text:
    State Board of Tax Appeals.
    AMERICAN INSURANCE COMPANY, PETITIONER, v. CITY OF NEWARK, RESPONDENT.
    Decided July 23, 1940.
    For the petitioner, Pitney, Hardin & Slcinner (by William J. Brennan, Jr.).

    For the respondent, James F. X. O'Brien (by Vincent J. Oasale).

   Quinn, President.

Petitioner is a stock insurance company, having its principle office in the respondent taxing district. It was subject to taxation for the year 1938, as of the assessing date, October 1st, 1937, upon its capital stock paid in and accumulated surplus, less the amount of assessments upon real estate belonging to the company, under Pamph. L. 1918, ch. 236, § 307. By judicial construction of substantially similar predecessor statutes, the act entails an assessing formula for such companies requiring: (a) determination of the true value of gross assets; (b) the deduction therefrom of debts and fixed liabilities, i. e., such as are certain and definite both as to obligation and amount, as of the assessing date; (c) the deduction from the remainder of the amount of assessed real estate and the value of non-taxable and exempt property. Trenton v. Standard Fire Insurance Co. (Court of Errors and Appeals, 1909); 77 N. J. L. 757; 73 Atl. Rep. 636; Fidelity Trust Co. v. Board of Equalization (Supreme Court, 1908), 77 N. J. L. 128; 71 Atl. Rep. 61.

The city of Newark levied an assessment against petitioner, under the statute, in the sum of $3,513,367, for the year 1938. Upon appeal to the Essex County Board of Taxation, the assessment was reduced to $3,112,118. The petition of appeal before this board prays a further reduction to $2,907,014. Upon the basis of the proof and argument adduced at the hearing, petitioner has in its brief, requested that the assessment be fixed at $2,046,370.44. In view of our conclusions with respect to the substance of petitioner’s contentions, however, we need not consider the propriety of a request for reductions not supported by a prayer in the petition of appeal, or by amendment thereof.

For sake of clarity, our consideration of the proof herein will be had under these headings: (a) assets; (b) deductible debts and liabilities; (c) deductible assessed realty and exempt and non-taxable property.

(a) Assets. The company’s valuation of the following of its assets upon the assessing date is undisputed:

Ledger Assets

Cash in office .......................... $4,175.00

National Newark deposit.............. 424,581.67

Other bank deposits..................... 241,072.05

Stocks and bonds ....................... 26,109,550.65

Bonds and mortgages ................... 1,145,705.00

Bond and mortgages (P. H. A.) .......... 932,373.21

Premiums uncollected (less than 90 days). . 1,892,914.86

Premiums uncollected (over 90 days)...... 264,884.25

Missouri premiums ..................... 41,800.52

Premium notes outstanding ............. 48,176.71

Becoverable insurance on paid losses..... 15,316.05

Inter-company accts. rec................. 67,982.16

Non-Ledger Assets

Accrued interest bonds and mortgages..... 19,621.68

Accrued interest on bonds ............... 86,574.04

Total Undisputed Assets ............ $31,294,727.85.

In addition to the assets set forth, the petitioner’s balance sheet shows real estate (company occupied), at $3,278,589.49, and real estate (all other) at $565,075.60. The city contends that the figures for these items should be respectively, $4,407,552.75 and $751,295.50. These, however, according to the proof adduced, are original cost amounts, and not reflective of true value, since they do not allow for any depreciation at all, which is necessarily a factor in selling value. Turnley v. Elizabeth (Supreme Court, 1908), 76 N. J. L. 42; 68 Atl. Rep. 1094. And see City of Newark v. Imperial Laundry Co. (State Board), filed December 12th, 1939. The cost of companjr occupied buildings was properly subject to write-offs for depreciation duly voted by the directors of the company, in the amount of $787,552.75. But petitioner’s claim for an additional deduction of $407,636.20 as a reserve for depreciation of such realty is not allowable, in the absence of a showing that such additional depreciation has accrued and is thus properly chargeable against the property, as a matter of valuation. Nor does the reserve, under sucli circumstances, represent a liability certain and definite as to amount, as required by the rule stated in Commercial Casualty Insurance Co. v. State Board of Tax Appeals (Supreme Court, 1937), 119 N. J. L. 94; 194 Atl. Rep. 390. See The National Commercial Title and Mortgage Guaranty Co. v. City of Newark (State Board, 1940), 18 N. J. Mis. R. 186; 11 Atl. Rep. (2d) 759. The burden as to this, as well as all other issues in the case, rests upon petitioner, in view of the presumption of correctness attending the county board determination. Estell v. Hawhens (Supreme Court, 1887), 50 N. J. L. 122, 125. Similarly, while the cost of the other real estate of petitioner, in the sum of $605,873.70, was properly chargeable with actually accrued depreciation, taken on the books of the company, of $29,565.82, there is no additional right to the deduction from cost of a reserve for depreciation. In pursuance of the foregoing the evidence indicates total realty of a true value of $3,620,000 (company office buildings), and $576,307.88 (other realty), or a total of $4,196,307.88.

Petitioner contends, however, that a proper construction of the statute would preclude the taking of real estate, for purposes of determination of gross assets, at a figure in excess of its assessed value. This contention is posited on the statutory provision for deduction of realty belonging to the company in its assessed value, and upon the theory that unless the real estate is similarly taken at its assessed value in computing capital and surplus, there will ensue double taxation of such realty. We cannot concur in this view. It was seen above that the first necessary step in the formula of assessment of a stock insurance company is the determination of the true value of its gross assets. Kealty owned is an asset. As writh all other assets, it must be taken at its true value. The statutory provision for the deduction from capital and surplus of the assessed value of real estate is for the purpose of avoiding any duplication of real estate taxes, but only to the extent of the actual assessed values of such realty. Concurrence in petitioner’s argument herein would result in the exemption from taxation of that portion of the true value of its real estate, which is represented by the excess which appears in this case to exist in such true value, over assessed value. The city of Newark is not estopped in this case from urging the assessment of petitioner’s capital and surplus as its true value, as required by statute, by mere reason of its underassessment of one of the constituents thereof, in the administration of a separate and distinct tax thereupon.

The respondent taxing district takes further exception to the statement of assets contained in petitioner’s balance sheet because of its failure to reflect as an asset an item of $680,000, constituting recoverable reinsurance on unpaid losses. According to the proof at the hearing, petitioner becomes entitled to this credit only if, as, and when it pays claims against it. Since reserves for unpaid losses are not a proper subject of deduction, as contingent (Commercial Casualty Insurance Co. v. State Board of Tax Appeals, supra), there appears to be no sound basis for the inclusion in assets of potential claims for reinsurance on such losses, which are equally contingent, and, in fact, valueless until losses are actually paid. The item in- question will not be included as an asset. The assets scheduled hereinabove, including real estate, aggregate $35,491,035.73.

(b). Deductible debts and liabilities. The parties have agreed as to the following amounts of debts and liabilities properly deductible in the computation of capital stock and accumulated surplus.

Dividends payable ..............$401,248.80

Commissions .................... 13,958.48

1937 Real estate taxes ............ 5,051.03

1937 Personalty taxes ............. 90,040.00

1937 Federal income tax ........... 130,000.00

1937 Premium taxes ............. 213,443.70

1937 Social security taxes......... 9,733.11

There is some question as to whether 1937 income taxes do not accrue as of December 31st, 1937, so as to preclude their constituting a liability on October 1st, 1937. Montgomery, Auditing Theory and Practice (3d ed.) 239. But we shall assume, for present purposes, that the deduction is proper.

Petitioner further claims, while respondent disputes, the deductibility of an item of $201,584.57, on account of drafts for losses, issued, but unclaimed upon the assessing date, by the petitioner, and by subsidiary companies, to the extent of ninety-four per cent, of those of the latter, in pursuance of an agreement by petitioner to assume that percentage of losses paid by them. There can he no question that this item is truly a liability of the company, and similar claims have been'deducted by this board in the past. See Fidelity Union Title and Mortgage Guaranty Co. v. City of Newark (State Board), filed December 8th, 1936.

There remains for consideration the deductibility, as a claimed liability, of petitioner’s reserves for the payment of 1938 taxes, as follows:

1938 Eealty taxes...........$111,681.29

1938 Personalty taxes........ 95,000.00

Petitioner strenuously urges the deductibility of these items upon the theory that they accrued upon the books of the company as a liability upon October 1st, 1937, and are therefore properly deductible in the determination of its capital stock and accumulated surplus as of that date. Numerous authorities are cited in support of the contention thus urged. Upon careful analysis, however, none of them appear to substantiate the proposition that estimated 1938 property taxes are a proper liability in the determination of a corporate balance sheet, as of October 1st, 1937.

While it is provided by statute that “all property shall be assessed to the owner thereof with reference to the amount owned on October first in each year” (R. S. 54:4-1), none of the other incidents of taxability accrue prior to the commencement of the tax year. The assessor’s lists are presented to the county boards of taxation on January 10th. R. S. 54:4-35. These are revised, corrected and equalized by such boards on or before April 1st. R. S. 54:4-55; N. J. S. A. 54:4-55. The taxes are payable quarterly, on the first day of February, May, August and November of each year, and become delinquent after those dates. R. S. 54:4-66; N. J. S. A. 54:4-66. Unpaid taxes become a lien on December 1st. R. S. 54:5-6; N. J. S. A. 54:5-6. Petitioner’s assertion that these taxes accrued as liabilities on October 1st, 1937, is not supported, as a fact, by the proof adduced at the hearing, nor in theory, by the accounting authorities referred to in its brief.

It is conceded that taxes which were actually accrued upon the assessing date, while not “debts,” are deductible liabilities, under section 307. Newark Fire Insuarnce Co. v. City of Newark (State Board), filed July 7th, 1936. That case, however, did not hold that taxes attributable to a tax year subsequent to the assessing date in question are deductible. Nor are t¿he other cases cited applicable to that precise situation. In City of Newark v. Mutual Benefit Life Insurance Co. (State Board), filed September 7th, 1937, the reference is to the deductibility of state and federal taxes accrued on the assessing date. The deduction involved in Colonial Life Insurance Co. v. City of Jersey City (State Board), filed September 28th, 1937, was for the estimated amount of taxes based upon business for the year. We are here concerned with property taxes, not income or business taxes. In Prudential Insurance Co. v. City of Newark (State Board Tax Reports, 1912-1934, p. 41), it was held that a tax against a deferred dividend fund for the year 1911, was deductible in computing 1912 personal property taxes of a life insurance company, determinable as of the preceding December 31st. All of the rulings of this board cited by petitioner antedate the strict and specific definition of deductible liabilities, contained in the Supreme Court decision in Commercial Casualty Insurance Co. v. State Board of Tax Appeals, cited supra. Such liabilities must be “fixed,” in the sense that they import “certainty and definiteness, both as to obligation and amount.” The liability must be “fully and precisely established on the assessing date.” The taxes here in question do not meet that test.

