author: Brown, C. C. J.

text:
    Hudson County Circuit Court.
    APPLICATION FOR THE AWARDING OF PROCESS OF SUBPOENA PURSUANT TO R. S. 54:4-16.
    Decided October 20, 1943.
    Lor the City of Jersey City, Charles A. Rooney.

    Lor the Lackawanna Warehouse Company, Inc., Wolber, Gilhooly & Yauch.

   Brown, C. C. J.

In May, 1943, the tax assessor of Jersey City ordered the Lackawanna Warehouse Company, Inc., and its agent, to appear before the assessor to testify and produce such lease or leases, or operating agreements which said company now has, or may have had on November 10th, 1942, with any person or corporation, on the Freight Terminal Building, located at No. 629 Grove Street, Jersey City, pursuant to R. S. 54:A-16. The vice-president and manager of the warehouse company admits the company conducts a warehouse business at and occupies the premises aforesaid for that purpose, with necessary furniture and office equipment. In April of this year the assessor appeared before this court for an order to compel the owner of the premises, the Delaware, Lackawanna and Western Bailroad Company, and its agents, to produce the leases or operating agreements it had with any person or corporation on the above mentioned premises pursuant to R. S. 5i:4r-3é. It appeared at that time the real property was owned by the railroad company and was assessed as second class railroad property. The petition of Jersey City for an examination was denied. See 21 N. J. Mis. R. 164. Article 4, title, Assessment of Personal Property; R. S. 54:4-16, the claimed statutory authority for granting the application now under consideration, provides in part: “The assessor shall have power to examine under oath any person or officer of a corporation with regard to the taxable property of himself, the corporation or others. * * * and may compel the attendance of such persons and other witnesses and the production of books and papers by his (the assessor’s) order therefor * * *. In case of failure to comply with the order, the assessor may apply to the circuit court * * * which shall award process of subpoena for such appearance and production and may punish for contempt any person disregarding such process.” The furniture and equipment of the respondent on the premises in question is taxable personal property. As to the lease or leases, in legal accuracy of construction without statutory directive, are “chattels real.” In Hutchinson v. Bramhall (Court of Errors and Appeals), 42 N. J. Eq. 372, it was held “a leasehold is a chattel real and goes to the executors or administrators. (1 Greenleaf Cruise, tit.- VIII, ch. 2, § 19.) A lease for nine hundred and ninety-nine years is a chattel which the administrators may dispose of as they may of other personal property of the estate.” In De Kyne v. Lewis, 139 Atl. Rep. 434, it was held that a term for years while denominated a chattel real is not in strict legal accuracy considered real estate, but, on the contrary, is considered personal property whether the duration is for one or ninety-nine years. At common law chattels real were considered personal property. See Jones’ Blackstone, Book II, 1234, 527; 50 Corp. Jur. 763; 22 Am. & Eng. Enc. of L. (2d ed.) 750; 2 Tucker’s Blackstone 305; 22 R. C. L. 65. In the State of Hew Jersey our courts have considered chattels real or leasehold interests personal property for many purposes. In Hutchinson v. Bramhall and Da Kyne v. Lewis, supra, leaseholds were determined personal property to be disposed of by the executors and administrators as such. See, also, McCormick v. Stephany, 57 N. J. Eq. 264. In Ocean Grove v. Sanders, 67 N. J. L. 1; affirmed, 68 Id. 631, a lease was involved in an action of ejectment and was referred to as such and not as realty and the action was held proper where there was a provision for right of re-entry. In Hutchinson v. Bramhall, supra, it was held that a mortgage on a leasehold interest was properly recorded the same as mortgages on personal property. In the State of New Jersey, in matters of taxation, leasehold interests have generally been classified by the taxing authorities as real property. The practice has prevailed so extensively it has been followed for many years and throughout the state. It has resulted in misapprehension with a loss of taxes to municipalities, as in the Ocean Grove Camp Meeting cases, before the decision in the Beeves ease, 79 N. J. L. 334; affirmed with some disapproval in 80 Id. 464; it has resulted in snarled relationships between owners and tenants as mentioned in Metropolitan Life Insurance Co. v. McGurk, 119 Id. 517; Becker v. Little Ferry, 125 Id. 141; affirmed, 126 Id. 338. The reason for those results stem in some degree from the supposed