*1
v. Fisher, Pennsylvania of and D. Michael COMMONWEALTH Attorney Pennsylvania and General Commonwealth of County being Montgomery, Board of of of Commissioners Buckman, (solely Joseph Richard and Mario Mele Hoeffel capacities) Appeals their official Board of of and Assessment County Montgomery County Montgomery, of Re and of spondents.
County Pennsylvania Commissioners’ of and Association County Adams, Chester, Dauphin,
Boards of Commissioners of , Indiana, Lackawanna, Schuylkill, Warren Counties1 and York Intervenors. Annenberg, H.
Walter as Sole Trustee of the Trust Under Petitioner, Annenberg, of Moses L. Will Pennsylvania Fisher, Attorney of Commonwealth D. and Michael Pennsylvania General of the of Commonwealth and Board of County Montgomery, being Commissioners of the of Richard Buckman, Joseph (solely Hoeffel and Mario Mele their capacities) official Appeals and Board of of Assessment County County Montgomery Montgomeiy, Respon dents.
County Pennsylvania Commissioners’ Association and the County Chester, Adams, Dauphin,
Boards of Commissioners Indiana, Lackawanna, Schuylkill, Counties, Warren York Intervenors.
Supreme Pennsylvania. Court of May
Submitted 1997.
Resubmitted Dec. 1999.
Decided June 2000. parties granted 1. pursuant These were status intervenor in this matter Court, per They to a curiam order dated June shall referred to hereafter as the Intervenor-Counties. *4 Henrich, Jr., Picotte, II, J. Maura E. Fay, William J. Peter Annenberg. Walter H. Leonore Philadelphia, for and Hann, Himsworth, A. Lupin, Steven H. Mark F. Steven Lansdale, Montgomery of Com’rs et al. County, for Bd. Pallante, Philadelphia, for In- Sprague,
Richard A. Denise tervenors. FLAHERTY, CAPPY, C.J., ZAPPALA,
Before NIGRO, CASTILLE, SAYLOR, NEWMAN and JJ.
OPINION ZAPPALA, Justice.
We
plenary jurisdiction2
exercised
over these matters to
17, 1913,
determine whether Section 4821 of the Act
June
amended,
4821-4902,
§§
P.L.
as
72 P.S.
is unconstitution
al as it
Clause of
violates
Commerce
the United States
7, 1998,
April
Constitution.3
opinion
On
issued an
holding
order
stock clause
(stock clause),
§
facially
P.S.
discriminated
Commonwealth,
against
Annenberg v.
interstate commerce.
I).
562 Pa.
As in our opinion detailed Walter H. Annenberg Annenberg, Sole for Trustee the Trust under the Will Annenberg, of Moses L. H. and Walter and Leonore Annen- Pa.C.S. 726. 2. I, 8,§ U.S. cl. Const. art. 3.
586 in for review the Commonwealth Court
berg, petitions filed of seeking personal that the stock clause a declaration violates the Commerce Clause the United property tax4 as it therefore null and void insofar States Constitution and is The any on stock held them. imposes corporate a tax jurisdiction over Court to exercise declined Commonwealth Annenbergs petition filed a Subsequently, this matter. Court, plenary jurisdiction this that we exercise asking with petition. the Annenbergs’ We granted over matter. I Annenberg our We April opinion. On issued we Court’s recent Supreme reasoned that the United States Faulkner, in 116 S.Ct. ruling Corp. Fulton U.S. 848, 133 (1996), stock compelled finding that the L.Ed.2d against interstate commerce. facially clause discriminated However, uncon that the stock clause was we did declare Rather, that a point. provision we noted tax stitutional at may being facially discriminatory which is nonetheless avoid personal imposes property tax of over 4. The statute which consists 2,400 words, sentences, comprising paragraphs. in three two contained applies personal property § While tax to several 72 P.S. 4821. application only its property, classes of are here concerned with pertinent part in property: one stock. The statute states class of any in tax shall be due all shares of stock [the on] bank, association, partnership, company limited cre- corporation, or ated formed under the laws this Commonwealth or or States, any government, except state shares of United or other or bank, any company, banking associa- stock bank and trust national in tion, institution, savings corporation, partnership limited liable to or tax, premiums gross a tax shares or a or liable to or on its relieved purposes capital stock tax State under the or from franchise for .... laws this Commonwealth (emphasis supplied). § 72 P.S. 4821 Annenbergs The of the stock clause tax which the attacked phrase being excludes unconstitutional is underscored above. That from tax stock held in entities to which apply. capital applies to stock and franchise tax stock tax Commonwealth, companies 72 P.S. organized under the laws of this hand, 7602(a). is entities The franchise other owed any jurisdiction organized which other than this Commonwealth which business and are liable to taxation this Common- also do 7602(b) Thus, §§ and 7601. the net of the stock wealth. 72 P.S. effect only pay "the on which an owner liable to clause is that corporations foreign pursuant the stock clause is on stock in I, 576-77, Annenberg Pennsylvania.” 562 Pa. at do do business A.2d at government null void where the is able to declared “by showing presumption invalidity overcome *6 simply is a tax’ to make ‘compensatory designed statute already interstate a borne by coxnmerce bear burden intra- Annenberg state commerce.” 562 Pa. at at A.2d Fulton). As (citing the into whether stock inquiry the nature, a in compensatory largely clause is tax is factual we Montgomexy County directed the Court of Common Pleas of on hearing compensatory to conduct a the tax issue and jurisdiction. retained Joseph