The debts and liabilities properly subject to deduction aggregate $1,065,059.69. Petitioner’s capital stock and accumulated surplus may then be set out as follows:

Gross assets ...........$35,491,035.73

Debts and liabilities .......... 1,065,059.69

Capital stock and surplus . . $34,425,976.04

(c). Deductible assessed realty and exempt and nontaxable property. From capital stock and accumulated surplus the following additional deductions are required:

Assessed real estate ........ $2,993,410.00

Exempt bonds and mortgages . . 1,145,705.00

Exempt F.H.A. bonds and mortgages 932,373.21

Exempt stocks ............. 17,696,208.55

Exempt bonds .............. 8,202,329.67

Total ................... $30,970,026.43

There results a taxable balance exceeding that fixed in the county board judgment from which petitioner appeals. The judgment will therefore be affirmed.


source: Caselaw Access Project

author: Quinn, President.

license: Public Domain

text:
    State Board of Tax Appeals.
    BANKERS INDEMNITY INSURANCE COMPANY, PETITIONER, v. CITY OF NEWARK, RESPONDENT.
    Decided July 23, 1940.

      Por the petitioner, Pitney, Hardin & Blcinner (by William, J. Brennan, Jr.).

    Por the respondent, James F. X. O’Brien (by Vincent J. Oasale).

   Quinn, President.

This case was tried and argued as a companion case to American Insurance Co. v. City of Newark, decided by this board simultaneously herewith, 18 N. J. Mis. R. 516. A number of the legal questions common to both cases have been discussed in the opinion in that case, and reference will be made thereto in connection with those issues. The underlying issue involved is the proper amount of the 1938 assessment against the capital stock and accumulated surplus of petitioner, as a stock insurance company, under Pamph. L. 1918, ch. 236, § 307. The original assessment, in the sum of $1,137,022, was affirmed by the Essex County Board of Taxation, upon appeal.

Under the statute, as judicially construed, we have to deter- • mine the true value of petitioner’s gross assets, deduct fixed debts and liabilities, so as to arrive at capital and surplus, and then deduct therefrom the assessed value of real estate, together with exempt or non-taxable assets. See American Insurance Co. v. City of Newark, supra.

Gross assets of petitioner aggregate, exclusive of real estate, $6,677,053.05. The city contends that petitioner’s real estate should be valued as an asset at $109,085.50, a figure obtained by its accountant from an examination of the books of the company. It is satisfactorily shown, however, that this amount represents original cost. Depreciation accrued as of the assessing date, in the amount of $10,717.58, was taken for the realty on the books of the company, and should be deducted from cost for present purposes. An additional write-off on account of realty of $24,867.92 is sought to be deducted by the company, but this cannot be allowed, it not appearing to represent depreciation accrued upon the assessing date, nor in anywise reflected upon the books oí the company on said date. See American Insurance Co. v. City of Newark, supra,. Heal estate will accordingly be valued at $98,367.92.

The city’s further attempt to include in gross assets an item of $35,457, representing reinsurance recoverable on unpaid losses, will not prevail, for reasons given in the American Insurance Co. opinion, supra.

Gross assets, including real estate, aggregate $6,775,420.97.

The amounts of debts and liabilities of the company were agreed upon by the parties, subject to legal questions raised by the city, (a) as to the deductibility of certain judgments and workmen’s compensation awards against the petitioner’s assureds, which, upon the assessing date, were pending upon appeal, and, to some extent, were thereafter reversed and canceled; and (b) as to the deductibility of taxes payable for the years 1937 and 1938.

Judgments and compensation awards actually entered on the assessing date are fixed liabilities of the company, and deductible notwithstanding the benefit of the hindsight afforded by the knowledge of subsequent events. Commercial Casually Insurance Co. v. State Board of Tax Appeals (Supreme Court, 1937), 119 N. J. L. 94; 194 Atl. Rep. 390; Prudential Insurance Co. v. City of Newark (State Board Tax Reports, 1912-1934, p. 41).

So far as taxes are concerned, deduction will be allowed for 1937 taxes, but denied for those for the year 1938, for reasons set out at length in American Insurance Co. v. City of Newark, supra.

Proper deductions on account of debts and liabilities amount to $549,252.68. Deducted from gross assets, there remains $6,226,168.29, as capital and surplus.

Assessed real estate and exempt stocks, bonds and mortgages amount to $5,497,203.45. Deducting this sum from that determined for capital and surplus, leaves a taxable balance of $728,964.84. The judgment of the Essex County Board of Taxation will be reversed and the assessment ordered fixed at the figure last stated.


text:
    New Jersey Department of Labor, Workmen’s Compensation Bureau.
    JAMES NICHOLSON, PETITIONER, v. HENRY R. EISENBERG, RESPONDENT.
    Decided June 8, 1940.
    Por the petitioner, J. Edward Bennett.

    Por the respondent, George E. Meredith.

   * * * * * * #

The petitioner testified that in the year 1934 he made an arrangement with Mr. Henry R. Eisenberg, now deceased, to work for the respondent at the rate of $5 per week, and with the privilege of sleeping in the basement of the office building. He stated that he was instructed to care for the fires, watch the premises and do odd jobs in connection with the business of the respondent. He testified that he slept on the premises everj^ night without exception since that time and that he received his pay of $5 on “pay day” which he fixed as Saturday, and said that he got his money in cash at the same time that the other employes of the company were paid.

The petitioner further testified that on the night of December 7th or 8th, 1938, he went to bed at nine o’clock in the evening and on a davenport which had been provided by a fellow worker and which had been placed near the furnace. He testified that he did not know what happened or how he got hurt, but that he found that his hand was burned when he awoke in the morning. When pressed for an explanation he stated again that ho did not know how his hand got burned, but he “figured it must have stayed there and cooked all night.”

The petitionér presented a witness who could shed no light on the accident or the cause of the petitioner’s burned hand, but he did say that he had seen the petitioner fix the fires on previous occasions, and also testified that he had helped the petitioner carry out ashes. This witness, however, admitted that he got no pay for carrying out the ashes. The petitioner also produced his sister, who testified that she had previously been down in the cellar and had seen the petitioner tending the furnace and that on one or two occasions when her brother was sick she got his pay.

Opposed to this the respondent produced three witnesses all of whom denied the petitioner’s contention that he was an employe. Their testimony indicated that the petitioner was a free lance car cleaner, and that he would wipe off the cars of some of the employes of the respondent for which he was paid amounts varying from ten cents to fifty cents, and that he also cleaned cars for others in the neighborhood. It was also established through these witnesses that the petitioner was allowed to sleep in the cellar as a matter of grace and entirely because of the charitable nature of the elder Mr. Eisenberg, now deceased, and further, that the petitioner did not always sleep in the cellar. It was shown also that on several previous occasions the truck driver, whose duty it was to fix the furnace, found the petitioner in the cellar in a drunken state when the witness came there in the morning to fix the fires.

These witnesses further stated that on the morning in question they went down to the cellar and found the petitioner lying in a stupified condition, and both from his speech and from his actions they concluded that the petitioner was intoxicated.

The respondent also produced a payroll record of the firm which listed a number of employes and a separate social security record. The petitioner did not appear as an employe on either of these records. Further, it was shown through these witnesses that the usual pay day at the plant of the respondent was Friday night and not Saturday noon, and they testified also that the petitioner was not paid a regular weekly wage of $5 as he claimed.

Hi Hi Hi Hi Hi 0 Hi Hi

I have carefully considered the testimony and from the more credible facts adduced I find that the petitioner was not in the employ of the respondent. It appears from the testimony that the petitioner had no steady job and that he needed a home and that Mr. Eisenberg out of the goodness of his heart allowed the petitioner to stay on the premises when he felt like it and gave him an opportunity to make odd amounts either by cleaning cars or doing occasional jobs as they arose. However, this work was neither regular, periodic nor recurring. R. S. 34:15-36; N. J. S. A. 34:15-36. It might be described as a hit or miss proposition. It appears, too, that the payments which the petitioner received when he did do an occasional job were paid not on the basis of an hourly wage, but the allowance was controlled in a large measure by the charitable mood at the moment of the respondent and his employes. Sometimes money was even paid when no services of any character were rendered.

Even if I were to conclude that the petitioner was an employe, it is impossible from the evidence to make a finding that the accident arose out of and in the course of the petitioner’s employment. At the time of the alleged accident the petitioner was merely satisfying his own convenience and comfort, and it is even difficult if not impossible from the testimony to determine how the accident happened. If I were asked to determine from the evidence how the petitioner got on the floor or how he burned his hand, my answer would have to be that I do not know. This is so, because the petitioner himself in his testimony stated that he did not know how his hand got burned. The lay witnesses who were called on his behalf shed no light whatever on this aspect of the case.

Having reached this conclusion, it becomes unnecessary to pass on the other grounds raised by the respondent.

In. view of tile foregoing, it is, therefore * * * ordered that the petition be and the same is hereby dismissed, without cost to either party.

Haeby S. Medinets,

Deputy Commissioner.


text:
    New Jersey Department of Labor, Workmen’s Compensation Bureau.
    MYER RUGG, PETITIONER, v. DRIWOOD CORP., RESPONDENT.
    Decided August 8, 1940.
    For the petitioner, 8. Martin Mandón.

