Clearfield Bituminous Coal Corp. v. Thomas

• Decision Date: 08 December 1939
• Docket Number: 70
• Citation: 9 A.2d 727,336 Pa. 572
• Parties: Clearfield Bituminous Coal Corporation v. Thomas et al., Appellants
• Court: Pennsylvania Supreme Court

9 A.2d 727

336 Pa. 572

Clearfield Bituminous Coal Corporation v. Thomas et al., Appellants

No. 70

Supreme Court of Pennsylvania

December 8, 1939

Submitted May 24, 1939

Argued November 29, 1939

Appeal, No. 70, March T., 1939, from decree of C.P. Cambria Co., March T., 1937, No. 1, in case of Clearfield Bituminous Coal Corporation v. John Thomas, Jr., et al., County Commissioners. Decree reversed.

Bill in equity. Before McCANN, P.J.

The opinion of the Supreme Court states the facts.

Exceptions to decree nisi dismissed and final decree entered. Defendants appealed.

Errors assigned, among others, related to the action of the court below in dismissing exceptions to the findings and conclusions of the chancellor.

The decree is reversed at the cost of the appellee.

George M. Spence, for appellants.

Philip N. Shettig, with him Robert M. Fisher and Thomas A. Swope for appellee.

William S. Rial, Deputy Attorney General, with him Claude T. Reno Attorney General, for intervenor.

Before KEPHART, C.J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES JJ.

OPINION

MR. MAXEY, JUSTICE

The County Commissioners of Cambria County appeal from the action of the Court of Common Pleas of that county in holding that the Act of July 18, 1935, P.L. 1196, 32 PS 75, is constitutional. If the decree of the court stands, the County Commissioners are bound to comply with the mandate of the Act and of the certificate of the Secretary of Forests and Waters, to wit: to reduce on their records the assessments upon certain surface lands of the appellee corporation to an amount not in excess of $1.00 per acre and to maintain such assessment until further notified by the Department of Forests and Waters.

The case was heard upon bill and answer. There was no dispute as to the facts. These are, inter alia, as follows: Plaintiff is the owner of a tract of unseated surface land containing 416 acres situate in Chest Township, Cambria County. Pursuant to the provisions of the Act of June 5, 1913, P.L. 426, plaintiff caused this land to be classified as auxiliary forest reserves and entered into a contract with the State Forestry Reservation Commission as provided by that act. The commission thereupon certified the land to the County Commissioners of Cambria County and thereafter plaintiff's land was valued for the purpose of taxation at the rate of $1 per acre under the provisions of the Act of 1913. One of the courts of common pleas of this Commonwealth declared this Act of 1913 unconstitutional, and no appeal from such decision having been taken, the Secretary of Forests and Waters, who had succeeded to the powers and duties of the State Forestry Reservation Commission, acting upon the opinion and advice of the Attorney General of this State, notified in October, 1934, the owners of all lands classified as auxiliary forest reserves under the Act of 1913, and the County Commissioners of the several counties wherein such lands are situate, that the contracts between the several owners and the State Forestry Reservation Commission as provided by that act were canceled.

Subsequently, the now challenged Act of July 18, 1935, P.L. 1196, was passed. Section 2 provides that "all surface land which would be suitable for the growing of merchantable forest products, whether they are now growing or shall hereafter be planted out, sown by seed, or reproduced naturally, and would thereby contribute to an adequate lumber supply for the people, protect the water supply, and give aid to flood control, and to the prevention of soil erosion, may be set apart according to the provisions of this act and exclusively used for growing trees for production of such merchantable products, and is hereby constituted a separate and distinct class of land to be known as forest reserves auxiliary to the State owned forest reserves. . . ." This section further provides the method whereby the owner of surface land may cause his land to be included in the aforementioned classification. Section 8 provides, inter alia, that all surface land classified and set apart as auxiliary forest reserves under the provisions of the Act shall be rated in value for the purpose of taxation not in excess of $1.00 per acre and shall continue to be so rated so long as the land remains within the class established by section 2. Section 9 requires the County Commissioners to reduce the assessment on their records to a sum not in excess of $1 per acre.