President A. Judge Smyth hearings conducted which the the Annenbergs, County Montgomery the and Counties) (collectively participated. Intervenor-Counties the healings, Judge After the close of Smyth President filed his 7,1998. Interim Report with this Court on October President Judge Smyth that found the Counties had not met their of proving burden that the stock a compensatory clause is tax and thus exclusionary language concluded that the stock However, was clause unconstitutional. Report Interim Judge Smyth President reasoned that statute need not be Rather, entirety. posited struck down in its he that language of the statute which from taxation excluded stock subject to or capital stock tax could be franchise severed from 72 P.S. leaving a tax which stock, to all applied they classes of whether held out-of- state or in-state corporations. Report Interim at 25. Finally, President Judge Smyth declared that Counties should be keep able to the tax which had been previously collected under the stock clause. In Report arriving Interim at 26. at this conclusion, Judge Smyth President that stated once the uncon- clause, stitutional exclusion was severed from leaving a tax to stock applicable held in either out-of-state entities, remained; or in-state a then valid tax President event, Judge Smyth that reasoned “[C]ounties permitted should be retain and collect the proper- ty on stock is not stock or franchise Report taxes.” Interim at 26. our standard re determining proper scope and a Report, presented seemingly of the Interim we are with
view jurisdiction exercised unique procedural plenary situation: we matters; subsequently over these we directed that another a master hold essentially special hearings tribunal act as jurisdiction to report, relinquish issue a but did not our juncture, reviewing tribunal. At this we are now that other findings fact Report containing proposed Interim 5 We that in such as and conclusions of law. find matters these jurisdiction have plenary exercised and have where to the tribunal which is in es relinquished jurisdiction Court, for this our acting special sence master review note, however, addressing must be de We that when novo. findings Judge Smyth, although of fact made President us, findings binding such we will afford them due *7 consideration, jurist presided hearings as the who over the in the best to the facts. Zimmer position was determine Cf. (1968) (in Zimmerman, 118, 236 a man v. 428 Pa. A.2d 785 master, of a proceeding, findings although divorce court, binding on the are entitled to due as the consideration master had the to hear and to observe the wit opportunity in a position pass upon nesses and thus better to witnesses); of credibility Snyder Snyder, such see also v. 533 (1993). 203, Pa. 620 1133 A.2d We now turn to the of substantive issue whether a stock clause is tax. Where a taxation statute compensatory recognize Authority Allegheny that the matter of v. We Port of Masloff 416, (1992), County, A.2d 531 Pa. 613 1186 wherein this Court stated employ it would a variant the abuse of standard in of discretion below, reviewing findings some of the "chancellor” shares common judice. Masloff, procedural elements with the matter sub In we exer- jurisdiction plenary prior any being over cised the matter to action taken a lower We then remanded the matter to the court. Common- hearings. Up point, strikingly to is wealth Court hold until this Masloff Masloff, at hand. In similar matter Commonwealth Court injunction sitting equity power permanent a had to enter —a matter, however, power Judge it exercised. this President power jurisdiction. Smyth had no issue as such an order we retained Thus, Judge Smyth necessarily President had no discretion which he Thus, appropriate exercise. we do not find that it could would be apply way. here is in a standard distinct crucial Masloff Masloff
589
facially
against
has
determined to
discriminate
interstate
been
commerce,
invalidity
a state
overcome the
may
presumption
“
by showing
‘compensatory
designed
that the statute is a
tax’
already
bear a burden
simply make interstate commerce
Fulton,
831,
116
borne
intrastate commerce.”
516 U.S.
(citations omitted).
It must
shown that the tax
S.Ct. 848
adequately
“advances a
local
that cannot be
legitimate
purpose
by reasonably nondiscriminatory
served
alternatives.” New
Limbach,
269, 278,
Energy Co.
Indiana v.
486 U.S.
108
(1988).
1803,
truly compensatory
100
302
In a
S.Ct.
L.Ed.2d
scheme,
stranger
greater
“the
from afar is
to no
as a
than
consequence
ownership
burdens
the dweller
incident,
or
gates.
pays upon
activity
within the
The one
one
another,
upon
and the other
but the sum is the same when the
reckoning
Oregon
Systems,
is closed.”