    For the respondent, John IF. Taylor (by Everiit Rhine-hart).

   sjc íJí i,< >!«

The facts in this caso are briefly that on October 20tb, 1939, petitioner in the course of his employment attempted to lift a partition section and while doing so was seized with a severe pain in the right side and back. This was about four p. m. and he stopped active work but remained about the premises until four-thirty p. m., when he went home. At home that night he applied home remedies and feeling improved the next morning, Saturday, October 21st, 1939, he went into work. About a half hour after starting work, while applying heavy clamps to a panel in gluing the same together, he got a severe pain in the right groin and at about nine a. m. noticed a “ball” in his side at the site of the pain. He was compelled to rest for fifteen minutes and then resumed work with the aid of a helper furnished by the foreman at his request. He went home at noon and went to bed about two p. m. because of the pain which grew so severe that at seven p. m. his son summoned Dr. Paul 0. Train, who on his arrival at eleven p. m. found petitioner acutely ill and suffering from a strangulated, right inguinal hernia. On the advice of this doctor petitioner entered The Jewish Hospital of Brooklyn on Sunday morning, October 22d, 1939, and underwent a herniotomy. Following this operation complications developed, namely retention of urine, infection of bladder and bronchial pneumonia. The petitioner remained at the hospital until January 13th, 1940, and was thereafter treated by Dr. Train until June 13th, 1940, when he was discharged and all treatment ceased. Medical and hospital bills have been submitted for allowance totaling $1,623.70, in addition to the claim for temporary disability and permanent disability fixed by petitioner’s medical witness at ten per cent, total.

Respondent contends that the hernia occurred on Friday, October 20th, 1939, and as no descent was shown to have resulted until following the occurrence of the morning of October 21st, 1939, it is, therefore, not liable for the claim as the descent did not immediately follow the cause. However, I am of the opinion that the hernia did not occur until the morning of October 22d, 1939, and that the testimony supports a finding of a compliance with the five statutory requirements in a non-traumatic hernia such as this one is and do so determine.

Respondent makes the further claim that since the statute in such cases limits its liability for expenses incidental to the operation and recovery to a sum not in excess of $150 it cannot be required to meet the total medical costs admitted to have been incurred in this case of $1,623.70. However, the medical expenses in this case were not entirely incidental to the operation and recovery therefrom but were in a large measure the result of the complications ensuing from the operation and, under the theory laid down by the Supreme Court in Dunn v. Atlantic City, 120 N. J. L. 141; 199 Atl. Rep. 5; affirmed, 121 N. J. L. 588; 3 Atl. Rep. (2d) 583, the respondent would be liable for the entire cost of medical treatment, as hereafter assessed, and all disability resulting from the original injury.

fiespondent’s medical expert maintained there was no permanent disability resulting from the original injury or consequent complications.

After a careful consideration of all the evidence and law involved I do find and determine:

That on October 22d, 1939, the petitioner sustained a nontraumatie right inguinal hernia arising out of and in course of his employment which meets all the statutory requirements for a hernia of that class and that as a result of the operation to correct said hernia petitioner sustained additional injury resulting in a temporary disability of thirty-three and six-sevenths weeks for the period October 21st, 1939, to and including January 13th, 1940, and permanent disability of five per cent, of total.

iji # # % % }'¡( i»í

It is, therefore, * * * ordered that judgment final be entered in favor of the petitioner and against the respondent.

:-c % :Jc ^ ífc sjc ij:

Harry H. Umberger,

Deputy Commissioner.


text:
    New Jersey Department of Labor, Workmen’s Compensation Bureau.
    JOHN REIS, PETITIONER, v. BREEZE CORPORATIONS, INC., RESPONDENT.
    Decided August 9, 1940.
    For the petitioner, Elias G. Willman.

    For the respondent, George E. Meredith (by Walter W. Hubley).

   # * # 5¡; ij; }>t

At the commencement of the trial of this case it was stipulated by and between the parties that the matter should be submitted to this court for a determination of the question of whether the petitioner suffered a compensable accident, it being further agreed between the parties that the question of disability should be withheld until such time as this court had found and determined whether or not the respondent was liable for the accident of the petitioner.

The petitioner * * * testified that he was employed by the respondent and had worked for this corporation for about two years prior to the date of the accident; that he was employed in the department of the concern where shelves were painted; that these shelves were being manufactured by the respondent for the Federal Government, to be used in one of the libraries in Washington, District of Columbia; that it was his job to dip these shelves into tanks of paint, and then place the shelves on racks, pushing same into an oven where the paint was dried or baked; that after the baking process was completed the shelves were removed and turned over to another department for further processing. The petitioner further testified that on October 6th, 1939, at about seven-thirty in the morning, he had gone out from the place where he was working, through a doorway, onto a balcony which was on the outside of the building, said balcony being approximately fifteen to twenty feet from the ground level; that he had gone out on this balcony to get fresh air; that he was standing on the balcony about five or six inches from the railing around the balcony when he lost his balance and fell backward, at the same time grabbing hold of a co-worker who was standing in front of him and causing said co-worker to be carried to the ground below with the petitioner. Petitioner further testified that the railing near to which he had been standing fell with him at the time of the fall; that at the time of this accident the petitioner had almost completed his shift, his work for that period ending at eight A. M.

Petitioner was cross-examined at length, chiving the course of which he was questioned as to whether or not he had been given orders not to go out on the balcony, and the petitioner denied such instructions. lie was also cross-examined as to the description of the balcony and the use of same by the employer, as well as the construction and nature of the railing. During the course of cross-examination the petitioner was presented with several photographs of the site of the accident, which were marked for identification. The petitioner was called upon by the attorney for the respondent, during cross-examination, to demonstrate to the court exactly the manner in which the accident had occurred.

The petitioner called as a witness one Benny Pruchnicki, co-worker with the petitioner, and the other party that was injured in the accident in this case. This witness testified as to the duties performed by the petitioner and himself, and described the accident in question. On cross-examination this witness was questioned relative to orders being given against the use of the balcony by the workmen, but the issuance of said orders was denied by this witness. This witness also admitted, on cross-examination, that he had instituted a suit now pending, against his employer as a result of the accident in the present case.

Various other witnesses were produced by the petitioner, either on the petitioner’s direct case, or in rebuttal, their testimony being, in the main, relative to the question of whether or not orders had been issued against the use of the balcony by the workmen of the respondent.

The respondent called as its witnesses Henry Curran, foreman of the petitioner; Henry Kruesheld, superintendent of the respondent corporation; John Holland, assistant superintendent; Falstaff Johnston, vice-president; Joseph Hrbanski, maintenance man of the respondent corporation; various other assistant foremen or co-workers of the petitioner; and one witness to the accident itself, employed by Waverly Terminal. These witnesses testified to the duties of the petitioner; the nature of the work performed by the respondent company; description of the premises of the respondent; their knowledge of the accident. Included in this testimony were specific statements by the witnesses that definite orders had been given all of the workmen in the department in which the petitioner was employed that they were forbidden to go out onto the balcony in question; that on at least several occasions locks had been placed on the door between the premises of the respondent and the balcony, the keys to said locks being retained by persons in authority, and which locks had on various occasions been forcibly pried from their location; that the balcony in question was not part of the leased premises of the respondent; that none of their operations were carried on on said balcony; that none of the duties of the petitioner had anjr connection with the use of the balcony. The respondent also offered into evidence various photographs of the scene of the accident.

This court has given careful and lengthy consideration to the matter as presented. All stipulations, all of the testimony, and any and all exhibits have been carefully considered by this court, and in addition to the foregoing, this court personally inspected the site of the accident in this case, as an aid to arriving at a fair and proper determination.

The matter as presented to this court by the petitioner claims an accident arising out of and in the course of his employment: the defense interposed by the respondent denies that the petitioner met with an accident arising out of and in the course of his employment, in that the petitioner, at the time of the accident, was not on the premises of the respondent, and that the accident occurred as a result of disobedience of orders, in that at the time of the accident the petitioner was at a place where he had been ordered not to be.

It is elementary in this state that in order that the petitioner may recover from the respondent, he must prove an accident arising out of and in the course of his employment. Both of these elements must be present. Among the many New Jersey cases which have established this rule are those of Furman v. Rockling Co., 3 N. J. Mis. R. 806; Bryant v. Fissel, 84 N. J. L. 72; Belyus v. Wilkinson-Gaddis & Co., 178 Atl. Rep. 181; Hall v. Doremus, 178 Id. 781, 175 Id. 369.

The petitioner alleges that Ms accident occurred during the course of his employment, and that same arose out of his employment. This allegation the respondent denies, claiming that the petitioner, as hereinbefore stated, was disobeying orders given by his employer when he placed himself at that point where the accident occurred.

It is an old and well-founded principle of law that an employer may regulate, by rules and orders, his employes, and is at liberty to define the sphere of duty of his workmen. Lash v. Ivins & Co., 19 T. L. R. 142; 5 W. C. C. 17.

The question of when disobedience of orders will prevent a petitioner from recovering from his employer has been gone into by the higher courts of this state, as well as the Compensation Bureau, on many occasions. This court feels that the principles relative to this situation are well established. It clearly appears that where the employer has seen fit to limit the sphere of the employment, then the violation of orders limiting such sphere defeats the right to compensation ; where the instructions relate to how the work should be done or as to the instrumentalities to be used in the prosecution of the work, a violation of such orders is not a bar to compensation. We find the rule, as stated above, set out in the case of Smith v. Corson, 87 N. J. L. 118; in which case the workman was ordered not to go onto certain scaffolding, but to work on the ground. He fell as a result of climbing on the scaffolding and was killed, and it was held that the accident did not arise out of and in the course of his employment, inasmuch as he had disobeyed orders relating to the sphere of his employment. Others, of the many cases on this point, include the case of Reimers v. Proctor Publishing Co., 85 N. J. L. 451; Cassele v. Mueller Macaroni Co., 99 Id. 270; Schelf v. Kishpough, 37 Id. 173. In arriving at the rules contained in the above cases this state followed a long line of English cases relative to this issue: Dougel v. Westbrook, Gordon’s W. C. Rep. 522; Pope v. Hills’ Plymouth Co., Id. 15; Barnes v. Nunnery Colliery Co., Id. 90; Whitehead v. Reader, 2 K. B. 48; 3 W. C. C. 40; Lowe v. Pierson, 1 Q. B. 261; Mulholland v. Hazelton, 75 Ir.; L. T. R. 217.

In the case now before this court, as in any case, it is incumbent on the court to weigh the probabilities and to sift the testimony to find where the truth lies, and from same to arrive at a proper decision. It goes without saying that the credibility of the witnesses is of major importance. As trier of the facts, the court, in addition to hearing the testimony of the witnesses, must consider the attitude and demeanor of the witnesses, the probability and plausibility of their stories, and to weigh their testimony against any possible interest or bias.

