The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1889-11-26
7HE ARGUMENT begun.
The State Opens Her Case
Against the D. L. &
w. r. R.
THE SUIT FOR NEAR A MILLION.
The Arbitrators Listen to Mr.. Gum
mere's Preliminary Presenta-
ti0n Of Facts,

A great battle of legal giants com
menced this morning in Chancey Cham
bers. f. w. Stevens, of Newark, and
Judge Dillon, of New York, who were
chosen to arbitrate the controversy be-
tween the State and the Delaware, Lacka-
wanna and Western Railroad Company
lessees of the Morris and Essex Railroad,
over the taxes, out of which the State
claims the company cheated it, sat this
morning to listen to the arguments.
Ex-Governor Bedle and his partners
William Muirheid and Flavel MCGEE and
F. F. Chambers, auditor of the Delaware,
Lackawanna and Western Railroad Com
pany, appeared for the railroad company;
and Attorney General Stockton and Will
liam S. Gummere represented the State.
A PRELIMINARY SKIRMIsH.
There was preliminary skirmish con-
cerning the procedure of the State IL the
argument. Governor Bedle argued that
as the State was represented by three
counsel and as the nature of the case had
been such as to require that he should
personally argue the case on behalf of the
railroad. he would respectfully request
that the State should unfold in advance
its mode of procedure.
After considerable legal squabbling the
arbitrators finally concluded to allow Mr..
Gummere to proceed with his argument in
his own way, and that he may fit himself
as to adjournment, ETC., to his fathers
health.
Barker Gummere is to follow his son
with an argument on behalf of the State,
then Governor Bedle is TO submit his
argument, after which Attorney General
Stockton is to close by replying TO the ex-
Governor.
This skirmish over, Governor Bedle
made an effort to have the briefs on each
side submitted to the arbitrators, but
that there be no exchange of briefs be-
tween Counsel. He did not care particu-
larly to have the briefs of the State and
would prefer to submit each day only SO
much of his brief as would cover that
particular days argument
The Attorney General and Mr.. Gum
mere objected and tie arbitrators decided
that each side must furnish the other
with the briefs in full.
OPENING THE ARGUMENT.
In opening the case Mr. Gummere eX-
planned the condition of affairs relating
to the annual taxes of the Morris and
Essex Railroad Company, which existed
prior to the arbitration and the reasons
which led to its being had. He next
sketched the history of the road from the
granting of it's charter in 1885.
BY the fifteenth section of their charter
the president and secretary of the COM
pany were required upon the completion
of the road to file under oath a statement
Of the amount Of the cost of said road in
the office of the Secretary of State; and
annually thereafter statement
to the Legislature of the earnings
of the road; and as SooD as the
net proceeds of the road shall amount to
seven per centum upon the cost. the COM
pany to pay to the State Treasurer State
tax of one per centum upon the cost of the
road.
A LONG EXEMPTION.
BY virtue of this section, Mr.. Gummere
said, the company, from the time of it's
creation up to 1863 constantly claimed
that it was absolutely exempt from taxa
ton, because it had not earned seven per
cent. of its cost.
In 1862 tax law was enacted which
subjected to taxation the real estate of all
private corporations, and under this law
the Supreme Court of this State held that
the Morris and Essex Railroad was
liable to taxation. In 1865 the company
obtained permission from the legislature
to construct branch road from Dover to
Hoboken through Boonton and Paterson.
By a clause of this act, Mr.. Gummere
claimed the company became bound to
pay a tax of one-half of one per cent.
without regard to whether the annual
proceeds of the road amounted to seven
per cent. of it's cost or not on January |,
1867, and each year thereafter. From
1867, down to the investigation which led
to this arbitration, the company did pay
such one-half of one per cent. upon the
cost of their road. but excluded the cost
of equipment and many other items
chargeable to the construction account.
NON-TAxABLE ACCOUNT SMELLS.
These excepted items increased so rap
idly that in the report for 1884 the COM
pany returned as the cost of it's road as
S24, $40, 597.59 and other construction ex-
penses which it claimed were not enl-
braced in the cost as SIS, 1877 ,444.74
IL was this enormous amount of con-
struction expenditure upon which the
company claimed exemption that at
tracted the attention of the State and led
TO the present controversy