Waste
Inc. v. Depart-
93, 103,
ment
Quality Oregon,
Environmental
511 U.S.
1345,
(citing
S.Ct.
128 L.Ed.2d
v.
Henneford
Co.,
Mason
Silas
300 U.S.
S.Ct.
First, argument personal the Counties’ that the we find that clause, tax, part compre- the stock of a including property legislature by is belied taxing scheme created hensive person- of these taxes. The first history of the enactment all in 1831. This tax reached al tax was enacted property revenues, residents and the from by Pennsylvania stock held Commonwealth’s, than Coun- to the rather this tax went 25,1831, ties’, of March P.L. 206. coffers. Act Act tax was not enacted until 1840. capital The first stock 11,1840, applied only P.L. This stock tax capital of June legislature expand- In Pennsylvania corporations. foreign corporations doing capital stock tax reach ed 1, 1868, May Act of P.L. 108. The Pennsylvania. business tax law exclud- personal property amended legislature which were liable for ing any corporations stock held 1, 1889, P.L. 420. A further tax. Act of June capital stock took in 1913 personal property place tax amendment county tax became a tax. when the tax so capital In amended the stock legislature business in corporations doing in foreign that the stock held under the franchise Pennsylvania would be taxed 16,1935, May tax. Act of P.L. 184. tax to make amended the legislature hable to the franchise were companies clear that stock
591 personal from the tax. Act of June exempt property also 1939, P.L. 413.6 legislature prop- amended the
Finally, tax, allowing option levying the counties the what had erty tax. 72 4821.1. Since that previously mandatory been P.S. time, counties have many opted collecting person- cease tax; present, only al at a third of the counties collect ¶¶ this tax. Interim at 43 and 44. Report review, agree Judge Smyth we with that Upon President an integrated, comprehensive system these taxes were not that Judge Smyth history taxation. President concluded shows that these of each other “developed independent taxes ... no throughout their histories time was [and that] [a]t at Report there a correlation between the taxes.” Interim ¶ not that the support 37. The evidence does the contention legislature of an part enacted these taxes interconnected scheme; finding thus President adopt Judge Smyth’s this point.
Our second reason for rejecting argument Counties’ that they have not established that the stock clause tax “is fairly by related to the services the State provided [which Fulton, benefit interstate commerce].” U.S. Ct. 848. attempted they Some the Counties to show that
provided services which benefited interstate commerce showing they provided corporations services which not doing Pennsylvania arguably business utilized. See Interim ¶¶ 7, However, Report at 12 and 17. none of the Counties established to what extent provided these services were to or doing utilized corporations Pennsylvania. business Thus, we are unable to whether tax imposed by determine fairly the stock clause “is related to the provided by services” the Counties. if, however,
Even we were find that the Counties met their burden as the first of the prong compensatory test, we would still find that their claim have they failed as essentially 6. The 1939 amendment was a codification this Court's Estate, (1936). decision in In re Arrott’s 322 Pa. 185 A. compensatory prong second The second prong. met the the tax the Counties establish requires tax test *10 roughly discriminatory by facially the clause imposed exceed, amount of the tax not the approximates,- but does franchise tax stock tax and the capital burden which the Fulton, 332-33, 116 848. 516 U.S. at S.Ct. impose. burden, testimony the presented
To meet this the Counties background was economics expert of an witness whose years that in the The witness testified policy. expert public collected 1992-1996, stock and franchise taxes were capital the that, general 12 mills went into a at á rate of 12.75 mills. Of basis, on a state-wide while the fund which was distributed Lottery to specifically mills allocated the remaining .75 were Fund. Cleanup Fund and the Hazardous Sites general 40.1% of that fund was approximately In postu- The witness governments.7 expert distributed to local taxes capital of the stock and franchise should lated that 40.1% to local The witness going governments. thus be viewed as (or mills 40.1% of 12 approximately calculated that 4.8 further mills) to local stock and franchise taxes went capital of the figure then that 4.8 mills compared in 1992. He governments tax and by personal property to 4 mills rate levied roughly approxi- tax personal property concluded that exceed, tax mates, the amount burden but does impose. the franchise tax capital stock tax and which expert testimony. witness’s persuaded We are not First, cognizance not take of the fact that the the witness did general governments from the fund to local money distributed counties, collect the only may is distributed tax, to municipalities, townships but also personal property districts, general may which in not collect the and school It is unclear which of the 4.8 portion tax.8 personal property thus could figure mills was distributed to the Counties and general governments local percentage 7. of the fund which went to fairly throughout period question. remained constant Pittsburgh Philadelphia Apparently, School District and the N.T., personal property point collected a tax. School District at one session) (morning at 68. 9/15/98 allegedly compensato- to the counterpart seen as a possibly portion and which distributed property ry personal tax personal property collect the which cannot local entities counterpart be seen as a could no fashion and thus tax. personal property
Second,
from
figures concerning distributions
the witness’s
every county
included distributions made
general
fund
for, as
highly problematic
in this Commonwealth. This
noted,
tax.
