81 A.3d 24
Pa.2013Background
- Stephen Girard's 1831 will created a large charitable trust administered for public purposes (Girard College and other civic improvements); the City of Philadelphia was named trustee and special state and local legislation implemented the will.
- The General Assembly created the Board of Directors of City Trusts in 1869 to administer Girard-related trusts; board members are appointed by Pennsylvania judges and the Board reports to state and city authorities.
- In 2001 the Board (acting for the City as trustee) purchased real property in Cumberland County and leased it to the Pennsylvania Office of Attorney General (OAG); rental income funds the Girard Trust/College.
- Cumberland County assessed and billed local real estate and school taxes on the property; the Board paid under protest and sought tax relief, claiming either sovereign immunity (as a Commonwealth agency) or tax exemption as public property used for a public purpose.
- Trial court granted summary judgment for the Board (holding the property immune and exempt); the Commonwealth Court reversed, holding the Girard entities were not Commonwealth agencies for tax-immunity purposes and that leasing the property to raise revenue defeated a public-purpose exemption.
- The Pennsylvania Supreme Court reversed the Commonwealth Court and reinstated the trial court: it concluded the Girard Trust/College and Board are, given their history and legislative framework, part of the Commonwealth sovereign for purposes of local real estate tax immunity; the Court did not decide the separate exemption question.
Issues
| Issue | Plaintiff's Argument (Board/City) | Defendant's Argument (County) | Held |
|---|---|---|---|
| Whether the Board/Girard entities are immune from local real estate taxation as an agency/instrumentality of the Commonwealth | The Board was created by the General Assembly to carry out public functions under Girard’s will; historical legislative involvement, judicial appointment and reporting, federal/state precedent, and long-standing treatment support Commonwealth agency status and immunity | The trust is a charitable but private beneficiary entity; title and equitable ownership distinctions matter; statutory creation/appointments do not automatically make the Board a Commonwealth agency for tax-immunity purposes | Court held the Girard Trust, College and Board collectively are part of the Commonwealth sovereign and immune from local real estate taxation (reversing Commonwealth Court) |
| Whether the property is exempt from local taxation as public property used for a public purpose | Alternatively, the property is public property (title in City) and leased to the OAG for a public purpose, so it is exempt under constitutional and statutory public-property/public-purpose provisions | Even if lessee is a government agency, leasing to generate revenue for the trust is an investment use that defeats the public-purpose exemption | Court did not reach this issue after deciding immunity; it expressly declined to decide the exemption question |
Key Cases Cited
- Commonwealth v. Board of City Trusts, 353 U.S. 230 (U.S. 1957) (U.S. Supreme Court held the Board operating Girard College was an agency of the State for Fourteenth Amendment purposes)
- Commonwealth v. Brown, 392 F.2d 120 (3d Cir. 1968) (Third Circuit emphasized close state involvement with Girard entities and criticized state-court substitution of private trustees)
- In re Estate of Girard, 386 Pa. 548 (Pa. 1956) (Pennsylvania Supreme Court decision addressing Girard College administration and state-action issues)
- Lehigh-Northampton Airport Auth. v. Lehigh Cty. Bd. of Assessment, 585 Pa. 657 (Pa. 2005) (discusses sovereign immunity from local taxation for public authorities and related factors)
- SEPTA v. Bd. of Revision of Taxes, 574 Pa. 707 (Pa. 2003) (held that leasing property to unrelated commercial tenants can remove immunity when activity is a commercial landlord function)
- Pennsylvania State Univ. v. Derry Twp. Sch. Dist., 557 Pa. 91 (Pa. 1999) (explains that agency/instrumentality status can vary by context and focuses on Commonwealth control of property)
- Delaware County Solid Waste Auth. v. Berks Cty. Bd. of Assessment, 534 Pa. 81 (Pa. 1993) (analyzes immunity using enabling legislation and incidents of ownership/governmental purpose)