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The franchise tax is entitled to priority in the payment out of the assets in the hands of a receiver, even if the tax is imposed subsequent to the appointment of the receiver, and if the receiver has not exercised any of the corporate franchises. In re U. S. Car Co., 69 N. J. Eq., 514.

The tax provided for under this section, being an "arbitrary imposition laid upon a corporation without regard to the value of its property or its franchises," will not be enforced in a foreign jurisdiction and given priority of payment over the claims of bona fide local creditors, where the business situs and all the property of a New Jersey corporation are located in another state and the insolvent corporation is being wound up in that state. Franklin Trust Co. v. State, 181 Fed. Rep., 769.

This decision is in accord with the view expressed in Ballou v. Flour Milling Co., 67 N. J. Eq., 188, where the court said that the imposition of such a tax would not be given extraterritorial effect.

A fee or franchise tax has no legal status in a foreign jurisdiction unless supported by statute or special equities. But it appears that this rule does not apply to bankruptcy proceedings. New Jersey v. Anderson, 203 U. S., 483.

154. Injunction against company in arrears for three months.

In addition to other remedies for the collection of such tax, it shall be lawful for the attorney-general, either of his own motion or upon the request of the state comptroller, whenever any tax due under this act, from any company, shall have remained in arrears for a period of three months after the same shall have become payable, to apply to the court of chancery, by petition in the name of the state, on five days' notice to such corporation, which notice may be served in such manner as the chancellor may direct, for an injunction to restrain such corporation from the exercise of any franchise, or the transaction of any business within this state until the payment of such tax and interest due thereon, and the costs of such application, to be fixed by the chancellor; the said court is hereby authorized to grant such injunction, if a proper case

appear, and upon the granting any service of such injunction, it shall not be lawful for such company thereafter to exercise any franchise or transact any business in this state until such injunction be dissolved. (Section 7 of the Act of April 18, 1884; P. L. 1884, p. 236.) When a "proper case" is presented, the Court of Chancery has no discretion, but must issue the injunction. Electro-Pneumatic Transit Co.'s Case, 51 N. J. Eq., 71.

See Jewett v. Bauman, 27 N. J. Eq., 171; In re Faure Elec. Light, &c., Co., 43 Id., 411; In re New York File & Sharpening Co., Id., 413; Macaulay v. White Sewing Machine Co., 9 Fed. Rep., 698; Cary Mfg. Co. v. Acme Flexible Clasp Co., 108 Fed. Rep., 873; s. c. 187 U. S., 427.

155. For failure for two years to pay state tax charter void, unless governor gives further time.

If any corporation created under any act of this state shall for two consecutive years neglect or refuse to pay the state any tax which has been or shall be assessed against it under any law of this state and made payable into the state treasury, the charter of such corporation shall be declared void as in section two of this act provided, unless the Governor shall, for good cause shown to him, give further time for the payment of such tax, in which case a certificate thereof shall be filed by the Governor in the office of the comptroller, stating the reasons therefor.

(Section 1 of the Supplement of April 21, 1896; P. L. 1896, p. 319; as amended by P. L. 1905, p. 508, Section 1.)

A company whose charter has been proclaimed by the Governor under this act is within the provisions of Sections 53-60 of the Corporation Act regulating the winding up of corporations. American Surety Co. v. Great White Spirit Co., 58 N. J. Eq., 526.

The tax is imposed solely as a condition of continued existence and is to be levied without regard to value of property or the exercise of the franchise. In re United States Car Co., 60 N. J. Eq., 514.

The receiver of an insolvent corporation must pay the tax when he has failed to make the proper return even though he has con

verted all of the property of the company into cash and has transacted no business. King v. American Vehicle Co., 70 N. J. Eq., 568. See also Duryea v. Am. Wood Working Co., 133 Fed. Rep., 329.

