The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1891-03-26
CORPORATION TAXES.
Important Interpretation in the
Case of the Jersey City Gas
Company.

TRENTON, March 20, 1s9l.-Judge Ed
ward T. Green has filed an opinion in the
United States Circuit Court In the case of
the Jersey City Gas Light Company VS.. the
United Gas Improvement Company which
contains an important construction of
the Act of April IS, 1884, imposing State
taxes upon certain corporations.
The plaintiff company is corporation
existing under an act of Incorporation of
the State approved in 1s49. The defend
ant was q rival corporation existing un-
der the laws OF Pennsylvania, but doing
business In the same city.
In December, 1884, the plaintiff and de-
fendant entered into a contract by which
the former leased TO the latter for term
OF twenty years works and property in
Jersey City at an annual money rental.
The lease contained a condition that all
| assessments and taxes levied upon the
real and personal property, franchises,
capital stock or gross receipts should be
paid by tae defendant. The entire con-
troversy is over this condition. The de-
fendant has paid all the taxes except
those levied by the Legislature under the
act of 1884. and these. the defendant
claims, do not fall within the terms of the
contract, because it is not tax on either
the real and personal property. fran
chises, capital STOCK or gross receipts of
the plaintiff. On the other hand, the
plaintiff contends that this is clearly a
tax upon its franchise.
After discussing the various sections of
the law relating 10 the case, Judge Green
finds this TO be fair and reasonable con :
struction OF the act:-That while IL ap-
| parentiv imposed upon certain CORPORA
tions, of which the plaintiff is one. tax
go nomine, its object is to exact license
| fee for the use Of franchise heretofore
granted, and this construction is entirely
In harmony with that adopted by the
| highest courts of the State of New Jersey.
Ii this tax Is a license fee, it follows that
| II cannot be tax upon franchise. In the
one case IL is exacted without regard to
the value OF the franchise and is paid
only for the use and enjoyment of the
franchise.
In the other, it must be assessed upon
franchise as thing Of value. whose value
can be accurately ascertained. For IL is
settled that in New Jersey a franchise Is
| property, and as such when 1t IS to be
taxed, its true value must be arrived at
as the basis of its settlement. For as 1t is
property, it falls directly under the pro-
tecting clause OF the constitution, that
property is to be assessed by general
laws aud uniform rules according to its
true value"
But nowhere In the act of 1884, taxing
| these corporations, is there specified or
designated, or suggested, any method or
scheme whereby the value of their fran
chise can be ascertained. Nor is their
value in any degree taken into account
in fixing the license fee. That IS done
ar bitrarily by the Legislature without the
slightest regard for the value OF fran
chise as a franchise, in other words, as
property. To hold, therefore, that this
act imposes tax upon franchises which
are property is to declare that the act con-
| travenes the constitution IN one Of its
most important provisions. 1t follows
from this conclusion that, as the defend
ant has not contracted TO pay license fees,
ment must be for 1t.