personal property
collect the
not all counties
the taxes
representation
an accurate
whether
give
order to
with the
parity
tax are
collected
franchise taxes the counties
stock and
fund,
would have had to
from the
the witness
general
receive
counties which collect the
calculate how much the
fund,
from
general
from the
exclude
receive
*11
to the
general
how much the
fund distributes
his calculations
tax.
personal property
which do not collect the
counties
Counties
met
assuming arguendo that the
had
Finally, even
nonetheless
of the three
we would
prongs,
the first
two
clause
they
had failed to establish that the stock
conclude
compensatory
they
tax is a
tax as
personal property
of the
prong.
as to the third
The third
have not carried their burden
requires
tax
that “the
compensatory
of the
doctrine
prong
im-
and intrastate taxes are
events on which the interstate
is, they
must be
posed
‘substantially equivalent’;
must be
exclusive
sufficiently
mutually
similar
substance
serve
”
Fulton,
for
The have failed to their burden of Counties establishing that the stock clause of the tax is a tax. are thus to find that compensatory compelled We portion of the stock clause which excludes from the personal which companies stock held capital stock and franchise taxes is unconstitutional as it violates the Clause of the Commerce United States Constitu tion. step analysis
The next in our is to determine whether the clause, exclusionary language in the stock language unconstitutional, may renders the stock clause be severed. issue, analyzing keenly precept we are aware of the of this favors “public policy severability.” Commonwealth Commonwealth, Education Department First (Pa.1977). School, 471 Pa. A.2d principles statutory This Commonwealth’s construction declare that every shall If provisions any
[t]he statute be severable. invalid, any statute ... provision held the remainder of the statute ... shall not be thereby, affected unless the *12 conclusion, support 9. As additional for his the witness stated that the taxpayers. incidence of the tax does not fall on the same class of With tax; personal property pays the it is the shareholder who the with taxes, capital corporation stock and franchise it is the itself which conclusion, however, pays arguing tax. The Counties contest this Estate, "unity that this Court in In re Arrott's held that there is a corporation between a and the interest” stockholder such that a tax Thus, paid by corporation being paid by is seen as the stockholder. the Counties that these three do conclude taxes fall on the same class of taxpayer. arguendo interpretation if we were to Even assume that the Counties’ correct, In enough re Arrott’s Estate is the taxes are still dissimilar prong analysis nature so that the third of the Fulton be met. cannot
595 so of the are statute provisions finds that the valid court with, depend and so connected essentially inseparably it cannot be application, or provision the void upon, have enacted Assembly would the General presumed one; unless or without the void remaining provisions valid standing provisions, remaining that the the court finds valid being executed alone, incapable incomplete intent. legislative with the accordance § 1925.10 Pa.C.S. issue, deter- Judge Smyth President addressing In this statute, of the unconstitutional mined that the which were companies from the tax stock held excluded taxes, could indeed and franchise however, this, arguing contest Annenbergs, The be severed. severability of time has altered passage in essence that the tax on stock property analysis, personal and claim that the argument, In of their entirety. support its must stricken legislature recently rejected has they point to the fact which would have provision bill which included a proposed to all classes of stock. tax extended 11/18/1996,A-7450, Print- Bill Amendments to Senate No. Annenbergs legisla- 2328. The claim that when the er’s No. bill, message it sent the clear rejected proposed ture this tax personal property it did not desire the stock clause They all of stock. contend that were apply classes tax personal property statute that the Court to sever the so stock, altering to all classes of we would be apply would in a fashion which the contours of the con- rejected years ago. They three legislature specifically Act, Statutory general, provisions Construction 1 Pa.C.S. prior seq., applied § to 1937. 1 1501 et cannot be to statutes enacted rule, 1502(a)(l)(i). exception general § There is an to that Pa.C.S. however, merely Statutory Construction Act which states that where law, statutory particular provi- existing construction then those codified applied Statutory shall be to statutes sions of the Construction Act 1502(b). § prior enacted to 1937. 1 Pa.C.S. § severability in 1 Pa.C.S. 1925 are principles as set forth prior See ex clearly the law as it existed to 1937. Com. a restatement of (1927); Humphrey, v. 288 Pa. 136 A. rel. Woodruff Thus, (1890). pursuant Meyerle, A. 136 Pa. Rothermel 1502(b), § matter. apply shall 1 Pa.C.S. 1925 to this 1 Pa.C.S. *13 so, that in by stating doing thwarting elude we would be the intent of a contemporary legislative body demonstrated thus be the to overstepping powers would allotted us to sever statutes. First, for Annenbergs’ argument fails two reasons. Intervenor-Counties, only
noted the a miniscule of rejected bill the of the concerned stock clause the Thus, in of property any tax. the absence evidence from the which would establish that legislative history bill was because of the of expansion scope voted down of the stock clause, necessarily it cannot be inferred that the current legislature opposed severing would be to portions the void this statute.