In the first place, I am not at all satisfied as to the credibility of the petitioner and several of his witnesses. Weighing their testimony and their demeanor against other testimony found in this case, as well as certain physical factors, as described by witnesses, or as observed by this court on inspection of the site of the accident, leads me to the foregoing conclusion. There are too many unexplained discrepancies between the petitioner’s case and the respondent’s case to satisfy this court that the allegations of the petitioner are founded on fact.

There is no contradiction to the testimony presented by the respondent that the point at which the accident occurred tras not part of the premises occupied by the respondent. The respondent in this case leased a certain portion of the Waverly Terminal Building, at one time known as the Durant Motor Company. From the testimony adduced by the respondent, it clearly appears that the balcony in question was not leased to the respondent and was not part of the premises utilized by them in their business. There was some testimony adduced by the petitioner that this balcony had been used for drying operations by the respondent. This has been denied by witnesses produced by the respondent, and after inspection of the premises by this court, I am satisfied that the accident did not occur on premises controlled or used by the respondent.

The respondent produced several witnesses, including the maintenance man, who testified that in addition to issuing orders against the use of the balcony by workmen, locks had been placed on the door between the premises occupied by the respondent and the balcony on at least several occasions, which locks had been forcibly removed by undisclosed persons. While all of the witnesses produced in the petitioner’s case denied that they had any part in the removal of said locks, they did not, nevertheless, satisfy this court that locks had never been used, and that they were used for any other purpose than to prevent access to the balcony by other' than the maintenance manager.

The petitioner’s description of the accident in question did not appear feasible. He testified, and described same, and from same, as well as a careful examination of the exhibits and a personal inspection of the balcony and railing in question, this court cannot conceive how the accident could have occurred as alleged by the petitioner.

As I have mentioned above, witnesses on behalf of the petitioner testified that the balcony had been used for drying purposes by the respondent. This was denied by the respondent’s witnesses. This court’s inspection of the balcony, if nothing else, satisfied the court that the balcony is in no position or condition to be used by the respondent for the purpose alleged by the petitioner. The entrance to the balcony is through a small door, which I understand has been placed thereon subsequent to the accident. The balcony itself is located on that part of the building overlooking a large driveway and entrance to the building itself as well as an adjacent building approximately seventy-five feet away. The condition in this driveway over which the balcony is located is not, in my opinion, located in such a position as to be an ideal place for cooling off. On the occasion of my visit, it was very warm and there were odors of gasoline and oil from the various trucks that use the drivewajr. In so far as the use of the balcony for drying any painted articles, the racks themselves are over six feet high and conveyed by means of rails and cannot be moved to the balcony. The balcony itself is covered with lint from the adjacent laundry and that in itself would be detrimental to using the balcony for the purpose of drying any freshly painted articles.

This court is satisfied from the testimony adduced in this case and all of the other elements that have gone into the making up of the trial of this case that the petitioner, and his fellow workmen, had been forbidden to use the balcony by the respondent, and that its use, at the time of the accident, was in violation of orders which limited the sphere of the petitioner’s employment. That the respondent issued such orders is, as hereinbefore mentioned, fully understandable and credible to this court. Locks were placed on the ' doorway at intervals in order to aid the enforcement of said orders; the balcony was not part of the premises occupied by the respondent; the balcony was in no condition to be used by the respondent in the operations carried on by the petitioner and his co-workers; there was nothing on the balcony to aid the petitioner in performing his duties, and, as a matter of fact, the petitioner testified that at the time of the alleged accident he was on the balcony for no purpose incidental to his work.

By the more credible testimony and the more probable and believable statements, as well as from the court’s inspection of the premises, and application of the established law relative to such a situation, I am satisfied that the petitioner’s accident did not arise out of and in the course of his employment, and that he suffered his unfortunate accident as the result of being where he had been ordered not to be by his employer. The petition must be dismissed.

# jfc í|í % Hs ❖

John C. Wegner,

Deputy Commissioner.


author: Clapp, Deputy Surrogate.

text:
    Essex County Surrogate’s Court.
    IN THE MATTER OF THE ESTATE OF BLANCHE B. GILBERT, DECEASED.
    Decided August 1, 1940.
    For the proctors for the petitioner, Pitney, Hardin & Slcinner (by Corwin Howell) and Dechert, Smith & Ciarle (by Carroll Wetzel, of the Pennsylvania bar).
    For the respondents, Edward R. McGlynn and Norman W. Harlcer and Maurice B. Saul (of the Pennsjdvania bar).
   Clapp, Deputy Surrogate.

On December 7th, 1939, the Essex County Surrogate’s Court by decree, granted letters of general administration respecting the estate of Blanche B. Gilbert, as of one who died intestate and a resident of this county. A day later her holographic will, unattested, was probated by the register of wills for the county of Philadelphia, Pennsylvania, on the representation that her domicile was there. On January 17th, 1940, Girard Trust Company, the executor named in the holograph, commenced this proceeding under R. S. 2:31-4 (N. J. S. A. 2:31-4) to set aside the surrogate’s order granting the general administration.

The substantial question is as to the domicile of the decedent. However, there are matters of procedure that should not go unmentioned. That the Girard Trust Company is suing here as executor may be taken from allegations of its petition, disregarding, as we may, its failure to style itself as executor in the introduction to the petition. Evans v. Evans, 23 N. J. Eq. 71. Whether to sue as executor was its only course, or whether it might have elected to sue individually, as in the usual action of an executor growing out of a transaction occurring after decedent’s death, need therefore not be decided. Morse v. King, 73 N. J. L. 548; 63 Atl. Rep. 986, overruling dictum of Stewart v. Richey, 17 N. J. L. 164; cited in Meyers v. Weger, 62 Id. 432, 439; 42 Atl. Rep. 280. Suing as executor, the Girard Trust Company must predicate its authority on R. S. 3 :13-7 (N. J. S. A. 3:13-7) (amended L. 1938, ch. 140) and the filing of an exemplified copy of its letters, which in this case was duly filed, prior to the commencement of this proceeding. The statute authorizes the prosecution of “any action * * * in any court of this state”—language adequate to cover this proceeding in the Surrogate’s Court. That broad language is in no way to be confined by the words later appearing in the statute referring to “an action at law or a suit in equity”'— words that do not properly comprehend a proceeding in a probate court. Harris v. Vanderveer’s Executor, 21 N. J. Eq. 424, 434; In re Merrill, 88 Id. 261, 281 ; 102 Atl. Rep. 400.

As a matter of procedure also, it may bo remarked that the petition herein was filed after the expiration of the time for appeal from the decree granting administration. There is a stream of authority in this state rising in Watkinson v. Watkinson, 68 N. J. Eq. 632, 642; 60 Atl. Rep. 931, to the effect that a decree in equity may be set aside after the time for appeal therefrom has expired, only in the case of newly discovered evidence or of some special equity. The surrogate’s practice is essentially equitable. In re Kellner, 121 N. J. Eq. 243; 189 Atl. Rep. 91. Surely a special equity arises in a case where the decree is beyond the jurisdiction of the court, as the decree granting administration is herein determined to be. Cf. McLaughlin v. Cross, 68 N. J. L. 599; 53 Atl. Rep. 703; Gloucester Trust Co. v. Goodfellow, 121 N. J. L. 546 ; 3 Atl. Rep. (2d) 561. No view need therefore be expressed as to whether an erroneous representation made to the court, and still adhered to, as here, within the bounds of reason and good faith gives rise to a “special” equity. See In re Fischer, 118 N. J. Eq. 599, 609; 180 Atl. Rep. 633, where possibly the time for appeal, then extending one year, had expired.

It may be that by way of exception to the principle of Watlcinson v. Watlcinson, supra, a decree in rem, obtained without litigation may be vacated at any time on a ground not a special equity. In re Bradford’s Estate, 43 N. J. L. J. 14; In re Kellner, 11 N. J. Mis. R. 201; In re Koehler, 102 N. J. Eq. 133; 140 Atl. Rep. 15. The three cases last cited, however, depend much on New York cases which do not recognize the principle of Watlcinson v. Watlcinson, supra, and on the contrary hold that except as provided by statute a decree may be opened at any time. In re Henderson, 151 N. Y. 423.

In point of substance the first question is whether the petitioner has the right to attack the proceeding in this court. The challenge here is to the validity of petitioner’s letters, and is based on the contention that Mrs. Gilbert was not domiciled in Pennsylvania at her death. The second question is whether Mrs. Gilbert died domiciled in New Jersey. The determination herein made that Mrs. Gilbert was domiciled in Pennsylvania at her death disposes of both issues. However, even if she were not then domiciled in Pennsylvania, the court, having concluded from the testimony adduced here that she never acquired a domicile in New Jersey, may of its own motion vacate its decree, thus found to be a nullity, even on collateral attack. It is thereby acting in the same manner as a court of general jurisdiction. R. S. 2:31-4; Morris v. Glaser, 106 N. J. Eq. 585; 151 Atl. Rep. 766; affirmed, 110 N. J. Eq. 661; 160 Atl. Rep. 578; 21 C. J. 115.

The first issue above stated is not expressed but can be drawn from paragraph third of the petition and answer. Furthermore, only on an issue so framed can there be explained the extensive proof and argument as to whether decedent was domiciled in Pennsylvania at her death.

' On these two issues the burden of proof falls on the petitioner. 34 C. J. 352; Cf. Ege ads. Dockerty, 40 N. J. L. 99. There are two presumptions mentioned in the briefs. One, perhaps, is that where a man is commorant, there his legal residence is. Cadwalader v. Howell, 18 Id. 138. Another is that a domicile once established continues in fact. In re Dorrance, 115 N. J. Eq. 268; 170 Atl. Rep. 601; 13 N. J. Mis. R. 168; 116 N. J. L. 362. The decision does not turn on these presumptions, however. When the presumptions work against petitioner and independent of them when they work in its favor, petitioner has submitted sufficient evidence to prevail.

