For Jersey Central Power and Light Company, Autenrieth & Wortendyke (Joseph F. Autenrieth).
For Public Service Electric and Gas Company, William H. Speer.
For New Jersey Bell Telephone Company, J. Henry Harrison, Thomas Glynn Walker and Robert F. Darby.
For New Jersey Power and Light Company, Wall, Haight, Carey & Hartpence (John A. Hartpence).
For City of Newark, Town of Montclair and numerous other municipalities, Herbert J. Hannoch.
For City of Jersey City, mayor and council of the City of Hoboken et al., Edward P. Stout.
For Town of Dover, Alfred J. Grosso.
Before Justices Case, Donges and Colie.
The cases enumerated above are on writs of certiorari to review the action of the State Board of Tax Appeals with respect to the 1940 gross receipts franchise tax imposed on the involved utilities. The cases were decided as a unit by the State Board, were argued together before us and, inasmuch as they turn upon a single and common question of statutory construction, are again disposed of as one.
The question is -- What is meant by the words "The whole length of its lines or mains" as used in section 3, chapter 4, Pamph. L. 1940, and section 6a, chapter 5, Pamph. L. 1940? The phrase appears also in the antecedent legislation. The statute imposes a tax upon such portion of the gross receipts of the utility -- using the language of section 6a, chapter 5, Pamph. L. 1940, supra -- "as the length of the lines or mains in this state, located along, in or over any public street, highway, road or other public place bears to the whole length of its lines or mains." The way that the formula works out is that if the utility is permitted to include in the classification that we have indicated by italics the connections which carry the
service of the utility from the highway to the immediate user its franchise tax becomes less. This is because the length of the lines or mains located along, in or over public streets, &c., thus becomes a smaller percentage of the whole; and it is the percentage which the length of the lines or mains along the streets, &c., bears to the whole length of the lines or mains that measures the amount of money to which the franchise tax is applicable. It was the finding of the State Board that those extensions which may be comprehensively grouped under the classification of service connections were not within the classification of lines or mains as used in the statute. The utilities are litigating that construction.
Practical operation, strangely enough, has worked, in different instances, in opposite directions. Some of the utilities, of which the Telephone Company was one, consistently included in their reports to the State Tax Department the service connections within the lengths of lines and mains. Others, such as the Public Service Electric and Gas Company, consistently excluded service connections from that classification. The State Tax Department apparently accepted that diverse system of reports and laid the several taxes in accordance therewith. Both methods could not be right as they constitute opposite constructions of what is essentially the same statutory provision. The issue was drawn when the Public Service Electric and Gas Company, which had previously excluded service connections in computing its mileage, included them in 1940. A substantial decrease in the company's franchise tax followed, and the municipalities, observing the decrease, discovered the reason. The legislature thereupon, chapters 20 and 21, Pamph. L. 1941, amended the statutes in such fashion as thenceforward to ...