93 N. J. L. Yardley v. Essex County Bd. of Taxation.

On certiorari, &c.

Before Justices TRENCHARD, BERGEN and KALISCH.

For the prosecutors, Albert C. Wall.

For the respondents, Borden D. Whiting.

The opinion of the court was delivered by

TRENCHARD, J. Alfred B. Jenkins died December 29th, 1916, a resident of West Orange, New Jersey. By his will he named as his executors and trustees Farnham Yardley, of West Orange, New Jersey, and Henry W. Montague, of Boston, Massachusetts, "and the survivor of them," and devised to them in trust for certain purposes certain bonds.

These bonds were kept by the decedent in his lifetime, and afterwards by his executors, in a safe deposit box in the State of New Jersey, but outside of the taxing district of West Orange, and were physically located in New Jersey, but outside of West Orange, on October 1st, 1918. The estate is still unsettled.

The assessors of West Orange assessed these bonds at their full value as of October 1st, 1918, for the taxes of 1919, and that assessment is brought here for review.

We are of the opinion that the assessment must be affirmed. The prosecutors ask that "one-half of the assessment and taxes" should be set aside. The substance of their contention is thus stated in their brief: "As the bonds were vested jointly in Yardley, of West Orange, and Montague, of Massachusetts, only one-half thereof, representing the portion of the estate vested in the resident executor and trustee, was taxable in West Orange."

We find no merit in this contention.

Of course, the fact that in previous years the assessment was made in accordance with the prosecutor's present contention is of no consequence in the determination of the present case which relates only to the legality of the taxes of 1919. We think this assessment lawful.

Yardley v. Essex County Bd. of Taxation.

93 N. J. L.

Section 202 of our Tax law (Pamph. L. 1918, p. 848) provides that "all property, real and personal, within the jurisdiction of this state, not expressly exempted by this act or excluded from its operation, shall be subject to taxation annually under this act at its true value," &c. From the language quoted it is clear that the property referred to is all property, whether real or personal, and if personal, whether tangible or intangible.

It is conceded that the bonds in question are not expressly exempted by the Tax act or excluded from its operation. It is also true that the bonds were within the jurisdiction of this state. The word "jurisdiction," as used in the act, means governmental jurisdiction, which is the equivalent of sovereignty. Central Railroad Co. v. Jersey City, 70 N. J. L. 81. That bonds which are physically located in a state (as were these) constitute property within its governmental authority is now settled law. The non-residence of the owner is not at all controlling. "State Tax on Foreign Held Bonds" Case, 15 Wall. 300; New Orleans v. Stempel, 175 U. S. 309; Wheeler v. Sohmer, 233 Id. 434; Hopper v. Edwards, 88 N. J. L. 471.

It is also to be observed that the Tax act provides, in section 301 (Pamph. L. 1918, p. 853), for the assessment of property of the nature of that in question. It reads: "The tax on all tangible personal property in this state, and on all taxable personal property of non-residents of this state shall be assessed in and for the taxing district where such property is found. ** * * Personal property in the possession or * executor

under the control of any person as trustee

*

*

*

*** shall be assessed in his name as such, separate from his individual assessment, or in the name of any one of several joint trustees * * executors * * if the one of them having actual control or possession cannot be ascertained by the assessor; but the personal property belonging to the estate of any decedent shall be assessed in the taxing district wherein the decedent resided at the time of his death, except such part of the tangible property thereof as

93 N. J. L.

Yardley v. Essex County Bd. of Taxation.

may be actually located in some other taxing district in this state and assessed therein."

It will be seen, therefore, that the above-quoted section recognizes that personal property is either tangible or intangible, and that it may be owned by residents or non-residents. It provides, in effect, that if the property is tangible it is assessed where found; if it is tangible or intangible, and is owned by non-residents, it is assessed where found; but the personal property (whether tangible or intangible) belonging to the estate of any decedent shall be assessed in the taxing district wherein the decedent resided at the time of his death, except such part of the tangible property thereof as may be actually located in some other taxing district in this state and assessed therein.