On the matter of domicile, the facts should be detailed. Mrs. Gilbert was born domiciled in Evansville, Indiana. With her husband she acquired a domicile in New York State, which she retained at least until his death in 1922. From then on and until March, 1931, she spent much time in several places, including Philadelphia, Pennsjdvania, and Caldwell, New Jersey. It was at Caldwell that there lived a step-daughter, Mrs. Strachan, of whom she was most fond. Mrs. Gilbert apparently visited Mrs. Strachan at the latter’s home on Eavine avenue, Caldwell, for a month or so after Mr. Gilbert’s death and, when departing, left for her future use there a comb, a brush, a toothbrush and a kimona. These things may have remained there for years. In this house and Mrs. Strachan’s later home,at 28 Hillcrest Eoad, Caldwell, there was a room which apparently, while the house was not rented to strangers (that is, from 1922 until October, 1936, and from May, 1937, until January, 1938), was known as “Mom’s room.” Mrs. Gilbert was called “Mom.” At times (exactly how frequently it does not appear) Mrs. Gilbert would stay perhaps a week or ten days in this room. She always had a key to Mrs. Strachan’s house. Despite the privilege she had to use this room, she spent several summers at an inn in Caldwell before 1927. It may be added, in relating Mrs. Gilbert’s associations with New Jersey, that a favorite niece of hers lived near Caldwell from 1922 to 1937; that from 1925, or shortly thereafter and during the rest of her life, she had many, if not all, of her dividend checks sent in care of the Citizens National Bank of Caldwell; and, further, that several times she went house hunting in Caldwell from 1933 to 1937.

Up to 1935 there is no proof, circumstantial or testimonial, that she regarded her home as in Caldwell. She spoke of it, indeed, as her summer home, but coupled with the word “summer” the word “home” prima facie lost its domiciliary force.

Her associations with Pennsylvania were strong, too. She had a sister at Lansdowne, Pennsylvania, and a niece in Drexel Hill, near Philadelphia, where the sister at times stayed or lived. Mrs. Gilbert spent two periods of time in the Hotel Pennsylvania (later the Hotel Philadelphian), an apartment hotel in Philadelphia, during the years 1928 and 1929—on the first occasion registering from Hew York and on the second from Philadelphia. Prom March, 1931, until October 1st, 1937, except for periods each of about one month in the summers of 1931, 1933 and 1936, and except for some other shorter periods, Mrs. Gilbert stayed at the apartment hotel referred to. This is corroborated from numerous sources not necessary to relate; for example, she paid rent continuously for the period stated, except the three months named. This rent ranged from $185 a month to $110 a month—an amount which, during five years of the period, came to one-third or one-quarter of her gross income as shown on her income tax returns. She had but one suite in the apartment hotel during the entire period of 1931-1937, consisting of a large living room, a kitchen, measuring nine by twenty, and a dinette that may or may not have been part of the kitchen.

In about March, 1935, Mrs. Gilbert became exercised over the Pennsylvania personal property tax, which applied to those domiciled in Pennsylvania and as to which there was then some publicity. She decided thereupon that her domicile was at her step-daughter’s in Caldwell and had the address put on her federal income tax return for 1934, made in the early part of March, 1935. She had used the Hotel Pennsylvania, Philadelphia, as her address on her income tax returns for the }rear 1930-1933 and for 1928. Prior to May 26th, 1936, the Federal Internal Revenue Regulations and law were silent as to the significance of the address required on an income tax return. By an addition to the regulations (T. D. 4643, C. B. XV-1, 124, amending income tax regulations, article 51-2), effective from that date and still in effect, the address was required to be that of the taxpayer’s “home or residential address.”

The directory published by Price & Lee Company for Caldwell for 1935 and compiled from a canvass made in March or April, 1935, listed Mrs. Gilbert’s name at her step-daughter’s address, doubtless a result of her wish to change her legal residence to Caldwell. Such a directory has been held admissible in evidence. 6 Wigmore on Evidence (3d ed.), § 1706. Her name had not appeared in the Caldwell directories previously, nor did it thereafter, though be it added that in 1937, when the next directory came out, the Caldwell house was rented, Mrs. Strachan being in the hospital.

It is fully open to inference from the evidence that Mrs. Gilbert stayed at Mrs. Strachan’s house for a short time on several occasions after she had decided that her domicile was there. On one occasion in 1935 or 1936 there is definite evidence that Mrs. Gilbert went to the address at Caldwell, saying to an employe of the Hotel Pennsylvania, in Philadelphia, before she left, that she was going “home” for a week or two. It should be noted, however, in considering the length of time she stayed at Caldwell, that a somewhat complete record of the statements of her several bank accounts (including that at the Caldwell Bank referred to) from the end of 1930 through April, 1937, discloses that not one of these statements, so far as discovered, went to Caldwell. Nearly all of them went to the Hotel Pennsylvania. In March, 1936, she again spoke of her home at the Caldwell address, at a time when she was giving directions as to her federal income tax return for 1935. In that return she declared the Caldwell address to be hers. On other occasions she spoke to two of her relatives, saying that her home was in Caldwell. It may be surmised that usually her declarations of residence in Caldwell were made when the Pennsylvania personal property tax came to her mind. On July 31st, 1936, she moved all her securities, which till then had been kept in New York, to her safe deposit box in the Caldwell Bank mentioned. Prom October, 1936, while Mrs. Strachan was at the hospital, until May, 1937, and again commencing January, 1938, shortly before Mrs. Strachan’s death in February, 1938, the Caldwell house was rented, but it is doubted that Mrs. Gilbert’s consent as to the rental was ever asked, or that any consideration was given toward getting her consent. She had no property interest in the house. Apparently, while Mrs. Strachan was ill, a neighbor of hers put up Mrs. Gilbert in Caldwell on occasional week-ends, even though Mrs. Strachan’s house was not then rented.

In March, 1937, the house being then rented, Mrs. Gilbert gave her address in her 1936 income tax return as “c/o The Citizens Nat. Bk. & Trust Co., formerly 28 Hillcrest Road, Caldwell, N. J.” At one time, in the summer of 1937, Mrs. Gilbert proposed to Mr. Strachan that she come up from Philadelphia and live with him while Mrs. Strachan was in the hospital and pay the same as she was then paying at the Hotel Pennsylvania. She started to consummate this arrangement with Mr. Strachan, but only stayed overnight. Respondents’ brief concedes that the arrangement was not completed.

In March, 1936, she had inquired whether the fact that her auto was licensed in Pennsylvania would make any difference as to her residence. She stored the car in Caldwell in the summer of 1937, leaving it there for the rest of her life, as she said "to help establish her residence there.” She felt that help was needed. This gives a glimpse of the artificiality of her state of mind toward the alleged Caldwell domicile.

On October 1st, 1937, she left the Hotel Pennsylvania, going to a hospital in Philadelphia, then to a hotel in Atlantic City for seven days, then to another hotel in Philadelphia for a little over a month, then to two hotels in California for a total period of ten months and then to still a different hotel in Philadelphia for two weeks. The remainder of her life until her death November 22d, 1939, was spent in Pennsylvania hospitals. In each of these five hotels last referred to she registered as from Philadelphia.

There are several declarations made by her after October 1st, 1937, which are offered to prove her unchanged attitude toward her alleged domicile in New Jersey. The income tax returns for 1937 and 1938 gave her address care of the Caldwell Bank named. Furthermore, she told a niece of hers that up to the time of Mrs. Strachan’s death, her home had been with Mrs. Straehan. And she told a night nurse at the hospital where she died, that she had lived in Caldwell. On the other hand, she told another nurse that after her husband had died, she had traveled and when she became homesick she came to Philadelphia as her home. According to the testimony, she never mentioned Mew Jersey to the latter nurse.

In July, 1939, Mr. Stewart, who for some years had prepared her income tax returns, and Mr. Wells, an attorney, called on her in a Philadelphia hospital at her request with reference to her will. The former testified that she said to them “the only home I have I know of would be with my stepdaughter in Caldwell.” Mr. Wells’ recollection apparently varies with this, for according to him she stated that she had stayed a great deal of the time with her step-daughter in Caldwell and that her business connections were there. Furthermore, Mr. Wells told her that there was a grave question as to her residence. He, thereafter, drafted a will, describing her as of Philadelphia, but it was never seen by her and there was no proof that she had authorized the statement as to residence. The will was admitted in evidence, not in proof of her residence in Philadelphia, hut only in so far as it might impeach Mr. Wells’ testimony. It does not impeach it and, therefore, has no force. Further, it may be noted that Mr. Wells testified that Mrs. Gilbert, when questioned as to her residence shown on her income tax returns, said “At my request, he [Mr. Stewart] filed them from Caldwell.” The words “at my request” may contain a veiled indication that she doubted the propriety of his doing so.

The petitioner produced as a witness a Mr. Bishop, a lawyer associated with petitioner’s counsel, who drafted a will for her shortly before her death. The will was never executed. He states that she said that she was a resident of Philadelphia and that the Hotel Pennsylvania had been or was her home. Mr. Bishop’s testimony is largelv corroborated by a representative of the bank who was present. Respondents attack this testimony on the ground of its lack of candor. Even beyond the attack it cannot be believed that she threw over her four years’ attempt at a New Jersey domicile without mention of it. However, in my view, the probabilities are that Mr. Bishop did believe her domicile to be in Pennsylvania and did persuade her to make an oral declaration of it. Such a declaration, however, adds little; she was to a large extent attempting to state a legal conclusion.

By way of generalization, it will be observed that here was a woman who, at least after 1922, had no civic interest and few domestic interests. All her furniture, except for a table belonging to her mother which she kept in her Philadelphia apartment, remained in storage from prior to 1922 until her death. She did no housekeeping in New Jersey, nor directed any to be done. On the other hand, she of course felt an authority as to her domestic affairs connected with her apartment at the hotel in Philadelphia and, indeed, did do some cooking there. She collected tilings, including linen, but these she put in a trunk found at her death in Philadelphia and probably never in New Jersey. Furthermore, it will be observed that she spent in Philadelphia most of her time from 1931 on—without being compelled to stay there from economic or other necessity. It was the place she preferred to be.

Depue, J., said in Harral v. Harral, 39 N. J. Eq. 279, 285, that to effect a change in domicile—“* * * the residence at the place proven for the domicile must be actual; to the factum of residence there must be added the animus manendi; and that place is the domicile of a person in which he has voluntarily fixed his habitation, not for a mere temporary or special purpose, but with a present intention of making it his home. * * *” As said in In re Paullin's Estate, 92 Id. 419; 113 Atl. Rep. 240, “we are not concerned with his possible motive,” even if the motive be to avoid taxes.

