The Sunday morning news. [volume] (Jersey City [N.J.]) 1886-1891, 1889-12-29
NO VH7TLlNG IT OUT.
Morris and Essex Must Pay
At Least Half a Million.
JOHN P. STOCKTON's FIGURES.
Allowing all the Company Claims,
The State is Still Largely Its
Creditor for Taxes 1t
Has Shirked.
JOHN P. STOCKToN's FIGURES.

The argument in the arbitration be-
tween the State and the Morris and Essex
Railroad Company for million and a
quarter of back taxes is still in prog
ress before Arbitrators Dillon and
Stevens. Ex-Governor Bedle is making a
mastery argument for the Railroad Com
pany. The main points for which he is
contending have already been presented
TO the readers of THE JERSEY CITY NEWS,
and the purpose of this article is TO show
i how the State is meeting them,
The States case is in the hands of At
torney General Stockton, wEo quickness
and thoroughness in the grasp of great
questions is demonstrated by the fact
that though he WAS not once present at
the taking of the testimony and did not
even begin to prepare his brief till after
i William 5. Gummere had opened the
argument on behalf of the State, his
brief was a document of striking force
and originality.
A DEBT-NoT TAX.
| His first argument was that the original
section - of the company's charter,
| which was repealed by the act of 1862,
and set up again by the act of 1865, was
a contract and not an imposition upon or
exaction from the company by force of
the sovereign power OF the State; that
| the time when the first payment
under this contract should have been
| made was shown by the testimony to
| nave been probably as far back as Jan
uary, 1S4S, certainly by January, 1851.
Clearly" he said, ''such sum became
debt, and if not paid at the time fixed
! for payment legal interest began to run
thereon Immediately upon the breach OF
the contract bv non-payment.
1T will scarcely be commended, on the
part of the company, that the claim of the
State is barred by the statute, but it may
1 be urged by Its counsel that the State has
| been guilty of such lacheS for more than
Etwenty Years as to raise in law a pre-
sumption OF payment against her; but
such contention is manifestlY insup-
| portable, because it is certain that the
| courts raise such presumption by an
| analogy to the statute of limitations. The
| claim of the State for simple interest only
is most lenient to the company. and is
| clearly both legal and equitable"
/ On the question OF the excess of land,
4 or land which the company claims is not
used for railroad purposes, the Attorney
| General argued that if this was SO they
| held land in breach of their contract,
into which the State had not enquired
| and no one else could; on this point he
| submitted that no man can take adj
vantage of his own wrong
The fact that this land is locally taxed,
| uC I'll ucu, NOu4Q uOU CO0SGFuG Gtle COIL
| tract Ii that were the necessary result
of using it for other purposes, it would
| not alter the agreement to pay the State
| on the cost of the road and appendages.
| In support If his argument on this
| point he cited numerous authorities, and
summed this branch of the argument up
! by declaring that if there be any doubt
| raised by an ingenious forcing of the con-
| struction of the words, the very existence
| of such doubt solves the question in favor
| of the claim of the State.
f1 e.. NET EARNINGS.
Some time was devoted to the subject
| of net earnings and numerous authori-
| ties were cited. 1t will be remembered
| that the claim of the State back of 1862
| is based on that section of the company's
| charter which provides that the company
shall pay one-half of one per cent. upon
| the cost of It's road as soon as the net pro-
| ceeds shall amount to seven per cent. on
| such cost, and that another act provides
| for the making of reports to the Legis-
| lature, in which shall be included the
proceeds of the road.
Now the cl,,im of the state is that the
| books OF the company show that z per
| cent on cost was earned as fan back as
| 1915, although the reports of the company
| Just referred to do not on their face show
| it, These reports as a matter of fact pur-
| port to show the net proceeds of the road.
But the Attorney-General argued very
Subway THAI tIcJ were liOb ItQuiiCu 10
report their net proceeds at all, but
merely the gross proceeds.
One of the authorities on the question
of net earnings, Justice Miller, of the
| United States Supreme Court, held that
| the books and records of company are
| evidence of the profits they have made.
| The Attorney General urged that it was
| impossible within the limits of any argu
ment to examine each item in the testi-
mony, but cited one example as follows
AN INSTANCE CITED.
In January, 1851, this company made
sworn statement to the Legislature show
ing that the total cost of the road includ-
| ing its equipment and all appendages, up
to the end of the year 1850, amounted to
$776, 800 GO. 1t further shows that the
gross receipts from the operation of the
| road during the year 1850 amounted to
| the sum of 1921 SAG. 81, and that the oper-
ating expenses of the road were S62, 1854. TO-
! If that amount alone had been deducted
| from the gross receipts. the residue
would be the net profits for the year, and
| that residue is S5S, 5sl. As, which is more
| than z per cent, upon the total cost of
the road, including all it's equipment and
| appendages. Instead, however, of return
ing that amount as the net proceeds of
| the road for the year 1850. the company
| in their statement returned to the Legis-
lature, deducted not only their current
| expenses from their gross proceeds,
but also deducted certain capital ex-
| penses, to wit, machinery bought for their
| shops amounting to S2,995.11 a loco
motive engine costing S. so, and GER
| tain new passenger and freight cars cost
| ing 81 324 81, thereby apparently reducing
| the net proceeds for the year to the sum
| of $43, ] As. II, which latter amount IS less
| than per cent. upon the cost of the road
| and equipment as returned by the COM
pany. That they had no right to make
such a deduction is shown by the decision
of Judge Bradley in the Union Pacific
Railroad case"
On the question of discount and in
terest the Attorney General insisted that
it was quite certain that the interest paid
and the discount lost by this company
lin raising money TO construct its road,
was just one of those expenses that are
| always incurred in the construction of
every railroad, and in the mind of the
I.Iegislature when it declared, in section
Is. that "the cost of road" should include
all expenses
On this question, also, authorities were
cited, one of them being the opinion of
Mr.. Justice Bedle the railroad COM
pany's counsel in this case) in the Su-
! preme Court in the case of the State VS..
City of Elizabeth, who, the attorney
general declared, determined that dis
count on the sale of bonds should be in
! cluded in an assessment of the cost and
expense of the improvement.
Governor Bedle interrupted here to say
that h xvo1lid n nt cro hack on that dneia-