Goldmann, Kilkenny and Collester. The opinion of the court was delivered by Kilkenny, J.A.D.
Mead Johnson and Company, a corporation of the State of Indiana, hereinafter "Mead Johnson," appeals from two judgments of the State Division of Tax Appeals. The first affirms an omitted tax assessment of $300,000 for 1964 made by the Borough of South Plainfield on personal property of Mead Johnson stored in a warehouse in that borough. The second affirms a tax assessment (not omitted) of $33,309 for 1965 on Mead Johnson's goods similarly stored in the same warehouse. Both judgments denied Mead Johnson's claims that the merchandise was stored in a public warehouse and was, therefore, exempt from taxation under R.S. 54:4-3.20.
"All 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 this chapter."
The statute 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." General Electric Co. v. City of Passaic, 28 N.J. 499, 505 (1958). Its constitutionality has been sustained and it has been applied in many reported decisions. Ibid. The warehouse exemption, originally adopted in 1925, "was based on
the legislative policy to further the common good by encouraging the development of New Jersey's warehouse industry". Id., at p. 509. It was anticipated that "any loss of taxes in the State of New Jersey would be more than offset by the increase of taxable property of New Jersey warehousemen resulting from their growth." Ibid.
There is no issue herein as to the storage of Mead Johnson's goods in the particular warehouse at 3605 Park Avenue, corner of Oak Tree Road, during the periods involved, or as to the value of the personal property, which consists essentially of medically prescribed food articles. As the Division properly observed, the sole question for decision is whether or not under all of the circumstances the personal property was stored in a warehouse within the meaning of the statutory exemption. The Division concluded that as between Mead Johnson and the operator of the warehouse, Oak Tree Distributors, Inc., the latter was not acting as a "warehouseman." It determined that "this warehouse is operated principally for the private convenience of Mead Johnson." On that finding, the tax exemption was denied.
Mead Johnson owned this warehouse and operated it through its own employees and for its own purposes until 1961 when, in furtherance of a change in company policy discontinuing its own warehouse operations throughout the country, it sold this warehouse in a bona fide sale for $275,000 to Nat Singer. Singer had stored products of Mead Johnson for many years prior thereto in his public warehouse in the Bronx, New York. Title was taken in the name of S.F. Investors, Inc., a New Jersey corporation organized by Singer and composed of members of his family and his New York attorney. The "S" and "F" in the corporate name represent the initials of Singer's children, Shirley and Fred. The deal involved a payment of 10% in cash and a 15-year purchase money mortgage for the balance, with interest at 4 1/4% and annual amortization of 4%.
The agreement of sale between Mead Johnson and Singer provided that for a period of one year commencing May 1,
1961 Singer would furnish Mead Johnson with all warehousing and distribution services for its products at such location, including as incidental thereto other necessary and connected services, such as mailing and invoicing services which it might require. Singer was to charge for all services and Mead Johnson was to pay therefor "cost, plus 5% thereof." It was further agreed that similar services would be furnished for a further period of two years commencing on May 1, 1962 "at your cost, plus 5%." The agreement also provided that "at any time during the said two year period either party may terminate such arrangement upon giving to the other party ninety days' written notice of such termination."
Singer formed another New Jersey corporation, Oak Tree Distributors, Inc., hereinafter "Oak Tree," similarly composed of members of his family and his New York attorney, to operate the warehouse as a tenant of the title owner, S.F. Investors, Inc. "Oak Tree" in this corporation's name was derived from the fact that the warehouse was at the corner of Oak Tree Road. There was no inter-corporate relationship between Mead Johnson and any of Singer's corporations. Neither had any stock or financial interest in the other. Except for the purchase money mortgage and its rights of storage under the agreement of April 26, 1961 -- limited to the periods specified therein -- Mead Johnson had no rights in any of Singer's corporations ...