For the prosecutor, Mark A. Sullivan.
For the respondents, William A. Stevens, attorney-general, and John Solan.
Before Justices Trenchard, Lloyd and Case.
The opinion of the court was delivered by
TRENCHARD, J. Acting pursuant to the provisions of an act entitled "An act to provide for the imposition of state taxes upon certain corporations and for the collection thereof," approved April 18th, 1884 (4 Comp. Stat., p. 5286, &c.; 2 Cum. Supp. Comp. Stat. 1924, p. 3565, pl. 519), the state board of taxes and assessment, on August 5th, 1929, assessed a franchise tax for the year 1929 in the sum of $5,862.50 against the prosecutor, and the validity of such action is now challenged.
As originally enacted, this statute, after providing for the imposition of franchise taxes upon certain corporations such as telegraph, telephone, cable companies, express companies not owned by a railroad company and otherwise taxed, gas and electric light companies, oil and pipe line companies, sleeping car companies and insurance companies, by designation according to the nature of their business, and "all other corporations incorporated under the laws of this state and not hereinbefore provided for," contained a proviso, which, although amended and supplemented from time to time, has not been substantially changed (so far as this issue is concerned) and which, in part, reads as follows:
"Provided, that this act shall not apply to railway, canal or banking corporations, or to savings banks, cemeteries or religious corporations, or to purely charitable or educational
associations, or manufacturing or mining corporations at least fifty per centum of whose capital stock issued and outstanding is invested in mining or manufacturing carried on within this state * * *."
The stipulation in this case shows that the prosecutor was incorporated on June 8th, 1904, under our "Act concerning corporations" (Comp. Stat., p. 1595); that its principal business at present is the operation of a steam railroad in Central America; that at this time it has an interest by way of investment in a number of mining properties; that the charter granted to it by the state empowers it to engage in numerous other lines of corporate activity, in addition to the power to construct and operate railroads outside of but not within the State of New Jersey.
Relying on the fact that its principal business at present is the operation of this railroad in Central America, the prosecutor claims immunity from this tax, due to the reference to railways in the proviso of the above-quoted statute. Our opinion is that the reference to "railway" in such proviso has no application to the prosecutor, but that by the use of such term the legislature intended to refer to railroads subject to franchise tax under a companion act -- the Railroad and Canal act of April 10th, 1884 -- and to indicate thereby that railroads taxable under the last named act were to be immune from taxation under the act here in question. Such, we believe, has been the practical construction given the statute by the state board of taxes and assessment for almost fifty years.
We find support for this view by a consideration of the ground upon which the tax is imposed, and the history of ...