intention between a landlord and tenant that the tax obligation is on the lessor for his reversioner interest as well as that of the lessee. As stated by Chief Justice Beasley in State, Morris Canal and Banking Co. v. Haight (Court of Errors and Appeals), 36 Id. 471, “The rule putting this obligation on the lessor, grew, originally out of the supposed intention of the parties, and the legal principle is nothing more than the creature of the construction of leases.” The practice of taxing leasehold interests as realty was referred to as early as the case of the State v. Blundell, 24 Id. 402, in which it was held: “Taxes on real estate may be assessed against either the tenant or owner, and the fact that by the lease the tenant must pay the taxes, does not prevent taxes from being assessed to and collected from the owner.” At page 404 of the same case it is .stated, “But the matter is left by the statute at the discretion of the assessor.” An assessor is not likely to attempt to unravel the taxable interests between a landlord and tenant if it is within his discretion to tax both interests in the land against the landlord as realty. The laying of an assessment by improper classification as real or personal property does not vitiate the tax imposed. Becker v. Little Ferry, supra. In Ocean Grove Camp Meeting Association v. Reeves, 79 Id. 334, the Supreme Court held that, “A tenant for years has an interest in land, and is therefore an owner of real property.” In that case the court was considering a lease that provided for a renewal which in effect conveyed the fee in the land. In that case the court also stated “In general a tenant is not assessed for his interest in the land because presumably it has no value. The rent which he pays is ordinarily all the land is worth. The estate for years has no market value in such cases * * *.” This statement was disapproved by the Court of Errors and Appeals in 80 N. J. L. 465. It can readily be determined that a leasehold interest is taxable and that in Hew Jersey it is usually taxed as realty. In other states the classification and taxation of leasehold interests are different in manj states. In Massachusetts in the case of Donovan v. City of Haverhill, 30 A. L. R. 358, there was involved a statutory proceeding relating to appeals on assessments. It was held that an assessment of real estate for taxation cannot be laid upon leases as an interest in the land which is to be assessed; nor upon the owner of such interest in his position as lessee; that a tax upon real estate whether assessed to the owner of the fee or to the person in possession, is a tax upon the whole land, and not merely on the interest of the person taxed. In the Donovan case the court referred to a statutory law as authority for its decision. In Orchard v. Wright et al. (Mo.), 20 Ann. Cas. 1072, it was held that a leasehold interest for twenty years was personal property and passes upon death of the owner to his executor or administrator. In the footnotes as reported in the above case reference is made to the states of Illinois and Mississippi as holding that leasehold interests are regarded as personal property. At page 1078 of the volume last cited it is stated “words and phrases shall be taken in their plain or ordinary sense, but technical words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical meaning * * And further, “chattels are defined as personal property, and that word standing alone, means chattels real as well as chattels personal * * In People v. Westervelt, 17 Wend. (N. Y.) 676, extensive reference is made to common law authorities uniformly holding chattels real to be personal property. Eeference is made to an English authority defining chattels real by saying: “Speaking of leaseholds for years he says: ‘They are called real chattels as being interest issuing out of or annexed to real estates, of which they have one quality, viz., immobility, which denotes them real, but want the other, viz., a sufficient, legal, indeterminate duration; and this want it is which constitutes them chattels.’” In Holzman v. Wager et al. (Md.), 22 Ann. Cas. 1912A, 619, it was held a term of years of whatever length while a chattel real is but personal property. In Metropolitan Building Co. v. King County (Wash.), 24 Ann. Cas. 1912C, 943, involving the question of a proper basis for valuation for tax purposes a leasehold interest was held personal property. A statute in that state defined a leasehold interest as personal property, which is the meaning at common law. To the same effect is the decision in Harvey Coal Co. v. Dillon (W. Va.), 6 L. R. A. 628. In this ease it was also held that taxing chattels real as personal property was not double taxation.

