For reversal -- Justices Case, Heher, Oliphant, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Case, J.
The primary question is the interpretation to be given R.S. 54:9-4 as amended by chapter 69, P.L. 1940. The secondary question is whether an appeal lies.
The controversy is about the valuation placed upon the common stock of the National Bank of New Jersey by the Middlesex County Board of Taxation for the purpose of assessing those shares for taxation and arises out of the fact that the retirable value of the preferred stock of the bank is double the par value of that stock. In arriving at the value of the common stock it was necessary, as will presently be more explicitly stated, to deduct from the assets of the bank the value of the preferred stock. The assessing authorities made the deduction by using the par value of the preferred stock, a method of calculation which was approved in the judgment under appeal. It is the contention of the appellant that the deduction should have been at the retirable value.
Pertinent portions of the controlling statute follows:
"54:9-2. The shares of the common capital stock * * * shall be assessed and taxed according to their true value, to be determined in accordance with the provisions of sections 54:9-4 and 54:9-9 of this title. * * *
"54:9-4. The value of each share of common stock of each bank shall be ascertained and determined by adding the amount of its capital, surplus and undivided profits and deducting therefrom the assessed value of its real property, including in such deduction the assessed value of all real property owned by a corporation all the stock of which corporation is owned by such bank, and also deducting therefrom an amount equal to the aggregate par or retireable value of all classes of the issued and outstanding preferred stock of such bank, and by dividing the result by the number of its shares of common stock outstanding, it being the intention that the shares of preferred stock and the capital represented thereby shall not be assessed or taxed; nor shall there be assessed or taxed any stock issued to former unpaid depositors of the bank while held to evidence their right to repayment under any plan of reopening or rehabitation approved by the Commissioner of Banking and Insurance. No deduction
or exemption shall be allowed or made from the value determined as provided in this section.
"54:9-9. Each county board of taxation shall * * * ascertain * * *
"(h) The true value of a single common share of each (bank), determined in accordance with the provisions of section 54:9-4 of this title; and
"(i) The amount of tax levied upon the common capital stock of each at the uniform rate."
There were two classes of preferred stock, "A" and "B," issued under agreement with the Reconstruction Finance Corporation following the national bank holiday of 1933. The Reconstruction Finance Corporation subscribed for the issue of preferred stock "A" consisting of 500,000 shares with an original par value, which was also its retirable value, of $15 each, amounting to a total of $750,000. Others, presumably directors of the bank, subscribed for 10,000 shares of preferred stock "B," each share having an original par value, which was also its retirable value, of $50, amounting to a total of $500,000. Thus, on the completion of those steps, preferred Class "A" stock had a par and retirable value of $15, and Class "B" preferred stock had a par and retirable value of $50; and all of that stock represented money actually paid to the bank in the same amount as consideration for the issue. In 1937, the Comptroller of the Currency suggested that the bank charge off its books certain assets which had resulted in losses. Thereupon, with the consent of Reconstruction Finance Corporation, the Articles of Association of the bank were amended so that the par value of preferred stock "A" was reduced from $15 a share to $7.50 a share and the par value of preferred stock "B" from $50 a share to $25 a share, but the retirable value of both classes of preferred stock was retained as theretofore, not only as the amount to be paid on the ...