For the prosecutors, Child, Riker, Marsh & Shipman.
For the respondents, John A. Matthews (Andrew B. Crummy, on the brief).
Before Justices Bodine, Heher and Perskie.
The opinion of the court was delivered by
PERSKIE, J. This is a taxation case. The facts in the case at bar are practically identical, save as to the names of the
parties, their respective addresses here and in New York, and the figures, with those set forth in the case of Newark Fire Insurance Co. v. State Board of Tax Appeals (Supreme Court), 118 N.J.L. 525. The issues presented and decided in that case were (1) jurisdiction to tax; (2) taxation upon the item of unearned premium reserve; and (3) taxation upon cash. The issues presented for decision in the case at bar are (1) jurisdiction to tax; (2) taxation upon unearned premium reserve; (3) taxation upon reserve for outstanding losses; and (4) taxation upon the item of book value of stocks and bonds over market value.
Deciding as we do that there is no difference in principle, for the purpose of taxation, between the item of reserve for losses and the item of unearned premium reserve, which we held to be taxable, our decision in the case of Newark Fire Insurance Co. v. State Board of Tax Appeals, supra, is dispositive of all issues in the case at bar save the fourth, wherein prosecutors contend that it was error to include the item of book value of its stocks and bonds over the market value thereof as a taxable asset.
In support of its contention it is argued that the regulations of insurance companies require book value of securities to be set up. These same regulations, it is pointed out, require the amortized value of the bonds and the market value of the stock to be set up under the heading of "Non-admitted assets." The board included these last two items as an asset, whereas prosecutors contend that the true value is to be determined by deducting the market value of stocks, and the amortized value of bonds from the book value, and that this is done by first setting up the book value and then deducting the difference between the book value and the market or amortized value so that the net value is reflected in admitted assets with market value.
We perceive in this contention nothing more than another of the many varied attacks already made by the taxpayer upon the tax exacting authority in the time immemorial and continuing struggle between these two opposing forces. It presents nothing new. There is ample strength, ample precedent
in the law to withstand and completely repel this assault. The basic weakness of this attack is that prosecutors proceed on the theory that exchange value or market value is the invariable test of true value under all circumstances. This is not so. In the words of our Court of Errors and Appeals in Newark v. Tunis, 82 N.J.L. 461; 81 A. 722 (opinion by Parker, J.), "* * * true value is not always to be ascertained by reference to selling price; * * * special circumstances may increase or depress market value without affecting true value or vice versa." And, on the other hand, as pointed out in that opinion by reference to the opinion of the Supreme Court (81 N.J.L. 45; 81 A. 490 -- opinion by Swayze, J.) there are many factors, not by way of limitation but rather by way of example, such as "good will, dividend earning power, ability in management, public confidence," &c., which are not reflected in book value. Under the tax law it is the duty of the assessor to make an independent investigation of these and all other factors in determining the true value. The case of Newark v. Tunis, supra, stands, therefore, ...