52 A.2d 581 | Pa. | 1947
The principal questions raised on these appeals are (1) whether the Defense Plant Corporation, a Federal instrumentality (hereinafter referred to as the Plant), is subject to a lien under Pennsylvania's Municipal Lien Act1 in respect of a tax assessed by a local borough against the Plant's land, buildings, machinery and equipment and, if so, (2) whether a judgment on a writ of Sci. Fa. to continue the lien of the tax may include interest for delinquency in payment and an attorney's commission for collection, both as prescribed by Pennsylvania statute.
The Plant was duly created and organized by action of the Reconstruction Finance Corporation2 (hereinafter referred to as R.F.C.), as an agency or instrumentality of the United States for the purpose of aiding the government in its national defense program. To that end, the Plant acquired and owned a steel mill in the Borough of Homestead, Allegheny County, Pennsylvania, which it leased to the Carnegie-Illinois Steel Corporation (hereinafter referred to as Carnegie). For the year 1944, the Borough levied against the Plant, in one lump sum, a tax on the assessed valuation of the land, buildings, machinery and equipment, comprising *503 the mill. By Joint Resolution of Congress,3 the Plant was dissolved on July 1, 1945, when all of its powers, functions, properties, etc., were transferred to its parent, the R.F.C. The tax assessed against the Plant for the year 1944 not having been paid, the Borough on July 13, 1945, filed a claim therefor against it in the Court of Common Pleas of Allegheny County; and on July 29, 1945 (evidently because of the dissolution of the Plant),4 the Borough caused a writ of sci. fa. to issue out of said court on the tax claim, summoning therein, as lienees, the R.F.C. and Carnegie.. In its agreement of lease, Carnegie had expressly assumed liability for all taxes levied and assessed against the subject property of the Plant.
Prior to the filing of the Borough's tax claim in court, Carnegie, then apparently conceding the Plant's liability for local taxes on its land and buildings, assumed to separate the assessed tax on its own self-determined basis and, according thereto, tendered to the Borough a sum of money claimed to represent the tax on the land and buildings. The Borough promptly refused the tender and shortly thereafter took the court action above-mentioned.
To the sci. fa. sur lien, R.F.C. and Carnegie filed separate affidavits of defense, raising questions of law, which the court below decided against the defendants, at the same time allowing them fifteen days for the filing of affidavits of defense to the merits. Upon a rule, ex parte plaintiff, for judgment for want of sufficient affidavits of defense to the merits, the court below made the rule absolute; and judgment for the plaintiff was accordingly entered in a total sum embracing the principal tax on the Plant's land, buildings, machinery and equipment, interest thereon at one-half percent per *504 month from the day the tax became delinquent until the entry of the judgment, and an attorney's commission of five percent (on the tax principal) for collection. It is that judgment from which Carnegie and R.F.C. took the pending appeals. As the questions raised by the appellants were ultimately decided below, and are here presented, on the basis of affidavits of defense to the merits, we need not consider the procedural question, which the learned court below noted, but did not pass upon, as to whether affidavits of defense raising questions of law properly lie to a sci. fa. sur lien where the defense is the taxpayer's alleged non-amenability to the tax and not to any invalidity of the tax or lien as such.
The appellants' main contention is that the property in Homestead, formerly owned by the Plant, was specifically exempt from the imposition of a lien for taxes by virtue of the express terms of the Pennsylvania Municipal Lien Act of 1923, cit. supra, which confines liens on tax and municipal claims to "All real estate . . . other than property owned by the Stateor the United States, . . ." (Emphasis supplied.) It is the appellants' contention that the property of the Plant, an instrumentality of the United States, was ipso facto the property of the United States and, therefore, not subject to a lien for the Borough tax. The contention cannot be sustained.
