249 Pa. 326 | Pa. | 1915
Opinion by
In 1879, the North Pennsylvania Railroad Company leased its road and equipment to the Philadelphia and Reading Railroad Company, and it is now operated by the latter’s successor, the Philadelphia and Reading Railway Company. The terms of the lease, so far as material to the question here presented, are as follows: Third. “That the party of the second part shall and will, during the continuance of the term hereby demised, assume the payment of, and punctually and faithfully pay all taxes and assessments upon the capital stock of the party of the first part, upon the yearly payments herein agreed to be made by the party of the second part to the party of the first part, and upon the dividends declared and paid by the party of the first part to its stockholders, out of the said yearly rent, for the payment or collection of which taxes or assessments the said party of the first part would otherwise be liable or accountable under any lawful authority whatever.” Fourth. “That the party of the second part shall and will punctually and faithfully pay all taxes, charges, levies, claims, liens and assessments of any and every kind, which, during the continuance of the term hereby demised, shall in pursuance of any lawful authority, be assessed or imposed on
Plaintiff paid to the United States government under the Federal Act of October 3, 1913, c. 16, 38 U. S. Stat. 114, 116, an income tax of $4,450.21, which income included the rent paid by defendant. Plaintiff then demanded in this action that defendant repay the above sum, less such amount, as represented the tax on income received from other sources. The amount of this reduction was agreed upon and the only question raised here is as to the liability of defendant to pay the remainder of the tax after such deduction. The lower court entered judgment in favor of plaintiff from which judgment this appeal was taken.
It is contended by defendant that the income tax is a tax upon net income and not a tax upon the rents or profits derived from real estate; and therefore such tax is not within the terms of the lease, which require defendant to pay inter alia all taxes or assessments on the “yearly payments” provided for in the lease. The real question to be considered is the meaning of the parties in view of the language used by them, there being no doubt if defendant agreed in appropriate terms to pay the income tax or any other tax to which the plaintiff might be subjected, such agreement would be binding, regardless of whether the income tax be technically viewed as a tax on rent or on the net income from rent. By the provisions of the third section of the lease, defendant agreed to assume the payment of all taxes and
The judgment of the lower court is affirmed.