For the prosecutor, Autenrieth & Wortendyke (Joseph F. Autenrieth, of counsel).
For the defendants, Ward Kremer (Edward R. McGlynn, John J. Quinn, Emerson L. Richards, Harry Cassman and Joseph Weintraub, of counsel).
Before Brogan, Chief Justice, and Justices Case and Heher.
The opinion of the court was delivered by
HEHER, J. The initial question for decision is whether intangible personal property of a public utility subject to the taxes prescribed by chapter 8 of the Laws of 1938 (superseded by chapter 5 of the Laws of 1940) was taxable for the years 1939 and 1940 under R.S. 1937, 54:4-1, et seq. We resolve it in the negative.
R.S. 54:4-2 ordained that, "Except as otherwise provided as to particular corporations, all property, real and personal, of a corporation shall be taxed the same as the real and personal property of an individual." Section 1 of the act of 1938, supra, decreed that the utilities therein specified "shall be subject to taxation only as in" that act directed. Section 5 provided that the "franchise and the property" of such corporations "shall not be subject to taxation of any kind or nature except as" laid down in that statute, and that the "taxes" to be imposed "shall be in lieu of all other taxes against any corporation subject" to its provisions, "its property, franchises or its gross receipts."
Section 6 of the last cited statute levied "excise taxes" for the "privilege of exercising its franchises and using the public streets, highways, roads or other public places in this state," computed (a) at a specified rate "of such proportion of the gross receipts" of the corporation "from its business over, on, in, through or from the whole of its lines or mains as the length of the lines or mains in this state, located along, in or over" the public streets "bears to the whole length of its lines or mains," and (b) "at the same rate as the average rate of taxation in this state as fixed for the current year by the State Tax Commissioner under" R.S. 54:24-1, et seq., "upon the gross receipts" of the corporation, as therein defined, from the business derived from its "lines or mains" in this state.
It would seem that the legislative design was the substitution of these excises for the local direct tax on all property not expressly made subject to such taxation by that statute. But defendants note that section 2 (c) defined the term "personal property" as including "all personal property except electric and gas appliances to be used for the consumption of
gas or electricity and held for resale and not for the purpose of production, transmission or distribution of gas or electric energy, and except the by-products of gas manufacture held for resale and not for the purpose of production, transmission or distribution of gas or electric energy, and except intangible personal property;" and the argument is made that the statute "does not purport to exempt any property other than the tangible property actually devoted to the utility purposes and the franchises;" that it "nowhere expressly exempts intangible property (or for that matter, tangible property not used in the utility business);" and that the "basis for the calculation of the tax is the income from tangibles used in the utility business and the basis for distribution is the same."
Apart from the fact that in practice it would be a matter of great difficulty thus to segregate the property "not used in the utility business" (in the sense that it made no contribution whatever to the gross receipts), the act evinces no such legislative purpose; nor does it, when considered as a whole, reveal an intention to render intangible personal property taxable under the General Tax Act. Section 3 directed that the "real estate," as therein defined, "and the electric and gas appliances" and "by-products of gas manufacture" held for resale and not for the purposes of production, transmission or distribution of gas or electric energy, owned or held by the corporation, "be assessed and taxed at local rates in the manner provided by law for the taxation of similar property owned by other corporations or individuals, * * *." Intangible personal property is not comprehended in any of these classifications. By section 2 (b), "railways, tracks, ties, lines, wires, cables, poles, pipes, conduits, bridges, viaducts, machinery, apparatus and equipment, notwithstanding any attachment thereof to lands and buildings," are excluded from the category of "real estate" taxable under the General Tax Act, ...