The footnotes to Blinn Lumber Co. v. Los Angeles County (Cal.), 84 A. L. R. 1304, contains copious references to many states, including Hew York, of well recognized methods of computing the value of leaseholds for taxing purposes. In Fidelity Trust Co. v. County of Wayne, 59 A. L. R. 698, reference is made to California, Illinois and Connecticut as holding that mining leases are taxed as real property. It would seem, from the cases cited, in some states leaseholds are taxed as personal property. In considering the application before the court it should be borne in mind that a statutory remedy is invoked; R. S. 54:4r-16, to aid the taxing authorities in ascertaining property to be taxed. The statute B. 8. 54:4-12 directs that the assessor shall annually ascertain by diligent inquiry and by the oath of persons to be assessed and others according to the best of his ability and judgment the names of all persons taxable in his district and the true value of all the personal property therein * * *.” A liberal construction of the tax laws and discovery procedure thereunder should be given for public purposes, not only that the office of government may not be hindered, but also that the rights of all taxpayers may be equally preserved; Paulison v. Taylor, 35 N. J. L. 184. To follow this liberal construction “chattels” should be taken in its largest significance to include “chattels real.” Then again, words woven in our jurisprudence since the early common law should not be disregarded but treated with legal accuracy. The discovery remedy provided in R. S. 54:416, relates to personal property. The legislature has evidently provided this remedy to assist the assessor in making “diligent inquiry” of all “personal property” in his district. This legislative directive should not be impaired by suppositive constructions of relations between landlords and tenants but should be liberally construed; nor should the legislative mandate be impaired or vitiated by following a practice of classifying personal property as real property unless there is statutory authority for so doing. There does not appear in any reported case a reference to any statutory authority defining leasehold interests in real property as real property. A reasonable and liberal construction of our present revised statutory laws has this effect. R. S. 1:1—2 contains the following definitions: “Personal property” includes goods and chattels, rights and credits, moneys and effects, evidences of debt, choses in action and all written instruments by which any right to, interest in, or lien or encumbrances upon property or any debt or financial obligation is created, acknowledged, evidenced, transferred, discharged or defeated, in whole or in part, and everything except real property as herein defined which may he the subject of ownership.” Another definition is: “The words ‘property’ and ‘other property,’ unless restricted or limited by the context to either real or personal property, includes both real and personal property.” Another definition of real estate and red property is the following: “The words ‘real estate’ and ‘real property’ include lands, tenements and hereditaments and all rights thereto and interests therein.” From the foregoing the context of the definition of “personal property” restricts the meaning of the word “property” to “personál property” and the words “interest in” refers to personal property. The definition of “real property” includes “all rights thereto and interests therein.” This includes all interests in real property. “Leaseholds” or “chattels real” are interests in real property. Courts in construing the law, must in order to discover the legislative intent, look to statutory language in its application to the subject. In re Hudson County, 106 N. J. L. 62; In re Freeholders of Hudson County, 105 Id. 57.

It is the determination of this court that while leaseholds, in the past, have been considered as personal property for many purposes, in the matter of taxation it has been the practice to consider them as real property; that the discovery procedure in R. S. 51:4-16, does not include leasehold interests as personal property. The petitioner’s motion is granted, to the extent that the agents or representatives of the respondent be required to appear and testify concerning the personal property of the respondent in the premises in question, and that a subpoena do issue to that end.


source: Caselaw Access Project

author: Martino, D. C. J.

license: Public Domain

text:
    Camden City District Court.
    MARY MAGLIANO, PLAINTIFF, v. METROPOLITAN LIFE INSURANCE COMPANY, DEFENDANT.
    Decided November 2, 1943.
    For the plaintiff, Franlc M. Lario.