The prosecutors assume in their brief that the bonds in question are intangible personal property. They make no claim that they are tangible property. They make no claim and there is nothing to indicate that the bonds were assessed in the taxing district, where they were actually located.

It follows, therefore, that since the bonds in question were not expressly exempted by the Tax act, nor excluded from its operation, and since they were physically located in New Jersey and were a part of the unsettled estate of the decedent, they were taxable at their true value in the taxing district wherein the decedent died, even though one of the two executors and trustees of the decedent was a non-resident of New Jersey.

The assessment will be affirmed, with costs.

Director General, &c., v. State Bd. Taxes, &c. 93 N. J. L.

DIRECTOR GENERAL OF RAILROADS AND LONG DOCK COMPANY, PROSECUTORS, V. STATE BOARD OF TAXES AND ASSESSMENT ET AL., RESPONDENTS.

Argued February 28, 1919-Decided July 28, 1919.

The illegal excess of local tax rate that was adjudged in the case of Garrison v. Jersey City, 92 N. J. L. 624, held, to affect the state tax rates on main stem and second-class railroad property imposed during the year 1918 so as to require corresponding revision of those rates.

On certiorari.

Before Justices PARKER and MINTURN.

For the prosecutors, Collins & Corbin (Robert J. Bain on the brief).

For the respondents, Thomas F. McCran, attorneygeneral.

The opinion of the court was delivered by

PARKER, J. The attack is upon an adjudication of the state board of taxes and assessment, refusing to modify the amount of taxes assessed against the prosecutors and due, under the law, between November 1st, 1918, and February 1st, 1919, but payable in installments. Comp. Stat., pp. 5268, 5269, pl. 454, being section 10 of the Railroad Tax law of 1888. Pamph. L., p. 269. The modification was applied for on the ground that so far as second-class property, so called, assessable at local rates, was concerned, the local rates reported to the state board had been subsequently reduced after being held invalid by the decision of this court in Garrison v. Jersey City, 92 N. J. L. 624, and that the tax on such second-class property should be correspondingly reduced by the board. As to first-class or main-stem property, the claim was that such local reductions, if adopted, materially

93 N. J. L. Director General, &c., v. State Bd. Taxes, &c.

modified the average rate collectible under Pamph. L. 1906, p. 121; Comp. Stat., p. 5279, and that the prosecutors and other railroads affected were entitled to a reduction resulting from a new calculation of the average rate with the reduced local rates as factors. The state board refused both applications and reaffirmed its original impositions, and this writ was thereupon allowed.

With respect to second-class property the case seems quite clear. By section 9 of the act of 1888 (Comp. Stat., p. 5268) "each company shall pay ** * ** a tax at the local rate as fixed and assessed for county and municipal purposes upon other property in each taxing district," on its second-class property as valued and assessed by the board. Necessarily, this means the local rate as lawfully fixed and assessed against other property. It would shock the sense of justice to say that when an illegal rate uniformly affecting individual and second-class railroad property, had been set aside in the courts and a revision made resulting in a lower rate, indi-, viduals should have the advantage of that rate and the railroad be denied it, mainly because, as apparently claimed in this case, the official reports from local authorities to the state board had gone forward, and the dates specified in the statute for their transmission to that board had gone by. As well might it be said that if the local officials should fail to send any report in due time, there could be no tax assessed against the railroads. The dates are mainly a time table and not statutes of limitation. And if, for example, a wholly legal tax were imposed locally and sent forward to the board, and later set aside, the railroad would not be liable for it on second-class property. The judgment of this court, in the Tumulty case and on the Garrison case, affected the entire Jersey City assessment, and removed the very foundation of the assessment for second-class property, leaving it to depend on the empty certificate of the local assessor, of rate which he later certified had been overruled by the court. The assessment brought up, so far as it relates to second-class property, must be set aside.