Second, importantly, Annenbergs’ argu- and far more inapt requests ment is as it that we focus not on the intent of statute, legislature which enacted the void provision but rather on the intent that can be inferred possibly from rejection by legislative body of a bill a than more one hundred years after the statute was enacted. such an analysis We find not in accord with our rules of statutory construction. § 1925 that we provision Pa.C.S. demands sever the void “it cannot presumed the statute unless the General Assem- bly remaining would have valid provisions enacted without ” void, Clearly, one.... Section 1925 our inquiry funnels enacting what the examining legislature would have done it known that the exemption placed had it the stock clause not, was unconstitutional. The statute does as the Annen- it, bergs would have us instruct us to examine what interpret subsequent legislatures would have intended vis-a-vis the per- Thus, reject sonal tax. the Annenbergs’ argu- ment on this point.
Next, Annenbergs argue that were we to sever the void clause, from provision thereby expanding the stock the stock encompass previously clause classes stock which had violating eluded the we would be separation powers doctrine as the to tax lies with power solely legislature. reject We this contention. When this Court severs a void statute, from it provision doing attempt so to to effectuate our- arrogating intent. We are therefore legislative to deter- rather are attempting to tax but power selves the *14 taxing have its legislature would exercised how the mine known, void. 1889, that the exclusion was it power had severability is regarding Annenbergs’ final contention clause is an of the stock portion unconstitutional the the point, than from this exemption; rather an exclusion sever that this Court can never argue Annenbergs apparently taxing from a statute. Whether exclusion an unconstitutional an or an exclu exemption is deemed question the phrase d.11 of Regardless sion, severability analysis is unaffecte the classified, our to determine void is task is provision how the of legislature the have enacted the remainder whether would it void without the had known that the portion the statute void statutory is no unconstitutional. There rule severing us from void exclusions. construction forbids Furthermore, arbitrary be most such a narrow and rule would favoring severabili peculiar light strong public policy ty. reasons, reject Annenbergs’ argu- the foregoing
For the we sever the exclusion. The net against severability and ments previously of this severance is that stock which had effect that the tax due the fact escaped in which stock was held owed either companies to the or will now franchise taxes corporate tax. severable, Having provision that the void determined any, retrospective remedy, what if question we turn to the outset, however, must At the we Annenbergs. is due the claim by made the Intervenor-Counties dispose only Annenbergs requested address this issue as the cannot Intervenor-Counties, only one appears there to be 11. As noted exemption: and an an exclusion legal distinction between an exclusion against authority exemption is to taxing while an is to be construed Co., against Constructing Inc. taxpayer. Ernest Renda be construed Commonwealth, 325, 416, (1987); Deigendesch 516 Pa. 532 A.2d v. Bucks, 228, (1984). County 482 A.2d Such v. 505 Pa. however, distinction, analysis. impact severability has no relief, declaratory injunctive and did not request any form of monetary relief in their Petitions for Review.
We find that the interpretation Intervenor-Counties’ Annenbergs’ Petitions for Review and of our concomitant power to award relief is exceedingly narrow. plaintiffs Where general relief, make a prayer for the court may grant any appropriate relief that conforms to the case made pleadings it although exactly is not relief which has been asked for by special prayer.... relief, prayer Under the for general the plaintiffs are enti tled to such relief agreeable as is to the case made in the bill, though different from specific prayed relief for. Clemmer, Lower Frederick Township 518 Pa. 543 A.2d Meth, (quoting Meth v. 360 Pa. 62 A.2d *15 (1949)). 848, 849 Annenbergs’ Petitions for Review filed with this
Court, they requested that we award the “relief sought their for Review ... filed with Petition[s] the Commonwealth ” Court on March 1996.... Annenberg Petition for Re- view, on filed and Dkt.1997, docketed at 003 Misc. at 1/03/1997 2; Annenberg Review, Petition for filed on and 1/03/1997 Dkt.1997, docketed at 004 Misc. at 2. In their Petitions for Court, Review filed with the Commonwealth the Annenbergs general made a for prayer relief. Annenberg Petition for Review, filed on M.D.1996, and docketed at No. 343 3/27/1996 9; Annenberg Review, Petition for filed 3/27/1996 M.D.1996, docketed at No. at 11. Clearly, although not specifically .requested, addressing the issue of whether mone- tary matter, relief is warranted this where the constitution- ality taxing provision a is challenged, would be within our power. See Lower Frederick Township.