    For the defendant, Starr, Summerill & Lloyd.

   Martino, D. C. J.

On October 27th, 1941, plaintiff’s decedent, Antonio Magliano, applied to the defendant company for a policy of insurance. On November 3d, 1941, the policy was issued and named the plaintiff as beneficiary. The policy was in the amount of two hundred eighty dollars ($280). The insured died on April 13th, 1942. The plaintiff claimed the benefits under the policy; the defendant company denied liability and offered a return of the paid premiums, which offer the plaintiff refused and the present suit was instituted.

The policy of insurance contained the following clause:

"When Policy is Incontestable and When Voidable. This policy shall be incontestable after it has been in force, during the lifetime of the Insured, for one year from its date of issue, except for nonpayment of premiums.

“Subject to the foregoing provision, if within two years prior to the date of issue of this Policy the Insured has received institutional, hospital, medical, or surgical treatment or attention, and the Insured or any claimant under the Policy fails to show that the condition occasioning such treatment or attention was not of a serious nature or was not material to the risk, this Policy shall he voidable by the Company either before or after any claim unless reference to such institutional, hospital, medical, or surgical treatment or attnction is endorsed on this Policy by the Company. Provided, however, that this Policy shall not be voidable because of absence of endorsement referring to any information which was disclosed in a written application for this Policy.

“If this Policy does not take effect, or is voided by the Company, the Company will return the premiums paid.”

No endorsement of any medical attention, other than “Cold February 1941” was disclosed upon the policy or the application.

Plaintiff testified and identified the policy of insurance and application for insurance which were admitted into evidence without objection. The plaintiff further testified that an offer of the return of the premiums paid was made by the defendant but was refused. The plaintiff then rested.

Defendant company called Dr. Salvatore Siniscalco who stated that he was decedent’s physician for approximately two years before his death and that the decedent was suffering from bronchial asthma and hypertension, that he did not see the decedent within a period of three months before his death. He stated on direct examination and also on cross-examination that he never revealed to decedent his ailments. He stated that he treated decedent for these ailmnts prior to November 3d, 1941, and for a period within two years of his death; the policy was in effect for a little more than five months. The defendant also called as a witness Janet Matthews who stated she was employed by a realtor of Camden, New Jersey, for whom the decedent performed janitorial duties, and that the decedent on October 23d, 1941, told her that he was quitting his job because his doctor had advised him that he had a serious heart ailment. This date was four-days before the application to the defendant was signed. The defendant offered to show certain hospital records which were objected to because of the manner in which the offer of proof was made. Counsel for defendant withdrew the witness and rested. The plaintiff offered no rebuttal and both sides rested. The defendant now moves for a directed verdict.

The failure to have endorsed upon the policy the medical treatment or attention administered by the decedent’s physician for a period within two years prior to the issuance of the policy cast a duty upon the claimant to show that the treatment was not for a serious physical condition. The nondisclosure of the medical treatment cast a burden of proof upon the claimant to show that the condition for which treatment was sought was not serious. Winter v. Metropolitan Life Insurance Co., 129 N. J. L. 187; 28 Atl. Rep. (2d) 657; Galonka v. Metropolitan Life Insurance Co., 129 N. J. L. 579; 30 Atl. Rep. (2d) 588.

Although a tender of the premiums paid was made by defendant company'and refused, this was not a prerequisite to the effective exercise of its reserved right to declare the policy void for breach of the cited condition. Winter v. Metropolitan Life Insurance Co., 123 N. J. L. 568; 9 Atl. Rep. (2d) 798.

Counsel for plaintiff contends that this court can enter judgment for return of the premiums paid should it rule that defendant is entitled to a verdict. The pleadings before the court do not justify such a conclusion. The proper form of action to recover back premiums on an insurance policy is an action at law for money had and received by the insurer. Mahoney v. Metropolitan Life Insurance Co., 80 N. J. L. 136; 76 Atl. Rep. 458.

