Alco Parking Corp. v. City of Pittsburgh

• Decision Date: 08 June 1972
• Citation: 291 A.2d 556,6 Pa.Cmwlth. 433
• Parties: ALCO PARKING CORPORATION et al., Appellants, v. CITY OF PITTSBURGH, Appellee.
• Court: Pennsylvania Commonwealth Court

291 A.2d 556

6 Pa.Cmwlth. 433

ALCO PARKING CORPORATION et al., Appellants, v. CITY OF PITTSBURGH, Appellee.

Commonwealth Court of Pennsylvania.

June 8, 1972

Argued Feb. 22, 1972. [Copyrighted Material Omitted]

Leonard Boreman, Baskin, Boreman, Wilner Sachs, Gondelman & Craig, Pittsburgh, Pa., Leonard M. Marks New York City, Richard H. Martin, Pittsburgh, Pa., for appellants.

Frederick A. Boehm, First Asst. City Sol., Pittsburgh, Pa., Ralph Lynch, Jr., City Sol., Grace S. Harris, Special Asst. City Sol., Pittsburgh, for appellee, City of Pittsburgh.

Before BOWMAN, P.J., and CRUMLISH, Jr., KRAMER, WILKINSON, MENCER, ROGERS and BLATT, JJ.

OPINION

ROGERS Judge.

The City of Pittsburgh in December 1969, pursuant to The Local Tax Enabling Act of December 31, 1965, P.L. 1257, 53 P.S. § 6901 et seq., enacted an ordinance imposing upon all parking transactions of operators of nonresidential parking places a tax at the rate of twenty per centum of the gross receipts from such transactions received during the year commencing February 1, 1970 and thereafter. The city has imposed a tax identical except as to rate since the year 1962, the ordinance imposing such prior to the year 1965 having been imposed under the Act of June 25, 1947, P.L. 1145, 53 P.S. § 6851, repealed and replaced by the Act of December 31, 1965, P.L. 1257. Under said ordinances the tax has been increased from ten per centum in 1962 to fifteen per centum in 1968 and by the ordinance here under attack to twenty per centum.

The appellants, parking lot operators, here sought in equity to restrain the city from enforcing the twenty per centum ordinance effective February 1, 1970. The court below, after trial on the merits, made an adjudication nisi dismissing the complaint and, after exceptions filed and dismissed, a decree that its adjudication nisi should be entered as a final decree. This appeal followed.

The subject of municipal taxes upon the gross receipts of parking lot transactions has been the subject of considerable litigation. All save one of the appellants' contentions here have been conclusively decided against them, and we will not burden this opinion by a lengthy repetition of the reasoning of such definitive holdings.

The appellants suggest that under the equal protection clause of the Fourteenth Amendment of the United States Constitution and uniformity clause of Article VIII section one ^[1] of the Constitution of Pennsylvania, P.S., their business may not be singled out for this tax. Their fire comes from two barrels: first, that there is no rational basis for distinguishing the commercial parking business from other businesses and second, that there is no such basis for distinction between nonresidential and residential parking. Unfortunately for the appellants the targets at which they aim have been long since removed from the range. In Philadelphia v. Samuels, 338 Pa. 321, 12 A.2d 79 (1940), the Supreme Court upheld for the purpose of a tax identical to that in the instant case by implication a classification of parking lots as distinguished from other businesses and explicitly the classification of open parking lots as distinguished from closed parking lots, writing:

'Another contention is that the ordinance is bad as discriminating against open parking places in favor of closed garages engaged in parking. It has not been shown that the municipal legislature did not have reasonable ground for separating open parking lots from closed garages and placing them in separate classes for the purpose of taxing the parking transaction in the open lot. The growth of such parking in recent years is (a) matter of common knowledge of which the courts take notice. Generally, the operation of such lots involves more extensive use of sidewalk and street than is involved in the operation of the closed garage; land occupied by a closed garage is assessed at the value of the land and buildings, whereas the open parking lot is assessed without buildings or buildings of negligible value. Other elements of the same general character suggest themselves. In such circumstances the court cannot say that the municipal authorities had not sufficient reason for the classification.' 338 Pa. at 326, 327, 12 A.2d at 82.

