182 Pa. Super. 122 | Pa. Super. Ct. | 1956
Opinion by
This is an appeal by Francis L. Plumly, surviving trustee of the estate of George F. Lasher, deceased, from the decree dismissing his complaint in equity
Defendants filed an answer to the averments of the complaint together with new matter; plaintiff filed a reply. A hearing was had and exceptions to the chancellor’s adjudication were dismissed by the court in banc. Plaintiff thereupon appealed to this Court.
No exceptions were taken to the chancellor’s findings of fact, and the facts as found are not questioned. Exceptions were to the conclusions of law.
Appellant, Francis L. Plumly, is the surviving trustee of the estate of George S. Lasher, deceased, who died on March 10, 1917. Included in the trust estate were four loft buildings, located in the City of Philadelphia and known as the Gilbert Building, the Fahnestock Building, the Lasher Building, and the Annex to the Lasher Building.
Prior to the sale of the Lasher Building and the Annex the estate had twenty employes engaged in maintaining and operating the buildings. At present thirteen persons are employed in the operation of the remaining buildings. The employes perform the functions of engineers and elevator operators, and provide maintenance and janitor service. All major repairs on the buildings are the responsibility of the estate. In addition to the usual services supplied to the tenants, appellant operates a generator to convert electric current from alternating to direct for the benefit of some of the tenants in their businesses. There are thirty tenants in the two remaining buildings, eight having been secured by the testator during his lifetime, nine by the trustee prior to 1930, six by the trustee after 1930, and seven by real estate brokers. Appellant’s present practice is to secure new tenants when necessary through real estate brokers.
Section 3 of the Act of May 23, 1949, P. L. 1669, re-enacted and amended by the Act of May 10, 1951, P. L. 265, 24 PS §584.3, provides: “Every person engaging in any business in any school district of the first class shall pay an annual tax at the rate of one (1) mill on each dollar of the annual receipts thereof.”
Section 1 of the Act, 24 PS §584.1, defines “business” as follows: “ (2) ‘Business.’ Carrying on or exercising for gain or profit within a 3chc>ol district of the
The Act of May 23, 1949, P. L. 1661, §1, 24 PS §583.1, provided as follows: “The Board of Public Education in school districts of the first class shall levy annually, on or after the second Monday of November and before the first Monday of December next following, a tax of one mill (.001) on each dollar of the total assessment of all real property assessed and certified for taxation in said district.”
Appellant concedes that the real estate held in trust is subject to the tax imposed by the Act of May 23, 1949, P. L. 1661, re-enacted and amended, 24 PS §583.1 et seq., and that the real estate tax imposed upon the trust properties under this act was paid for the years 1949 to 1952, inclusive. The latter act is relevant only in so far as it is related to appellant’s contentions concerning the tax on gross receipts.
Appellant has presented two questions on this appeal. First, he contends that the annual gross receipts tax constitutes improper double taxation of the real estate held in trust under the terms of testator’s will; second, that the rentals from the loft buildings are not receipts from a “business,” as defined in the act. We find no merit in either position.
As said in Spencer v. Snedeker, 361 Pa. 234, 238, 64 A. 2d 771, 772, “Double taxation exists only where
Appellant argues that the gross receipts tax is in reality an income tax, and that as such it is a double tax upon real estate from which the income is derived. The case of Kelley v. Kalodner, 320 Pa. 180, 186, 181 A. 598, upon which appellant relies, is not controlling. In the first place, the intention of the Legislature to impose both taxes was unmistakable, and secondly there is here no lack of uniformity.
As to his second contention, appellant argues that the management of the loft buildings and the collection of rentals therefrom is not clearly such a business or commercial activity as falls within the definition of “business.” As defined in the act, “business” constitutes “carrying on or exercising for gain or profit . . . any trade, business, ... or commercial activity, . . .” 24 PS §584.1. The operation of a business by a trust estate could not be a proper exemption and is not within the exemptions as set forth in the act. An attempt to exempt trust estates engaged in business from the gross receipts tax would result in lack of uniformity in the application of the tax upon similar kinds of business. Board of Christian Education of The Presbyterian Church v. Philadelphia School District, 171 Pa. Superior Ct. 610, 617, 91 A. 2d 372.
Among the qualifying requisites under the act’s definition of “business” is that the business be operated for gain or profit. Philadelphia School District v. Frankford Grocery Co., 376 Pa. 542, 548, 103 A. 2d 738. There is no question but that appellant maintains and operates the loft buildings in order to realize a profit which is to be passed on to the beneficiaries of the trust; and it appears that the trust is making a profit. It is appellant’s ultimate position that, he does not conduct
The chancellor found, and it is not contradicted, that appellant not only collects the rentals but also provides managerial, janitorial, and other services for the tenants. In Pennsylvania Co. for Insurances on Lives and, Granting Annuities v. Philadelphia, 346 Pa. 406, 410, 414, 415, 31 A. 2d 137, 139, it was held that the definition of the word “business” in a revenue measure as “an enterprise, activity, profession, or undertaking of any nature conducted for profit,” included the collection of rentals from commercial buildings where the trustee engaged in such activities as the employment of labor, the active management of the property, and supervisory efforts. In Philadelphia Suburban Water Co. v. Pennsylvania Public Utility Commission, 164 Pa. Superior Ct. 320, 327, 328, 64 A. 2d 500, this Court held that the operation of an apartment development where the owner supplied utility service to the tenants was a commercial activity for utility rate purposes. In Board of Christian Education of The Presbyterian Church v. Philadelphia School District, supra, 171 Pa. Superior Ct. 610, 91 A. 2d 372, we held that the gross receipts tax in question in the instant case applied to rentals received by a charity from tenants in an office building. In speaking for this Court* Judge Reno said (page 619 of 171 Pa. Superior Ct., pages 375, 376 of 91 A. 2d) : “The instant tax is laid upon receipts from business, including receipts from any commercial activity. ... To the extent that the Board leases office
Under the Statutory Construction Act of May 28, 1937, P. L. 1019, §58, 46 PS §558 (3), provisions imposing taxes shall be strictly construed. In so viewing the Act of May 23, 1949, P. L. 1669, as re-enacted and amended, 24 PS §584.1 et seq., we conclude that the management and operation of the loft buildings by appellant constitute a business or commercial enterprise subject to the gross receipts tax, and that the Legislature intended this tax, under these circumstances, to be imposed in addition to the real estate tax under the Act of May 23, 1949, P. L. 1661, as re-enacted and amended, 24 PS §583.1 et seq.
The decree of the court below is affirmed, at the cost of appellant.
Complaint in equity was filed on October 20, 1953.
The Lasber Building and its Annex were sold on December 21, 1054, and are not involved in the present action except in so far as the rentals produced by them prior to the sale may be taxable.
By the Act of May 29, 1951, P. L. 493, 24 PS §583.1 et seq., the Act of 1949 was re-enacted and amended to provide for a tax of not less than one nor more than one and one-half mills.