For the prosecutor, Firmin Michel and William J. Shepp.
For the respondents, David T. Wilentz, attorney-general, Herbert J. Hannoch, John Solan, Morris Weinstein and George D. Rothermel.
Before Justices Case, Donges and Porter.
The opinion of the court was delivered by
CASE, J. The city of Camden prosecutes its writ of certiorari to review a judgment of the State Board of Tax Appeals dated August 9th, 1938, which affirmed the valuations made by J. H. Thayer Martin, State Tax Commissioner, under chapter 7, Pamph. L. 1938, of the property of New Jersey Water Company, located in, on or over the public streets, highways or other public places in the city of Camden and in twelve neighboring municipalities. The statute imposes upon every person, co-partnership, association or corporation using public streets or other public places by virtue of a state or municipal franchise a charge, denominated an excise tax, for the use of the franchise. The taxpayer is usually a public utility and we shall speak of it as such. The charge is a percentage rate calculated upon the gross receipts of the utility, and the proceeds constitute a fund which is distributed among the municipalities wherein the utility operates in proportions arrived at as follows. The utility is required, under the oath of its chief officer, subject to heavy penalty for failure to file and to accusation and conviction of the crime of perjury for willful falsification, to file with the state commissioner certain data, including, as of the valuing date, all of its property "located in, on or over any public street," &c., and the commissioner then, under the further direction of the statute, values all of the property of that utility, "located in, on or over any public street," &c., by municipalities, and apportions to each municipality such part of the gross receipts fund as is commensurate with the proportion which the value, as found by the commissioner, of the utility's property within that municipality bears to the total value throughout all of the municipalities wherein the utility operates. The property as such, except franchises, remains subject to local taxation. The Water Company is not a party to, and is not concerned with, the litigation. The property of the company is involved only in the sense that it is used as a measuring stick for the division of the gross receipts tax among the municipalities. The central idea has been in our statutory law for almost forty years, and the difficulties incident to division of the moneys has been a concurrent legislative problem.
Prosecutor's points are, first, that sections 5 and 2(c) of the statute contain an unlawful delegation of legislative power and therefore are unconstitutional in that they offend paragraph 1, section I, article IV of our State Constitution: "The legislative power shall be vested in a Senate and General Assembly;" and, second, that the tax commissioner did not determine value in accordance with the statutory authority.
Section 5 of chapter 7, Pamph. L. 1938, provides that:
"For the purpose of securing a fair and equitable apportionment of the excise taxes imposed by this act upon a uniform basis among the several municipalities, the State Tax Commissioner shall annually * * * establish a valuation as herein defined * * * of the property of each taxpayer located in, on or over any public street, highway, road or other public place in each municipality in this state. * * * the State Tax Commissioner shall certify to the governing body of each of the several municipalities * * * entitled to receive a portion of the excise taxes imposed by this act such valuation of such property located in such municipality and his valuation of such property located in each other municipality, to the end that the several municipalities may have a basis for estimating the amount of the tax imposed by this act to be apportioned to each such municipality. * * *."
Section 2(c) provides that:
"'Value' or 'valuation' means a value or valuation fixed at a figure determined by the State Tax Commissioner for the purpose of providing a unit of measure for a fair and equitable apportionment of the excise taxes imposed by this act, to the end that the apportionment of the taxes imposed by this act shall be fairly and equitably apportioned upon a uniform basis among the municipalities entitled thereto."
The genesis of the questioned legislation was in chapter 195, Pamph. L. 1900, called the Voorhees act. That statute wiped out all franchise taxes except the tax thereby imposed. Its constitutionality was sustained (North Jersey Street Railway Co. v. Jersey City, 73 N.J.L. 481; affirmed, 74 Id. 761); and the statute has been frequently cited in our cases.
A brief review of antecedent legislation will be helpful. The Voorhees act set up what is called a franchise tax against all persons, co-partnerships, associations or corporations (other than municipal corporations and railroad and canal companies) which had the right to the use of the streets or other public places. The tax was not a franchise tax in the sense of a tax upon a franchise as property. Strictly it was a license fee imposed as a condition upon which the enjoyment of special privileges in the streets was made to depend (the North Jersey Street Railway Co. case, supra, 74 N.J.L. 761, at 765). Nevertheless the statute named the charge a franchise tax, our Court of Errors and Appeals (Atlantic City and Shore Railroad Co. v. State Board, 88 Id. 219, at pp. 220, 221), used that terminology in distinguishing the tax from a property tax, and the term is a convenient shortening of a rather awkward phrase. The method of assessing the property by local assessors and of taxing at local rates was preserved by the Voorhees act, but the several assessors were directed to make annual return of their valuations of such assessed property as was located in, upon or under any street, highway, road, lane or other public place to the State Board of Assessors. The persons subject to such franchise tax were directed to make annual report to the State Board of Assessors of their gross receipts, and upon such gross receipts a yearly franchise tax at a statutorily fixed percentage rate was assessed by the State Board. The State Board was thereupon directed to apportion the anticipated proceeds of the franchise tax to the various taxing districts in proportion to the value of the property located in, upon or under any public street, or the like, as shown by the aforesaid assessors' statements filed with the board, collection thereof to be made by the municipal collector.
The inequity of the distribution under the Voorhees act among the municipalities upon values as assessed by local assessors with their varying standards was soon apparent, and a remedy was attempted in chapter 142, Pamph. L. 1903, by giving the State Board of Assessors "power to inquire into, equalize and revise the valuations returned to them in said statements by the local assessors of the various taxing districts, * * * so as to secure an equitable and fair valuation and apportionment of said franchise tax upon a uniform basis of valuation between the various taxing districts entitled thereto * * *." Changes in the statute were made from time to time keeping step with the change in the state taxing system as by chapter 240, Pamph. L. 1918; chapter 302, Pamph. L. 1927, and chapter 158, Pamph. L. 1937; but equivalent language was always retained, as e.g., the 1937 amendment, supra: "but the State Tax Commissioner shall have the power to inquire into, equalize and revise the valuations returned to him in said statements by the county boards of taxation, * * * so as to secure an equitable and fair valuation and apportionment of said franchise tax upon a uniform basis of valuation between the various taxing districts entitled thereto." A like provision is in the 1937 Revision, 54:31-5. It was held in West Orange v. State Board of Tax Appeals, 115 N.J.L. 396; affirmed, 116 Id. 414, that this legislation was a mandate upon the commissioner to use the assessments certified to him by the assessors as a basis for the ...