6 A.2d 870 | Pa. | 1939
The State Employes' Retirement System invested $400,000 of its fund in a bond and mortgage, secured by properties on Market Street and North Fourth Street in the City of Harrisburg. Upon default in interest and taxes, the properties were sold at sheriff's sale to the Commonwealth as purchaser on behalf of the Retirement System. Subsequent thereto, taxes were periodically assessed against this real estate, for the years 1934 to 1937, by Dauphin County, the City, and the School District of Harrisburg, though the title to the realty remained in the Commonwealth. During this time, the properties were rented to another department of the Commonwealth and to private commercial tenants. The Commonwealth did not pay the taxes so assessed, whereupon the City caused an execution to issue against the properties for delinquent taxes, and they were duly advertised for sale. The Commonwealth, through the State Retirement System, moved by petition to strike off the assessments of the taxes for the years above mentioned and the judgments and executions based thereon. The court below granted the prayer of the Commonwealth's petition, and this appeal followed.
May real estate owned by the Commonwealth, or one of its boards, be subjected to taxation by one of its municipal subdivisions? Subject to constitutional limitations, the elementary premise is that the power to tax vests exclusively in the legislature; it may by express direction delegate segments of the taxing power to municipal *180
bodies, whose exercise thereof is confined to the power so delegated. This was fully discussed in Wilson et ux. v.Philadelphia School Dist. et al.,
It is not to be presumed that the general provisions of Section 201, delegating a portion of the power to tax real estate to municipal subdivisions, was meant to include property owned by the Commonwealth. The legislators did not intend to upset the orderly processes of government by allowing the sovereign power to be burdened by being subjected to municipal taxes. Legislative *181
enactments presumptively affect only private rights and do not embrace the rights of a sovereign unless the sovereign is explicitly designated or clearly intended. See Baker et al. v.Kirschnek et al.,
Not only is this real estate outside the scope of the general taxing provisions of the Act of 1933, but it has, also, been specifically exempted by Section 17 of the State Employes' Retirement Act.4 This section furnishes a broad and sweeping exemption from taxation to the Retirement Fund as well as to the benefits and rights accruing to individuals under the provisions of the Act. The intention was to exempt the contributions made to the fund by members and by the Commonwealth as well as the payments to members therefrom.
The retirement fund consists of property in various forms. Not more than ten per cent of the entire amount may be kept on deposit in banks; the remainder is invested in securities and other forms of interest-bearing *182 obligations, under Section 6(5) of the Retirement Act.5 This mortgage originally taken by the Retirement System was without doubt a constituent part of the retirement fund exempted by Section 17 from tax burdens. The purchase of the real estate, at sheriff's sale, was only incidental to the primary investment, forced on the Commonwealth by the default on the mortgage and the absence of other purchasers at the sheriff's sale. When the security thus became a part of the fund, the legal incidents attaching to the mortgage continued to attach to the real estate, and immunity from taxation was not surrendered by the Commonwealth or the Retirement System.
Appellants argue that the exemption of Section 17 to "the moneys in the fund" does not embrace real estate. The words employed were not meant to be restrictive, and to apply only to cash, deposits, and the like. The context confirms the understanding that the word "moneys" was used comprehensively and synonymously with the word "property," thereby including real estate. See Newhard v. Newhard,
It is objected that the Constitution forbids the grant of immunity as to the property involved because the premises are partially occupied by tenants for private commercial purposes. Even assuming that the constitutional restriction of Article IX be applicable to property *183 owned by the State, it does not follow that there has been a violation. Section 1 of that Article permits the exemption of public property used for public purposes, and the Act of 1933, as well as Section 17 of the Retirement Act, carries this into effect. Notwithstanding its rental to commercial enterprises, the real estate is in fact being used for a public purpose, that is, it is part of the fund of the State Employes' Retirement System. Even if owned outright by the State, the revenues therefrom could only be devoted to public purposes under the Constitution. So long as the use of the property by the State is public there can be no constitutional violation.
The resulting issue is whether the fund of the Retirement System is property used for a public purpose of the Commonwealth, and whether the real estate here involved is being held by it as a properly acquired part of that fund, rather than as a private business enterprise. Generally, the question whether public property is being used for a public or private purpose under Article IX is resolved by determining whether the particular property is held for governmental or proprietary reasons. Such an inquiry cannot be controlled by the criteria existing years ago. The old landmarks cannot be our exclusive guides, for our social panorama has been extended along broad lines, calling for the institution of new and different relationships between government and members of the general public. The category of governmental functions has been constantly enlarged with new governmental operations to meet changing conditions. Proprietary functions have also increased with the times.
Although the line between the two groups is often shadowy and difficult of demarcation, it is beyond dispute that the performance of the State's obligation to compensate and protect its servants is a governmental function rather than a proprietary one. We stated in Busser et al. v. Snyder et al.,
It is of no consequence today that the duty of performing this function was entrusted to a subordinate governmental agency with corporate powers and with funds partially contributed from the salaries of employes. Although years ago the thought of committing the execution of a function of government to a separate body of this sort was seldom entertained, it is now a common practice and of course does not impair the governmental aspect of the work undertaken. Nor do contributions *185 from employes' salaries render the undertaking semi-private and subject to municipal revenue laws. The outstanding effect of such contributions is to bind the governmental body to its obligation to remunerate the contributors, and thereby to further good government.
The fact that revenue is derived from the property or that it is leased for private use does not preclude the existence of a public use by the Commonwealth. This Court recently held inDornan v. Phila. Housing Authority et al.,
Here the chief use of this property by the Commonwealth is as an investment of the retirement fund, and merely a temporary investment. The duty of the Retirement System's officers is to dispose of the property as soon as it is advisable to do so,6 and the presumption is that this duty is not being violated.
As we have decided the case upon the grounds set forth, it is unnecessary to discuss the other questions raised in the briefs.
Decree affirmed at appellants' cost.