Except for the nominal tax resulting from the assessment of the land so classified, at $1 an acre, no tax is paid on the land until the trees are "harvested," at and after which time "ten per cent of the stumpage value of the trees" is payable, as provided in section 10 of the Act. As to when trees shall be harvested, section 4 provides as follows: "Whenever trees growing on said surface land have become suitable for merchantable forest products, the secretary shall, at the request of the owner, or on his own motion, make an examination of said land and designate for the owner the trees to be cut, if in the judgment of the secretary there be any, and the cutting and removal of said trees so designated shall be in accordance with the instructions of the secretary." A dispute between the secretary and the owner as to the desirability of the cutting and removal of the trees, is made a question for judicial determination.

This Act may be summarized as follows: For what it deems to be the general welfare, the legislature has provided a means by which the owners of certain types of lands can be almost wholly exempted from the payment of taxes for years and until the timber on those lands is "harvested." Whether or not any timber on such lands is ever harvested is left to the initiative of either the owner or the Secretary of Forest and Waters. If neither of these persons wanted the timber harvested, it would not be, and no taxes would be paid on the land, except the nominal tax on a valuation of $1 an acre. If the timber is harvested, 10% of the stumpage value of the timber is payable as taxes. These stumpage taxes, therefore, might be paid fifty years after or at any other period, after the land was placed in the forest reserve class. If this stumpage tax, when, and if ever, paid, is divided by the number of years the land was in the favored class, the average tax per year would manifestly be of a rather small amount.

It is undeniable therefore that the Act now challenged is a tax exemption Act. That it does not completely exempt lands from taxation, does not alter the fact that it is pro tanto an act exempting lands from taxes they would otherwise bear. The contention that the stumpage tax when (if ever) paid is the equivalent of the sum of the annual taxes the land would otherwise have paid, is unsound. If such was the fact, that would defeat the very purpose of the Act, that purpose being to reward or compensate a landowner for setting aside his land "for growing trees." For his contribution to the general welfare in doing this, he is relieved, in respect to such land, of the payment of all taxes except the nominal tax on a valuation of one dollar an acre, until that date, presumably in the far future, when he or the Secretary of Forests and Waters may decide that the timber should be harvested. To put the matter concretely, A may own a tract of land assessable at $100 an acre. By having his land accepted as an auxiliary forest reserve, he immediately secures a 99% reduction in his taxation until the indefinite future date (which may never arrive) when the timber is harvested. Even if the timber is harvested after the landowner has enjoyed a long period of immunity from taxation, only a tax amounting to 10% of the value of the "harvest" is imposed. Averaging this over the term of years the land has been exempt, makes the average annual tax much less (it may fairly be assumed) than it would have been had the land not been put in the preferred class.

With the wisdom of the legislature in translating into a statute this particular conception of sound public policy, we have nothing to do. The question presented to us is: Has the legislature the power under the Constitution to enact such a statute? This question the appellants emphatically answer: "No." They claim that it is a tax exemption statute and that therefore under section 2 of Article IX of the Constitution, it is void, for that section so declares unless the property exempted is the property enumerated in section 1 of Article IX (section 1, B of Article IX has no application here), to wit: A, Public property used for public purposes; B, Actual places of religious worship; C, Places of burial not used or held for private or corporate profit; D, Institutions of purely public charity; and E, Real and personal property owned, occupied and used by any branch, post or camp of honorably discharged soldiers, sailors and marines. It is, of course, well settled that when the Constitution enumerates the kind of property that may be exempted from taxation, it by implication excludes all other taxable property.

In Cope's Est., 191 Pa. 1, 43 A. 79, this court declared unconstitutional the Act of May 12, 1897, P.L. 56, which act exempted personal property to the amount of $5,000 in the payment of the inheritance tax. This court, in an opinion by Chief Justice STERRETT, after referring to the above quoted sections 1 and 2 of Article IX of the Constitution, said "These limitations on the power of the legislature mean something. They are plainly intended to secure, as far as possible, uniformity and relative equality of taxation, by prohibiting generally the exemption of a certain part of any recognized class of property, and subjecting the residue to a tax that should be borne uniformly by the...