City of Phila. v. Cumberland Cnty. Bd. of Assessment Appeals

• Decision Date: 30 October 2013
• Citation: 81 A.3d 24
• Parties: CITY OF PHILADELPHIA, Trustee under the will of Stephen Girard, Deceased, acting by the Board of Directors of City Trusts, Appellant v. CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Appellee.
• Court: Pennsylvania Supreme Court

81 A.3d 24

CITY OF PHILADELPHIA, Trustee under the will of Stephen Girard, Deceased, acting by the Board of Directors of City Trusts, Appellant

v.CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Appellee.

Supreme Court of Pennsylvania.

Argued May 9, 2012.

Decided Oct. 30, 2013.

Sarah Chadwick Cocke, Esq., PFM Group, for Public Financial Management, Inc.

James G. Colins, Esq., Stephen A. Cozen, Esq., Sara Anderson Frey, Esq., Cozen O'Connor, Philadelphia, Gary Dean Fry, Esq., Archer & Greiner, P.C., Philadelphia, Christopher Anil Amar, Esq., Charles B. Gibbons, Esq., Pittsburgh, Jack Mentzer Stover, Esq., Harrisburg, Buchanan Ingersoll & Rooney, P.C., Joseph T. Kelley Jr., Esq., Kelley & Murphy, Howard A. Rosenthal, Esq., for City of Philadelphia, Trustee Under the Will of S. Girard, Deceased, Acting by the Brd of Drectors.

Stephen Douglas Tiley, Esq., Frey & Tiley, Carlisle, for Cumberland County Board of Assessment Appeals.

Robert L. Knupp, Esq., Knupp Law Offices, LLC, Anthony T. McBeth, Esq., Harrisburg, for County Commissioners Association of Pennsylvania.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Chief Justice CASTILLE.

The issue in this appeal is whether certain property (the “property”) in Cumberland County, which is owned by the City of Philadelphia as trustee of the Stephen Girard Trust and leased by the Board of Directors of City Trusts (colloquially and hereinafter “the Board of City Trusts” and, where the context is clear, “the Board”) to the Pennsylvania Office of Attorney General (“OAG”), is subject to local real estate taxation in Cumberland County. The trial court held, in a grant of summary judgment, that the property was both immune and exempt from local real estate taxation.¹ The Commonwealth Court reversed in a published opinion. For the reasons set forth below, we reverse the Commonwealth Court and reinstate the order of the trial court, on grounds of tax immunity.

I. Background

Stephen Girard's Will and the entwined nature and status of the Girard entities ² have produced nearly two centuries of litigation in multiple contexts. Girard was a unique person and the Girard Trust is a unique legal entity. Born in Bordeaux, France, on May 20, 1750, Stephen Girard died on December 26, 1831 at eighty-one years of age; his life reflects the early history of the nation and of his chosen home, Philadelphia, Pennsylvania. ³

Girard was born into a family that had established a lucrative business trading in the West Indies in the Caribbean Sea; he began working in his father's counting house at ten years old, went to sea for the first time at age fourteen in 1764, and received little if any formal education. Girard left France permanently in 1773 and ultimately settled in Philadelphia in 1777 after several years as a trading sea captain; he became a citizen of Pennsylvania in 1778. During the American Revolution and the years after, he maintained and augmented his growing commercial fortune, becoming a ship owner and builder in 1789. In the following decades, Girard traded within what is now the United States, to ports including Charleston, South Carolina, and New Orleans, Louisiana, and all over the globe: the West Indies, Europe, the Mediterranean, the Baltic and Russia, South America, the East Indies, India, and China. His trading wares included grain, wine, fruit, hemp, iron, coffee, tea, and silk. Anticipating the War of 1812 with England and its likely effect on international maritime commerce, Girard shrewdly reduced his trading activity, liquidated his overseas holdings, collected outstanding foreign debts owed to him, and invested in the First Bank of the United States. Girard became the foremost banker in Philadelphia and the nation when he acquired the bank itself in 1812 after the federal government declined to renew the bank's charter, which expired in 1811, twenty years after its 1791 inception at the behest of Alexander Hamilton, the first Secretary of the U.S. Treasury.

Girard's second career as a banker flourished. He served as a primary financier of the nation during the War of 1812 and on the board of the Second Bank of the United States, which was established after the war, in 1816. ⁴ Having renounced international trade, Girard invested in land, primarily in Philadelphia (including a working farm located on the site of the present-day historic district of Girard Estate in South Philadelphia), but also throughout Pennsylvania and in Kentucky and Louisiana. Some of the Pennsylvania lands Girard acquired, in Columbia County and Schuylkill County (which includes the borough of Girardville, established in 1832), contained abundant coal; after Girard's death, coal royalties produced hundreds of thousands of dollars each year, sustaining the Trust in the process.