Judgment is directed for the defendant.


author: Habby S. Mebtnets, Deputy Commissioner.

text:
    New Jersey Department of Labor, Workmen’s Compensation Bureau.
    OSCAR A. AISSEN, PETITIONER, v. REINER CONSTRUCTION CO., RESPONDENT.
    Decided November 3, 1943.
    For the petitioner, .David Roskein.

    For the respondent, James J. Bannon, Jr.

   The respondent denied that the petitioner’s accident, which •occurred on June 19th, 3943, while he was on a public highway, at or in the vicinity of 66 Augusta Street, Irvington, New Jersey, arose out of and in the course of his employment with the respondent. The testimony of the petitioner, which is undisputed, indicated that he was employed by the respondent as a painter, and that on the day in question he was directed by his employer, Carl Eeiner, to repair to his home at 361 Fabyan Place, Newark, New Jersey, for the purpose of collecting his weekly salary. The testimony discloses that it was the custom of the respondent to pay off his employees on Saturday at one o’clock at the place where they were working. On the day in question, the undisputed testimony discloses, Carl Eeiner called at 66 Augusta Street, Irvington, New Jersey, where the petitioner was in the performance of his duties as a painter, and directed, upon the termination of his day’s employment to call at his home for his pay, as the employer had, for some reason, been unable to make such payment as ‘he customarily did. While in the act of crossing the street the petitioner was struck by a motor vehicle. He was hospitalized in the Irvington General Hospital from J une 19th, 1943, to June 25th, 1943, and thereafter he underwent medical treatment by Dr. Maelyn E. Baker. The reasonable cost of such hospitalization and medical treatment is properly chargeable to the respondent.

After hearing the testimony I have come to the conclusion that the petitioner should prevail, and find as a fact that the automobile accident, sustained by the petitioner, arose out of and in the course of his employment with the respondent. That petitioner was in the act of going to his employer’s home for his pay; that the employer had requested the petitioner so to do and thereby increased the hazard of the petitioner’s employment and extended the scope thereof in so doing, and that the injury sustained by the petitioner in obedience to orders issued by his employer, arose out of and in the course of his employment with the respondent. With respect to the disability aspect of this case there -appears to be no controversy as the parties have stipulated the same.

I further find, that the respondent had due and timely notice and knowledge of the said accident as provided by the statute, and that the petitioner’s wages entitle him to a compensation rate of $20 per week. I further find that the respondent is chargeable and shall pay the reasonable cost of the hospital expenses, incurred during the petitioner’s confinement at the Irvington General Hospital, and the reasonable cost of the medical expenses incurred with Dr. Maelyn E. Baker.

On behalf of the respondent the testimony of Dr. Eulton E. Massengill was adduced. It was his opinion that the petitioner’s present disability does not exceed 15-20% loss of usefulness of the right foot, and in his opinion, in view of the favorable prognosis, the permanent disability would not exceed 15% of the foot.

Dr. Max Hummel appeared on behalf of the petitioner. It was his opinion that the settlement effectuated was fair. He found enlargement of the ankle at both malleoli with limitation in motion thereof. In his opinion the disability ranged from 25-27y2% of the foot.

I, therefore, order, on this 25th day of October, 1943, that judgment be entered in favor of the petitioner and against the respondent.

Habby S. Mebtnets, Deputy Commissioner.


author: Waesche, President.

text:
    State Board of Tax Appeals.
    APPEAL BY HENRY K. NORTON, TRUSTEE OF THE PROPERTY OF NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD COMPANY FROM THE FRANCHISE EXCISE TAX ASSESSMENT MADE BY THE STATE TAX COMMISSIONER OF THE STATE OF NEW JERSEY AGAINST NEW YORK, SUSQUEHANNA AND WESTERN RAILROAD SYSTEM FOR THE YEAR 1943.
    Decided October 26, 1943.
    For the Hew York, Susquehanna and Western Bailroad Company, Lum, Fairlie & Wachenfeld (by Chester W. Fairlie).
    For the State Tax Commissioner, David T. Wilentz, Attorney-General (by Milton B. Conford).

