State v. Parker

The opinion of the court was delivered by Depue, J.

The assessment in question was made against the prosecutors, upon the capital stock and accumulated surplus of the company, at the rate of one and a half per cent., being the rate at which the real and personal estate owned by individuals in the same ward was taxed.

It was conceded on the argument, that the prosecutors, at a sale of the real estate, franchises, and works of the Trenton Delaware Falls Company, made in pursuance of an act passed on the fifteenth day of February, 1844, to relieve the creditors of that company, became the purchasers, and that by such purchase they acquired not only the property of the Trenton Delaware Falls Company, but also the franchises of that company, including any exemption from, or restriction upon, the power of taxation, that was granted in the original charter.

By the eighteenth section of the act incorporating the Trenton Delaware Falls Company, passed on the sixteenth -of February, 1831, (Adn of 1831, p. 131,) it is enacted, “ that as soon as the said dam and other works are finished so as to be used, the managers of the said company shall cause to be filed, under oath or affirmation of at least two officers of said company, a statement of the amount of the cost of said water power, and other works, with its appendages, including all expenses, in the office of the secretary of state; and it shall be lawful for the council and general assembly of this state, at any time hereafter, to levy a tax on the company hereby incorporated, not exceeding the half of one per cent, upon its capital stock subscribed and paid in.”

The prosecutors insist that by this section they have a ■contract with the slate restricting the power of taxation *434 within the limit of one half of one per cent, upon their capital stock subscribed for and paid in, and that the tax imposed in excess of that rate is unlawful.

It was urged that the prosecutors, by force of this section,, came within the class of corporations excepted from tax by the fifteenth section of the tax law of 1866, (Acts of 1866, p. 1084,) as being exempted from taxation by virtue of any contract in their charters or other contracts with the state. If this position be correct the entire assessment is illegal. The authority to assess private corporations for their capital stock and accumulated surplus, is conferred by the fifteenth, section, and all such corporations as 'have such contract with the state, are entirely excluded from the subjects of taxation, based upon capital stock or accumulated surplus. The language of the section is: “ That all private corporations of this state, except banking institutions, and except those which, by virtue of any contract in their charters, or other-contracts with this state, are expressly exempted from taxation, and except mutual life insurance companies specially-taxed, shall be, and are hereby required to be respectively assessed and taxed at the full amount of their capital stock-paid in and accumulated surplus.”

To bring a corporation, not being a banking or insurance company, within the exception of this section, it must be one having a contract of entire exemption from all such taxation for state, county, township, or municipal purposes, as is imposed by the general system of taxation in force in the state. Unless the prosecutors have a contract of entire exemption from all such taxation, they come within the class of corporations made taxable by this section, and being taxable, are to be taxed for their capital stock and accumulated surplus at the same rates as the property of private individuals is taxed.

The eighteenth section of the charter of the prosecutors contains no express provision, exempting them from the usual and ordinary taxation for state, county, and municipal purposes. But it was argued that the restriction in the last *435 clause of the section, while not in express terms made applicable to such taxation, by necessary implication extends thereto; and while it may not amount to an entire exemption from taxation for general purposes, yet it must be allowed the force of a limitation on the power of the legislature, to subject the company to taxation under the general tax laws, which may, from time to time, be passed by the legislature, beyond the sum of one half of one per cent, on tlieir capital stock.

The power of taxation is an essential attribute of sovereignty, reaching to all persons, and property belonging to the body politic. It resides in the government as part of itself, and need not be reserved where property of any description, or the right to use it in any manner, is granted to individuals or corporate bodies, and it will never be presumed to be relinquished unless the intention to do so is declared in clear and unambiguous terms. Providence Bank v. Billings, 4 Pet. 514 ; Philadelphia and Wilmington R. R. Co. v. Maryland, 10 How. 393 ; State v. Newark, 2 Dutcher 519.

This power is necessarily unlimited in its extent, unless restrained or qualified by constitutional provisions, or legislative enactment, assuming the form of an irrepealable contract, and for that reason within the protection of the constution. No limitation or restriction upon the exercise of this essential attribute of government, will be raised by implication. The intention to limit or abridge must be declared by positive legislative enactment, expressed in a.s olear and unambiguous terms as would be required to constitute a total renunciation of the power of taxation.

This unlimited power of taxation does not, however, include the power to levy an arbitrary sum upon a single corporation. It extends only to the right to subject the property of a corporation to such taxation as by the general laws of the state may be imposed on the kind of property of which it is the owner, or to subject it to such taxation as corporations, as a class, are made liable to. Beyond the exercise *436 of this power of taxation, the legislature cannot assess upon a single corporation an arbitrary assessment, and compel its payment, because that would be a taking of private property for public use without compensation, unless the power to make such an assessment is expressly reserved.