Girard's endeavors were not limited to private enterprise; he was also a selfless public citizen of Philadelphia. The Pennsylvania Supreme Court described his public service over a century and a half ago in Soohan v. City of Philadelphia, 33 Pa. 9, 1859 WL 8661 (Pa.1859):

In the great yellow fever of 1793, which broke out in Water street, within a square of his residence, Mr. Girard distinguished himself by visiting and attending upon the sick, and by his invaluable services as an active manager of the hospital at Bush Hill.

Seventeen thousand persons left the city, and of the remainder, upwards of four thousand, or nearly a fifth, died. At a meeting of the citizens of Philadelphia, the Northern Liberties, and district of Southwark, assembled on Saturday, the 22nd day of March 1794, and presided over by Thomas McKean, a signer of the Declaration of Independence, and then chief justice, and afterwards governor of the state, their most cordial, grateful, and fraternal thanks were presented to their fellow-citizens named in the proceedings, “for their benevolent and patriotic exertions in relieving the miseries of suffering humanity on the late occasion.” One of these citizens, thus gratefully remembered, was Stephen Girard, under whose “meritorious exertions and peculiar care,” at the Bush Hill hospital, in conjunction with Peter Helm, “every possible comfort was provided for the sick, and decent burial for those whom their efforts could not preserve from the ravages of the prevailing distemper.”

In 1797 and 1798, the fever again prevailed in Philadelphia with fearful violence, and again Mr. Girard exhibited the same enlarged philanthropy, and the same disregard of danger, by liberal contributions, and personal services to the sick and dying.

In 1802, Mr. Girard was elected a member of the city councils, and so continued for several years. Upon the expiration of the charter of the first Bank of the United States, he established his own private bank, in the building occupied by the late national institution, and his first cashier was Mr. George Simpson, the cashier of the late bank.

1859 WL 8661, at *9–10.

At the time of Girard's death in 1831, his estate was valued at nearly $7 million, making him (it is believed) the wealthiest man in the nation at that time. The estate included ships, land, stock in the public debts of Philadelphia, Pennsylvania and the United States, and shares in insurance companies, Pennsylvania turnpikes and a bridge, the Franklin Institute, the Schuylkill Navigation Company, the Chesapeake and Delaware Canal, and the Danville & Pottsville Railroad.

Girard married, but outlived his wife and had no surviving children. In 1830, the year before he died, he met with his counsel and created what became his last Will and testament, subject to two later codicils; the Will was reprinted and published in 1874. SeeWill and Codicil of the Late Stephen Girard, Esq. (James B. Chandler 1874) (“Girard Will” or “the Will”) (cites infra are to specific provisions of the Will, followed by the corresponding page numbers in the published version). The Girard Will left specific sums to relatives, including Girard's brother and each of his brother's six children and four other nieces, as well as bequests to friends, life incomes to his maid and to his farm housekeeper and her family, and bequests to persons indentured to him. The vast majority of his considerable fortune, however, was left to support charitable and public causes in and about Philadelphia. Thus, Girard left sums to Pennsylvania Hospital, asylums for orphans and the deaf and mute, a society for relief of impoverished shipmasters and their families, and amounts to be invested so as to provide housing fuel for the poor of Philadelphia. Girard also left specific bequests to establish a public school in Philadelphia, and a neighborhood school just outside the then-boundaries of the City, in Passyunk Township.⁵ Girard Will, Clauses I–XVIII, at 3–14.

The residual portion and great majority of Girard's estate, estimated to be worth about $5 million at the time of his death, was also left to further public purposes in the city he called home. The Will stated plainly: “I have sincerely at heart the welfare of the City of Philadelphia.” Girard Will, Clause XX, at 18. The directives Girard included in his Will corroborated this point. Thus, Girard left $500,000 to the “Mayor, Aldermen, and Citizens” of Philadelphia to remove and to prohibit all buildings made of wood or other combustible materials in the city and to create Delaware Avenue in place of the former Water Street, where Girard had kept his riverfront offices, so as to improve the eastern half of the City. His specifications for these public improvements were set forth in minute detail. Girard explained that by all of these improvements, “it is my intention to place and maintain the section of the City, above referred to, in a condition which will correspond better with the general cleanliness and appearance of the whole City, and be more consistent with the safety, health, and comfort of the Citizens.” Girard Will, Clause XXII, ¶¶ 1–3, at 35–40.

Girard...