The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1889-12-02
THE POINTS In THE CASE
Issues i'll the Great Rail
road Suit Clearly
Stated.
CLAIMS SET UP ON BOTH SIDES.
Did Taxes Become Due as Far
Back as 1S452---What Goes to
Taxable Cost of the Road?


The battle of the legal giants now wag-
ing in the Vice Chancellors chambers, in
the First National Bank Building, over
the small amount of a million and a
quarter of back taxes, alleged by the
State to be due it from the Morris and
Essex Railroad Company. is one that will
long be remembered in the history Of
railroad litigation. Never before in the
history of this State has case of such
magnitude been brought to the attention
of the public, either through the courts
or by arbitration, and possibly never be-
fore was such an array of the brilliant
legal talent of which this State can SO
single issue. For instance there are en-
gagged in this battle as the representa-
tiyes and exponents of the States claim
the highest prosecuting officer of the
State-Mr. John p Stockton, who has
won SO many splendid victories for
the State, and by whose efforts
the State has saved or gained
an aggregate amount equal to the money
he has drawn from her treasury by
thousand fold; Mr.. William S. Gummere,
to whose efforts alone is due the gather
ing of the array of facts in support OF the
States claim, and who in fact drew the
complaint of the State and figured mere
than any other one man in the making of
the schedule which shows year by year
the amounts out of which 1t is claimed
the company has cheated the State and
who is now SO ably arguing before the
arbitrators why the claim OF the State in
every particular should be sustained;
and, lastly, Mr.. Barker Gummere, of
whose ability as corporation lawyer
every man of any prominence in the State
knows. On the other side, representing
the Morris and Essex Railroad Company,
as well as the Delaware, Lackawanna and
Western Railroad Company, its lessor, is
Ex-Governor Joseph D. Bedle, statesman,
jurist and distinguished citizen, by whose
efforts alone the victory shall have been
If it is decided that the Morris and
Essex Railroad Company is not indebted
to the State, as claimed. Now, what are
the points of this argument, as they have
developed during the three days of it's
progress? First, it is claimed by the
State that under the 3rd section of the
supplement and its original charter the
Morris and Essex Railroad Company was
to pay to the State tax of one-half OF
one per cent. on the cost of its road as
soon as the net proceeds amounted to
seven per cent. on such cost, and annual
ly thereafter.
WHY THE STATE CLAIMS TAXES.
Now the State claims that the books of
the company demonstrate the fact beyond
the shadow of doubt that the net pro-
ceeds of the road away back as far as the
year 1645, showed a profit of at least
seven per cent. on it's cost, and as an evil
dence of that fact they produce the testi-
mony of Expert Stevens, the chief witness
for the State, which is as follows
O. Can you tell from the ledger the
proflt or loss of the company for this
year 1S45-I mean the net profit or loss?
A. can
Q. What does it appear to be from the
books2
A. $S0,911.22
And being asked how he arrived at that
conclusion, he answered that the net pro-
fits were the amount of the credit side of
the company'S balance sheet for that
year. less the. debts, exclusive of divi-
dends. Now Mr.. Gummere's insistment
is that this profit of 30,91122 for lS45 was
more than seven per cent. on the cost of
the road as shown by the company's
books. and that the fact that it was at
least seven per cent. on the cost of the
road established the right of the State to
its claims for ever thereafter, irrespective
of the fact whether the company ever
earned seven per cent. again or not. In
other words, under the language of the
statute, once having reached point
where their net earnings amounted to
seven per cent on cost, the company was
bound annually thereafter to pay the tax
SET I0rJl IN tnG STATUTE.
GOVERNOR BEDLE SAYS THE FIGURES ARE
CORRECT.
Governor Bedle before the arbitfators
the other day said:-"That balance sheet
is an admission of the company that the
amount of S3O,o11.22 is correct. Mr..
Stevens says that that amount is net
profits, but that is his own deduction.
The statement of the company don't show
one way or the other. So far as the COM
pany's balance sheet is concerned, it may
be so or it may not be so." These re-
marks of the Governor stirred Mr.. Gum
mere up to this reply:-"The books of the
company are supposed to be record and
an accurate record of the results of the
company's business. When you want to
know what the net earnings of COM
pany are, what are you to do? Why, turn
to the profit and loss account of the COM
pany. Now, submit, all that we can
show is what the profit and loss account
of this Morris & Essex Railroad Company
for that year (1s45) shows, and that is
what we have shown"
AS is shown with reference to the year
1845 so it is with reference to all the years
up to 1866.
WHAT is COST OF ROAD?
After 1866 the various supplements to
ne original charter had so changed the
atus of things that, while ''cost of road'
as still a basis of taxation, the question
\ net proceeds was not considered. And
was on LnG Qu6SulOu w udU luCluuoQ
i cost of road?' that the whole argu-
laent of Friday last hinged. And it all
come about in this way:--lt appears from
the testimony that in 1866 the amount of
cost OF road, as returned by the company
to the legislature, was some $300,0OO in
excess of the amount contained in Expert
stevens report to the State Board. And, |
by the way, that is the year in which the |
State admits that the company actually
paid q larger amount of tax than they |
really should have paid, and in their
account the State has given the company
the proper credit as they claim, for the
oyerpayment On the other hand, in 1867
the report of Expert Stevens showed an
amount of construction expenditures
5000, 900 in excess of the companys report
of the same time to the Legislature.
THE LAWYERS STRIKE A SNAG.
And right here occurred the most excit- |
ing part so far of the legal sparring in
the argument. Judge Dillon raised the
point as to what items went 10 make up
this difference of $500, 600 one way in 1886
and S200,0 900 the other way in 1867. MIR.
Gummere replied that MIR. Stevens had
taken the aggregates under the various
construction heads in the books of the |
company and had added them up, and
the amount of construction he reported |
was the result. Now, whether these
items are or are not part of the cost of
the road is legal question to be solved
by your honors," he exclaimed.
But" said Judge Stevens, 1--WE want