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It will be seen that the Board does not convene in their appellate capacity until late in December, and the experience of last year proves that these appeals cannot be heard, and the various complaints examined and adjusted, until long after the assembling of the Legislature. And it is necessary to have whatever corrections are needful and proper, made before the extensive schedules and tables can be made up with accuracy. This plan was adopted last year, and all the figures and statistics found in the full report, are the corrected figures after the revision. The same course will be pursued in the report of
It has been already intimated that at the time the report of last year was written, the subject of revision was then occupying the attention of the Board. Complaints were filed in writing by seventysix of the railway corporations, covering almost every conceivable ground of objection. Arguments were made by learned counsel on the law points involved, and a mass of testimony taken in regard to the averments of over-valuation. The Board patiently listened to the arguments, and thoroughly and carefully examined the testimony in each case, and in every instance, when convinced of the justice of the complaint, cheerfully made the needed correction. The result was that the aggregate reduction in the entire valuation of nearly two hundred million dollars of property, was $5,087,969.91; and the reduction in the tax amounted to $92,481.28, as will be seen by the following table:
State Tax. Taxing Districts. First assessment.... $195,525,963 87 $977,628 76 $388,523 50 Final assessment... 190,437,993 96 952,188 99
The Board think it a matter of congratulation that in the first year of the application of a totally new law, and in the valuation of so vast an amount of property, in such endless variety—real and personal, tangible and intangible—they found, after an exhaustive examination of their work, so little to correct.
In the report which we had the honor to submit to the Legislature at its last session, we endeavored to explain the views adopted by the Board in the construction of the law in all cases where there seemed to be any doubt, and to give the principles and methods upon which our valuations were based and our conclusions reached. We endeavored also to show, from statisties and comparative statements, that the railroads of the State, by our assessments under this law, were paying no more than their just proportion of the burden of taxation, and expressed the hope and belief that these corporations, upon a candid examination of the subject, would acquiesce in the tax assessed.
The hope and expectation then entertained and expressed by the Board, that these corporations would recognize the fact that their taxation under this law was approximately just, have not been realized. The new law under which these assessments were made, it is true, increased their taxation some thirty per cent in the aggregate, and in individual cases even more.
Increased taxation is never welcomed either by individuals or corporations, and, perhaps, it ought not to be surprising that the railroad managers were restive under their increased burdens. Apparently they failed to draw the inference that perhaps the present tax only seems too high because of the undoubted fact that hitherto it had been altogether too low.
Some of the companies, notably the large number comprised in what is known as the “ Pennsylvania System,” and also the roads embraced in the “Erie System,” while expressing their conviction that the tax was excessive, and filing written protests to this effect, nevertheless paid the tax, much to their honor and credit.
But of the ninety companies included in the list of those assessed, thirty-four resist the assessment and have appealed to the judicial tribunals for redress by writs of certiorari as provided for in the sixteenth section of the act.
The following is a list of the contesting companies :
Central Railroad Company of New Jersey.
Manufacturers' Railroad Company.
These cases, of such paramount importance to the State, are now in charge of the Attorney-General, whose ability and fidelity are the sure guarantees that the interests of the State will be protected and its honor and dignity maintained. The Board would not trespass upon the province of the law officer of the State, but it seems to them that this report would be incomplete without a brief statement of the present status of these cases. By far the most important and interesting information on this point will be furnished by the Attorney-General, but perhaps this report may be read by many who may not have access to the fuller report he will doubtless make.
The reasons given by the contesting companies for asking the court to set aside the assessments, in whole or in part, are many, and are seemingly multiplied by being stated in a variety of forms. But they are reducible, when stripped of legal verbiage, to the following points : First. That the act of April 10th, 1884, under which these assess
ments were made, is in violation of Paragraph 12, Section 7, Article IV. of the Constitution of the State of New Jersey, which provides that “ Property shall be assessed for taxes under
general laws and by uniform rules, according to its true value.” Second. That the act is unconstitutional because it is in violation of
the last clause of Section 1 of the Fourteenth Amendment of the Constitution of the United States, which reads: "Nor shall any State deprive any person of life, liberty or property, without due process of law, nor deny to any person within its jurisdiction the
equal protection of the laws.” Third. That several of the larger companies are exempt from taxa
tion under the act of April 10th, 1884, by virtue of alleged
previous contracts with the State. Fourth. That the Board erred in their method of valuing franchise
that the tax assessed thereon is excessive and unequal, and, there
fore, illegal and void. Fifth. That the valuation of the corporal or tangible property, both
real and personal, is excessive.
At the November Term of the Supreme Court the vital, constitutional and legal questions involved in this controversy, were argued with great ability by the distinguished counsel of the several protesting companies on the one side, and met, on the part of the State, by the masterly replies of the Attorney-General and his associates, Barker Gummere, William T. Hoffman, William H. Corbin, Robert F. Stockton, Jr., and William S. Gummere, esquires, which, in their fullness, clearness and vigor, leave nothing to be desired. It is, perhaps, safe to say that no more important case was ever presented to our State courts for adjudication, and that the arguments on both sides will rank with the most conspicuous efforts of any of the great lawyers that have adorned the bar of this State.
The judgment of the court has not, up to this time, been rendered. If its decision shall sustain the constitutionality of the law, and the other legal points made by the State's counsel, nothing will then remain but the discussion in detail of the testimony taken in regard to the complaints of excessive or unequal valuation by some of the contesting companies.
It may be well to state at this point that the railroad corporations consider the provision for the taxation of franchise as the unpardonable error of the law of 1884, and the severest criticisms on the work of the Board relate to the methods and rules adopted by them for the ascertainment of the value of franchise. There seems to be a degree of sensitiveness on the part of the corporations in regard to the “ franchise tax” which it is difficult for the Board to understand. It is bravely contended by some of them that there is no taxable value whatever in franchise; by others that if there be any taxable value it must be small where a general railroad law exists, the privileges of which are free and open to all; and the rules and methods adopted by the Board for estimating the true value thereof have been denounced by the corporations and their counsel by the use of a large part of the condemnatory adjectives of the language.
As to the first objection, the Board has simply to say that the Legislature, in the act of April 10th, 1884, specifically singles out franchise as an element of value, and requires that value to be separately ascertained by the Board. It is a command we cannot escape even if we would. And is it not a clear inference that the Legislature considered this an important element of value in railway corporations by thus singling it out and directing its separate valuation ?
On the second point, in their report of last year the Board dealt at some length with this vexing question of franchise taxation, and endeavored to show, by various judicial decisions and quotations from eminent authorities, that the taxable quality of franchise was a definitely-settled thing, and quoting Mr. Justice Miller, who says (State Railroad Cases, 2 Otto 603): “That the franchise, capital stock, business and profits of all corporations are liable to taxation in the place where they do business, and by the State which creates them, admits of no dispute at this day.” In regard to the rules and methods adopted by the Board for the ascertainment of the value of this intangible property, they were adopted after a long and earnest inquiry into the subject, and; however faulty and objectionable they may seem to the corporations, they were the result of the best judgment of the Board. These rules were given upon the requirement of the Supreme Court, and are as follows:
“And the said Board do further certify and return that for the purpose of ascertaining the value of the franchise of the several corporations whose franchises were taxable under the provisions of the act above mentioned, they adopted the following rules and principles as