Commonwealth v. Danville Bessemer Co.
| Decision Date | 04 January 1904 |
| Docket Number | 8 |
| Citation | 56 A. 871,207 Pa. 302 |
| Parties | Commonwealth, Appellant, v. Danville Bessemer Company |
| Court | Pennsylvania Supreme Court |
Argued June 2, 1903
Appeal, No. 8, May T., 1903, by plaintiff, from judgment of C.P. Dauphin Co., Commonwealth Docket 1902, No. 164, on appeal from tax settlement in case of Commonwealth v Danville Bessemer Company. Affirmed.
Appeal from tax settlement.
Trial by court without a jury under the Act of April 22, 1874, P.L 109.
WEISS, P.J., found the facts to be as follows:
The defendant company was incorporated under the laws of the state of New Jersey, August 18, 1899, for the purpose of manufacturing iron and steel.
2. Prior to the approval of the Act of May 8, 1901, P.L. 150, upon and according to the provisions of which the claim of the commonwealth is founded, the company brought its capital, or a part of it, into this state and invested it in the purchase of a blast furnace and rolling mill plant and engaged in the manufacture of iron and steel.
3. The authorized and paid in capital stock of the company is $360,000 which was issued "wholly in pursuance of authority conferred by the state of New Jersey."
4. It made report under date of July 20, 1901, accompanied with a protest of July 26, 1901, against liability to pay a bonus or make report, in which it sets forth that its chief office in this state is located in the city of Philadelphia; that it has no bonded indebtedness; that the amount of capital wholly employed here is "cash, $140,000; property value to make up balance of capital stock is conjectural;" and in addition and for the information of the auditor general, that the capital invested in Pennsylvania is "in cash $140,000; in manufacturing works the balance," and that the property located in this state consists of a blast furnace, rolling mill plant and tenement houses, "all arbitrarily valued at $250,000." From the affidavit of the company, which was offered and received in evidence without objection, it is made to appear that "the amount in value of the company's capital actually invested or employed in Pennsylvania has not at any time since the passage of the act of May, 1901, exceeded $250,000," though the statement in the report that the capital invested was $140,000 in cash and the balance in manufacturing works, fully justified the accounting officers in assuming that the amount thereof employed wholly in the state was $390,000.
5. The auditor general and state treasurer settled an account against the company April 18, 1902, in which they charged it with one third of one per cent on $390,000, or $1,300, from which an appeal was taken June 10, 1902, and various specifications of objection filed thereto.
6. The defendant belongs to a class of companies incorporated under the laws of another state, authorized by the provisions of the Act of June 9, 1881, P.L. 89, and the act amendatory of it approved June 16, 1893, P.L. 466, to take, have and hold real estate necessary for corporate purposes, and erect manufacturing establishments within this commonwealth.
7. The company complied with the provisions of the Act of April 22, 1874, P.L. 108, entitled "an Act to prohibit foreign corporations from doing business in Pennsylvania without having known places of business and authorized agents," and the certificate of the secretary of the commonwealth is exhibited as by the terms of said act is required.
8. The defendant has not, since the passage of the act of May 8, 1901, made any additional investment of capital in Pennsylvania or employed in said state any amount in addition to that which was invested and employed prior to the passage of the act of May 8, 1901.
9. Defendant has no bonded indebtedness, and the capital employed by it in Pennsylvania was derived from capital stock alone and no part of it is or was borrowed money.
10. Defendant makes annually to the auditor general returns of its capital stock and pays thereon annually the same tax as is imposed upon corporations organized for similar purposes under the laws of Pennsylvania.
11. The amount of capital employed by defendant in Pennsylvania was not greater than corporations of the same kind organized under the laws of this state are entitled to employ.
12. The commonwealth seeks to recover a bonus of one third of one per centum upon the capital actually employed by the company in Pennsylvania, and rests its claim and right to do so upon the Act of May 8, 1901, P.L. 150.
The court after citing Com. v. Erie & Western Transportation Co., 107 Pa. 112, and Com. v. American Car & Foundry Co., 203 Pa. 302, decided that the right to recover the bonus must be denied to the commonwealth.
Judgment was accordingly entered for defendant. Commonwealth appealed.
Error assigned was the judgment of the court.
Hampton L. Carson, attorney general, with him Frederic W. Fleitz, deputy attorney general, for appellant. -- The act is not a retroactive statute. A license to a foreign corporation to enter a state does not involve a permanent right to remain. Subject to the laws and constitution of the United States, full power and control over its territory, its citizens and its business, belong to the state: Rector, etc., of Christ Church v. Philadelphia, 65 U.S. 300; Doyle v. Continental Ins. Co., 94 U.S. 535; Phila. Fire Assn. v. New York, 119 U.S. 110 (7 S.Ct. Repr. 108).
There is no contract between the foreign corporation and the commonwealth which is violated by the act of May 8, 1901: Milsom Rendering & Fertilizer Co. v. Kelly, 10 Pa.Super. 565; Hagerman v. Empire Slate Co., 97 Pa. 534; Com. v. Del. Division Canal Co., 123 Pa. 625; Com. v. Erie & Western Transportation Co., 107 Pa. 112.
M. E. Olmstead, with him A. C. Stamm, for appellee. -- There is an essential distinction between a tax and a bonus. The legislative power of taxation is limited only by its own sovereignty; a bonus implies a consideration for something conferred, and where the corporation receives nothing beyond what it possessed by its charter, the legislature cannot exact additional consideration: Com. v. Erie & Western Trans. Co., 107 Pa. 112; Com. v. Bailey, Banks & Biddle Co., 20 Pa.Super. 210.
The act of 1901 does not apply to capital invested prior to its passage: Com. v. American Car & Foundry Co., 203 Pa. 302; Taylor v. Mitchell, 57 Pa. 209; Peoples' Fire Ins. Co. v. Hartshorne, 84 Pa. 453; Sproul v. Standard Plate Glass Co., 201 Pa. 103. If the act of 1901 requires the payment of a bonus by defendant upon or in respect of capital invested in Pennsylvania prior to its passage, it impairs the obligation of contracts: Memphis, etc., R.R. Co. v. Railroad Commissioners, 112 U.S. 609 (5 S.Ct. Repr. 299); Dartmouth College Case, 4 Wheat. 518; Com. v. Erie & Western Transportation Co., 107 Pa. 112; Providence Bank v. Billings, 4 Peters, 514; Wolff v. New Orleans, 103 U.S. 358; New Jersey v. Wilson, 7 Cranch, 164; Houston & Texas Central Ry. Co. v. Texas, 170 U.S. 243 (18 S.Ct. Repr. 610); Green v. Biddle, 8 Wheat. 1.
Before MITCHELL, DEAN, FELL, BROWN, MESTREZAT and POTTER, JJ.
In affirming this judgment but little need be said. The claim of the commonwealth is for a bonus of one third of one per centum upon the amount of the capital of the Danville Bessemer Company, a foreign corporation, employed within this state. It is made under the Act of May 8, 1901, P.L. 150, the first section of which is, "That from and after the passage of this act all corporations, limited partnerships or joint stock associations, except foreign insurance companies chartered or created by or under the laws of any other State, or of the United States, or of any foreign country, whose principal office or chief place of business is located in this commonwealth, or which have any part of their capital...
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