The Newark star and Newark advertiser. [volume] (Newark, N.J.) 1909-1909, 1909-11-09
TAX BOARD HEARS
~PRUDENT|AL'S CITY
ASSESSMENT FIGHT
Levy on Co., 900 Spec
cial Reserve Fund Not Legal,
Says Counsel.


Dental Insurance Company from the
s14, 600, 900 special reserve fund of the
Prudential Insurance Company on de-
ferred dividend policies was held this
morning before the County Board Of
Taxation. City Attorney Herbert Boggs
appeared for the city. Edward d. Duff
pany.
The first evidence introduced were
copies of the resolutions passed at the
meetings of the directors of the Pru-
Dental in February, 1908, and February.
1909. In which the sum, which, with
interest subsequently added and claims
paid therefrom, made the $14,00 0 900 in
question, was apportioned to the policy
holders by the directors.
John K. Gore, actuary of the COM
pany, testified that on the account
books of the company the $14, 000, 900 is
| considered as a separate liability. Mr..
| Gore testified that the money in ques-
ton was accumulated under industrial
policies, and is being held for pay
ment under such.
Some time was then taken up in the
| explanation by Mr.. Gore of the differ
| ence between a non-participating and a
participating policy. Under the State
| insurance law, Mr.. Gore said, the conn
pany is compelled to hold for a certain
| class of policy-holders whatever sur
plus fund is accumulated under that
certain form of policy. Thus the fund
in question. now $14,0 00, 900. will exist
until the policies under which 1t is ac-
cumulated run out.
The definition of the term reserve
fund.- as used in insurance business
was then explained by Mr.. Gore under
examination. He said that the fun
is that surplus of h premium charged
at the beginning of the policy over the
necessary death rate, which, after
wards accommodating, insures a level
rate no matter how long a man may
i've.
City Attorney Boggs then examined
Mr.. Gore on two policies which a
been offered in evidence. 1t was
brought out that the policy was not
~tontine; but that the insurance COM
pany feels that the law of 1907 does not
change the right of policy-holders as
to participation or non-participation,
according to the contract in their pol
icies. Asked if before 1907, the yea of
the passing of the present insurance
law, the company had apportioned
every year a sum such as the n now
in question, Mr.. Gore answered in the
negative. saying that that had been
done every five years.
President Lathrop Anderson, of the
board, interrupted the proceedings at
this point to say nat the $14, 900, 600
was there as money set aside to meet
certain liabilities due to the policy
holders. and that taxes should be paid
upon them
Mr.. Duffield, viewing the tax levy
from the point of equity, stated in his
summary that the Prudential, although
possessing as much in assets az other
companies. pays more to the United
States than any other insurance COM
pany. Furthermore, that a man in San
Francisco should pay the city of New
ark taxes on his savings here, while
he is paving taxes to the State, which
gives a charter to the insurance COM
pany, is not right.
Continuing his argument, Mr.. Duffield
further argued that the matter rested
purely on the Interpretation of the in
surance statutes. He said that the
$14, 0OO,0 900 is a liability not to be taxed
under the statutes. and that every au-
thority on the subject so holds. He
further said that the sum until this
year was so construed by Newark.
Speaking for the city, Attorney Boggs
referred to the act of 1908. as it differed
from the act of 1906, in regard to ex-
emptions. These, he said, consist of
liabilities and debts. On liabilities on
policies, however, such as the one in
question, continued Mr.. Boggs, the law
| declares hat the value shall consist of
the estimate of the Commissioner of
Banking and Insurance, and that this
value alone shall be deducted.
As TO such liabilities as might arise
from clauses in special participation"
policies, as the one in question, it was
said that the law in 10S let that
alone, because the value could not be
ascertafned, because such value de-
pended on the future action Of the
board of directors. In 107 the law de-
clared that every year a certain sum
must be set aside, which at the end of
the policies will equal the total earn
ings of the same. Mr.. Boggs then con-
tinued his argument, with the aim of
proving that the Legislature never ex-
empted such liability, inasumch as they
must have known at the time of the
passing of such laws of the existence
of such policies, and had made no pro-
vision for such, then the policies are
still liable to taxation.
Rising in rebuttal, Mr.. Duffield
claimed that the reserve fund was not
exempted as special liability; but
that it is more in the nature of a
limitation than of a special exemption.
Furthermore. he claimed that because
the $14. 00o, 900 does not have to be paid
out at a specified date, it is not, there
fore, a liability upon which taxes are
to be levied. Finally, claimed Mr..
Duffield, the sum in question is not
under the control of the company, and
is by all law thus made a liability.
NJ --- d.