Furthermore, addressing this issue be would consistent with our oft-stated principle “liberally we construe” our civil and appellate procedure rules in order to achieve the interests justice expeditious an fashion. Peters Sanitary Creek Welch, Authority Pa. 681 A.2d 126); (citing Pa.R.C.P. Pa.R.A.P. 105. It is undisputed that constitutionality challenged Annenbergs squarely refunds claims for filed properly and have stock clause if Clearly, we do Appeals. of Assessment the Board with Annenbergs, is due to juncture what relief at this review later this issue to review likely compelled most shall with grapple Appeals left Board of Assessment after the from this Court. any direction it -without remedy if the argue also The Intervenor-Counties it at this addressed, not decide we should is to be issue to President matter back should send the but rather juncture on this issue. We find hearing another to hold Judge Smyth compensato- unnecessary. Unlike of action such a course hearing for which a issue, factual issue complicated a ry tax fully have parties purely legal. this issue is required, issue; delay judgment no need we see briefed be held. hearing another ordering yet President this issue. to the substance of Now we turn concluded Report his Interim Judge Smyth unconstitutional, leaving valid the exclusions [s]inee retain collect permitted to should be Counties] [the to the subject on stock that is hand, taxpay- On the other or franchise taxes. capital stock based on the their fiscal affairs planned counties ers and stock and that stock assumption personal proper- under the were not taxable franchise taxes to collect tax should not be allowed tax. ty [The Counties] exempt. Since the was believed to be retroactively on what may wish to expanded, [the Counties] will be *16 tax base tax, if it at they impose option impose their exercise collection of the all, rate. Therefore at a lower not taxed should formerly tax on stock that adoption of new tax only, following the prospectively operate or ordinances. resolutions Judge of President at 26. The net effect Report
Interim for quo the status would be Smyth’s recommendation the tax which had maintained: taxing years would be prior Counties, be retained collected would previously been held retroactively collected on stock not be but the tax would in companies which had been to the capital stock or Furthermore, franchise tax. expanded tax which resulted from severing provision void from the stock clause would apply only years. future tax
The United States Supreme Court was
with a
confronted
identical situation McKesson v. Division Alcoholic
nearly
Tobacco,
Beverages and
Dept. Business Regulation
Flor
ida,
18,
(1990).
2288,
496 U.S.
110 S.Ct.
L.Ed.2d
McKesson,
Supreme
the Florida
Court held that a taxing
provision which favored in-state products violated the Com
Court,
merce Clause.
Supreme
however,
The Florida
de
clared that its ruling
purely
would be
prospective only and the
taxpayers would
be entitled to a retrospective
remedy.
The United States Supreme
error,
Court held that this was
stating that
provide
“State
meaningful
[must]
backward-
looking
rectify
relief to
Id.
any unconstitutional deprivation.”
31, 110
at
S.Ct. 2238. The Supreme Court noted that the Due
Process Clause of the Fourteenth Amendment compelled such
a duty
required
and
the State fashion a backwards
looking remedy whereby those who had paid the tax were put
in the same
position
taxpayers
those
who had been favored
Id. 43,
unlawful
by the
exemption.
Henry,
(1938).
305 U.S.
59 S.Ct.
601 the retro- calibrating tax period, contested during the emption nondiscriminatory a hindsight to create active assessment (3) partial combination of a refund scheme; or a applying assessment, as the resultant tax long so retroactive partial a a reflects period the contested during assessed actually com- interstate against not discriminate that does scheme 40-41, 110 S.Ct. merce. Id. at it that the Unit of McKesson makes clear
Our review remedy retroactive some States Constitution dictates ed is discrimination prior so that the unconstitutional is due here however, Counties, contend that we are so rectified. Rather, indeed have the they claim that we do constrained. whether the determination power decide retroactively only, thus apply will clause is unconstitutional retrospective remedy. support denying Annenbergs in American decision argument, they of this cite this Court’s 212, Associations, Pa. 596 A.2d McNulty, Inc. v. 528 Trucking (1991). 784 cases, from both the last case a series
McNulty was
Court,
concerned
Supreme
States
this and the United
In American
constitutionality
highway
use taxes.
266,
Associations,
Scheiner, 483 U.S.
107
Inc. v.
Trucking
2829,
(1987),
Supreme
97
226
the United States
S.Ct.
L.Ed.2d
Court, see American
judgment
of this
Court reversed
Scheiner,
430,
Associations,
510 Pa.
509 A.2d
Inc. v.
Trucking
(1986),
taxes violated
highway
held that certain
use
838
then remanded
The Scheiner Court
the Commerce Clause.
(cid:127)
ruling
[the]
to this Court “to consider whether
the matter
Darusmont,
292,
549,
(1986);
S.Ct.
v.