On the matter of domicile, we cannot measure our case with the rules set in Givernaud v. Variel, 86 N. J. Eq. 80; 97 Atl. Rep. 49; affirmed, 87 N. J. Eq. 654; 103 Atl. Rep. 1054, or in Trust Company of New Jersey v. Spalding, 125 N. J. Eq. 66; 4 Atl. Rep. (2d) 401, urged upon this court by respondents, nor by Texas v. Florida, 306 U. S. 398, urged by petitioner. Too many circumstances both of our case and of those cases remain unmeasured.

In considering the factum of residence at Caldwell, it will be observed that from 1935 on Mrs. Gilbert stayed there but for a week or ten days on one trip and for other short periods oji several other trips. Presence “for a space of time, however brief,” may suffice to constitute the requisite factum, if the requisite intent concurs. Cadwalader v. Howell, 18 N. J. L. 138, 145; Restatement, Conflict of Laws, § 15 (3).

We may pass any question as to the factum of residence, for Mrs. Gilbert had not the requisite intent as to the Caldwell house. “The intention required for the acquisition of a domicile is an intention to make a home in fact and not an intention to acquire a domicile.” In re Dorrance, supra. It is true that she at times used the word “home” in reference to the Caldwell house and that the idea of home-will vary somewhat with each homeseeker; but her mental associations with the house do not total up to that minimum, without which, in view of the law, no home can be acquired. Her declarations in this regard are not conclusive as to her intention. Trust Company of New Jersey v. Spalding, supra. Her actions belie her words. Firth v. Firth, 50 N. J. Eq. 137; 24 Atl. Rep. 916; Texas v. Florida, supra.

Prior to 1935 her attitude toward the Caldwell house was that of a visitor who was welcome to go there whenever she wanted, even without an invitation. What thoughts did she have in 1935, or thereafter, to change her regard toward the Caldwell house from that of a place to visit to a home for herself? It is conceived that she altered her attitude toward the place in no way, except at times to change the label for it to “home,” “residence” or “domicile.” And it is concluded that she did not usually apply that label in her thoughts. A home is more than a name. She did not intend to transfer to Caldwell any more of the domestic affairs of her life, if the word “domestic” may be used in a broad sense. She did not intend to stay there for any longer period of time than she had before, nor did she intend to go there any oftener. Further, it is worth mentioning, slight as the factor is by itself, that neither before or after 1935 did she apparently give a thought toward paying her way at the Caldwell house, except for the day in July, 1937, referred to, when her arrangement in that regard was not completed.

Wherein, then, did her former attitude toward herself as a visitor at the Caldwell house, taken with the new label of home she occasionally put on the place, fall short of an intent to acquire a home? No attempt is made here to analyze the concept of home or the intimate relationship appertaining thereto. However, it may be said that she lacked a certain possessiveness, in point of that relationship, that goes with the phrase “my home,” as distinguished from the phrase “someone else’s place where I am always welcome.” Furthermore, she had not, to the degree required, an animus manendi—an intent to settle, down. “The question, therefore, of his domicile * * * is simply a question whether he has fixed his domicile in his habitation.” King v. King, 74 N. J. Eq. 824; 71 Atl. Rep. 687. There is a notion of fixity or stability connected with domicile. This intention to settle down, to fix one’s home, involves not only a mental disregard of permanent changes in habitation, but also a design to spend an amount of time there, the quantum of which has not been determined by the authorities. It is doubted whether Mrs. Gilbert planned to spend in the Caldwell house even a few days in each year. Even when she intended to go to the Caldwell house for a few days, it is probable that her attitude was that she might or might not go there another time as circumstances unfolded. Her relationship with the Caldwell house was all too casual.

The question now recurs as to whether she was domiciled in Pennsylvania at her death. Did she intend to make her apartment at the Hotel Pennsylvania her domicile for any time during 1931-1937? It is clear that she kept no string attached to her New York domicile after 1931; that domicile was abandoned. The testimony of Mr. Bishop, of the representative of the bank who was with him, and of one of the nurses who attended Mrs. Gilbert, puts in the record declarations made by her shortly before her death that she regarded Philadelphia as her home. Even if these declarations are disregarded, there remain the hotel registrations in 1931, 1937 and 1938, where she declared herself as from Philadelphia. However, her own conduct circumstantially speaks even more loudly for her intent to settle down in the hotel and make it her fixed habitation. She was no casual visitor here. It is concluded that during most of the time that she was at the apartment hotel and until the last of her stay there, there was absent from her mind “any present intention of not residing permanently or indefinitely” in the apartment there. In re Dorrance, supra. A hotel building can become a domicile. Title Guarantee, &c., Co. v. Isherwood, 2 N. J. Mis. R. 342. And the Philadelphia apartment became hers.

By reason of the fact that she left that apartment in October, 1937, petitioner has felt a necessity of proving that she retained a eitywide domicile in Philadelphia, all of which lies in Philadelphia county. King v. King, supra; Restatement, Conflict of Laws, § 9, comment (5), •§ 16, particularly comment (d). There is no force to the assertion that she acquired a domicile in the hospital Just before her death. The evidence of a floating intention on her part to make Philadelphia her home city is none too adequate. Such an intention is conceivable, but comparatively rare. However, that matter need not be decided for in any case her domicile remained in Philadelphia. If she acquired no new citywide domicile, then she never lost her domicile in the Hotel Pennsylvania; for having acquired no new home, the domicile in the hotel continued as a matter of law, notwithstanding her abandonment of it. The obiter dictum of Valentine v. Valentine, 61 N. J. Eq. 400; 48 Atl. Rep. 593, following the English law that on the abandonment of a domicile of choice the domicile of origin revives, has been repeated. Givernaud v. Variel, supra; In re Paullin’s Estate, 109 Atl. Rep. 13; affirmed on other grounds, 92 N. J. Eq. 419; 113 Atl. Rep. 240. But this rule is most unnatural in America and has nothing in public policy here to recommend it. The weight of authority in this country is contrary, and in accord with the holding here. That the Court of Errors has noted this trend of the law may be taken from its reference in Watkinson v. Watkinson, 68 N. J. Eq. 632 (at p. 638); 60 Atl. Rep. 931, to 10 Am. & Eng. Encycl. L. 15. Restatement, Conflict of Laws, § 23, comment (&); 1 Beale Conflict of Laws, § 23.3. Furthermore, Cf. Hibbert v. Hibbert, 72 N. J. Eq. 778; 65 Atl. Rep. 1028, perhaps to the effect that one must definitely abandon the city of one’s domicile as well as the house of one’s domicile for the domicile of origin to revive; and even then the “artificial,” “unusual” English rule “might” not be followed.

The conclusion, therefore, is that the grant of letters of general domiciliary administration by the Essex County Surrogate’s Court was void for the reason that the court lacked jurisdiction, the decedent having been domiciled in another state at her death. Romanchik v. Howard Savings Institution, 118 N. J. L. 606; 194 Atl. Rep. 185; In re Paullin, supra.


text:
    Orrin W. Pineo, petitioner, v. Natalie Bushnell Craven, otherwise called Natalie Bushnell Pineo, defendant.
    [Decided August 16th, 1940.]

      Messrs. Hophins & King, for the petitioner.

      Messrs. Howe & Davis, for the defendant.
   Herr, A. M.

Defendant, Natalie B. Pineo, makes application to this court in behalf of herself, her mother, Mrs. Natalie Bushnell, and her aunt, Miss Olga Borcherdt, all residing outside of this state, to have their testimony taken by deposition de bene esse. The petitioner resists, contending that the matter is purely within the discretion of the court, and that the application should be denied upon the merits.

The application is made under R. S. 2:100-26; N. J. S. A. 2:100-26:

“Before whom testimony taken. Any party in a civil cause or any defendant in any indictment desiring the testimony of any witness who resides out of this state may, instead of taking his testimony by commission, take the testimony of such witness de bene esse, before any judge of any supreme, circuit or district court, or court of common pleas, of the state or country where such witness is, or before any commissioner of deeds appointed by the governor of this state, resident in the state or country where such witness is, or before a commissioner specially appointed for that purpose by the court in which such action is pending, or any judge thereof, or before a master in chancery of this state.” Source L. 1900 c. 150 p. 315 § 45 (Comp. Stat. p. 2234 § 45).

It will be observed that the present form of statute is derived from, and except in minor respects not important to a decision of the issue now presented, identical with section 45 of the Evidence act (Comp. Stat. 1910 p. 2284). The old section 45 is covered by four sections, 2:100-26 to 29 (N. J. S. A. 2:100-26 to 29), inclusive.

As to Mrs. Pineo herself, the petitioner argues that the court has discretion as to whether or not to permit the taking of her depositions, citing R. S. 1987, 2:100-46 (N. J. S. A. 2:100-46), which reads as follows:

“Examination de bene esse of party absent from state; commission; procedure; effect. If a party in any action or proceeding of a civil nature pending in any of the courts of this state, be absent from the state, whether the residence of such party be within or without the state, the court in which such action or proceeding is pending, in its discretion, or any judge of such court, in term or vacation, on affidavit or proof thereof, to the satisfaction of such court or judge, and on such terms as such court or judge may direct, may award and issue, under the seal of the court, a commission to such person or persons as the court or judge may think fit, authorizing such person or persons, or any two or more of such persons, to examine de bene esse such party on oath, in the same manner and with the same force and effect as in the case of a material witness who resides out of the state.” Source L. 1902 c. 14$ p. 459 § 1 (Comp. Stat. p. 2286 § 56b) ; Suppl. to L. 1900 c. 150 p. 862.

It will be noted, however, that this section applies only to cases in which a commission is sought.

