Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1910-01-25
tFro.n a staff Correspondent. !

TRENTON, Jan. 20.--With Frank Il.
Jess dissenting. the State Tax Board
today reversed the Essex County Board
of Taxation and the Newark Tax Board
in their assessment of bank stock al
u standard other than book value"
The opinion. prepared by Major Carl
Lentz, president, holds. in the appeal
of w. Campbell Clark from the assess
ment on his stock in the Essex County
National Band, of Newark, that its
value for purposes of taxation is S51.l3
per share.
This is test case, and means an
other loss for Newark If the decision
Is sustained by the coursf The value
Is reached as follows:
Total resources. SO, ,695, 269.29; total
liabilities, exclusive Of capital, surplus
and undivided profits, ss109, SO1.5f.
residue, $685., ,i6772.
Deduct from this real estate $262,0o1.
exempt securities, $i,Sl1,600; total,
$2O7S.6oo, leaving $5ll.s6I72. when.
divided by 10000, the number of shares,
leaves 51.19 per share of $l00 par valus.
Majority Decision.
! The decision of the majority OF rho
board was as follows;
The appeal from the Essex County
Board of Taxation in this case brings
up the question of valuation of tho
shares of stock of national banks. The
contention of the city is that shares
OF national banks should be assessed
for the purpose of taxation according
to the price that such shares would
! sell for in the open market; in Other
words, at their market value. The con-
tention of the bank is that the shares
should be assessed according to book
value that is what the books of the
bank show the value of its assets IN
be. In both cases, whether book value
or market value is taken, the value OF
the real estate and exempt securities
is to be deducted, and the value of the
shares is to be ascertained by the di-
vision of the number of shares into
the residue
The constitution OF New Jersey, ard-
Gle iv., section I, paragraph IL, says
that property shall be assessed under
general laws, by uniform rules. accord
ing to its true value Section of the
revised tax act of 1903 says that al
property. real and personal. within TIE
jurisdiction of this State, not expressly
exempted by this act or excluded from
its operation, shall be subject to annual
taxation at it's true value There can
therefore se no question that both the
constitution and the tax act of 1903 ex-
pressly command that true value shall
be the criterion of assessment.
True value may be market value
or it may be book value, or II may be
neither. In order words, it requires
an ascertainment by evidence and eN-
animation of what the true value Of
the property is
No General Rule.
No general rule can be laid down
for the assessment of bank shares other
than that which the Constitution and
the general tax law provide, that IS.
assessment at true value. Market
value fiuctuates for various reasons.
The sudden sale of a large number OF
shares of a bank will depress market
value The discovery of an embezzle-
ment of a banks assets, which may
have existed on May 20 but may not
have been discovered until later,
would show the market value of the
shares on that day to have been fie-
titious. The improper management OF
banks business would also tend to
drive the market value of the shares
below true value. On the other hand,
a strong, vigorous and progressive
management, and the support given to
the oank by the deposits of large cor
porations will advance the market
value beyond true value. In other
words, market value depends upon 50
many conditions foreign to true value
that it would not be a compliance with
the Constitution or the revised tax
act to take it as a criterion for assess
ment
In Flitcrafu VS.. Woodstown, subse-
quent to the decision in Lippincott vs.
Lippincott in the Court of Errors and
Appeals, Justice Garrison, in the order
mace in that case, virtually laid down
the principle that true value was 10
be ascertained in the assessment OF
bank shares. In Lippincott VS.. Lippin-
6ott, the Court of Errors and Appeals
speaking through MIR. Chief Justice
Gummere, held that from the true
value shall be deducted the value oi
the real estate and on-taxabie securi-
ties. From this language the city at
torney argues that the learned chiel
justice meant market value. We can
not agree With him, and can only in
terpret the language of the chief jus.
tice to mean what he expressly says
The evidence. in this case shows that
the real estate of the bank appears or
its books as of the value OF $100,0pe
The assessors of Newark have assessed
. | = 4 Il no.