For the prosecutor, Charles B. Niebling.
For the defendant City of Newark, Thomas L. Parsonnet (Vincent J. Casale, of counsel).
Before Justices Bodine and Heher.
The opinion of the court was delivered by
HEHER, J. The question for decision is the validity of an assessment for taxation on intangible personal property of prosecutor, a stock insurance company, levied for the year 1945 by the City of Newark under R.S. 54:4-22, as amended by chapter 245 of the Pamphlet Laws of 1938.
The levy was in the sum of $75,700, or 15% of the sum of the company's paid-up capital and surplus in excess of liabilities and certain reserves for taxes, unearned premiums, losses, and so on. The capital and surplus upon which the assessment was made included on the assessing date bonds issued by the United States in the total sum of $451,682.25; and it is contended that section 54:4-22, cited supra, is "in contravention of the Constitution and laws of the United States," in that the proviso incorporated by the amendment of 1938, cited supra, fixing a minimum assessment at the rate of 15% of the paid-up capital and surplus in excess of
liabilities, served to impose a direct tax upon the bonds issued by the federal government included in the capital and surplus account.
Stocks, bonds, Treasury notes, and other obligations of the United States are "exempt from taxation by or under state or municipal or local authority." 31 U.S.C.A., § 742; R.S. 54:4-3. Vide Howard Savings Institution v. Newark, 63 N.J.L. 547. The exemption does not now extend to interest upon obligations, or dividends, earnings, or other income upon shares, certificates, stock, or other evidences of ownership, or gain from the sale or other disposition of such obligations and evidences of ownership issued on or after March 28th, 1942, by the United States or any agency or instrumentality thereof. Chapter 147 of the Public Laws of 1947; 61 Stat. 180; 31 U.S.C.A., § 742a.
The tax imposed by section 54:4-22, as amended, is not an excise, but an ad valorem tax on personal property. It is comprehended under this heading in the Revised Statutes. The tax is levied "upon the full amount or value" of the company's property (exclusive of real estate and tangible personal property, which are to be separately assessed and taxed where located, all shares of stock owned by the company, and nontaxable and exempt property), less "all debts and liabilities certain and definite as to obligation and amount," and all reserves for taxes and a fixed proportion of the reserves for "unearned premiums, losses and other liabilities;" provided the assessment against the "intangible personal property" shall "in no event be less than 15% of the sum of the paid-up capital and surplus in excess of the total of all liabilities of such company," as stated in the company's annual statement for the preceding calendar year filed with the State Department of Banking and Insurance, after deduction "from such total of capital and surplus" of the amount of all tax assessments against real estate standing in the company's name.
Thus, there is no specific provision here for the exclusion of stocks, bonds, and other obligations of the United States from the base paid-up capital and surplus in the calculation of the statutorily fixed minimum assessment on intangible ...