For reversal -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling and Jacobs. For affirmance -- None. The opinion of the court was delivered by Jacobs, J.
The issue presented on this appeal is whether the personal property of Liggett & Myers Tobacco Company, located on floor space demised to it under a written agreement of lease dated April 12, 1948 between Lackawanna Warehouse Company, Inc. as lessor, and the Tobacco Company, as lessee, was exempt from taxation under the terms of R.S. 54:4-3.20.
The statute provides that personal property stored in a warehouse of any person, copartnership or corporation engaged in the business of storing goods for hire shall be exempt from taxation under chapter 4 of Title 54. It was enacted to place our public warehouses on an equal competitive footing with those of our neighboring states where no personal property taxes were imposed. Schwartz v. Essex County Board of Taxation, 129 N.J.L. 129, 134 (Sup. Ct. 1942), affirmed 130 N.J.L. 177 (E. & A. 1943); Maritime Petroleum Corp. v. City of Jersey City, 1 N.J. 287, 295 (1949). We consider that the legislative reference in R.S. 54:4-3.20 to property stored in a warehouse contemplated the customary possession by the warehouseman, as bailee, of
goods owned by another, the bailor, and this has apparently been recognized in the decisions applying the statutory exemption. Pattison & Bowns, Inc. v. Saddle River Twp., 129 N.J.L. 135, 136 (Sup. Ct. 1942), affirmed 130 N.J.L. 177 (E. & A. 1943); Halligan & McLellan, Inc. v. State Board of Tax Appeals, 122 N.J.L. 551 (Sup. Ct. 1939); Dearborn Chemical Co. v. Division of Tax Appeals, 135 N.J.L. 580 (Sup. Ct. 1947).
In the Pattison & Bowns case the owner of coal stored it in open premises of Independent Warehouses, Inc., a warehouseman engaged in the business of storing goods for hire. In rejecting the contention that this did not come within the statutory exemption, the court expressly adopted the language in Love v. Export Storage Co., 143 F. 1, 13 (C.C.A. 6 1906), that goods "may be warehoused upon a parcel of ground inclosed, or open, or partly so" and that the "only thing essential to the warehousing of goods is that their possession be changed from that of their owner to that of the warehouseman." In the Halligan & McLellan case the court sustained the exemption upon a finding that "there was clearly a bailment of the goods"; the absence of warehouse receipts and the exercise of a measure of supervision by the bailor's employees were considered as not creating "a different relationship." Similarly, in the Dearborn Chemical case the court found that the presence of the owner-prosecutor's employees at the warehouse space did not, as it viewed the testimony before it, "destroy the relationship of bailor and bailee, existing between prosecutor and the warehouse company." Cf. Crown Can Co. v. Division of Tax Appeals, 135 N.J.L. 517 (Sup. Ct. 1947).
In Gilson v. Pennsylvania R. Co., 86 N.J.L. 446, 448 (Sup. Ct. 1914), affirmed 87 N.J.L. 690 (E. & A. 1915), Justice Trenchard stated that a bailment "consists in the holding of a chattel by one person under an obligation to return or deliver it to another after some special purpose is accomplished"; many other definitions with varying shades of meaning may be found in the books. See Story, Bailments (8 th ed. 1870), p. 4; Schouler, Bailments (1905),
p. 2; Paton, Bailment in the Common Law (1952), p. 4. On recent occasions our courts have been called upon to determine whether new situations, unknown to the earlier common law, were to be brought within the orbit of established bailment concepts. Marsh v. American Locker Co., Inc., 7 N.J. Super. 81 (App. Div. 1950), affirmed 6 N.J. 81 (1950); Moore's Trucking Co. v. Gulf Tire & Supply Co., 18 N.J. Super. 467 (App. Div. 1952), certification denied 10 N.J. 22 (1952). While these were dealt with on their own footings, there was invariable approval of the basic tenet that there is no bailment unless possession and primary control of the property is in the bailee. Thus, in the Marsh case the court stated that the authorities "all recognize the need that there be possession of the property by the bailee." And in the Moore's Trucking case the court noted that "the cases dealing with a chattel of one person which is left by him on the premises of another, indicate that there is a bailment if the latter is given primary control of the chattel for the time being."
It is clear that the ordinary delivery of goods to a public warehouseman, for redelivery to the owner when called for, constitutes a bailment within the exemption provided in R.S. 54:4-3.20. But it is equally clear that there may be special arrangements between the owner and the warehouseman which exclude the bailor-bailee relationship and substitute an entirely different relationship outside the statutory exemption. See 56 Am. Jur. 331 (1947); 138 A.L.R. 1137 (1942). Cf. Frederick, Public Warehousing (1940), p. 88, where the author, after defining "space rental" as the leasing from the warehouse operator of a definite space on a square-foot basis, in lieu of the rental or purchase of quarters elsewhere, said:
"The relationship between storer and warehouseman then becomes one of landlord and tenant, with the lessor performing none of the duties of a bailee; not being custodian of the merchandise of the terant, directly or indirectly; issuing no acknowledgment or warehouse receipts for any merchandise that may be placed in the space thus leased or rented; and in no way being responsible as a warehouseman for any such merchandise."
Lackawanna has admittedly leased portions of its warehouse to companies which actually engage in manufacturing at the leased premises. It is not substantially disputed by the parties that goods stored by these companies at the leased premises are not exempt from personal property taxation. Any contrary view would seem to discriminate against New Jersey manufacturers generally and enlarge the statutory exemption beyond its acknowledged purpose. In addition, it would fly in the face of the accepted rule that since tax exemption statutes afford special privileges they are to be construed most strongly against the claimants. See Atlantic City Transp. Co. v. Director, Division of Taxation, 12 N.J. 130, 146 (1953); Borough of Edgewater v. Connoil Corp., 4 N.J. Super. 338, 342 (App. Div. 1949). In any event, as suggested in City of Trenton v. State Board of Tax Appeals, 127 N.J.L. 105, 106 (Sup. Ct. 1941), affirmed City of Trenton v. Rider College, 128 N.J.L. 320 (E. & A. 1942), the ...