On appeal from Division of Tax Appeals, and certification by this court of its own motion.
For reversal -- Justices Heher, Oliphant, Wachenfeld, Burling and Brennan. For affirmance -- Chief Justice Vanderbilt, and Justice Jacobs. The opinion of the court was delivered by William J. Brennan, Jr., J. Jacobs, J. (dissenting). Chief Justice Vanderbilt has authorized me to state that he joins in this dissent.
Is a licensed transporter who is the innocent victim of the theft of an interstate shipment of alcoholic beverages owned by another liable to pay taxes upon the stolen goods under the Alcoholic Beverage Tax Law? We think not.
Two sealed trailers loaded with cases of whiskeys en route across New Jersey from Kentucky and Indiana to New York upon through bills of lading were stolen by persons unknown in the early morning hours of December 9, 1949 from the Fairview, New Jersey Terminal of Wilson Freight Forwarding Company, a licensed transporter, R.S. 33:1-13, while parked temporarily over night awaiting pick-up for delivery in New York by tractors manned by crews affiliated with a New York Teamsters Union Local. A sealed trailer of Motor Cargo, Inc., also a licensed transporter, loaded with whiskeys shipped upon through bill of lading from Illinois to New York was stolen by persons unknown in the early morning of March 15, 1950 while parked temporarily over night at Motor Cargo's Hoboken terminal awaiting pick-up for delivery in New York. Both of the Wilson trailers were recovered later in the day of December 9, 1949 in New York State, one near Newburgh and the other near Goshen. The first named still contained about one-fifth of its cargo, but the second was empty. The Motor Cargo trailer was found deserted, and empty, on a New York City street on March 15, 1950.
The Beverage Tax Bureau assessed Wilson a tax of $5,173.20 upon the stolen liquor, exempting from the tax only the portion recovered in the trailer found near Newburgh. Motor Cargo, Inc. was assessed a tax of $2,448 upon the entire contents of its trailer. Each paid the tax against it under protest, and appealed to the Division of Tax Appeals, which affirmed both assessments. The transporters' appeals to the Appellate Division from the respective judgments of the Division of Tax Appeals have been certified to this court of its own motion.
The primary question on the appeals is whether the Legislature provided for a tax against licensed transporters in the circumstances presented in the instant cases. R.S. 54:43-6 imposes the tax in respect of beverages involved in "illegal acts in this state," but that section is not applicable nor is it invoked by the State. It applies only to persons who manufacture, possess, distribute, transport, or offer for sale alcoholic beverages in violation of a federal or state statute or who conspire to do any such acts. The State admits that appellants were duly licensed transporters legitimately carrying on their business within the terms of their licenses and that they were not culpably involved in the thefts. The State relies upon R.S. 54:43-1, which imposes the tax upon any "sale" of alcoholic beverages within this State or upon any "delivery" thereof made within this State. There may, of course, be a "delivery" without a "sale." The statutory scheme to tax either event occurring in this State is obvious recognition that an individual taxpayer may in given circumstances reasonably be taxed as upon the one and not as upon the other.
It is an elementary rule that taxes "cannot be imposed upon an individual unless he is explicitly brought within the terms of the taxing act." Public Service, etc., Transport v. State Bd. Tax Appeals, et al., 115 N.J.L. 97 (Sup. Ct. 1935). Are the appellants in the instant circumstances persons contemplated by the Legislature as taxable upon a "sale"? We find nowhere in the statute any evidence to support the State's contention that such was the intent, and much to oppose that contention. A "sale" usually imports a transfer of property in the goods by the owner or by one authorized in his behalf to transfer such property. 46 Am. Jur., Sales, p. 194. Here appellants were not the owners of the stolen liquors and had no authority to sell them. Moreover they could not lawfully sell or offer them for sale with or without the permission of the owners without violating the terms of their licenses which authorized them only "to transport alcoholic beverages into, out of,
through and within the state of New Jersey and to maintain a warehouse." R.S. 33:1-13. Authority to "distribute and sell" is reserved to such as manufacturers, wholesalers and retailers licensed so to do. R.S. 33:1-10, 11 and 12. Whether one licensed only to transport attempting to sell in violation of his license would be taxable as upon a "sale" under R.S. 54:43-1 or under R.S. 54:43-6 as being involved in "an illegal act," or under both sections, is a question not before us. It is sufficient that we think that there may fairly be inferred from the context of the statute as a whole a purpose to tax a licensed transporter of the beverages of others, sought to be taxed in circumstances which involve no claim of a violation of his license, not as upon a "sale" but, if at all, as upon a "delivery" of such beverages within the State. The care taken by the Legislature in several sections of the statute to distinguish between "transportation" and "sale" buttresses this interpretation. See R.S. 54:42-2, R.S. 54:43-2, R.S. 54:43-6, R.S. 54:45-1.
This construction of the statute disposes of the State's contention that the statutory definition that a "sale" shall include a "theft," and the provision that stolen beverages "shall be deemed to have been sold" within this state, R.S. 54:41-2, support the assessments. Indeed, to interpret the statute as making such definition applicable to these carriers, who were the innocent victims of the thefts, who were not the owners of the goods and had no authority to transfer the property in them, and whose trailers, one still partly loaded, were recovered in the State of New York, would constitute such application of the statute a clear denial to appellants of the equal protection of the laws in violation of the Fourteenth Amendment to the Federal Constitution. The statutory inference, if applied to the carriers in such circumstances, is so strained and so utterly without a "reasonable relation to the circumstances of life as we know them," Tot v. United States, 319 U.S. 463, 63 S. Ct. 1241, 87 L. Ed. 1519 (1943), as to be plainly arbitrary and unreasonable. Such a palpably fictitious measure of the tax
must be rejected as clearly arbitrary. See Ring v. North Arlington, 136 N.J.L. 494 (Sup. Ct. 1948), affirmed 1 N.J. 24 (1948), appeal dismissed 335 U.S. 889, 69 S. Ct. 250, 93 L. Ed. 427 (1948); Lane Distributors, Inc., v. Tilton, 7 N.J. 349 (1951); In re Vanderbilt's Estate, 281 N.Y. 297, 22 N.E. 2 d 379 (Ct. App. 1939), ...