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 Jacobs, J.
The fundamental issue presented to us for determination is whether the Legislature, by the general terms of R.S. 40:52-1 and R.S. 40:52-2, has delegated power to municipalities to impose solely for revenue purposes, license taxes upon all businesses operating within their borders including manufacturers, wholesalers and retailers.
On December 12, 1952 the Board of Commissioners of the City of Jersey City adopted an ordinance "establishing licensing requirements for businesses having a situs in the City." It contains no regulatory features whatever and is admittedly a taxing measure designed to raise anticipated revenues of $3,000,000 annually. It provides that wholesalers and retailers shall pay license fees measured by their
gross receipts, manufacturers shall pay license fees measured by their payrolls, and truckers shall pay license fees measured by the square footage of space occupied by their truck terminals. It provides further for other classifications and license fee bases, for certain exemptions, for a Business License Bureau and Business License Board of Review, and for other matters which need not be detailed here. On December 13, 1952 Harry F. Salomon and others, retailers located in Jersey City, instituted an action in the Law Division attacking the ordinance for lack of statutory basis, inter alia, and seeking a judicial determination of its invalidity. On December 19, 1952 a similar action was instituted by plaintiffs L. O. Koven & Brother, Inc. and others, a manufacturer and real estate brokers located in Jersey City. The status of the plaintiffs to maintain their proceedings as Jersey City taxpayers and citizens or persons who were affected by the terms of the ordinance is beyond question. See Gurland v. Kearny, 128 N.J.L. 22, 26 (Sup. Ct. 1942); O'Mealia Outdoor Advertising Co. v. Rutherford, 128 N.J.L. 587, 591 (Sup. Ct. 1942); Koons v. Atlantic City, 134 N.J.L. 329, 338 (Sup. Ct. 1946), affirmed 135 N.J.L. 204 (E. & A. 1947). Cf. Haines v. Burlington County Bridge Commission, 1 N.J. Super. 163, 170 (App. Div. 1949); Garrou v. Teaneck Tryon Co., 11 N.J. 294, 302 (1953). Before answer, the plaintiffs moved for a stay of the ordinance pending trial and the defendant city moved for summary judgment. The Law Division granted the stay and denied summary judgment. The city appealed from the granting of the stay (Rule 4:2-2(a)(1)) and pursuant to leave (Rule 4:2-2(b)) also appealed from the denial of summary judgment. The appeals were consolidated in the Appellate Division and we certified on our own motion. Rule 1:5-1(a).
The power of taxation is a vital attribute of government and is vested in the State Legislature; municipalities being but creatures of the State have no comparable power except to the extent plainly delegated to them by the Legislature. Jersey City v. Martin, 126 N.J.L. 353, 360 [12 NJ Page 384] (E. & A. 1941); Jersey City v. North Jersey Street Ry. Co., 78 N.J.L. 72, 74 (Sup. Ct. 1909). Cf. Edwards v. Mayor, etc., of Borough of Moonachie, 3 N.J. 17, 21 (1949). The bulk of municipal revenues required for their operations are received from general property taxes imposed pursuant to express and comprehensive legislative provisions. R.S. 54:4-1; R.S. 54:4-9; R.S. 54:4-23. These property taxes had their origin in colonial times and have been in effect for over a century in much their present form. See The General Property Tax in New Jersey, Sixth Report of the Commission on State Tax Policy, 3, 7 (1953). In recent years there has been considerable agitation for the granting of broader tax powers to municipalities to enable them to meet the tremendously increased costs of governmental services. In response to similar stimuli the Legislatures of our neighboring states have authorized municipalities to impose business taxes based on sales, gross receipts, etc., subject, however, to express statutory provisions and limitations. See 53 Purdon's Pa. Stat., §§ 2015.1-2015.8; N.Y. General City Law, § 24 a. Our own Commission on State Tax Policy in its report on Taxation and Public Policy in New Jersey, Fifth Report (1950) submitted several alternative proposals to our Legislature, including a project to place local governments in a position to finance themselves from bases other than property. A specific method suggested by the Commission (at p. 19) in furtherance of this project was "to authorize counties and municipalities to levy, assess and collect such taxes as are suitable for local administration -- for example, a consumers sales tax, luxury taxes, gross business tax or income (payroll) taxes." No legislative action has thus far been taken pursuant to this report of the Commission; indeed, no effective legislation has ever been passed avowedly designed to broaden the bases for municipal taxation, except R.S. 40:48-8.15 (L. 1947, c. 71, § 1), which authorized cities of the fourth class to adopt sales taxes subject to express statutory provisions and limitations. See Karins v. Atlantic City, 137 N.J.L. 349 (Sup. Ct. 1948). No fourth-class city other than Atlantic City has ever taken
action under this legislation; and it may be noted that our only state legislation imposing general consumer sales taxes was very short lived. See L. 1935, c. 268, effective June 11, 1935, repealed by L. 1935, c. 329, effective October 25, 1935.