449 U.S.
101
United States
(1981);
Corp.,
Sperry
493 U.S.
In presenting
argument,
have
Counties
failed to
cognizance
take
the fact that
there has been a
since the Smith
change in the law of retroactivity
plurality
Smith,
opinion. Subsequent
issued its
Supreme
Court
overruled Chevron Oil insofar as it
permitted
a court
recaplioned
13. The Scheiner matter was
after remand to this Court
Scheiner,
Supreme
Secretary
from the United States
Court as James I.
Revenue,
Department
replaced
position by
in his
Eileen
502(c),
McNulty.
recaptioned
Pursuant
to Pa.R.A.P.
the case was
Trucking
McNulty.
American
v.
Associations
decades,
standard,
accepted
14. For
the Chevron Oil test was the
courts,
many
determining
federal courts as well as
state
for
.
whether a
retroactively.
applied
part
decision was to be
The three
test states that
may opt
purely prospective
a court
for a decision to have
effect where:
law;
(1)
(2)
principle
retroactivity
the decision establishes a new
further,
retard,
perhaps
would
application
and could
of the new
rule;
application
produce
inequita-
retroactive
could
substantial
ble results.
a new rule of law
selectively
apply
whether it would
determine
Taxation, 509
Virginia Dept.
prospectively only. Harper
(1993);
86, 97,
Reynolds
113 S.Ct.
L.Ed.2d
U.S.
749, 751-53, 115
S.Ct.
Hyde,
ville Casket Co. v.
U.S.
(1995). The Court stated that where the
.Although Supreme the United States Court has crafted a broad of range permissible remedies under the United States
Constitution, Annenbergs see that once this supra, argue Court has determined that as a matter of constitutional law they remedy, statutory are entitled to a then law dictates that only type remedy money they one of is allowed: the had discriminatory person- stock clause of the paid pursuant them, immediately plus al tax must be tendered to any statutory support interest which is owed. of this § argument, Annenbergs cite to 72 P.S. 5566b. Section 5566b, in relevant reads as follows: part, taxes, etc.,
§ of to which political 5566b. Refund subdivi- entitled; sion is not interest legally (a) or any person corporation Whenever of Common- paid paid, pays wealth has or caused to be or hereafter or treasury any causes to be into the subdivi- paid, political sion, or or directly indirectly, voluntarily protest, any under fees, sort, any penalties, any taxes of license fines or other moneys political legally to which the subdivision is not entitled; then, cases, in such authorities of the proper subdivision, political upon filing with them of a written payment, hereby and verified claim for the refund of the make, budget public directed to out of appropriations taxes, fees, funds, penalties, refund such license fines or other to which the subdivision is not moneys political legally made, shall moneys entitled. Refunds said unless filed, claim with the political written therefor subdivi- involved, years payment sion within three thereof. 5566b(a) terms, In its (emphasis supplied). simplest P.S. *20 provides Section 5566b a mechanism for the refund of taxes legally “to which the subdivision is not political entitled.” However, Section 5566b is to this case. inapplicable legally We have not concluded that the Counties are not a tax on stock levy personal property corporate entitled to Rather, in holdings. levying we have determined that a tax on stock personal property corporate holdings, the Coun grant ties are not entitled to the contained legally exemption § in 72 in a corporations P.S. to stock which have taxable Pennsylvania doing nexus with because so discriminates in violation of against interstate commerce the Commerce in the stock exclusionary language By severing the Clause. unconstitutional, we the stock clause which renders clause proper- to a ability levy personal have left intact the Counties’ holdings generally. stock ty corporate tax on County Annenbergs’ on the by Montgomery The tax levied which Montgom- constituted a tax to corporate holdings stock granting It was the County legally entitled. ery in corporations stock exemption Annenbergs’ limited to the which constitut- Pennsylvania a taxable nexus with which have P.S. County. Since 72 illegal by Montgomery act ed a political refund to taxes which 5566b limits its mandated entitled, a it is to case legally inapplicable subdivision is not has not levied a tax to Montgomeiy County such as this. entitled, an legally granted but has instead which it was legally from a tax to which it was entitled.15 illegal exemption range limit the broad 5566b does not therefore Section to under the United States Constitution permissible remedies by of taxes collected the Counties. the refund sum, compensatory In that the stock clause is not a hold which excludes from portion tax and the of the stock clause which are companies held stock and franchise taxes is therefore making fashioning argument 15. In that our discretion a suitable 5566b, implies remedy that it is is limited Section dissent improper, upon concluding stitutional, portion taxing a that a scheme uncon- taxing authority keep previously to allow the the taxes taxes those who benefited from the levied and collect back from so, portion. doing suggests unconstitutional dissent Supreme improper United States Court countenanced an and unlawful remedy in McKesson. The final two remedies outlined the United authority Supreme taxing allow States Court McKesson retain taxes, thereof, previously or a levied under an unconstitu- long taxing tional as back taxes are collected from those who scheme exemption, hindsight benefited from the unlawful so as to "create implies nondiscriminatory The dissent’s that the scheme.” conclusion remedy Supreme United States Court sanctioned a in McKesson which would allow the state of Florida to retain taxes which it was not entitled quite unlikely to as a matter of law. We find it United States Rather, Supreme glaring oversight. Court committed such a the choice provided by Supreme of remedies the United State Court in McKesson actually imposed deprive [the ensures that the tax which is "does taxpayer] moneys against of tax in a manner that discriminates inter- McKesson, 110 S.Ct. state commerce.” 496 U.S. *21 unconstitutional; exclusionary language void of the that severable; must forth- clause is and that the Counties stock consistent with this provide retrospective remedy opin- with a ion. is relinquished.
