For the prosecutor, Arthur T. Vanderbilt.
For the respondents, Frank A. Boettner and John A. Matthews.
Before Justices Bodine, Heher and Perskie.
The opinion of the court was delivered by
PERSKIE, J. The question before us concerns the validity of the personal property assessment made by the city of Newark on October 1st, 1934, for the year 1935 against prosecutor. The assessment was made in accordance with our General Tax act. Pamph. L. 1918, p. 858, P307, as amended.
Prosecutor is a general fire insurance company organized under the laws of this state with its registered office at 31 Clinton street, in the city of Newark. For six years prior to the assessment its main and executive offices have been and now are at 150 William street, in the city of New York. Prosecutor's general business is conducted in New York, and
all the books of the company, except those required by law to be kept at its registered office in New Jersey, are located there. Although a small amount of cash and some few securities are kept in New Jersey so that business may be done here, the great majority of these items is either in the New York offices or in banks in that state. The business conducted at the Newark office is confined to local regional underwriting and the adjustment of claims arising therefrom. Reports on such business are sent to the main office in New York. The record also discloses that prosecutor pays no personal property tax in New York, and, for aught that appears, no such tax is exacted by that state.
The state board of tax appeals affirmed the assessment as made by the taxing authorities of Newark thereby assessing the intangible property owned by prosecutor. This court granted certiorari and prosecutor argues that the assessment as made should be reduced because (1) New Jersey has no jurisdiction to tax the intangibles; and (2) because it was error to include the item of unearned premium reserve as a taxable asset.
First: As to jurisdiction to tax prosecutor in this state. This question must, in light of the proofs, be considered upon the inescapable premise that prosecutor had its business situs as of October 1st, 1934, and still has it, in New York; that the securities, the personalty involved, have become an integral part of its business situs in New York; but that prosecutor pays no personal property tax to the State of New York.
It is fundamental that jurisdiction to tax depends primarily on the type of tax sought to be exacted and the property that is subject to the tax. Here the tax, under the act, is a personal property tax. The property subject to the tax constitutes securities which represent paid in capital stock and accumulated surplus of the company. Such securities are clearly intangibles. It is well settled that intangible personalty is taxable at the domicil of the owner. Kirtland v. Hotchkiss, 100 U.S. 491; Blodgett v. Silberman, 277 Id. 1; Farmers Loan and Trust Co. v. Minnesota, 280 Id. 204. That principle finds its support in the legal maxim mobilia sequuntur [118 NJL Page 527] personam. The use of this maxim like the use of most other maxims in jurisprudence, is not the solution of the problem; it is merely a formal and unexplanatory statement of a legal conclusion. Cf. 9 Harvard Law Review 13; 8 Am. L. Rev. 519. Thus frequently its use is not very helpful. But since contrary to the case of tangibles, intangibles have no actual situs, are not physically under the definite control of any one jurisdiction, the rule is embraced in the maxim developed and is justified even to this day as a rule of convenience. Convenience, however, brings hardship. So it was not long before exceptions to the general rule as stated gradually found and worked themselves into the law. Thus it has been held that where intangible personal property became an integral part of a business carried on in a state other than that of the domicil of the owner of the intangibles, then that other state, the state wherein the intangibles acquired a "business situs," had jurisdiction to levy a personal property tax upon these intangibles. New Orleans v. Stempil, 175 U.S. 309; Metropolitan Life Insurance Company of New York v. New Orleans, 205 Id. 395; Wheeling Steel Corp. v. Fox, 298 Id. 193; Safe Deposit and Trust Co. v. Virginia, 280 Id. 183; Farmers Loan and Trust Co. v. Minnesota, 280 Id. 204; First National Bank of Boston v. Maine, 284 Id. 312; see 76 A.L.R. 806. Conceding the application of this exception to the general rule, the problem soon arose as to whether, when the "business situs" theory did apply, the state of the domicil could still tax. The answer to that question is not free from serious doubt, a doubt which the Supreme Court of the United States has sounded ...