors, 61 N. J. Law, 461, 39 Atl. 638. It appears, therefore, that the tax measured by gross receipts, which was first imposed on street railway companies under the act of 1900, and continued by the act of 1906, was imposed in lieu of the tax upon the franchise to exist as a corporation assessed under the act of 1884.

(c) The act of 1906 applies only to corporations which have a franchise to occupy the public streets, and the act of 1900 is similar to it in this respect. The fact that the tax is calculated upon the proportion of gross receipts which the mileage of the tracks of the corporation on public streets, etc., in this state bears to its entire mileage, thus excluding mileage on private rights of way, as well as mileage out of the state, shows that it was intended by the Legislature to consider in providing for this tax the value of the franchise of the company to occupy the streets, etc., with its tracks, and to impose a tax upon such franchise which should bear a relation to its value. This is indicated by section 7, which provides that...