The purpose of the above-quoted clause from the Act of 1923 is obvious. The legislative intent, so evidenced, was to recognize and respect the rule that property of a sovereignenjoying immunity from taxation cannot be made lienable for tax claims. And so, the exception was deliberately made to apply to "property owned by the State or the United States". However, it was not intended to mean that, thereby, property of an instrumentality of the United States was automatically to be included among the immunized properties excepted from the purview of the Lien Act. Unless expressly so provided, property of an instrumentality of the United States does not enjoy the immunities attaching *505
to property of the United States. In Reconstruction FinanceCorporation v. J. G. Menihan Corp.,
With the presumption against the transference of sovereign immunity to a governmental instrumentality thus clearly established, the appellants obviously failed to meet the consequent burden of showing that the Plant's property in the instant case bore a status akin to property owned by the United States. On the contrary, the undeniable fact is that the property of the Plant, in particular, was expressly rendered subject to local taxation by direct Congressional action, as will appear. It is, of course, fundamental that a sovereign government may not be taxed without its consent. And, as a logical corollary, neither may its property be liened for taxes assessed against it without its consent. But, where the sovereign consents to local taxation of its own or its instrumentality's property, such property is taxable to the same extent and in the same manner as any other property of like character. In general, the tendency of Congressional policy has been not to extend the attribute of sovereign immunity to corporate agencies or instrumentalities of the Federal government and, particularly, not to those engaged in business or manufacturing enterprises. For a recognition and judicial confirmation of that policy, see the Keifer, Burr andMenihan cases, supra. Consonantly with that policy, Congress, upon authorizing the R.F.C. to create additional corporate instrumentalities for the purpose of aiding the government in its national defense program, expressly provided that "any real property of the corporation [i. e., R.F.C. or any of its creatures, such as the Defense Plant Corporation] shall be subject to State, Territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed".5 That the term "real property", as used in *507
the statutory provision above-quoted, includes the machinery and equipment of the steel mill, as well as its land and buildings, was not our own independent view of the congressionally expressed intent: see Defense Plant CorporationTax Assessment Case,
It follows, therefore, that the entire property of the Plant upon which the Borough of Homestead assessed a tax for the year 1944 was subject to such local taxation. Even the appellants now concede that, as indeed they must. But, they continue to argue that, although the Plant was liable for the tax assessed against it, a lien on the tax is not available to the Borough because of the exception in the Lien Act of 1923 in favor of "property owned by the . . . United States". We have already considered whether the Plant's property was "property owned by the . . . United States" and concluded that it was not. But, beyond that, we now hold as a matter of statutory construction that the phrase "property owned by the . . . United States", as employed in the cited section of the Pennsylvania Municipal Lien Act, was meant to embrace only such property of the United States as has not been laid open by the sovereign to local taxation; and we accordingly conclude *508 that the Plant's property (being expressly subjected by the sovereign to local taxation) was not within the intent of the exception in the Lien Act.
The construction, otherwise, for which the appellants contend would lead to an anomalous situation. Thus, a tax lawfully levied and assessed against a taxable governmental instrumentality would not be lienable while like assessments against all other taxables of the same tax district would be lienable. Such a condition would, moreover, violate our State Constitution by depriving the tax of uniformity in the matterof its collection under general laws, as the Constitution requires: Article IX, section 1. The construction so advocated by the appellants is, therefore, to be rejected because of two compelling rules of construction, viz., neither an intention to effect an absurd result nor an intention to violate the Constitution of this Commonwealth is to be imputed to the legislature: Statutory Construction Act of May 28, 1937, P. L. 1019, Article IV, section 52 (1) and (3), 46 PS 552 (1) and (3).
The fact that the United States owns all of the stock of the R.F.C., the owner of the Plant, is of no significance to a consideration of the question as to the taxable owner of the property in question: see the Menihan case, supra, at p. 83, where the government's sole ownership of R.F.C.'s stock was noted but without any relevant importance being ascribed thereto. Under Pennsylvania law, one's ownership of a corporation's entire stock does not constitute him the owner of the corporation's property: Monongahela Bridge Company v.Pittsburg Birmingham Traction Company,
The appellants' remaining contention calls for little discussion. The interest for delay in payment of the *509
tax and the attorney's commission for collection are statutorily prescribed incidents in all cases of overdue taxes. When duly imposable, such charges, along with the tax originally assessed, constitute the tax then due and, consequently, the amount of the lienable tax claim: seeHamilton v. Lawrence,
There is no merit in the appellants' further argument that, in any event, the Plant was not liable for interest and attorney's commission on so much of the tax as was based upon the assessed valuation of its lands and buildings which portion the appellants affected to tender to the Borough. There was no separate assessment of the land and buildings at any time. The entire property, designated on the tax rolls as "One Steel Mill". was assessed as a whole. Nor was there a valid separation of the tax liability through any competent municipal action. Unseparated taxes are no less due and payable because of the pendency of an appeal from the assessment: General County Assessment Law of May 22, 1933, P. L. 853, Article V, sections 518-519, as amended (
The judgment is affirmed.
". . . The corporation, including its franchise, its capital, reserves, and surplus, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority; except that any real property of the corporation shall be subject to State, Territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. The exemptions provided for in the preceding sentence with respect to taxation . . . shall be construed to be applicable not only with respect to the Reconstruction Finance Corporation but also with respect to (1) the Defense Plant Corporation. . . ."