Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1914-01-08
PUBLIC SERVICE
FILES ANSWER TO
GAS RATE RULING
Holds There Can't Be Different
Values for Taxation and
Rate-Making.


can't be two true values" one for
purposes of taxation and another to
serve as a basis for rate-making. is
the gist of a supplementary brief
which the Court of Errors today per-
mitted Frank Bergen, general coun-
sci for the Public Service Gas Com
pany, to file in support of that COR
poration's appeal from the Supreme
Courts decision upholding the ninety
cent rate for gas fixed by the Board
of Public Utility Commissioners for
what is known as the Passaic divi-
sion.
An answering brief was accepted
from George L. Record.
Mr.. Bergen's brief opened with the
statement that the first step in a pro-
ceeding to prescribe rates for pub
lie service, after finding that an exist
ing rate is unjust and unreasonable
or in a proceeding to tax the property
of a corporation, is Ito ascertain the
true value of It's property"
The constitution declares that
property shall be assessed for taxes
under general laws. and by uniform
rules, according to its true value"
Would Hold to Practise.
In ascertaining the true value" of
the property of railroad companies,
the brief goes on to say, 1t has been
| the practise in New Jersey for nearly
thirty years to estimate the value of
their tangible property, then subtract
the value of that property from the
market price of the securities of the
companies, and declare the remainder
to be the value of the franchises,
meaning all the intangible properties
of the companies. The value of the
tangible property and the value of the
franchises. so ascertained. constitute
the true value" of all the property
of a railroad company.
The same method of appraisement,
the brief urges, may be employed,
and is, in fact, the only practical
method of ascertaining the true
value" of companies employed in
public service other than steam rail-
road companies. And If, therefore, II
should be held that the true value OF
a gas company cannot be ascer-
tanned by it, or that the value OF
| its franchises is not a part of the
true value of its property, 1t would
be impossible to continue the method
/, of taxing the properties Of steam
railroad companies that has prevailed
! in this State since 1884.
To do so would be a discrimination
that is forbidden by the Fourteenth
| Amendment Certainly, the brief de-
clares, the State cannot maintain the
position that after ascertaining the
true value of property employed In
public service it may tax the prop.
erty according to that value, and
prescribe rates for the use of the
same property based on a different
Valuation. The true paItle of the
property is the Indispensable basis ol
/ hofb r,roceedfnTg
Cites Railroad Gases.
The brief cites the cases of the
Central Railroad Company VS.. the
state Board of Assessors and OF the
West Shore Railroad Company
| against the same body, in both OF
which the before stated rule for valu-
ing franchises was affirmed.
In the West Shore case the tangible
property of the railroad was ap-
praised at $20,060. 141 and the value
of the companys stock and other
securities at $6s,000,000, and the court
accordingly found the "adventitious
value or the value of the franchises"
to be s47 1889, ,S59. To get at the value
of the franchise in New Jersey the
court took such proportion of S47, 9S9,
s59 as the length of the road in the
State bore to the entire length of the
line, Dy WHICH ilediio thc Ndluc VI the
franchise in New Jersey was found
to be 50, 1870, ,534
In further support of the appellant
company's contention, the brief
quotes from the Wisconsin Supreme
| Courts opinion in the Appleton
Waterworks Company's case as fol-
lows:
'"The value of the plant and busi-
ness is an indivisible gross amount;
II is not obtained by adding up a
number of separate items, bpt by
taking a comprehensive view of each
and all of the elements of property,
tangible and intangible, including
property rights, and considering
them all. not as separate things, but
as inseparable parts of one harmoni-
GUS entity"
Intangible Property an Asset.
The intangible propert yof a rail-
road or gas company. by whatever
name it may be called. or of what
ever elements it may consist, sis an
asset of great value and prin-
cipal basis for credit" In the present
case that value was rejected, al
though 1t constitutes a part of the
true value of the appellants property
and may be taxed. as has been
shown; and, of course, being part of
the true value Of the property, it may
be capitalized. sold and leased. 1t is
unnecessary to say that no part of
the true value Of property can be
taken away by the power to prescribe
rates.
In conclusion the brief tells that the
net income from the gas properties in
the Passaic division for the year 1911,
the rate being 81 per 1000 cubic feet,
was S469, 407.13. At ninety cents the
income would have been 1856, 1880. As
1t took 1888. 1898 to pay the guaran-
teed dividends and interest on the Sc
curities of the Paterson & Passaic
Gas and Electric Company, there
would have been left s3.4s027 avail
able for dividends on the sum of ST.
5O3, ,661 81. expended by the Public
sservice on the Passaic division prop
erties since II took them over under
lease more than ten years ago. This
would be return on the additional
Investment of a little more than 2
per cent
E.cL Ax,sof1~ Eora~ noo4l.