In McGillick v. City of Pittsburgh, 415 Pa. 581, 203 A.2d 480 (1964), the Supreme Court affirmed Per curiam an order of the Allegheny County Court specifically upholding the city's classification, continued in the present ordinance, of commercial parking places as taxable and residential as not subject to levy. Finally, on this point, lacking better expression of our own devising, we quote from Commonwealth v. Lafferty, 426 Pa. 541, 550, 233 A.2d 256, 261 (1967), where the classification upheld was that of taxable non-public utilities as distinguished from excluded public utilities, Mr. Justice Eagen there wrote:

'Further, it is in the context of the whole Sales and Use Tax statute that we must view the exclusion. Since this statute is one designed to raise revenue, the state need not justify any distinction drawn between the taxed and the nontaxed 'so long as some other reasonable basis for treating the various classes differently exists. Where such distinction exists, the wisdom of the legislative policy of taxing one class and not another is not a matter for the courts.' Commonwealth v. Life Assurance Co. of Pa., 419 Pa. 370, 377 n. 11, 214 A.2d 209, 215 n. 11 (1965). As stated in Commonwealth v. Life Assurance Co. of Pa., Id. at 376--377, 214 A.2d at 214: 'By necessity a wide discretion must be conceded to the Legislature in the classification of various businesses or occupations for purposes of taxation . . .''.

As further stated in Commonwealth v. Life Assurance Co. of Pa., 419 Pa. 370, 376, 379, 214 A.2d 209, 214, 215 (1965):

'The only constitutional limitation placed upon the power of the Legislature to distinguish between various entities for purposes of taxation is that their basis for doing so be reasonable. . . .

And where such distinction rests upon differences recognized and acted upon by the business world, it is not within the province of the courts to intrude . . . So long as the classification is neither capricious nor arbitrary, there is no denial of the equal protection of the law. . . .'

The distinction here between parking lots and other businesses and between commercial and residential parking lots, as has been held in Philadelphia v. Samuels, Supra and McGillick v. City of Pittsburgh, Supra, satisfy constitutional requirements.

Within the general ambit of equal protection and uniformity, the appellants make two othr arguments, one based on what this tax might be named and the other on the asserted inaccuracy of a statement in the preamble of the ordinance concerning the characteristics of the appellants' enterprises. As to the first, appellant Meyers Brothers contends that because the city at some time in the course of the litigation called the tax a license tax, it is such and under settled principles may not exceed the cost of regulation. As clearly declared in Philadelphia v. Samuels, Supra, the measure in question is an excise tax imposed upon the transaction of parking a motor vehicle. It is a revenue measure by terms of the ordinance and by the Act of Assembly by which it was authorized. In Philadelphia Tax Review Board v. Smith, Kline and French Laboratories, 437 Pa. 197, 262 A.2d 135 (1970), the Supreme Court held that a tax imposed by the City specifically denominated a 'License Tax' was nevertheless a revenue measure and not preempted by a state license and regulatory measure. ^[2]

The appellants' argument that the preamble of the ordinance here somehow supports their view that the classification of their enterprises for the tax is unreasonable is difficult to follow because it stems from a misreading of the ordinance. The preamble in question states: 'Nonresidential parking places, by reason of the frequency of their use at various hours of the day, their location, their relationship to traffic congestion and other characteristics, present problems requiring municipal services and affect public interest, differently from parking places accessory to the use and occupancy of residences. . . .' The appellants say that this seeks to justify the classification of parking lots on the basis that such lots cause congestion and therefore require municipal services, and that because such lots in fact alleviate congestion and reduce municipal concern for traffic congestion, the asserted basis for classification disappears. But the quoted portion of the ordinance, as we read it, does not seek to justify the distinction between parking lots and other businesses but between nonresidential and residential lots. Nor does it suggest that parking lots cause congestion; rather, it says that their activities are related to congestion and require municipal services.

We have attempted here to treat all of appellants' arguments based upon alleged want of equal protection and lack of uniformity. We have carefully considered their thorough briefs and have concluded that the ordinance satisfies these constitutional requirements.

The appellants further vigorously contend that rate of tax here imposed is so high as to result in the taking of their property without due process of law. A tax, they say, which is confiscatory is unconstitutional. Despite the city's argument and the finding of the court below to the contrary, this tax is indeed imposed at an unreasonable rate. The Undisputed evidence on this record is as follows:

1. There are about 24,300 parking spaces in the City of Pittsburgh. Of this number 6100 are served by a public parking authority subjected to this tax, but exempt from other taxes including those on...