   Waesche, President.

Henry K. Horton, trustee of the property of Hew York, Susquehanna and Western Bailroad Company, appeals from the amount of the franchise tax assessed against said railroad system by the State Tax Commissioner for the year 1948, pursuant to the “Bailroad Tax Law of 1941,” as amended (R. S. Cum. Supp. 54:29A-13, eb seq.; N. J. S. A. 54:29A-13, et seq.). This said trustee maintains that in computing the net railway operating income of said railroad system for the year ending December 31st, 1942, the State Tax Commissioner failed to deduct from its total railway operating revenues from all sources the sum of $75,366.92 for depreciation of road and structures, and the sum of $198,679.00 for railway tax accruals for the years 1933 to 1936, inclusive. Pursuant to section 9 of chapter 337 of the laws of 1942 (1942, R. S. Cum. Supp. 54:29A-44; N. J. S. A. 54:29A-44), the railroad filed with the State Tax Commissioner a statement showing its railway operating revenues for 1942, all deductions therefrom, and its net railway operating income remaining after such deductions. In this statement the railroad deducted the above mentioned two items for depreciation and for railway tax accruals.

Under an order of the Interstate Commerce Commission issued on January 19th, 1942, railroads were not required to include in their reports to the Interstate Commerce Commission for the year 1942 any item for depreciation on road and structure. The New York, Susquehanna and Western Bailroad did not claim any depreciation charges in its reports to the Interstate Commerce Commission for the year 1942 and the Interstate Commerce Commission did not fix any depreciation charges in determining the net railway operating income of the said railroad for the year 194-2. The railroad, however, applied to the Interstate Commerce Commission for the rates to be used in computing depreciation charges for the year 1942 and received such rates from the Interstate Commerce Commission under date of May 22d, 1942, but these rates were not binding on the railroad in the event that later data justified changes.

The railroad maintains that in determining its net railway operating income for the year 1942, the State Tax Commissioner should have allowed a deduction of $75,366.92 from the total railway operating revenues from all sources for depreciation, computed on the depreciation rates set forth in the aforesaid letter from the Interstate Commerce Commission.

We think the State Tax Commissioner’s refusal to allow this deduction is justified by the clear language of the law because no depreciation was claimed in the reports to the Interstate Commerce Commission and none was fixed by the Interstate Commerce Commission. Section one of chapter 169, Pamph. L. 1942 (1942 R. S. Cum. Supp. 54:29A-14; N. J. S. A. 54:29A—14), provides as follows:

“Depreciation charges shall in no instance, however, exceed the amount claimed by the railroad for depreciation in its report or reports to the Interstate Commerce 'Commission and fixed, or if none was claimed then as fixed, by the Interstate Commerce Commission in determining the net railway operating income of the railroad for the year under consideration.”

We will next consider the claim made by the trustee for the railroad that the unpaid balances of railway tax accruals for the years 1933 to 1936, inclusive, are deductible from the 1942 total railway operating revenue from all sources in computing the net railway operating income for 1942.

In its report to the Interstate Commerce Commission for the year 1942, under the heading, “Miscellaneous items in income and profit and loss accounts for the year,” the railroad reported the payment in 1942 of $198,679 to the State of ISTew Jersey for the unpaid balances of taxes due for the years 1933 to 1936, inclusive. The railroad did not deduct these taxes in computing the net railway operating income it reported to the Interstate Commerce Commission for the year 1942. The State Tax Commissioner refused to allow a deduction of the aforesaid sum of $198,679 because the railroad had not deducted it in reporting its net railway operating income for 1942 to the Interstate Commerce Commission.

