For the prosecutor, John G. Dluhy.
For the defendants, Pitney, Hardin & Skinner.
Before Justices Case, Donges and Heher.
The opinion of the court was delivered by
DONGES, J. Reconstruction Finance Corporation, on November 2d, 1936, acquired by purchase at a sale by a trustee in bankruptcy certain personal property, consisting of machinery, equipment and tools, theretofore the property of Cretona Print and Dye Works, a corporation, which was located in the City of Clifton. The purchase was made to protect the interest Reconstruction Finance Corporation had in the property, arising out of a loan made by it to the Cretona corporation in the sum of $400,000, pursuant to the provisions of section 5d of an act of Congress, known as Reconstruction Finance Corporation act, on which loan the borrower had defaulted.
As of October 1st, 1937, the prosecutor herein, City of Clifton, assessed said personal property for taxation for the year 1938, in the sum of $70,000. On appeal the Passaic County Board of Taxation affirmed the assessment. The State Board of Tax Appeals reversed the judgment of the County Board and ordered the assessment to be canceled.
A single question is presented, namely, whether the property in question is the property of the United States and subject to exemption from taxation because of a lack of power in the states to tax property of the United States and its governmental agencies and because of the provision in the statute of this state (R.S. 54:4-3.3) that "The property of the United States * * * shall be exempt from taxation * * *."
The act of Congress, known as "Reconstruction Finance Corporation act," approved January 22d, 1932, 47 Stat. ch. 8, pp. 5-12, is entitled "An act to provide emergency financing facilities for financial institutions, to aid in financing
agriculture, commerce, and industry, and for other purposes." It provides in section 10: "* * * The corporation, including its franchise, its capital, reserves, and surplus, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any state, county, municipality, or local taxing authority; except that any real property of the corporation shall be subject to state, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed."
When consideration is given to the purposes, organization, and operations of the corporation, it becomes apparent that it was designed to be and in fact is a governmental agency of the United States and that property held by it is property of the United Staes.
The act of Congress provides: "Sec. 2. The corporation shall have capital stock of $500,000,000, subscribed by the United States of America, payment for which shall be subject to call in whole or in part by the board of directors of the corporation." The sum ...