The case of Baelde v. San Domingo Improvement Co., 88 Atl. Rep. 485; 85 N. J. L. J. 111, a Supreme Court case decided June 21st, 1912, is in point. In that case the plaintiff made application to have his own testimony taken de lene esse. The defendant resisted the application quoting 2:100-46, in its then form (P. L. 190:2 c. 143 p. 459 § 1; Comp. Stat. p. 2236 § 56b). The court considered the identical questions now raised, saying, on page 486:

“Before the enactment of the present evidence statute of 1900, the law provided for depositions to be taken in two cases; the first of witnesses within the state, and with which we are not concerned here; secondly, of witnesses residing out of the state. The latter could be accomplished by two methods. Gen. Stat. 1,403. The first method was by a commission awarded and issued by the court'or the judge upon proof of the facts hind on such terms as the court or judge may direct’ to examine de bene esse. This required the approval of the interrogatories. The procedure is given in Gen. Stat. 1403 §§ 29 to 46, both inclusive. The forty-fourth section enacts That the party requiring such examination of depositions shall be at the sole expense thereof, and shall not have any allowance for the same in the taxation of costs.’ Under this statute, where testimony was taken on a commission, the amounts paid to counsel and for the expense of the commission were disallowed in Main v. Main, 50 N. J. Eq. 712; 25 Atl. Rep. 372. The second method of taking the testimony of a foreign witness is sometimes called that of the ‘open commission.’ This first appears, J think, in the act of 1862, page 225. It has been carried in the act apparently ever since, first as section 38 of the Evidence act of 1874, amended in 1893 (Gen. Stat. 1410 § 66). This is now section 45 of the Evidence act of 1900, page 376. In 1908 a supplement (page 277) was passed providing that the party requiring the examination should, in the first instance, be at the sole expense, which might be included in the taxed costs of the prevailing party if so ordered. This section, as above stated, was construed in Hite v. Dell, 78 N. J. Law 28,9; 78 Atl. Rep. 72. I take it that the procuring of the deposition of a foreign witness, either by a commission or upon notice, was a matter of right and not a matter resting in the discretion of the court.”

While it is true that that decision was a Supreme Court issue, the same statutes concerning depositions apply to this court as well. R. S. 2:100-9 (N. J. S. A. 2:100-9) (which was section. 47 of the old Evidence act; Comp. Stat. 1910, p. 2235). See, also, R. S. 2:100-39 (N. J. S. A. 2:100-39). The old form of this statute, section 46 (Comp. Stat. 1910, 2234), explicitly provides:

“It being the intention of this section to give the parties to actions who reside out of state the same privilege to have their depositions taken out of state as to other witnesses in such actions residing out of state.”

It seems clear, therefore, that the purpose of R. S. 2:100-39 (N. J. S. A. 2:100-39) is to extend the right granted by R. S. 2:100-26 (N. J. S. A. 2:100-26) so as to include parties as well as witnesses.

In the Baelde Case, the court directly considered that question, and so held on page 486:

“Up to the passage of the act of 1900, however, no provision was made for the taking of the evidence of a party to an action. Such right was incorporated in the forty-sixth section of the act of 1900; the latter part of which reads as follows: £It being the intention of this section to give to the parties to actions, who reside out of the state, the same privilege to have their depositions taken out of the state as to other witnesses in such actions, residing out of the state.5 It is clear that thereby parties and witnesses are put upon the same footing, and the privilege to a party is to be measured by the privilege theretofore accorded to a witness. It will be noticed that the forty-sixth section applies to a non-resident.55

A little further on, the court says:

“I take it the act of 1902 is not effective to enlarge the powers of the judge to impose terms under the application sub judice.”

There can be no question as to the right of the defendant, Mrs. Pineo, to have the testimony of her mother and her aunt taken out of the state. They are not parties to this action, they have complete liberty of movement, and no legal means can compel them to come to Hew Jersey. This court must therefore order their testimony to be taken in Iowa, and even if there be discretion to decline to order Mrs. Pineo5s evidence to be taken in like manner, there is little point in denying the defendant the right to testify, when the same commissioner could be used to take the testimony at the same time and place with no additional burden imposed upon the parties. It is, of course, always desirable for the court (especially when it sits as a jury as well as a judge of law) that the witnesses be seen directly, as credibility is sometimes so determined. However, this argument can be applied to the testimony of any witness taken out of the state. The absence of an opportunity to observe the witnesses’ manner in testifying always exists, and if this were a controlling consideration the discretion of the court ought never to be exercised so as to permit the taking of testimony de bene esse.

Since this is a suit to annul a marriage, the state is a party. Public policy requires that the defense be encouraged. Mrs. Pineo’s refusal to attend this court in person, while it may not be reasonably justified, must be excused on the ground of her emotional instability, the reality and serious extent of which is evident from the proofs already before the court. For this reason, as well as upon the grounds first above stated, T think her application should he granted.

I will advise an order accordingly.


text:
    State Board of Tax Appeals.
    THE EWING CEMETERY ASSOCIATION, INC., PETITIONER, v. EWING TOWNSHIP, RESPONDENT.
    Decided September 10, 1940.
    Eor the petitioner, William N. Cooper and Frank H. Lawton.

    Eor the respondent, Hervey C. Scudder and George LI. Bohlinger,' Jr.

   Quinn, President.

Petitioner is a non-profit cemetery association, duly incorporated under the Bural Cemeteries act. In or about the year 1933 it constructed a building within its cemetery property, situate in the respondent taxing district, to be used as an administration building and chapel. In April of that year, acting upon behalf of the association, its president procured permission of the State Department of Health to establish a crematory in the basement of the administration building, for the cremation of dead human bodies, and such a crematory was built therein and has since been maintained and operated by the cemetery association. The proceeds of the crematory go to meet the expense of operation of the cemetery generally. The question presented upon this appeal is whether the building, used for the various purposes set forth, was properly subjected to taxation by the township for the year 1939, in view of the provisions of R. S. 54:4-3.9 (N. J. S. A. 54:4-3.9), providing that:

“Graveyards not exceeding ten acres of ground, and cemeteries and buildings for cemetery use erected thereon, and all mausoleums, vaults, crypts or structures intended to hold or contain the bodies of the dead, and solefy devoted to or held for that purpose shall be exempt from taxation under this chapter.”

The petitioner’s appeal from an assessment levied upon the building for the year in question, claiming exemption therefor as a “building for cemetery use,” was dismissed by the Mercer County Board of Taxation.

There appears to be no question that a structure built upon cemetery premises for administration and chapel purposes would be fairly comprised within the phrase, “buildings for cemetery purposes.” Does the same result obtain where the basement of such a building is converted into a crematory, there being, apparently, no discontinuance of the original functions of the building at the same time? It appears to us entirely reasonable that it should, where, as is here the ease, facilities for the burial of the cremated ashes are made available by petitioner in special plots for that purpose, or for their keeping in urns placed in niches of the same building. Whether or not the process of cremation is subject to assimilation, under present day cemetery practices, into the proper functions of a modern cemetery, so as to make a building exclusively devoted thereto by a cemetery, a “building for cemetery use,” within. the statute, need not here be determined. We think it is sufficient to say that a building already devoted to undeniable cemetery uses was not rendered any the less a cemetery building by the use of its basement for non-profit cremation purposes. It is significant that the exemption statute, here in question, as distinguished from other exemption legislation, does not require that the buildings shall be exclusively devoted to cemetery uses. See Township of Cranford v. Cranford Legion Holding Co., Inc. (State Board), filed November 10th, 1936.

Despondent urges upon us that the operation of a crematory is not within petitioner’s proper corporate powers. If this is so, it is a matter for the attention of the attorney-general, by quo warranto, but not the occasion for any departure by this board from the letter of the statute, expressly granting exemption from taxation to buildings substantially devoted (as we construe the act) to cemetery uses.

The judgment of the Mercer County Board is reversed, and the assessment ordered canceled.


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    State Board of Tax Appeals.
    1937 CASE CITY OF NEWARK, PETITIONER, v. WEYERHAEUSER TIMBER COMPANY, RESPONDENT. 1938 CASE CITY OF NEWARK, PETITIONER, v. WEYERHAEUSER TIMBER COMPANY, RESPONDENT. 1939 CASE CITY OF NEWARK, PETITIONER, v. WEYERHAEUSER TIMBER COMPANY, RESPONDENT. 1939 CASE WEYERHAEUSER TIMBER COMPANY, PETITIONER, v. CITY OF NEWARK, RESPONDENT.
    Decided September 10, 1940.

      For the city of Newark, James F. X. O’Brien (by Vincent J. Oasale).

    For Weyerhaeuser Timber Company, McCarter & English (by Conover English).

   Quinn, President.

These appeals were heard together and bring up the 1937, 1938 and 1939 personal property assessments levied by the city of Newark against the Weyerhaeuser Timber Company. These were fixed for each year by the assessing authorities of the taxing district at $1,000,000. Appeals to the Essex County Board of Taxation resulted in judgments for said years, respectively, of $376,772, $409,500 and $328,800. The city now appeals to restore each of the assessments to the amount originally levied, while the taxpayer seeks to reduce the county board judgment for the year 1939 by an additional $44,389.96, representing the value of certain machinery and equipment, claimed by the company to constitute fixtures annexed to realty, and therefore not to be taxable as personalty, and an automobile, exempt from taxation under R. S. 54:4-3.21.

The bulk of the difference between the original assessments and the amounts of the county board judgments represents the inventory of merchandise, or average of stock in trade on hand, held by the company in the taxing district for each of the tax years in question. The company claims exemption for such inventory as having been stored in a public warehouse under R. S. 54:4-3.20. Whether or not it was so stored is the first question requiring disposition herein. The inventory figures are agreed by the parties to be $621,545.72, $590,516.46 and $773,557.32.

The second substantial issue raised in each of the cases is as to the taxability of the machinery and equipment referred to hereinabove, as personalty.

The third question presented is as to the deductibility of debts owing to New Jersey creditors upon the assessing dates for each of these years. We will consider these questions in order. An understanding of the first two, however, will be promoted by a brief resume of the background of the company’s occupancy of the site where the taxed property has been located.

The company occupies three buildings, up on a thirty-acre tract at Port Newark, which it leased from the city of Newark, owner, under indenture of lease dated January 16th, 1926, for a term of twenty years, commencing June 1st, 1926. Under the terms of the lease, the tenant was authorized to, and did build the buildings in question, for the storage, finishing, and merchandising of forest products, the lease providing that improvements thus constructed should become the property of the city at the conclusion of the term. It was further specifically provided, however, that the tenant should have the right to remove all machinery, fixtures and equipment. This -reference is applicable to a large crane, movable on tracks installed in the storage shed, planing machines and saws in the planing mill, and miscellaneous other equipment in the saw mill. From 1926 until September 26th, 1934, the company carried on at the demised premises (using the buildings and equipment referred to) its business of receiving lumber shipped to Port Newark, and merchandising it from that point. On the date last mentioned, however, the company caused to be organized a subsidiary New Jersey corporation, wholly owned by it, named Atlantic Terminals, Inc., to which it proceeded to sublease the storage and mill buildings and the equipment therein contained. The new corporation promptly proceeded to engage in the business of conducting a public warehouse for hire, storing all of the merchandise received at Port Newark by petitioner, which it treated as an ordinary patron, and in addition receiving for storage general public merchandise to the extent that its books showed 322 accounts as of September 30th, 1936, 333 as of September 30th, 1937, and 328 as of September 30th, 1938.