Both counsel for the railroad and the Deputy Attorney-General agree that the railroad could have deducted this item of $198,679 for taxes due for the years 1933 to 1936, inclu-. sive, in reporting its net railway operating income for 1942. to the Interstate Commerce Commission and that if it had so deducted it, then the State Tax Commissioner should, deduct it in computing the net railway operating income for, the year 1942 for the purpose of assessing the 1943 franchise tax. We do not agree. . . . ■ .

These unpaid taxes for the years 1933 to 1936, inclusive, were due and payable into the state treasury during the year for which they were respectively levied, and were in default, when they remained unpaid after December 1st of the year in which they were payable. 1924 Cum. Supp. C. S. 208-447i; N. J. S. A. 54:27-1 to 54:27-4. It seems clear that when a tax becomes due and payable it has accrued and it is therefore a tax accrual. The fact that an appeal has been taken from the assessment does not change the due date nor stop the running of interest on the taxes that are in default. The tax as assessed remains due until set aside and interest accumulates from such due date. Nor is it of importance how the railroad treats such tax in its bookkeeping. The tax has accrued to the state and it is a tax accrual to the railroad in the year for which it was assessed. Hence, the $198,679 is the sum total of the unpaid 1933 railway tax accruals, the unpaid 1934 railway tax accruals and so on for each of the four years from 1933 to 1936, inclusive.

The statute says that in computing the franchise tax:

“A ‘iranch ise base’ shall be computed for each year by deducting the sum of two hundred thousand dollars ($200,000.00) from the next preceding year’s net railway operating income.” Section 1, chapter 169, Pamph. L. 1942; R. S. Cum. Supp. 54:29A-14; N. J. S. A. 54:29A-14.

The statute further says that in computing the “next preceding year’s net railway operating income” there shall be deducted from the “total railway operating revenues from all sources:”

“Costs of railroad maintenance, operation and depreciation, railway tax accruals, uncollectible railway revenues, rentals (both debits and credits) for equipment leased for less than one year or interchanged, and joint facility rents (both debits and credits).” 1942 R. S. Cum. Supp. 54:29A-14: N. J. S. A. 54:29A—14.

It is obvious that the “total railway operating revenues from all sources” are only such revenues that accrue the same year for which the “net railway operating income” is computed, that is, the year preceding the year for which the franchise tax is computed and assessed. In other words, the “next preceding year’s net railway operating income” is computed from the “next preceding year’s total railway operating revenues from all sources.” It is likewise obvious that in order to arrive at the railroad’s “next preceding year’s net railway operating income” the deductions the statute directs shall be taken from the railroad’s “next preceding year’s total railway operating revenues from all sources” can be only those costs that accrued during the “next preceding year,” that is, the “next preceding year’s” costs of railroad maintenance; the next preceding costs of operation and depreciation: the “next preceding year’s” railway tax accruals ; and so forth. When the tax accruals were put on its books by the railroad or were paid has no bearing upon net railway operating income as computed according to the statute. 1942 R. S. Cum. Supp. 54:29A—14; N. J. S. A. 54:29A-14.

We, therefore, conclude that the unpaid 1933 to 1936 railway tax accruals were not deductible in computing the railroad’s net railway operating income for the year 1942 for the purpose of assessing the railroad’s 1943 franchise tax. The fact that the unpaid 1933 to 1936 railway tax accruals were not shown on the books of the railroad until 1942; and the fact that they were reported by the railroad to the Interstate Commerce Commission in 1942 in the profit and loss accounts are immaterial facts which have no bearing whatever on the determination as to whether or not they should be deducted from the railroad’s 1942 “total railway operating revenues from all sources” in computing the railroad’s 1942 “net railway operating income” for the' purposes of assessing the 1943 franchise tax.

The appeal is dismissed and the franchise tax as assessed by the State Tax Commissioner is affirmed.