Jurisdiction dissenting concurring opinion Justice CAPPY files a and joins. which Justice NIGRO
CAPPY, Justice, dissenting. concurring Majority that the Counties have failed to agree I with the that the stock clause of the carry showing their burden compensatory tax is a tax and that the violates the Commerce Clause of the United clause therefore Furthermore, I agree exemp- States Constitution.1 cannot, however, I with the agree tion should be severed. due; I Majority’s remedy conclusion as to what therefore Majority’s as to that respectfully opin- dissent ion. argue that once Majority, Annenbergs
As noted this court has determined that constitutional law mandates remedy are entitled to a for the unconstitutional they statutory only collection of this then law dictates one a of this type remedy support is allowed: refund. 5566b, to 72 a statute argument, Annenbergs cite P.S. entity that when a has collected a governmental dictates entitled,” legally provide tax to which it “is not it shall a taxpayer. “refund of such taxes” to the however, Instead, it Majority, rejects argument. The Supreme notes that the United States Court’s decision Tobacco, Beverages v. Division Alcoholic McKesson Florida, 18, 31, Regulation Business 496 U.S. Dept. of that a S.Ct. 110 L.Ed.2d did mandate it is that a tax always refund must issue whenever determined collected, unconstitutionally has been but rather allowed the great leeway fashioning backward-looking remedy. State a court, in Majority fashioning remedy contends that this I, 8,§ 1. U.S. Const. art. cl. 3. judice, myriad options sub has that available the matters it; is not posits it that our discretion circumscribed *22 remedy the for an ille- pronouncement only
legislature’s Rather, is gally taxpayer. collected tax a refund to the the of Majority stridently contends that the dictates 72 P.S. § apply “Montgomery County 5566b do not here because has entitled, a tax to which it was not but has legally levied an from a tax to which granted illegal exemption instead it legally Majority op. (emphasis was entitled.” at 352 original). reasoning espoused by Majority
I believe that the is First, internally Majority inconsistent. finds that stock clause violates the Commerce Clause. The Counties’ by collection of the tax on stock held personal property in out-of-state entities was therefore unconstitution- taxpayers yet, Majority paradoxically al. And to hold that proceeds legally the Counties were nonetheless entitled to this collect § provisions and the of 72 P.S. 5566b therefore do not I apply. respect, simply With all due cannot fathom how the Majority logically can conclude both that a tax unconstitu- tionally and that the legally collected Counties were entitled to very collect that same tax. legislature plainly has stated that a tax has been where
collected to which
“is
government entity
legally
enti-
tled,”
taxpayer
given
then the
shall be
a refund.2 In my
opinion, a tax which was unconstitutionally collected is without
question one to which
governmental entity
legally
was “not
Thus, I
only remedy
entitled.”
believe the
available in the
judice
§
matters sub
by
the one mandated
72 P.S.
5566b: a
I
refund. As
am not persuaded
Majority’s attempt
to
statutory requirement
providing
I believe that a "refund” could
way
provide
be met
in at least
two fashions. One
would be
an
immediate,
lump
payment
money.
way
satisfying
sum
Another
the dictates of 72 P.S.
5566b would be to allow the Counties to
compensate
taxpayers by granting
equal
the affected
them a credit
illegally
pursuant
discriminatory
the amount of taxes
collected
to the
any
This credit could
utilized
clause.
to offset
taxes owed
taxpayer
county,
pursuant
whether those taxes be owed
any
the stock clause
tax or
other tax.
conclusion, I
respect-
must
unpalatable
apparently
avoid this
majority opinion.
this
fully
dissent from
dissenting opinion.
joins
concurring
Justice NIGRO
ORDER PER CURIAM: NOW, the Petition for day July,
AND this 31st ordered to parties Appeal granted. Allowance of issues: following brief the
(1) the trial permitted appeal Is the Commonwealth judgment acquittal granting appellants court’s order under Pa. case-in-chief the close Commonwealth’s 1124(A)(1)? R.Crim.P. pleas Superior court of common Whether the from allowing appeal the Commonwealth
Court erred a new trial by ordering and further err appellants’ acquittal acquittal? after the