The section in question does not contain either an exemption from taxation for general purposes, or a restriction on the power of the legislature to subject this company to the same taxation as by general laws may be laid upon corporations. It amounts only to a reservation of the right to the state to require of this corporation the payment of such sum in the nature of a bonus for its corporate franchises, as the legislature may see fit, in its discretion, to impose, within tiie limit of one-half of one per cent, on its capital stock subscribed for and paid in. It has none of the features of a provision restricting or regulating taxation from year to year. The right reserved is to make only one single assessment, and that assessment can only be made by virtue of a special act of the legislature, specifically requiring this company to pay such sum as the legislature may name, within the stipulated limits, and when that right is once exercised, the power of the legislature to resort to this method of assessment is exhausted.

That this is the true construction of the charter of the prosecutors, is made apparent by a reference to contemporary legislation, by which exemptions from general taxation are granted. At the same session of the legislature at which the Trenton Delaware Falls Company was incorporated, the Paterson and -Hudson River Railroad Company, and the Elizabethtown and Somerville Railroad Company, were also incorporated — the act incorporating the Elizabethtown and Somerville Railroad Company being passed on the ninth day of February, 1831, and the act incorporating the Trenton Delaware Falls Company being passed on the sixteenth of the same month.

The eighteenth section of the act incorporating the Paterson and Hudson River Railroad Company, provides that the com *437 pany should, after five years from the passage of the act, pay to the treasurer of the state, yearly and every year, a tax of one-quarter of one per cent, upon their capital stock paid in, and yearly and every year, after the expiration of ten years, a tax of one-half of one per cent, upon the capital stock so paid in as aforesaid, and provides that no other or further tax or impost shall be levied or assessed upon said company. By the fifteenth section of the act incorporating the Elizabethtown and Somerville Railroad Company, the -company is required, as soon as the not income of the road shall amount- to seven per centum upon its cost, to pay to the treasurer of the state, annually, a tax of one-half of one per centum on the cost of the road, with a proviso of exemption from other taxes and imposts, the same as that contained in the charter of the Paterson and Hudson River Railroad Company.

Provisions of a similar character are contained in the charter of the Delaware and Raritan Canal Compauy, passed February 4th, 1830; of the Camden and Amboy Railroad Company, passed the same day; of the New Jersey Railroad and Transportation Company, passed March 7th, 1832, and of the New Jersey, Hudson, and Delaware Railroad Company, passed March 8th, 1832. In each of these charters a certain annual sum is required to be paid by the company to the state, either at once or after a certain specified period or event, and words of express exemption from other taxation are annexed.

These provisions in the charters of the companies referred to, embrace all the elements of a contract — -a consideration —die payment, or agreement to pay to the state certain sums annually, and express words of agreement on the part of the state to accept the same in lieu of ordinary taxation. In the charter of the prosecutors, all these elements are wanting. Yo tax is required to be paid by them, graduated by their capital stock, or the cost of their works, nor is there any requirement of any specific tax to be paid to the state. The state has received no consideration for the grant, in the shape of an *438 annual or other sum, paid or to be paid into the state treasury. The grant to the prosecutors is exclusively for the benefit of their stockholders, and the object of the incorporation is purely local in its benefits.

If it were permissible to abridge the power of the legislature in the exercise of its powers of taxation, by implication, without positive legislative enactment clearly expressed, an intention to exempt a corporation from ordinary taxation could not be inferred from the reservation to the legislature, of the right to require the payment to the state of a bonus for its corporate franchises, which the legislature might have exacted at once as a condition of the grant, without relinquishing the power of taxing its property in common with other property in the state. The eighteenth section of the charter of the prosecutors is no more than a reservation by the legislature of the right to require the payment of such bonus whenever they may think proper to exact it. The restriction contained in that section is only a limitation upon that reserved right. It is no restriction on, or abridgment of, the powers of the legislature in the laying of taxes for general purposes. The assessment was, therefore, properly made upon the capital stock and accumulated surplus of the company at the same rate at which other taxable property was taxed.

The prosecutors were the owners of real estate in the township of Ewing, within this state. For this real estate they were assessed in the said township at a valuation of three thousand dollars. That sum they were entitled to have deducted from their capital stock and accumulated surplus. No such deduction was made. In that respect the assessment is erroneous and must be corrected. In all other respects the assessment is affirmed.