Lead Opinion
Opinion by
The School District and the City of Pittsburgh (appellants) claimed additional mercantile license taxes from Herman Fineberg, trading as Industrial Uniform Company (appellee), following their examination of his books and records. The basis of their claims was that Finеberg, who had reported and paid tax as a wholesaler, should have reported and paid tax as a retailer. Fineberg promptly paid the claimed amounts and appealed to the County Court of Allegheny County which sustained his position аnd ordered the additional amounts refunded. The City and School District appealed.
The parties have filed a statemеnt of the case pursuant to Supreme Court Rule 53 in which they set forth the taxpayer’s method of doing business. He purchases work clothing and sells it to industrial laundry service companies. These companies in turn rent the work clothing to their customers under an аrrangement whereby clean clothing is delivered and dirty clothing picked up for laundering at regular intervals. The rental chargе includes both the cost of the work clothing and the laundering service.
Under both the Act of June 20, 1947, P. L. 745, as amended, 24 P.S. §§582.1-582.13, levying a mercantile tax of one-half mill on wholesalers and one mill on retailers for the benefit of the School District, and the City ordinance, еnacted under authority of the Act of
Fineberg, as well as the court below, relies strongly on the Paper Products case. There we held, inter alia, that a taxpayer who sold wrapping suрplies to other persons, which other persons used them in connection with their sales of goods to customers, was a whоlesale vendor because the taxpayer’s customers transferred title to the wrapping supplies to the ultimate сonsumers and included the cost of such supplies in the markup of the goods sold. It is true in the present ease that the cost of the uniforms is included by the laundry service companies in their rental charge, but it is equally true that title to the uniforms does not pass to the customers of the service companies. In other words, the service companies do not resell the uniforms. A resale by Fineberg’s customers is a necessary finding to a conclusion that Fineberg is a wholesaler; since no such finding can be madе, the position of the City and School District must be upheld.
Judgments reversed.
Notes
Use of the dual words “dealers” and “vendors” in the taxing act and ordinancе involves no distinction in this respect.
Dissenting Opinion
The factual situation presented in the instant case is novel under the taxing statutes in that the sale by the taxpayer is not to one who “resells” in the strict sense of the word, but, likewise, it is not to the ultimate consumer of the prоduct sold. The ultimate consumer is, in fact, the person to whom the buyer from taxpayer leases the uniforms.
Both the city ordinanсe enacted under authority of the Act of June 25, 1947, P. L. 1145, as amended, 53 P.S. §§6851-6857, and the Act of June 20, 1947, P. L. 745, as amended, 24 P.S. §§582.1-582.13, impose the respective taxes upon “wholesale vendors or dealers.” The majority observes in footnote that “use of the dual words 'dealers’ and 'vendors’ in the taxing аct and ordinance involves no distinction in this respect.” I firmly disagree with this position. Such a construction renders mere surplusagе language intended by the Legislature to have meaning and is in violation of the principles of statutory construction. See Stаtutory Construction Act, May 28, 1937, P. L. 1019, §51, 46 P.S. §551.
As noted by the court below: “It is not for us to delete language which the legislators saw fit to include. They did include not only vendors but dealers. Can it reasonably be said that persons who buy clothing, wearing apparel, and continually lease out uniforms for industrial employees, take them back for re-laundering and leasing to the same customers or to other сustomers, are not dealers in goods, wares and merchandise? True, a dealer is also one who buys something in order to sell it, nоt one who buys to keep or makes to sell. One may be a dealer who buys to sell, and he may be a dealer who buys to lease, he may be both. ... A person who buys clothing, then sells it or leases it to industrial launderers and/or their employees usually under a lеase-use-agreement which pro
In Paper Products Co. v. Pittsburgh,
“Furthermore, if there were any reasonable doubt, tax statutes must be strictly construed in favor of the taxpayer and most strongly against the taxing authorities: [citing cases].” Paper Products Co. v. Pittsburgh, supra,
I dissent.
The Court in Paper Products distinguished wrapping paper from such things as heat, Ught and showcase on the basis that title to the wrapping paper passes to the customer. In the instant case, the uniforms are much more akin to the wrapping paper, sincе they are repeatedly in the hands of the ultimate consumer who actually uses them. The more important basis of Paper Products is that the paper was used directly in the sale by the retailer. The uniforms here are even more directly involved in the sale, since the sale of the service requires that use of the uniform be included.