436 Pa. 131 | Pa. | 1969
Lead Opinion
Opinion by
Effective January 1, 1953, the City of Philadelphia enacted a Mercantile License Tax upon persons and
This modification was apparently precipitated by this Court’s decisions in Y.M.C.A. v. Reading, 402 Pa. 592, 167 A. 2d 469 (1961), Pinebrook Foundation, Inc. v. Shiffer, 416 Pa. 379, 206 A. 2d 314 (1965), and Bell Telephone Co. v. Philadelphia, 421 Pa. 14, 218 A. 2d 727 (1966). These decisions answered the question whether “an erroneous interpretation of a taxing statute by a tax official supports his being prohibited from again enforcing that taxing statute against the decree winner.” We concluded that “such action may not be proscribed.” Bell Telephone Co. v. Philadelphia, supra at 16.
It is conceded by all parties to this litigation that the injunction the appellants obtained in 1953 falls within the prohibited class of injunctions established in the Y.M.C.A.-Pinebrook Foundation, Inc.-Bell Telephone Co. line of cases. Therefore, the decision by the court below to modify the 1953 injunction is essentially correct. The only issue presented for our consideration is whether the injunction should have been modified as it was—to only enjoin the collection of the Mercantile License Tax through the end of 1953—or whether the injunction should have been modified so as not to affect those tax years prior to the city’s challenge of the
The city argues that the modification of the decree should be completely retroactive. To support this proposition it cites both the Bell Telephone and Pinebrook Foundation cases. In both of these, the modification of the decree resulted in completely retroactive application of the rule against enjoining the collection of taxes. In opposition, appellants cite this Court’s disposition in the original decree modification case, Y.M.C.A. v. Reading, and certain equitable principles which should be given effect in a situation such as this one. Specifically, appellant quotes from Y.M.C.A.: “Because of the parties’ reliance upon past practice and because of the time lapse that would impose an inequitable hardship on the litigant, we shall determine the present controversy . . . .” 402 Pa. at 598, 167 A. 2d at 472.
It is our view that appellants’ argument must be upheld. Since in these cases of necessity we must give effect to equitable principles (as well as this Court’s decision as to injunctions in tax cases), we believe it is reasonable that the city be permitted to assert tax liability only as to those years after which appellants were put on notice that the original decree might be modified. To do otherwise would tear down some of the most basic foundations of our jurisprudence—the requirements of timely appeals and of finality of judicial adjudications.
Here the city and appellants litigated the Sterling Act exemption in 1953, the city failed to appeal from that determination, and the companies relied on the exempt status for thirteen years (as did the city) — during which time mergers took place, business records were destroyed and business decisions were made on the basis of a final judicial adjudication upon which
This Court has indeed declared that injunctions in tax cases such as this one are procedurally improper. But we did not do so until 1966. It hardly seems necessary for the implementation of such a policy that those who relied on such unappealed injunctions prior to our decision in Pinebrooh now suddenly be assessed with retroactive taxes from which they were judicially declared to be immune. The city as an aggrieved party had the right to appeal, which it did not pursue. To sustain the city’s retroactive tax claims is tantamount to ignoring the whole area of jurisprudence which demands timely appeals and to granting the city in reality an appeal nunc pro tunc sixteen years later. Such a holding would place the Court in the role of parens patriae of the taxing-body litigant. If this is a proper role for the Court to assume for a public taxing body, why not for all litigants? It seems sufficient to satisfy our purposes that such tax injunctions only be subject to modification at a date after the parties to such decrees were put on notice that their validity was in doubt.
Therefore, we conclude that the action of the court below in modifying the injunction to only apply to the years preceding and including 1953 does not comport with the equitable principles inherent in any such proceeding. For that reason, we modify the decree so that it reads: “That the City of Philadelphia is en
Decree affirmed as modified. Each party to pay own costs.
Dissenting Opinion
Dissenting Opinion by
The majority adheres to this Court’s decisions in Bell Telephone Company of Pennsylvania v. Philadelphia, 421 Pa. 14, 218 A. 2d 727 (1966); Pinebrook Foundation Inc. v. Shiffer, 416 Pa. 379, 206 A. 2d 314 (1965), and Young Men’s Christian Association v. Reading, 402 Pa. 592, 167 A. 2d 469 (1961), as stating the law in this area. It also concedes that the injunction obtained by appellants in 1953 was overbroad and that the decision by the court below to modify the 1953 injunction is “essentially” correct. The only issue on which there exists a difference of opinion is whether the City should assess taxes beginning with 1954 or 1967.
The majority has selected the latter date as the proper one pursuant to “equitable” principles. That is, because the City failed to appeal the 1953 determination and because appellants relied on that determination for thirteen years, it is reasonable to assert tax liability only from 1967. Such a decision, we are told, is necessary to reinforce the principles of timely appeals and finality of judicial adjudications.
It is certainly anomalous to grant appellants the benefit of equitable principles when they have not acted equitably throughout the period in question. In its
As to reliance, appellants contend that record destruction and merger policies make it “literally impossible” to assemble mercantile tax information. Perhaps that is so, but appellants’ self-serving assertions should not decide the issue. The taxing authority should at least be given the opportunity of studying appellants’ records to determine whether the proper tax can be computed. If the City imposes a tax that
Certainly the public and those involved in the administration of justice have an interest in the finality of adjudication. But to be weighed against that is the great public interest in having available to it that tax revenue properly due. (It must be remembered that the majority concedes this money was properly owed to the City and would have so ordered in 1953.) With cities so in need of additional funds, the interest in finality of adjudication should not automatically be given precedence.
Finally, this case is factually and legally indistinguishable from Bell Telephone, supra. In that case the court below held that its original decree, issued in 1953, was in error and modified the decree so as to restrain the collection of the City tax only for years up to and including 1953. This Court affirmed the modified decree. The opinion gave no weight to the fact that the City of Philadelphia had not appealed the 1953 decree and did not consider relevant any reliance by Bell. The reasons stated by the majority in this case are not cause enough to refuse to follow Bell Telephone which is directly on point.
The decree should be affirmed so that the City has an opportunity to investigate appellants’ records and determine whether the proper amount of tax due can be ascertained.
I dissent.