Commonwealth v. Pennsylvania Coal Co.

• Decision Date: 07 January 1901
• Docket Number: 16
• Citation: 197 Pa. 551,47 A. 740
• Parties: Commonwealth v. Pennsylvania Coal Company
• Court: Pennsylvania Supreme Court

47 A. 740

197 Pa. 551

Commonwealth v. Pennsylvania Coal Company

No. 16

Supreme Court of Pennsylvania

January 7, 1901

Argued May 28, 1900

Appeal, No. 16, May T., 1900, by defendant, from judgment of C.P. Dauphin Co., Commonwealth Docket, 1899, No. 109 1/2, on appeal from tax settlement, in case of Commonwealth v Pennsylvania Coal Company. Affirmed.

Appeal from tax settlement.

The facts appear from the opinion of the Supreme Court.

Error assigned was in overruling exceptions to the opinion and judgment of the court on appeal from tax settlement.

M. E Olmsted, with him A. C. Stamm, for appellant. -- Coal sent by appellant to New Jersey, New York, Wisconsin and Canada, and there stored awaiting sale, became part of the general mass of the property of said state and subject to taxation there: Brown v. Houston, 114 U.S. 622.

Within the very language therefore of this court in Com. v. American Dredging Co., 122 Pa. 386, and Com. v. Del., L. & W.R.R. Co., 145 Pa. 96, the coal in question being taxable in the jurisdiction where located, is exempt at the domicil of the owner: McCulloch v. State of Maryland, 4 Wheaton, 316; Com. v. Standard Oil Co., 101 Pa. 119; Com. v. Montgomery Lead & Zinc Mining Co., 5 Pa. C.C.R. 89.

Appellant's money was not invested in mortgages, but in real estate. It practically retains its title to that real estate until the purchase money mortgages are paid. These purchase money mortgages are clearly taxable in New York, within the ruling of the Supreme Court of the United States in Savings & Loan Society v. Multnomah Co., 169 U.S. 421.

Appellant's interest in this real estate being taxable in New York, is not taxable in Pennsylvania: Com. v. Del., L. & W.R.R. Co., 145 Pa. 96.

John P. Elkin, attorney general, with him Frederic W. Fleitz, deputy attorney general, for appellee. -- The defendant company has parted with its title to the real estate. The title has passed out of the Pennsylvania Coal Company and belongs to other persons or corporations. The defendant company holds, in place of the title, a security for the debt in the shape of a mortgage. As a matter of fact, the defendant company will have no further interest in the title to the real estate which has been disposed of. It is fair to presume that the mortgages will be paid when due, and that the proceeds will be recovered into the business of the company, and hence, will be an element that will enter into the value of its capital stock. The mortgage is the only thing the company has to indicate its interest in the real estate, the title to which has passed to third parties. The purchase money is, therefore, taxable: McKeen v. County of Northampton, 49 Pa. 525; Short's Est., 16 Pa. 63; Williams v. Banks, 19 Md. 22; Baltimore v. Patterson, 50 Md. 371; People v. Eastman, 25 Cal. 603.

It is true the courts have held that tangible property, permanently located outside the state for the use or benefit of the corporation, is exempt from taxation, but in no instance have the courts gone so far as to allow deductions for the property of a corporation that is in transit to the place of its destination: Com. v. American Dredging Co., 122 Pa. 386; Com. v. Montgomery Lead & Zinc Mining Co., 5 Pa. C.C.R. 89.

The Supreme Court of New Jersey, in the case of State v. Engle, 34 N.J.L. Rep. 425, held that a company owning coal lands in Pennsylvania, which sent coal, mined on their land, by railroad to Elizabethport, where it was deposited on the wharf for separation and assortment for the purpose of being shipped in vessels to purchasers in New York and New England, was not subject to taxation for the coal so held in the state of New Jersey.

To the same effect is the case of Lehigh & Wilkes-Barre Coal Co. v. Carrigan, 39 N.J.L. Rep. 35.

Before GREEN, C.J., McCOLLUM, MITCHELL, DEAN, FELL, BROWN and MESTREZAT, JJ.

OPINION

MR. JUSTICE BROWN:

The capital stock of the Pennsylvania Coal Company was appraised at $17,000,000 for the purpose of taxation. From this sum certain deductions were allowed by the commonwealth, leaving the taxable value of the stock at $15,840,000, and from this still further deductions or exemptions are claimed by the appellant. Capital stock tax is a property tax, but the property of the corporation, for the purpose of taxation, is reached through the tax imposed directly upon the stock, the value of which is ascertained, in the first instance, as directed by the act of assembly. When the actual value of the capital stock is so ascertained, deductions or exemptions are necessarily allowed, from time to time, by the commonwealth in determining the real sum upon which the tax ought to be...