Commonwealth v. Lackawanna I. & C. Co.
| Decision Date | 28 June 1889 |
| Docket Number | 48,49 |
| Citation | 129 Pa. 346,18 A. 133 |
| Parties | COMMONWEALTH v. LACKAWANNA I. & C. CO |
| Court | Pennsylvania Supreme Court |
Argued June 6, 1889
APPEALS BY PLAINTIFF AND DEFENDANT FROM THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY.
Nos 48, 49 May Term 1889, Sup. Ct.; court below, No. 43 March Term 1889, C.P.
On January 7, 1889, upon report made by the Lackawanna Iron & Coal Company, the auditor general and state treasurer made a settlement of account for taxes as follows:
For tax on capital stock, per act of June 7, 1879, for years ending first Monday of November, 1887 and 1888, as per report herewith filed.
$ 37,500
Thereupon the said company filed specifications of objections to the said settlement of account, which averred:
1. The act of June 7, 1879, P.L. 112, under authority of which the tax in the settlement hereby appealed from purports to have been charged, was, in so far as it imposed a tax upon the capital stock of manufacturing corporations, repealed by the twentieth section of the act of June 30, 1885, P.L. 193. The Lackawanna Coal & Iron Company is a manufacturing corporation, and there is not now, and was not at the date of the settlement of said account by the auditor general and state treasurer, any act of assembly authorizing the imposition of the tax charged in said settlement, or of any state tax upon said company, or upon its capital stock.
2. The act of June 7, 1879, in so far as it imposes a tax on capital stock, is in violation of § 1, article IX. of the constitution of Pennsylvania, which provides that "all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws."
3. The act of June 7, 1879, in so far as it imposes a tax on capital stock, is in violation of § 1, article XIV. of the amendment to the constitution of the United States, which provides that "no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the law."
4. The account appealed from is erroneous, illegal and void, for the reason that for each of the years 1887 and 1888 it imposes a tax upon capital stock invested in bonds issued by the government of the United States, which said bonds and the capital stock whereby they are represented are not subject to the taxing power of the state of Pennsylvania.
On February 5, 1889, the parties submitted the cause to the decision of the court, without a jury, under the provisions of the act of April 22, 1874, P.L. 109, and the hearing being had, on May 6, 1889, the court, McPHERSON, J., filed the following decision:
FINDINGS OF FACT.
1. The defendant is a corporation of this commonwealth, incorporated by the act of April 5, 1853, P.L. 306. Supplements thereto were passed May 2, 1855, P.L. 398, and April 27, 1864, P.L 631. All these acts are made part of this finding.
2.
3. Its capital stock represented the following property, all of which was reasonably necessary in the prosecution of its principal business:
Manufacturing plant, including buildings
real estate, machinery, etc., the
value of which was
$ 1,500,000
Coal property, the value of which was
500,000
Ore property, the value of which was
400,000
$ 2,400,000
It also represented the following
property, which has not been shown
to be reasonably necessary in the
prosecution of its principal business:
$ 4,180,000
4. During the first tax year named, it declared several dividends amounting to fifteen per cent, and during the second tax year, it declared several dividends amounting to ten per cent.
5. On January 8, 1889, the accounting officers made a settlement taxing the entire capital stock, under § 4, act of June 7, 1879, P.L. 114, and from this settlement the present appeal is taken.
CONCLUSIONS OF LAW.
So much of the defendant's capital stock as is invested in United States bonds is not taxable by the state: Bank v. Commonwealth, 9 Wall. 353.
a [In our opinion the twentieth section of that act was intended to operate simply on capital employed in manufacturing; the purpose being to free such capital from a burden believed to be hampering our own industries in the struggle for a market.] It was hardly intended to relieve from taxation, capital, although belonging to manufacturing companies, which was not actually used in manufacturing, but was invested, as in the case before us, in interest bearing securities, in unnecessary real estate, or in a business not reasonably required by the principal corporate purpose. Language which relieves from taxation is to be strictly construed: Academy v. Philadelphia Co., 22 Pa. 496; Miller v. Kirkpatrick, 29 Pa. 226; Crawford v. Burrell Tp., 53 Pa. 219; and we therefore hold, following the effect of several previous decisions of this court, that the defendant is a manufacturing corporation, within the provisions of the act of 1885, only as to so much of its capital stock as it has shown to be thus employed.
The burden is upon it to make out its claim to the relief set up; if it fails, the capital stock tax of 1879 is properly collectible. It has thus failed with respect to the last three items of paragraph 3, and we must therefore decide a due proportion of its capital stock to be taxable. The fraction is 1,280,000/4,180,000 or 64/209 of $ 3,000,000, amounting to $ 888,038 and upon this sum the commonwealth is entitled to recover as follows:
555.00
Total
$ 11,866.37
for which sum we direct the prothonotary to enter judgment if exceptions are not filed according to law.
To the foregoing decision the commonwealth filed exceptions, alleging that the court erred:
1. In the finding of fact included in []
2. In not finding that the business of the corporation, during the tax years in question, was mining iron ore, making and manufacturing iron and steel, mining coal and quarrying limestone, and transporting and conveying the same, and such other objects as were necessary in the prosecution of said business, including the right to own timber and ore lands, and the actual ownership thereof, and also limestone lands, with the right to mine, quarry, remove and dispose of the minerals and limestone therefrom, and the mining and quarrying thereof: citing § 4, act of April 5, 1853, P.L. 306; § 2, act of May 2, 1855, P.L. 398; § 2, act of April 27, 1864, P.L. 631.
3. In not finding that in the prosecution of its business, during the tax years in question, the company supplied from its own mines the lump coal used in its blast furnace, and sold the other sizes of coal mined by it; that out of a little over eight hundred thousand tons of coal mined, it sold about four hundred and fifty thousand tons; that it owned the stock of the ore mine in the state of New York, from which mine the ore was exclusively used at the works of the company at Scranton; and that it also procured ore and limestone from its property in New Jersey.
4. In not finding that the Lackawanna Iron & Coal Company, was a corporation organized for the purposes of mining, quarrying and manufacturing, and was actually engaged in the prosecution of said purposes.
5. In the conclusion of law embraced in []
6. In not holding that the twentieth section of the act of 1885 exempted from taxation such, and only such corporations, as are exclusively organized for and engaged in the business of manufacturing.
7. In not holding that the capital invested in the coal property mentioned in the third finding of fact was subject to taxation.
8. In not holding that the capital invested in the ore property mentioned in the third finding of fact was subject to taxation.
9. In not entering judgment for the commonwealth for the full amount of tax claimed.
The defendant filed exceptions, alleging that the court erred:
1. In the conclusion of law embraced in [] a
2. In directing judgment to be entered against the company for $ 11,866.37. b
3. In not directing judgment to be entered in favor of the defendant. c
On May 18, 1889, the court overruled the exceptions filed by both parties, and directed judgment to be entered in accordance with the decision filed.
Thereupon the commonwealth took the appeal to No. 48, specifying that the court erred:
1-9. In overruling the plaintiff's exceptions. to
...
To continue reading
Request your trial
-
In re Rollins Gold & Silver Min. Co.
... ... manufacturing company within the meaning of the act releasing ... manufacturing companies from taxation. Appeal of Commonwealth ... (Pa. Sup.) 18 A. 133. The above is conceded by counsel for ... petitioning creditors, at whose instance this company was ... declared a ... ...