The city of Newark contends that Atlantic Terminals, Inc., is a more fiction, designed to enable the Weyerhaeuser Timber Company to escape taxation on its merchandise on hand, as purportedly, but not actually stored in a warehouse for hire. The facts established at the hearing, however, lead to the inevitable' conclusion that Atlantic Terminals, Inc., is in every respect a going, operating and substantial warehousing enterprise. If it is, the motivation for its organization is of no consequence. It was testified on behalf of the Weyerhaeuser Company that organization of the warehouse corporation was made necessary for competitive reasons, but, however that may be, this board can have no proper concern with tax avoidance objectives, so long as their effectuation is within the letter of the applicable statutes. See Hoboken v. State Board of Taxes and Assessment (Supreme Court, 1930), 107 N. J. L. 35; affirmed (Court of Errors and Appeals, 1931), 108 N. J. L. 195; Hoboken v. The Hoboken Dock Co. (State Board), filed September 12th, 1939; City of Newark v. New Jersey Investment Co. (State Board, 1940), 18 N. J. Mis. R. 182; 11 Atl. Rep. (2d) 730; City of Newark v. Universal Insurance Co. (State Board), 18 N. J. Mis. R. 507: 14 Atl. Rep. (2d) 549.

The Atlantic Terminals, Inc., was incorporated for the express purpose, inter alia, of canwing on the business of a warehouseman under the statute governing the conduct of that business. R. S. 57 :1-1, et seq. The extent of the custom which it has developed in the course of its business has been noted above. It handles, in precisely the same manner as does any other regularly established warehousing business, goods of every character, including lumber. Ten per cent, of the general cargo is outbound. The servicing of lumber by the company in such manner as is required bjf its customers, including the Weyerhaeuser Company, does not derogate from its essential character as a public warehouse. Under the circumstances outlined, we are bound to hold the inventory of Weyerhaeuser Timber Company at all times situate in a public warehouse, and therefore exempt from taxation, within the controlling precedent of Halligan & McLellan v. State Board of Tax Appeals (Supreme Court, 1939), 122 N. J. L. 551; 6 Atl. Rep. (2d) 668, a closely comparable fact situation. In accord: Blanchard Lumber Co. v. City of Newark (State Board), filed December 19th, 1939. If the city regards the exemption statute as having been subject to abuse in this or other situations, its proper recourse is to the legislature, not to gwasi-judicial tribunals bound to apply the statute as construed by the courts. The question as to the constitutionality of the act was expressly left open by the court in the Halligan & McLellan case, and of course will not be passed upon by this board in advance of a determination thereof by the courts.

We proceed to a consideration of the contention urged by the timber company that the machinery and equipment hereinabove described constitutes part of the freehold, under the law of fixtures, and is therefore not subject to assessment for taxation by the city as personal property. The identical question was raised by the company in the appeal of the 1935 tax assessment before this board. In an opinion by the late president of the board, Commissioner Weaver, it was held that the property was not fixtures, for the reason that it did not appear that the equipment had been installed with the intention that it should be permanently affixed to the buildings to which it had been attached. City of Newark v. Weyerhaeuser Timber Co., filed March 9th, 1937. This conclusion is seen to be thoroughly justified by a consideration of the lease between the city as landlord and the timber company as tenant, wherein, after providing that all improvements erected upon the premises should become the property of the city at the end of the term, it was specifically further agreed: “that the tenant shall have the right to remove therefrom all machinery, belting, cranes, trade fixtures and equipment.”

The significance of this proviso is that the machinery and equipment in question was not installed in the buildings with the “intention of making a permanent accession to the freehold.” And under the cases, such an intention is au indispensable prerequisite, along with the requirements of physical annexation and application to use with the realty, to a finding that the machinery has become a part of the freehold. Chancellor v. Cruse (Court of Chancery, 1914), 83 N. J. Eq. 232; 90 Atl. Rep. 673; Bank of America, &c., v. LaReine Hotel (Court of Chancery, 1931), 108 N. J. Eq. 567; Knickerbocker Trust Co. v. Penn Cordage Co. (Court of Errors and Appeals, 1904), 66 N. J. Eq. 305; 58 Atl. Rep. 409.

The taxpayer has sought to escape the consequences of the proviso referred to by passing a corporate resolution waiving its right to remove the machinery and equipment at the end of the term and by communicating that fact to the city. This act can have no effect upon the issue before us, however, for either of two independently sufficient reasons. The company’s present intention to abandon the equipment cannot alter the operative fact that at the time of installation, it was not intended that it should remain permanently annexed to the buildings. And that is the determinative criterion. See the cases cited, supra. Secondly, the company cannot effectuate a unilateral modification of what is seen to be a provision of the lease involving important benefits to the city, without the acceptance of or concurrence in such modification by the city. The machinery and equipment is personal property, taxable to the taxpayer for each of the tax years under appeal.

We have finally to consider claims for deductions for debts made by the company for each of these tax years. The taxpayer is a foreign corporation, and it will therefore suffice to say that we have recently held, in City of Newark v. Household Finance Corp. (State Board, 1940), 18 N. J. Mis. R. 295; 12 Atl. Rep. (2d) 899, that foreign corporations have no right of deduction for debts. The claims will therefore be disallowed.

Exempting inventory, but taxing machinery and equipment, for each of the tax years, results in taxable balances, based upon valuations agreed upon by the parties, as follows:

1937 ................. $391,401.34

1938 .................. 394,622.23

1939 ................. 332,880.06

The judgments of the county board for the years 1937 and 1939 will be modified by increasing the assessments to the amounts set forth. There having been no appeal by the taxpayer from the county board judgment of $409,500 for the year 1938, that judgment will be affirmed for said year.


text:
    State Board of Tax Appeals.
    HARBOR TANK STORAGE COMPANY, PETITIONER, v. CITY OF JERSEY CITY, RESPONDENT.
    Decided September 10, 1940.
    Eor th.e petitioner, Thomas Meehan.

    'For the respondent, James A. Hamill (by Frank P. McCarLhy)

   Quinn, President.

The city of Jersey City levied two personal property assessments against the petitioner for the year 1938, based upon its supposed possession of taxable personalty at two locations in that city, one at Thirteenth street and the other at Warren street, the former in the sum of $275,000 and the latter, $160,000. Appeals from these assessments to the Hudson County Board of Taxation were dismissed.

The petitioner proved to our satisfaction at the hearing that it owned no property whatsoever in the respondent taxing district upon the assessing date. It operates storage tanks for hire at the locations referred to, for the warehousing of vegetable oils and molasses in bulk. The storage tanks and equipment are leased by the petitioner from the Delaware, Lackawanna and Western Bailroad, and from the American Sugar Company. Merchandise stored in the tanks does not belong to the petitioner. It is merely a bailee for hire. None of this proof was contradicted by the city at the hearing.

As personal property is subject to assessment only against the owner thereof, R. S. 54:4-1 (N. J. S. A. 54:4-1), no valid assessment is possible against petitioner. Petitioner is accordingly entitled to a judgment setting the assessments aside, as to it.


text:
    State Board of Tax Appeals.
    POSTAL TELEGRAPH-CABLE COMPANY OF NEW JERSEY, PETITIONER, v. J. H. THAYER MARTIN, STATE TAX COMMISSIONER, RESPONDENT.
    Decided September 10, 1940.

      For the petitioner, G. William Shea.

    For the respondent, David T. Wilentz, attorney-general (by John Solan).

   Quinn, President.

Petitioner was subject to taxation for the year 1939, for the franchise to use public highways, streets and places in the conduct of its business in this state, under Pamph. L. 1938, ch. 7. It does both an intrastate and interstate business in the transmission of telegraphic messages, and for the year in question, maintained a total of 268.912 miles of line in the state, of which 252.702 miles were erected upon or over public highways, streets and places.

From its business for the period attributable to the tax year 1939, its gross receipts were $18,013.97 derived from intrastate business, and $201,303.88 from interstate business. The statute provides for the levy of the tax as follows:

“The excise tax imposed on each taxpayer shall be a sum equal to five per cent, of such portion of the taxpayer’s gross receipts as herein defined of their business over, on, in, through or from the whole of the taxpayer’s lines or mains as the length of the lines or mains of such taxpayer in this state along, in or over any public street, highway, road or other public place bears to the whole length of the taxpayer’s lines or mains. In case the gross receipts of any such taxpayer for any calendar year shall not exceed the sum of fifty thousand dollars ($50,000) the tax on such taxpayer for such calendar year shall be computed at the rate of two per centum (2%), instead of at the rate of five per centum (5%), of the gross receipt.”

The assessment made by the State Tax Commissioner was in the sum of $876,77, determined by applying the five per cent, rate to the sum of $17,535.31, which in turn, represents that proportion of gross intrastate receipts which the number of miles of line in public places, &c., bears to the total length of the company’s lines in the state. Petitioner assigns as error the use by the commissioner of the live per cent., rather than the two per cent, referred to in the statute. It urges that “gross receipts,” as referred to in the last sentence of the statutory excerpt set out above, means gross receipts taxable, and not gross receipts from interstate as well as intrastate business. And since gross receipts taxable were less titan $50,000, it contends that the tax should have computed on the basis of two per cent. The Court of Errors and x\ppeals, however, has heretofore construed a substantially similar predecessor enactment to the contrary. Bergen Aqueduct Co. v. State Board (Court of Errors and Appeals, 1920), 95 N. J. L. 486; 112 Atl. Rep. 881. It was there held that the larger percentage was intended for use in the event that total receipts of the company, from whatever source, should exceed the sum of $50,000. We are, of course, concluded by that construction of the act.

Petitioner further urges that if the statute is to be construed in the manner which, as seen, we deem mandatory upon us, it is unconstitutional, as in effect laying a direct and burdensome tax on its interstate business, citing New Jersey Bell Telephone Co. v. State Board (1930), 280 U. S. 338. While we do not regard that decision as analogous to the situation herewith presented, we do not, in any event, undertake to pass upon constitutional questions of first impression in advance of their determination by the courts.

The assessment will be affirmed.