On appeal from final judgments of the Division of Tax Appeals.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Burling, J.
[12 NJ Page 134] Five appeals were taken by the Atlantic City Transportation Company (hereinafter referred to as the Company) from the assessment and apportionment of excise taxes. The appeals were consolidated for hearing in the Division of Tax Appeals in the State Department of Taxation and Finance. Five separate judgments were filed there. The Company appealed from each judgment to the Superior Court, Appellate Division, where by order entered upon the Company's petition the five appeals were consolidated with the consent of all respondents. Prior to hearing
of the consolidated appeals before the Superior Court, Appellate Division, certification was allowed by this court upon our own motion.
There are two types of tax involved in these appeals. The taxing statute involved is designed to enact a "use" tax, i.e., a franchise tax for the use of public streets, etc., and in addition is designed as a classification statute enabling the State to place in one category utility corporations which use in their operations any part of a public place (as defined in the act), in order to simplify taxation; it provides for franchise and gross receipts taxes in lieu of all other taxes and thus renders unnecessary separate classification and taxation of a subject corporation's franchise or franchises and real and personal property. This purpose is clearly expressed in L. 1940, c. 5, sec. 1 (subsequently amended by L. 1952, c. 264, sec. 2, see N.J.S.A. 54:31-45). It provides for a franchise tax for actual use of public places, and a gross receipts tax in lieu of all other property and franchise taxes. Involved in these consolidated appeals are a gross receipts tax for 1948 levied under the provisions of L. 1940, c. 5, sec. 6, and franchise and gross receipts taxes for 1949 and 1950 levied under L. 1940, c. 5, sec. 6, as amended by L. 1948, c. 217, sec. 1. The differences between the section as originally enacted and the section as amended in 1948 have no bearing upon the questions involved in these appeals.
We quote from the statute as amended merely to describe the issues at hand. The pertinent portions of L. 1940, c. 5, sec. 6, as amended by L. 1948, c. 217, sec. 1, supra, read as follows:
"6. Every street railway, traction, gas and electric light, heat and power corporation using or occupying the public streets, highways, roads or other public places in this State shall in the year one thousand nine hundred and forty-eight and annually thereafter pay excise taxes for the privilege of exercising its franchises and using the public streets, highways, roads or other public places in this State, as follows:
(a) A tax computed at the rate of five per centum (5%) of such proportion of the gross receipts of such taxpayer for the preceding calendar year 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, exclusive of service connections, bears to the whole length of its lines or mains, exclusive of service connections. In case the gross receipts of any such taxpayer for any calendar year shall not exceed fifty thousand dollars ($50,000.00) the tax on such taxpayer for such calendar year shall be computed at the rate of two per centum (2%) instead of at the rate of five per centum (5%).
(b) A tax at the average rate of taxation in this State as computed under the provisions of subsection (c) of this section upon the gross receipts of such taxpayer for the preceding calendar year from its business over, on, in through or from its lines or mains in the State of New Jersey."
(It is noted that the foregoing section of the statute was further amended by L. 1952, c. 264, sec. 4, see N.J.S.A. 54:31-50, effective subsequent to the periods of time of assessment involved in the present appeals.)
For convenience with respect to the consideration of the taxes levied and the respective appeals therefrom with which we are here concerned, we refer to a tax computed under subsection (a) of the foregoing provision as a "franchise tax" and to a tax computed under subsection (b) of the foregoing provision as a "gross receipts tax." In the light of these prefatory remarks the course of the various appeals to the Division of Tax Appeals is as follows:
On September 12, 1948 the Company appealed the gross receipts tax assessed against it for 1948 (the franchise tax for that year was not appealed); on April 29, 1949 it appealed the franchise tax assessed against it for 1949; on July 22, 1949 it appealed the gross receipts tax assessed against it for 1949; on May 11, 1950 it appealed the franchise tax assessed against it for 1950; and on August 8, 1950, it appealed the gross receipts tax assessed against it for 1950. Each of these five appeals, respectively, at various times was listed for hearing before the entire Division of Tax Appeals, but hearing was adjourned without date. All five were ultimately listed for hearing before the entire Division on October 17, 1950, adjourned again and finally brought on for hearing on April 25, 1951. As hereinabove noted, when the hearings began before the entire Division of
Tax Appeals on this date all five appeals were consolidated for the purposes of hearing and consideration by that tribunal.