156. Comptroller to report list of delinquents. Governor to issue proclamation declaring repeal of charter.

On or before the first Monday in January in each year the comptroller shall report to the Governor a list of all corporations which for two years next preceding such report have failed, neglected or refused to pay the taxes assessed against them under any law of this state as above, and the Governor shall forthwith issue his proclamation, declaring under this act of the legislature that the charters of these corporations are repealed, and all powers conferred by law upon such corporations shall thereafter be deemed inoperative and void.

(Section 2 of the Supplement of April 21, 1896; P. L. 1896, p. 319; as amended by P. L. 1900, p. 319; P. L. 1901, p. 221; P. L. 1905, p. 509, Section 2.)

This section does not prohibit a corporation from winding up its affairs and does not prevent an adjudication in bankruptcy. In re Munger Vehicle Tire Co., 159 Fed. Rep., 901.

157. Proclamation to be filed and published.

The proclamation of the Governor shall be filed in the office of the secretary of state, and published in such newspapers and for such length of time as the Governor shall designate.

(Section 3 of the Supplement of April 21, 1896; P. L. 1896, p. 319; as amended by P. L. 1905, p. 509, Section 3.)

158. Penalty for exercising powers under charter after proclamation.

Any person or persons who shall exercise or attempt to exercise any powers under the charter of

any such corporation after the issuing of such proclamation shall be deemed guilty of a misdemeanor, and shall be punished by imprisonment not exceeding one year, or a fine not exceeding one thousand dollars, or both, in the discretion of the court.

(Section 4 of the Supplement of April 21, 1896; P. L. 1896, p. 319; as amended by P. L. 1905, p. 509, Section 4.)

159. Attorney-general may proceed against corporations in arrears; receiver may be appointed.

After any corporation of this state has failed and neglected for the space of two consecutive years to pay the taxes imposed upon it by law, and the comptroller of this state shall have reported such corporation to the Governor of this state, as provided in this act, then it shall be lawful for the attorney-general of this state to proceed against said corporation in the court of chancery of this state for the appointment of a receiver, or otherwise, and the said court in such proceeding shall ascertain the amount of the taxes remaining due and unpaid by such corporation to the State of New Jersey, and shall enter a final degree for the amount so ascertained, and thereupon a fieri facias or other process shall issue for the collection of the same as other debts are collected, and if no property which may be seized and sold on fieri facias shall be found within the said State of New Jersey, sufficient to pay such decree, the said court shall further order and decree that the said corporation, within ten days from and after the service of notice of such decree upon any officer of said corporation upon whom service of process may be lawfully made, or such notice as the court shall direct, shall assign and transfer to the trustee or receiver appointed by the court, any chose in action, or any patent or patents, or any assignment of, or license under any

patented invention or inventions owned by, leased or licensed to or controlled in whole or in part by said corporation, to be sold by said receiver or trustee for the satisfaction of such decree, and no injunction theretofore issued nor any forfeiture of the charte" of any such corporation shall be held to exempt such corporation from compliance with such order of the court. And if the said corporation shall neglect or refuse, within ten days from and after the serving of notice of such decree, to assign and transfer the same to such receiver or trustee for sale as aforesaid, it shall be the duty of said court to appoint a trustee to make the assignment of the same, in the name and on behalf of such corporation, to the receiver or trustee appointed to make such sale, and the said receiver or trustee shall thereupon, after such notice and in such manner as required for the sale under fieri facias of personal property, sell the same to the highest bidder, and the said receiver or trustee, upon the payment of the purchase money, shall execute and deliver to such purchaser an assignment and transfer of all the patents and interests of the corporation so sold, which assignment or transfer shall vest in the purchaser a valid title to all the right, title and interest whatsoever of the said corporation therein, and the proceeds of such sale shall be applied to the payment of such unpaid taxes, together with the costs of said proceedings.

(Section 5 of the Supplement of April 21, 1896; P. L. 1896, p. 320; as amended by P. L. 1905, p. 509, Section 5.)

160. Governor may correct mistake when corporation inadvertently reported.

Whenever it is established to the satisfaction of the Governor that any corporation named in said

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