Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1910-01-17
pure Question of Law.

Insurance of the State of New Jersey
dated February 8, 1909.
pure auestion of Law.
1.-THE only question involved in this
(, case is onezof law, and hat is, whether
the fund assessed by the city of New
ark was an asset or a liability on De-
cember 81, 1908.
"Up to February 10. 1908, there was
no separation from the general assets
of the company of the fund so above
created and if thai condition had con-
tinued until December 81, 1908, and
without the enactment of the law of
1907, there would have existed a trust
fund of an unascertained amoun in
the hands of the company, for which
it would have had TO render account
in the proper courts to the interested
p~olicyholders. The passage of the act
of 1907 tP. L.. D. 1922 compelled every
domestic life insurance company doing
business in this State, conducted on
the mutual plan or in which the policy
holders are by the terms of their poll
cies entitled to share in the profits OF
surplus, to annually ascertain the
amount of such surplus to which all
of such policies as a separate class are
entitled, and Shall annually %apportion
to such policies as a class the amount
of the surplus so ascertained and carry
the amount of such apportioned sur
plus, plus the actual interest earnings
and accretions of such fund. as a dis
tinct and separate liability to such
class of policies on and for which the
same was accumulated, and no COM
pany or any of it's officers shall be per-
mitted to use any part of such appor-
toned surplus fund for any purpose
whatsoever other han for the express
purpose for which the same was ac-
cumulated.'
PROFITS and Surplus Set Aside
I'm compliance with This statute of
1907, the board of directors of the Pru-
Dental Life Insurance Company of
America, by resolutions passed Feb
ruary 10, 1908, and February 8, 1909, set
apart from the profits and surplus of
the company the net sum of $14, $685.
279.37 for the benefit of participating
policy-holders above referred to. This
statute of 1907 expressly enacts that
when the fund is so set apart and
( created it shall be a distinct and sep
arate liability.
"All life insurance companies are
taxed under the revised tax act of 1903,
section Is, and chapter 213 of the Laws
OF 1906, which provide that life insur-
ance companies shall be assessed and
taxed for the full amount of their prop
erty deducting the amount of their
debts and liabilities, as they existed
on the thirty-first day of December
next preceding the annual statement
made to the assessor in the township,
city or taxing district where the prin-
cipal office of the association or cor
poration is located.
1.-THE learned attorney for the city,
in a very able manner argued that
the liability referred to in the act of
1907 was not such a liability as the re-
vised tax act of 1908 contemplated.
''There are no words of limitation at
tached to the word liability in h
tax act of 1908. On the contrary, it eX-
prcssly states nat the debts and liabil-
tiles of the company shall be deducted.
Legality Questioned.
THE city attorney also raised the
question, though he did not press It
before his board. that the act of 1907
wa unconstitutional, and that. there
10TG.H IL HSl1Oulu 1Ol Dt ldhtI iiio VII
sideration.
"This board has always refused to
Question the constitutionality of an
act Of the Legislature, feeling that the
unconstitutionality of a law should
properly be determined by The Supreme
Court. A different policy would give
ali county boards of taxation and other
statutory boards q similar opportu-
L.. - -. 1890, 4ta onctifIftinoa1if "
OF laws. and YOU create general con-
fusion and Injurious litigation.
rThe city attorney raised a further
roint that in case the board held that
the first item of ST. 5,O44.S7 was a
liability. the second item of Sass. 3S0.1O,
not having been set apart and appor-
toned as q portion of the above fund
until February 3, 1909, this action OF the
board of directors was too late to
create a liability ON the t~hirty-flrst of
December, 1905.
I'VE do not agree with him in this
contention. The action of the board
of directors was simply an ascertain
n.ent of the amount to which the fund
was entitled on December 81, 1908. 1t
was n mathematical calculation, which,
considering the immense amount Of
business lone during the year ending
December 81, 1908, and including that
day, it would be legally impossible to
ASCERTAIN by 10 o'clock midnight on De-
cember 81. A minute afterwards would
be January /, 1909, and the same OBJ
lection made to February s could also
have been made to January !, 1909.
lis Not Taxable.
Applying, therefore, the general tax
act of 1908 and the acts of 1906 and
1907 to the facts as prove by the evil
dence before us in this case, we are OF
the opinion that the sum of $14 1928. 279.37
was a liability on December 81, 1908,
and therefore, under the tax act Of
1903, should have been deducted as a
liability from the property of the COM
pany as 1t existed on that date.
Item No. 2. amounting to S271, 1871,
was set apart by resolution of the board
of directors as a voluntary act of their
part. TO pay the annual premiums due
on industrial policies, where the in
sured had reached the age of 70 and
kept the premiums on his policy paid
up. This fund remains in the hands of
the Prudential Insurance Company,
and is paid by the company to itself for
premiums on that class of policies. We
hold that this sum is not a liability,
bat is an asset, and was properly as
sessed n taxed by the city of New