Despite the apparent unwillingness of the Legislature to adopt any statute authorizing general municipal taxation other than property, the efforts to tap new sources of municipal revenue continue. In 1947 the City of Trenton adopted its ordinances 504 and 505 under Title 40, Chapter 52 of the Revised Statutes which provides that the governing body may enact ordinances "to license and regulate" a. Vehicles --, b. Autobuses --, c. Cartmen --, d. Hotels --, e. Automobile garages --, f. Theatres --, g. Lumber and coal yards, stores and other kinds of business --, h. Street signs --, i. Auctioneers --, j. Sales advertised as forced sales --, k. Gypsies --, l. Barbershops. See R.S. 40:52-1. The succeeding section, R.S. 40:52-2, provides that the governing body "may fix the fees for all such licenses, which may be imposed for revenue, and may prohibit all unlicensed persons and places and vehicles, businesses and occupations from acting, being used, conducted or carried on; impose penalties for violation of ordinances providing for licenses, and revoke any license for sufficient cause and after notice and hearing." Trenton's ordinances require wholesalers, retailers and designated trades and professions to obtain licenses. Their titles set forth that they are ordinances "governing, regulating and fixing license fees" of certain businesses, trades and professions, and in section 2 they provide that the fees are for revenue "and for regulation and control." They have never been attacked in judicial proceedings and for present purposes we may assume that they are regulatory ordinances under R.S. 40:52-1. Jersey City's ordinance goes much further and stands on a different footing. It is purely a taxing measure without any regulatory aspects whatever and is made applicable to all businesses, including those clearly having intermunicipal and interstate aspects such as manufacturers, and with varying tax bases including gross receipts, payrolls and square footage. Nevertheless, it is
defended by the city as being within the authority afforded by R.S. 40:52-1 and R.S. 40:52-2, and the issue squarely before us is whether these provisions, read in the light of their history, purpose and context (Ablondi v. Board of Review, 8 N.J. Super. 71, 75 (App. Div. 1950)) may be given any such sweeping effect. See Grogan v. DeSapio, 11 N.J. 308, 323 (1953); United States v. Champlin Ref. Co., 341 U.S. 290, 297, 71 S. Ct. 715, 95 L. Ed. 949, 955 (1951). The parties have referred us to collateral rules of statutory construction but they acknowledge that in the ultimate the determinative question is whether the Legislature meant, by what it said in R.S. 40:52-1 and R.S. 40:52-2, to enable the taxing action taken by the city and attacked in these proceedings. Cf. Newark Aqueduct Board v. Newark, 50 N.J.L. 126, 131 (Sup. Ct. 1887); N.J. Good Humor, Inc. v. Bradley Beach, 124 N.J.L. 162, 164 (E. & A. 1940), with Const. 1947, Art. IV, Sec. VII, par. 11; Fred v. Mayor and Council, Old Tappan Borough, 10 N.J. 515, 518 (1952). This issue is of public concern and will be considered here without regard to the suggested limited nature of the contentions advanced by the plaintiffs in the Law Division. See City of Newark v. Pulverman, 12 N.J. 105, 108 (1953); Morin v. Becker, 6 N.J. 457, 460 (1951).
In North Hudson County Railway v. Hoboken, 41 N.J.L. 71, 81 (Sup. Ct. 1879), the court dealt with a legislative grant in a city charter of power "to license and regulate cartmen, hackmen, auctioneers, common criers, hawkers, peddlers, junk-shop dealers, junk dealers, venders, porters, hucksters, city railroad cars, dealers in second-hand articles, and scavengers." It found that this was plainly a grant of power for police and not taxation purposes; in reaching its conclusion it pointed out that the phrase "to license and regulate" connoted the object of supervision and control and that the "collocation of trades and employment" likewise indicated that regulation rather than taxation was the object. It struck ...