65 Pa. Super. 384 | Pa. Super. Ct. | 1917
Opinion by
The case stated, agreed upon by the parties, discloses the following facts which are material to the determination of the question here involved. Mary Van Beil, by deed dated September 1, 1906, conveyed to Daniel E. Brogan, the lot of ground at the southeast corner of Tenth and Market streets, in the City of Philadelphia, reserving a yearly ground rent of $10,000, payable in quarterly payments of $2,500, on the first days of December, March, June and September in every year. The deed
This annual rent, being in excess of $3,000, the defendants were required, in behalf of the plaintiff, to deduct and withhold from the plaintiff an amount equivalent to the normal income tax upon the same and make and render a return, in accordance with the provisions of the act, and to pay the normal income tax “to the officer of the.United States Government authorized to receive the same, and they are each hereby made personally liable for such tax.” Under the act of congress the defendants became collectors for the government of the income tax as respects this rent. This is known as “collection at the source,” and the purpose of it is to secure to the government the amount of the tax, when that is secured it matters not to the government how the parties may settle the matter among themselves. The provision of the statute authorizing the party paying the rent to withhold an amount equivalent to the normal income tax is merely- incidental to the primary purpose of the act, the collection of revenue. This provision was intended to enable a tenant to retain, in advance, out of the payment due to his landlord the amount of the tax which he would be required to pay and which he himself had not covenanted in his lease to pay. There is nothing in the act which would ’warrant a construction that the
“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 the 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 the net income from .rent”: North Pennsylvania Railroad Co. v. Philadelphia & Reading Railway Co., 249 Pa. 326; Catawissa Railway Co. v. Philadelphia & Reading Railway Co., decided October 25, 1916, and not yet reported. What then, is the meaning of the covenants, above quoted, in this deed? Daniel E. Brogan, for himself, his heirs and assigns covenanted to pay to the grantor, her heirs and assigns “the aforesaid yearly rent or sum of $10,000 lawful money as aforesaid on the days and times hereinbefore mentioned and appointed for payment thereof without deduction, defalcation or abatement for any taxes, charges or assessments whatsoever.” If the parties had known that a Federal Income Tax was in the. future to be imposed and that the tenant under that law would be required to pay the tax, on the “yearly rent or sum of $10,000,” they could not have used words more fitting to forbid the tenant from deducting the amount of the tax so paid from the yearly rental. In this part of the covenant they use the term “yearly rental” as synonymous with the “siiqi pf $10,000.” This broad covenant is not
The judgment is reversed and judgment is now entered for the plaintiff and against the defendants in the sum of $85 and costs.