At the April 25, 26 and 27, 1951, hearings all seven members of the Division of Tax Appeals were present; at subsequent hearings held June 5, 6, 7, 18, 19 and 22, 1951, the entire membership of the division did not sit, but at each hearing at least four of the members sat. On May 27, 1952, the division met for the purpose of "consideration" of the five (consolidated) appeals. Commissioner Frankenbach was not present; Commissioner Labrecque did not participate in the deliberations. The other five members were present and voted to dismiss the appeals, four members voting to adopt a report filed by Commissioner DeVoe and the fifth member, Commissioner Kreamer, voting to dismiss the appeals but reserving the right to file concurring "reasons." His concurring statement of reasons was filed June 24, 1952.
A separate judgment in writing was prepared with respect to each of the five appeals. Each of these judgments, dismissing the respective appeal and affirming the levy of tax as made by the Director of the Division of Taxation was signed by President Rogers and Commissioners Kreamer, DeVoe and Wiener. The judgments were dated July 31, 1952, and were filed on the same date.
The Company's notice of appeal from each of the five judgments of the Division of Tax Appeals to the Superior Court, Appellate Division, was served upon the Attorney-General of New Jersey, the Cities of Atlantic City, Linwood, Ventnor, Somers Point, Margate, Northfield, Ocean City, Pleasantville, the Borough of Longport, and the Division of Tax Appeals. Each notice of appeal was filed September 12, 1952. On October 9, 1952, the Company addressed a petition to the Superior Court, Appellate Division, to consolidate the five appeals. An order of consolidation, consented to by the Attorney-General of New Jersey, the respective solicitors for the cities of Atlantic City, Linwood, Ventnor, Somers Point, Margate, Northfield, Ocean City, Pleasantville and the Borough of Longport, was entered October 17, 1952. As hereinbefore
noted, the consolidated appeals were certified on our own motion prior to hearing before the Appellate Division.
Before proceeding to outline the questions involved and to express our determination thereof, it is deemed advisable to relate that at the hearing on June 6, 1951 the Division of Tax Appeals ruled that although the statute required notice to all the municipalities entitled to a portion of any of the taxes involved in the appeals to the division, and therefore they properly had been given notice of the five appeals herein, the municipalities themselves had not appealed and therefore had no right affirmatively to assert any alleged deficiency in the assessments. The City of Ventnor City opposed this ruling and was accorded an exception, but neither Ventnor nor any other municipality appears to have appealed therefrom. The City of Atlantic City has appeared before this court as a respondent, being directly interested in the principal questions involved, hereinafter to be detailed. The other municipalities, although constituted respondents herein, have filed no briefs and have presented no argument here.
The questions involved in these consolidated appeals may be summarized as follows: (a) Is each judgment of the Division of Tax Appeals fatally defective upon the ground that the division failed to reduce to writing findings of facts as required by the pertinent statutory provisions? (b) Did the Director of the Division of Taxation without statutory authority materially alter the Company's excise tax returns for the years 1948, 1949 and 1950? (c) Is the decision of the Superior Court, Appellate Division, in Atlantic City Transportation Company v. Walsh, 6 N.J. Super. 262 (App. Div. 1950), determining the Company's 1947 franchise and gross receipts tax appeals, res adjudicata as to the question whether that portion of the Company's electric trolley lines which pass down Atlantic Avenue in the City of Atlantic City for a distance of 3.043 miles is in a "public street" or other "public place" within the meaning of L. 1940, c. 5, and the amendments thereto? (d) If the said decision of the Superior Court, Appellate Division, concerning the 1947 tax appeals of the Company is not res adjudicata, is the 3.043-mile
portion of the Company's electric trolley lines passing down Atlantic Avenue in the City of Atlantic City use or occupation of a public street, highway, road or other public place within the purview of L. 1940, c. 5, and amendments thereto, supra ? (e) In computation of the gross receipts tax was inclusion of gross receipts of a street railway corporation from the whole of its lines in the State of New Jersey "where operations on such lines as were upon public streets were permanently abandoned, after less than a month of reported year" (viz. 1948) unreasonable, illegal and confiscatory?
As has been the case in several appeals from state administrative agencies, one of the questions involved in these consolidated appeals is whether the five judgments of the Division of Tax Appeals adjectively are fatally defective. The defect asserted by the Company to exist is that the Division of Tax Appeals failed to reduce to writing findings of facts supporting the respective judgments. It is settled in this state that "The requirement of findings is far from a technicality and is a matter of substance" and "A conclusion requires evidence to support it and findings of appropriate definiteness to express it," in order to "enable the reviewing court to intelligently review an administrative decision and ascertain if the facts upon which the order is based afford a reasonable basis for such order." N.J. Bell Tel. Co. v. Communications Workers, etc., 5 N.J. 354, 375, 377 (1950). We have held that these principles are applicable to tax appeals. D., L. & W.R. Co. v. City of Hoboken, 10 N.J. 418, 424-427 (1952). The respondent contends that the Division of Tax Appeals complied with the applicable statutory provisions in this respect by adopting ...